Bad trip: How cul­ture con­flict and a need for cash near­ly broke Lykos

In ear­ly 2023, the founder of the psy­che­del­ic med­i­cine com­pa­ny Lykos Ther­a­peu­tics met with a po­ten­tial in­vestor for din­ner, feel­ing out the chem­istry for a fi­nan­cial — and per­son­al — re­la­tion­ship that could set the com­pa­ny’s fu­ture.

The in­vestor, Pro­tik Ba­su, was close to lead­ing a huge in­vest­ment in­to Lykos, which was on the cusp of bring­ing to pa­tients a new type of treat­ment for post-trau­mat­ic stress dis­or­der. Rick Doblin, Lykos’ founder, had once hoped to avoid sell­ing any eq­ui­ty in the com­pa­ny at all.

Pro­tik Ba­su

Over the two-and-a-half-hour din­ner, the two men bond­ed over lib­er­a­tion the­ol­o­gy, a Chris­t­ian so­cial jus­tice move­ment that sought to em­pow­er the poor and im­prove so­cio-eco­nom­ic dis­par­i­ties. Lykos’ drug mido­mafe­t­a­mine, bet­ter known as the psy­che­del­ic MD­MA, was speed­ing to­ward the FDA. The com­pa­ny be­lieved it could help the rough­ly 13 mil­lion Amer­i­cans suf­fer­ing from PTSD, in­clud­ing every­one from vet­er­ans to sur­vivors of sex­u­al vi­o­lence. As the two men moved to­ward a deal, the in­vest­ment felt like an ide­al part­ner­ship.

But in the ear­ly days of their re­la­tion­ship, Ba­su al­so gave Doblin a warn­ing. If they worked to­geth­er, he said, out­siders might try and paint them as two pro­tag­o­nists pit­ted against each oth­er. Ba­su’s in­vest­ment would give his ven­ture cap­i­tal firm, He­le­na, pow­er and au­thor­i­ty that Doblin and Lykos, whose ear­ly op­er­a­tions had been fund­ed in part by donors, hadn’t be­fore had to share.

A few months lat­er, Ba­su’s firm led a more than $100 mil­lion in­vest­ment in­to Lykos that would fund the com­pa­ny’s rapid growth, and its plans to launch the drug af­ter a re­view by the FDA.

It nev­er got that far.

Lykos would face a bru­tal re­view by US reg­u­la­tors ear­li­er this year that led to the drug’s re­jec­tion. The com­pa­ny was forced in­to a pun­ish­ing round of lay­offs, let­ting go of 75% of its staff, and oust­ing its top ex­ec­u­tives and CEO. And Doblin would be forced off the board in the cul­mi­na­tion of long-sim­mer­ing ten­sion over Lykos’ mis­sion, his own am­bi­tions, and the com­pa­ny’s grow­ing pains as it tried to bring a break­through, but con­tro­ver­sial, ther­a­py through the strict US reg­u­la­to­ry sys­tem.

End­points News spoke with more than 10 sources in­volved with Lykos over the last 18 months, who spoke about its cul­ture, op­er­a­tions and de­scribed key events. Most spoke on con­di­tion of anonymi­ty. The com­pa­ny de­clined to com­ment on the to­tal­i­ty of this sto­ry, elect­ing to an­swer se­lect ques­tions.

Doblin is one of the few who agreed to speak on the record. A month af­ter his ex­it, Ba­su’s warn­ing over din­ner seems pre­scient. The founder says that in ret­ro­spect, his path had been di­verg­ing from the com­pa­ny’s for some time.

“There were just a bunch of de­ci­sions at the Lykos board lev­el that I didn’t re­al­ly agree with,” Doblin said in an in­ter­view with End­points.

‘We would have to go to in­vestors’

Lykos’ ori­gins date back to 1986, when Doblin found­ed a group called the Mul­ti­dis­ci­pli­nary As­so­ci­a­tion for Psy­che­del­ic Stud­ies, bet­ter known as MAPS. The non-prof­it’s goal was to re­build the per­cep­tion of MD­MA as a po­ten­tial med­i­cine, one year af­ter the Drug En­force­ment Agency named it a Sched­ule I sub­stance, the agency’s strictest des­ig­na­tion about a chem­i­cal’s po­ten­tial for abuse.

In 2014, MAPS spun out Lykos (called MAPS PBC at the time), en­vi­sion­ing it as a cor­po­rate off­shoot that could turn MD­MA in­to a ther­a­peu­tic drug and get it ap­proved by reg­u­la­tors. Whol­ly owned by MAPS, it was al­so a “key part of MAPS’ strat­e­gy to be­come a sus­tain­able non-prof­it or­ga­ni­za­tion,” ac­cord­ing to a 2018 snap­shot of MAPS PBC’s web­site.

In the ear­ly years, that vi­sion was fund­ed by phil­an­thropy. But as oth­er psy­che­del­ic com­pa­nies sprout­ed up, it be­came hard­er to bring in mon­ey from peo­ple who re­al­ized that in­stead of be­ing donors to a char­i­ty, they could be share­hold­ers in a busi­ness, Doblin said.

