• Fri. Jul 19th, 2024

Eight mental health biotech companies trying to make a difference

In the U.S. alone, it is estimated that one in five adults live with a mental illness. According to the Kaiser Family Foundation, the COVID-19 pandemic exacerbated this issue, with about four in 10 U.S. adults reporting symptoms of anxiety or depressive disorder in 2021, showing a significant increase from before the pandemic. Given these statistics, it’s no wonder that there are so many mental health companies now operating within the biotech industry. In this article, we take a look at eight of these companies.

According to a report last year from Pharmaceutical Research and Manufacturers of America (PhRMA), there were at least 163 drugs targeting mental health already in the clinic or waiting for the U.S. Food and Drug Administration (FDA) review. Treatments for depression made up the largest section of the mental illness pipeline, with 54 medicines being developed.

Despite the hurdles associated with developing drugs for psychiatric conditions – for example, the underlying pathology of many of these types of diseases is not very well understood – many biotech companies have set up with a primary focus on these disorders. 

The companies on this list are using several different approaches to developing psychiatry drugs, from psychedelics to precision medicine. So, let us take a look at eight mental health companies looking to change people’s lives for the better.

Alto Neuroscience 

Alto Neuroscience is pioneering precision psychiatry by developing targeted medicines that will help patients get better faster. The company’s clinical pipeline includes novel drug candidates for depression, post-traumatic stress disorder (PTSD), schizophrenia, and other mental health conditions. It also has its own biomarker platform called the Precision Psychiatry Platform. This measures brain biomarkers by analyzing electroencephalogram (EEG) activity, neurocognitive task performance, wearable data, and other factors, in order to match each patient with the right Alto product candidate.

Alto’s approach is backed by Eli Lilly and other investors, which participated in a $45 million series C financing round raised by Alto in November. At the time, the company said the funds would be used to support ongoing and planned clinical development of the company’s late-stage candidates, with four placebo-controlled phase 2 clinical trial readouts expected by early 2025.

Shortly after, in December, Alto also announced positive results from the phase 2 study of one of its lead candidates, ALTO-300, which demonstrated clinically meaningful improvements, as well as favorable safety and tolerability in patients with major depressive disorder (MDD). Patients characterized by an EEG biomarker demonstrated robust clinical improvement in depression symptoms and higher response rates, as measured by the Montgomery–Åsberg Depression Rating Scale (MADRS), compared to patients without the EEG biomarker. The company has now initiated a phase 2b study evaluating ALTO-300 in 200 patients with MDD. 

atai Life Sciences

Mental health company atai Life Sciences was founded in 2018, as a response to the significant unmet need and lack of innovation in the mental health treatment landscape. The company is dedicated to efficiently developing innovative therapeutics to treat depression, anxiety, addiction, and other mental health disorders. By pooling resources and best practices, atai aims to responsibly accelerate the development of new therapies to achieve clinically meaningful and sustained behavioral change in mental health patients. 

The company has launched several smaller mental health companies under its umbrella. For example, it fully owns EmpathBio, Revixia, and Viridia. Plus, it has stakes in other players, such as Compass Pathways, which is also included on this list. 

atai has several psychedelic and non-psychedelic programs in its portfolio. The most advanced candidate being developed by the company itself is called RL-007, which is an orally available compound that modulates cholinergic, glutamatergic, and GABA-B receptors, thereby ostensibly altering the excitatory/inhibitory balance in the brain to produce pro-cognitive effects. The first patient was recently dosed with the drug in the phase 2b study for the treatment of cognitive impairment associated with schizophrenia (CIAS). Initial results from this study are expected in the second half of 2024.


Focusing on central nervous system (CNS) conditions that currently have limited treatment options, company Axsome has already succeeded at being a major player in the mental health space, after its drug for major depressive disorder (MDD) was approved by the U.S. Food and Drug Administration (FDA) back in 2022. 

The drug is called Auvelity. It is a combination of dextromethorphan – most commonly known as a cough suppressant – and bupropion – which is used to treat MDD and facilitate tobacco cessation. Dextromethorphan affects N-methyl-D-aspartate (NMDA), glutamate-1, and sigma-1 receptors in the brain, which have all been implicated in the pathophysiology of depression. Meanwhile, bupropion’s cytochrome P450 inhibition boosts dextromethorphan’s blood levels, allowing for once-daily dosing. 

When it was approved by the FDA, Auvelity became the first rapid-acting oral medicine approved for MDD, providing relief within one week of taking it. This means it could be very effective for patients with treatment-resistant depression, who do not respond well to traditional antidepressants. 

Compass Pathways

Compass Pathways is focused on improving the lives of those who are suffering with mental health challenges and who are not helped by current treatments. It is pioneering the development of a new model of psilocybin treatment, in which its proprietary formulation of synthetic psilocybin, called COMP360, is administered in conjunction with psychological support. Psilocybin is the main psychedelic compound in magic mushrooms; it has been suggested that it can rewire the brain to treat depression long-term after just one or two doses.

Compass’ lead program is for treatment-resistant depression, in which COMP360 is currently being tested in a phase 3 study. According to the mental health company, this is the largest randomized, controlled, double-blind psilocybin treatment clinical program ever conducted. 

COMP360 has also been given a breakthrough therapy designation by the FDA. 

In August last year, Compass announced up to $285 million in private placement financing. At the time of the announcement, the company said it intended to use the net proceeds from the financing to fund its pivotal phase 3 clinical program in treatment-resistant depression, its commercial planning and preparation efforts, its ongoing phase 2 trials in anorexia nervosa and post-traumatic stress disorder, and its development of digital technologies to complement and augment its therapies and its discovery and preclinical research.

