In the span of a week, Lykos Therapeutics has been rejected by the FDA, had three published papers retracted, dealt with a boardroom shakeup and, yesterday, cut 75% of its roughly 100 employees.
It’s a series of events that’s almost certain to add to the controversy around the startup, which was once seen as a leader in psychedelic-aided therapies. Now, its future as a company is up in the air.
Endpoints News spoke with Lykos CEO Amy Emerson just a few hours after a town hall in which employees were told that many of their colleagues had been laid off.
This interview has been significantly edited for length and clarity.
Max Bayer: Who’s accountable for the decisions today and where the company has found itself?
Amy Emerson: It’s not been one person making that decision. That’s been the leadership team and the board in collaboration.
Bayer: At least from the press release, none of the executive team is leaving. Why not?
Emerson: There’s changes at all levels of the organization. We’re really creating an organization that is simplified and straightforward, clear accountability so that we can do the work that’s next. But we haven’t released the names of people affected.
Bayer: But is anyone leaving? I mean, you don’t have to name the specific ones.
Emerson: Yes.
Bayer: What’s your financing plan going forward? (Editor’s note: Emerson previously told Endpoints before the FDA decision that a request for a new trial would be “a different circumstance for raising money.” The company raised $100 million in January.)
Emerson: We need to go to the FDA, understand next steps, and plan to raise. The main focus right now is taking us to a position that makes us strong enough to do the work and conserve resources.
Bayer: How much of the $100 million is still available to you? Is there some of that money that you don’t have yet from investors?
Emerson: I think what you’re seeing us do is make sure that we make that runway last to get us through to a better understanding. Then we can be more clear on what our raise is.
Bayer: Have investors seemed interested in that? Or have they told you “no”?
Emerson: The good thing about the type of investors that we had in our round is that a lot of them really believe in the work that we’re doing and are leaning in to support us.
Bayer: So none of the investors that you had in the $100 million have told you that they don’t want to participate in another round?
Emerson: I can’t say that. I have a CFO that I would have to go through the exact list with. But we have not initiated another round right now, but we’re absolutely keeping our investors informed. They need information. I don’t think they’re just gonna say “we’re in.”
Bayer: You had mentioned that you were already game-planning for whatever the FDA decision was which, I think in light of a rejection, means another trial. What is that going to cost?
Emerson: I don’t have a number yet. We haven’t had a meeting with FDA yet, and there’s a lot of negotiation that has to happen. Then we will cost out what they tell us — but I don’t have a number right now.
Bayer: Has that happened internally?
Emerson: Our focus was what do we need to do to be successful? And it was reset, get smaller, get strategic, bring in David Hough, who really understands this. He’s a veteran, he’s been through this. We have to have that clarity to understand what resources we need to do what FDA is asking. (Editor’s note: Hough was a longtime R&D executive at Johnson & Johnson who helped develop the company’s esketamine depression treatment, Spravato. Lykos appointed him as senior medical advisor.)
Bayer: What’s the other internal work that you’re referencing?
Emerson: We are still laying people off, we’re still negotiating, we’re still looking at what our team is. There’s a lot of work still going on today and tomorrow, and presentations that we need to do to our board on where we land.
Bayer: One source I spoke to described a rumor that executives are keeping their bonuses, but employees are not. Is that correct?
Emerson: That is 100% not true. Everybody got the same percent and nobody got their full bonuses, including all the executives. It was 50% and everybody got it.
Bayer: There was also a smaller round of layoffs earlier when the company submitted its FDA application, right?
Emerson: Yeah, we did have some restructuring. I think it was at the end of last year.
Bayer: Was it imperative that Rick leave, given that he was maybe a barrier to legitimization for the company? (Editor’s note: Rick Doblin, founder and president of the Multidisciplinary Association for Psychedelic Studies, left Lykos’ board as part of the broader cuts.)
Emerson: It was really important that the company evolved from Rick. He moved out of the company a number of years ago and onto just the board. Rick is still much more involved in MAPS. But there’s been a lot of conflation of what the two companies are.
MAPS has a different mission than Lykos, and Lykos needs to focus narrowly on clinical, regulatory work for midomafetamine as a prescription medicine. That is a much more narrow focus than what Rick works on at MAPS. And we have to make that more clear. He hasn’t had day-to-day responsibility in Lykos for years.
Bayer: Was he a part of the decision to not collect positive adverse event data in the clinical trials? I had heard that was something that he explicitly felt like the company didn’t need to do.
Emerson: No, he was not part of the Phase 3 program. He was at the board level at the time we were starting the Phase 3s.
Bayer: Did you fight to keep your job after the FDA rejection? I think employees blame you for why three-quarters of them are being laid off.
Emerson: As far as people blaming me, that’s fine. The CEO is there to be accountable, and I am up for that. There hasn’t been a fight on specific leadership. I’m not really thinking about myself right now; I’m thinking about the organization.
Bayer: But the counter-argument would be that the fact that you’re still here shows that you’re not actually being held accountable.
Emerson: Well, is the only way to be held accountable to lose your job?
Bayer: The employees who are being let go are conceivably being held accountable. Let me frame it this way: How would you describe yourself as taking accountability?
Emerson: I take accountability by making these difficult decisions. I’m happy to make the difficult decisions that need to be done. That’s what I’m here to do. I’m here to make sure that we do the right thing, that we talk to the FDA, and that we keep working to bring this forward. And I will do that in whatever way is needed. And those are not discussions I’m going to have in the media. I stand behind the decisions that I have to make that allow us to keep going and get us pointed in the right direction.
Bayer: Thank you. I appreciate you taking questions on a hard day.