“I did not re­al­ize that we would not be able to raise the mon­ey we need­ed from phil­an­thropy,” Doblin said of his ear­ly vi­sion.

It be­gan to flirt with more tra­di­tion­al forms of fi­nanc­ing, and head­ing in­to 2023, the com­pa­ny had added to its fund­ing by sell­ing a con­vert­ible note — a loan that can be turned in­to eq­ui­ty — and by sell­ing rights to fu­ture roy­al­ties. But it had nev­er sold a stake in the com­pa­ny out­right, and Doblin said he came to the con­clu­sion that “we would have to go to in­vestors.”

“​​We did what­ev­er we could, for as long as we could, to fore­stall sell­ing own­er­ship,” he said.

Many of Lykos’ ear­ly em­ploy­ees had come from MAPS, main­ly to con­tin­ue the clin­i­cal de­vel­op­ment work through Phase 3. But as the piv­otal tri­al pro­ceed­ed and the com­pa­ny grap­pled with po­ten­tial­ly need­ing to sell a drug, it be­gan to hire work­ers with ex­per­tise in mar­ket ac­cess, com­mer­cial­iza­tion and state gov­ern­ment af­fairs, many of them from larg­er drug­mak­ers that had very dif­fer­ent cul­tures. There were about 154 em­ploy­ees at the be­gin­ning of 2023, ac­cord­ing to the com­pa­ny.

The old guard and the new of­ten didn’t see eye to eye on how to progress the com­pa­ny.

Mul­ti­ple sources told End­points that mem­bers of Lykos and MAPS would have calls to­geth­er, de­spite the two or­ga­ni­za­tions hav­ing very dif­fer­ent goals. For ex­am­ple, MAPS’ fo­cus on the de­crim­i­nal­iza­tion of drugs some­times ran di­rect­ly counter to Lykos’ work, es­pe­cial­ly when plan­ning for the po­ten­tial launch of MD­MA-as­sist­ed ther­a­py in states like Ore­gon or Col­orado, where de­crim­i­nal­iza­tion was al­ready tak­ing ef­fect.

Some em­ploy­ees at Lykos al­so ques­tioned the heavy em­pha­sis on ther­a­py, which Doblin main­tains is core to the ther­a­peu­tic ben­e­fit of the drug. He told End­points that giv­ing pa­tients MD­MA with­out ther­a­py is “very, very risky” and has ad­vo­cat­ed for train­ing ther­a­pists by giv­ing them the drug. He says that some peo­ple at Lykos threat­ened to quit if the com­pa­ny moved for­ward with that plan.

“I think that the peo­ple that hold me in low re­gard are ner­vous al­so about one of the core mis­sions of MAPS, which is both drug de­vel­op­ment and drug le­gal­iza­tion,” Doblin said.

New raise in­clud­ed old mon­ey  

At the start of 2024, Lykos an­nounced the clo­sure of its Se­ries A, a mile­stone that ap­peared to re­in­force its mo­men­tum.

But much of the new mon­ey the com­pa­ny an­nounced was al­ready ac­count­ed for by its now much larg­er work­force, ac­cord­ing to peo­ple fa­mil­iar with the com­pa­ny’s bud­gets. It had al­ready made a num­ber of small cost cuts and hir­ing freezes, and a por­tion of the more than $100 mil­lion the com­pa­ny tout­ed had ac­tu­al­ly been raised through the con­vert­ible loan — and at least par­tial­ly spent.

The deal al­so of­fi­cial­ly gave Ba­su more pow­er. While MAPS had shares with ex­tra vot­ing pow­er, He­le­na and Ba­su had the fi­nal say on bud­getary de­ci­sions, ac­cord­ing to a source fa­mil­iar with Lykos’ cor­po­rate struc­ture. MAPS PBC was of­fi­cial­ly re­named Lykos, and in Feb­ru­ary the FDA ac­cept­ed its ap­pli­ca­tion for mido­mafe­t­a­mine, tee­ing up an Au­gust de­ci­sion.

The com­pa­ny al­so an­nounced two key hires: Al­li­son Rosen­thal, a long­time vet­er­an of Ot­su­ka, as chief com­mer­cial of­fi­cer. Coy Stout al­so joined the team as VP of mar­ket ac­cess.

Af­ter years of liv­ing out­side the es­tab­lish­ment, the com­pa­ny was knock­ing at the door of le­git­imiza­tion by the drug world’s reg­u­la­to­ry gold stan­dard, and a po­ten­tial­ly lu­cra­tive prod­uct launch.

Then the roof fell in.