Freedom Biosciences 

When Freedom Biosciences emerged from stealth in 2022, with $10.5 million in seed financing, its goal was (and still is) to develop next-generation viable and efficacious ketamine and psychedelic therapeutics. 

Ketamine has been proven to be a successful treatment for depression in patients who do not respond to traditional selective serotonin reuptake inhibitors (SSRIs) or other medications. However, chief executive officer (CEO) Dina Burkitbayeva, said in a press release statement that current first-generation commercial ketamine treatment options are falling short due to cost, access, and burdensome time requirements.

Freedom Biosciences has a ketamine-specific program known as FREE001. FREE001 is a ketamine treatment that has been demonstrated in clinical trials to have more durable effects than ketamine. A phase 2 investigational study showed that the combination provided 14 days of antidepressant effects, which is two to three times longer than the usual two to seven days of effects from ketamine alone. This extended efficacy has extremely promising implications for the treatment’s accessibility for patients who are unable to make frequent visits to a clinic.


MindMed’s goal is to be the global leader in the development and delivery of treatments that unlock new opportunities to improve patient outcomes, through the development of a pipeline of innovative product candidates, with and without acute perceptual effects, targeting neurotransmitter pathways that play key roles in brain health disorders. The mental health company’s psychiatry pipeline includes investigational therapies for the treatment of generalized anxiety disorder, ADHD, and autism spectrum disorder. 

In December 2023, MindMed announced positive topline results from its phase 2b trial of its lead candidate, MM-120 (lysergide D-tartrate), for generalized anxiety disorder. The trial met its primary endpoint, with MM-120 – which was administered as a single dose – demonstrating statistically significant and clinically meaningful dose-dependent improvements on the Hamilton Anxiety rating scale (HAM-A) compared to placebo at week four. Lysergide is a synthetic tryptamine belonging to the group of classic, or serotonergic, psychedelics, which acts as a partial agonist at human serotonin-2A (5-hydroxytryptamine-2A [5-HT2A]) receptors. MindMed is developing MM-120, the tartrate salt form of lysergide, for both generalized anxiety disorder and ADHD. 

Given the positive results from its phase 2b trial for generalized anxiety disorder, the company plans to hold an end-of-phase 2 meeting with the FDA in the first half of 2024, and expects to initiate phase 3 trials in the second half of 2024.

Relmada Therapeutics 

Company Relmada Therapeutics is dedicated to improving the standard of care for CNS disorders, with its primary focus being the mental health space. It is currently concentrating on advancing its ongoing phase 3 program of REL-1017, which aims to offer a revolutionary treatment for MDD.

REL-1017 works as an N-methyl-D-aspartate (NMDA) receptor (NMDAR) channel blocker that preferentially targets hyperactive GluN2D channels. NMDARs are known to have a primary role in physiological neural plasticity, and their dysfunction has been associated with many CNS disorders, including MDD. The primary cause of MDD may be excessive activity of a subtype of NMDARs called the GluN1-GluN2D subtype. REL-1017 may regulate these receptors, while not interfering with the physiological activity of other NMDARs.

In September last year, Relmada announced positive efficacy and safety results from its phase 3 long-term study of REL-1017 for the treatment of MDD. Patients treated daily with REL-1017 for up to one year experienced rapid, clinically meaningful, and sustained improvements in depressive symptoms and associated functional impairment. The drug was also well-tolerated with long-term dosing, showing low rates of adverse events and discontinuations due to adverse events. Furthermore, no new safety signals were detected.


Vistagen is aiming to transform the treatment landscape for individuals living with anxiety, depression, and other CNS disorders. The mental health company is advancing therapeutics with the potential to be faster-acting, and with fewer side effects and safety concerns, than those currently available. 

Vistagen’s pipeline includes six clinical-stage product candidates, including fasedienol (PH94B), itruvone (PH10), PH15, PH80, and PH284. Each candidate is an investigational agent belonging to a new class of drugs known as pherines. Pherines are administered as low microgram dose level nasal sprays and are designed with a novel mechanism of action that activates chemosensory neurons in the nasal cavity and can beneficially impact key neural circuits in the brain without systemic uptake or direct activity on CNS neurons in the brain. 

In August last year, the company announced positive topline results from its phase 3 trial of fasedienol nasal spray for the treatment of social anxiety disorder. The trial met its primary endpoint, with fasedienol demonstrating a statistically significant difference in the average Subjective Units of Distress Scale (SUDS) score during a public speaking challenge compared to placebo. The trial also met its secondary endpoint, demonstrating a statistically significant difference in the proportion of clinician-assessed responders between fasedienol and placebo as measured by the CGI-I scale. Fasedienol was also well-tolerated and demonstrated a favorable safety profile consistent with all prior trials.

Mental health market surge: Companies meeting growing demand

In 2021, Visiongain published a new report on the mental disorder drugs market size. It stated that the market was valued at $36.77 billion in 2020, and is projected to reach at a market value of $58.91 billion by 2031. Some of the major factors propelling this growth are the rising prevalence of mental disorders, the mounting investment in drug research and development (R&D) by pharmaceutical & biopharmaceutical companies, the growing mental health care awareness, new product launches, and a rising acceptance of mental disorder drugs worldwide.

This projected market value suggests that there is clearly a high demand for more advanced products for the treatment and maintenance of severe mental disorders. And considering the successful work being performed in developing mental health drugs by the companies on this list, the biotech and biopharma industries certainly seem to be responding to this demand.


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