From skep­ti­cism to re­jec­tion 

In June, out­side ex­perts ap­point­ed by the FDA gath­ered in Sil­ver Spring, Mary­land to dis­cuss the com­pa­ny’s drug. De­spite two suc­cess­ful Phase 3 stud­ies, mem­bers of the FDA’s ad­vi­so­ry com­mit­tee heav­i­ly crit­i­cized the com­pa­ny for fail­ing to col­lect da­ta that could’ve bet­ter in­formed the drug’s po­ten­tial for abuse. There were con­cerns that pa­tients knew they were on the drug, and not a place­bo, cast­ing the re­sults in­to doubt. And they asked about bias in the types of pa­tients who had been picked for the tri­al.

In the end, the vote against rec­om­mend­ing the drug was 10-1. An out­side pric­ing group as­sess­ing the pro­gram cast ad­di­tion­al doubt on the in­tegri­ty of the de­vel­op­ment pro­gram, lam­bast­ing Lykos for a pri­or case of al­leged sex­u­al mis­con­duct in a Phase 2 study.

By the time the FDA re­ject­ed the drug in ear­ly Au­gust, few were sur­prised. And Ba­su’s warn­ing to Doblin was about to be­come very re­al.

Cor­po­rate over­haul 

On Aug. 15, six days af­ter the FDA re­jec­tion, Lykos an­nounced it was let­ting go of 75% of its rough­ly 100 em­ploy­ees. Ac­cord­ing to sources, the de­par­tures in­clud­ed Gen­er­al Coun­sel Ar­man Nader­shahi and Rosen­thal, the chief com­mer­cial of­fi­cer hired just a few months pri­or.

Amy Emer­son

En­doints asked CEO Amy Emer­son in an in­ter­view af­ter she de­tailed the staff cuts why she was stay­ing on, giv­en what in ret­ro­spect looked like sig­nif­i­cant mis­steps dur­ing the drug tri­als.

“I stand be­hind the de­ci­sions that I have to make that al­low us to keep go­ing and get us point­ed in the right di­rec­tion,” she said. “And those are hard de­ci­sions to make.”

Doblin, how­ev­er, was out. The founder, who had for years ap­peared on stages tout­ing the po­ten­tial of psy­che­delics, was now far too prob­lem­at­ic a front­man. Ba­su told him that the sto­ry of Lykos could no longer be about him or his cru­sade, ac­cord­ing to a per­son fa­mil­iar with the con­ver­sa­tion.

In an in­ter­view af­ter his ex­it, Doblin de­scribed Ba­su’s firm He­le­na as an “im­pact in­vestor” that’s “not will­ing to sac­ri­fice prof­its for im­pact.” He said it was a “mis­take” that he did not an­tic­i­pate that He­le­na would be will­ing to make cer­tain trade-offs for po­ten­tial fi­nan­cial re­turns. Ba­su de­clined to com­ment on Doblin’s al­le­ga­tion.

For a few weeks, Emer­son hung on. “I am not re­al­ly think­ing about my­self right now,” she said. “I’m think­ing about the or­ga­ni­za­tion.” There had been no fight over her job, she said on the day of the cuts.

There hadn’t been, in large part be­cause the de­ci­sion to re­place her had been made at the time of the re­struc­tur­ing, ac­cord­ing to a source fa­mil­iar with the move. Ul­ti­mate­ly, Emer­son made the call, an­oth­er source said, and hand­ed in her res­ig­na­tion.

Her ex­it was re­vealed on Sept. 5, and Chief Op­er­at­ing Of­fi­cer Michael Mul­lette, who was most re­cent­ly at Mod­er­na af­ter more than 19 years at Sanofi, was named the in­ter­im CEO, with David Hough, the ar­chi­tect of J&J’s es­ke­t­a­mine spray Spra­va­to, be­com­ing chief med­ical of­fi­cer. To­geth­er, the two had a com­bined 39 years of ex­pe­ri­ence at large drug­mak­ers, com­plet­ing the com­pa­ny’s trans­for­ma­tion away from the psy­che­delics move­ment that found­ed and led it.

In a state­ment to End­points, Emer­son said she re­mains “very proud of the team.”

“There is no doubt that mis­takes were made, as will hap­pen in any pi­o­neer­ing jour­ney, but the progress is un­de­ni­able and I am as con­fi­dent as ever that in the end, this ef­fort will be suc­cess­ful and that we will be able to pro­vide help to mil­lions of peo­ple who des­per­ate­ly need it,” she said.

A source fa­mil­iar with the plan­ning said Lykos’ first en­gage­ment with the FDA is in Oc­to­ber, where the agency can ex­pand on the re­jec­tion and Lykos can ask for more clar­i­ty on what da­ta are need­ed to po­ten­tial­ly try again.

An­oth­er source says it’s un­like­ly Lykos will for­mal­ly dis­pute the FDA’s de­ci­sion and would rather fo­cus on rais­ing more mon­ey for an ad­di­tion­al study. For now, the com­pa­ny said in a state­ment that it has enough cash to “sup­port its NDA re­sub­mis­sion process.”

And Doblin is con­fi­dent that Lykos will ul­ti­mate­ly suc­ceed. “The mis­sion con­tin­ues,” he said.