- After a long stretch of limited innovation addressing mental health, we are seeing an increasing number of new solutions targeting these challenges.
- Several companies are exploring new pharmaceutical solutions, while others are exploring the clinical potential of naturally derived ingredients.
- Digital tools addressing mental health and overall well-being have grown in recent years, including direct-to-consumer and employer-facing products.
In recent years, there have been several developments for treating mental health from existing and newer pharmacological companies. These innovations — which come after decades of slower-paced advances — include novel drugs and digital offerings. Against this backdrop, and with our sustainable investing framework, we believe there is potential for investment opportunities among corporate leaders and solutions providers.
We discuss these issues in greater detail in our "Mental health: Insights and investment implications" white paper.
Pharmaceutical development is accelerating
There have been several waves of psychiatric-focused innovation from the pharmaceutical industry starting in the mid 1950s. A second wave developed in the 1980s and 1990s with the emergence of antidepressants known as SSRIs by several brand names, and SNRIs.
In recent years, a renewal of interest in central nervous system targets has emerged.
In recent years, a renewal of interest in central nervous system targets has emerged. The Food and Drug Administration (FDA) has approved novel pharmaceutical and digital therapies for treating common mental illness. Sage Therapeutics and Johnson & Johnson have led the way in novel treatments for depression. In 2019, Johnson & Johnson announced the FDA approval of Spravato, a ketamine-derived nasal spray for adults with treatment-resistant depression. It was the first novel drug approved in decades for treating major depressive disorder (MDD).
Also in 2019, Sage announced FDA approval of its Zulresso (brexanolone) injection, the first and only treatment specifically approved to treat postpartum depression (PPD). Sage is also starting clinical trials to test the efficacy of a rapid acting oral therapy that targets PPD and acute MDD.
Several smaller and mostly private companies are exploring the clinical potential of other psychedelic-derived active ingredients in treating mental illness. Examples include psilocybin, found in over 200 species of mushrooms; lysergic acid diethylamide (LSD); and methylenedioxymethamphetamine, often found in illicit drugs such as ecstasy or MDMA.
Rapid growth in digital therapies and applications
Digital tools and applications have grown quickly in recent years and include both direct-to-consumer and employer-facing product offerings. For lower acuity conditions, app-based programs can be effective solutions. These include Happify, a digital program that aims to help users improve overall well-being through daily interactive activities, and Headspace, a meditation and sleep app. While growth in digital tools for low-to-moderate patient needs has been prolific over the past several years, these solutions are not currently regulated and limited research on effectiveness is available.
For more intensive patient needs, one potential solution is myStrength, which was acquired by Livongo Health in 2019. The myStrength digital tool includes clinically backed cognitive behavioral therapy-based programs that interact with the user to address depression, anxiety, stress, substance use, chronic pain, and sleep challenges.
Several private companies, including Akili Interactive Labs, Pear Therapeutics, and Click Therapeutics, have reported promising initial data behind their prescription digital therapies, which operate at the intersection of technology and biology. Currently, these companies are focused on substance abuse disorders, ADHD, chronic insomnia, autism spectrum, and major depression. These software-based medical products provide more targeted care, must be prescribed by a licensed professional, and are subject to FDA approval. In the future, many diseases may be treated using prescription digital therapeutics.
Telemedicine adoption continues to increase, especially for mental health treatment
Further along the continuum of care are e-counseling platforms that provide users access to a network of thousands of licensed professionals. One such tool, BetterHelp (owned by Teladoc), offers members direct online access to licensed psychologists, clinical social workers, and marriage and family therapists. Members currently pay $40 to $70 per week for counseling. Talkspace is another popular e-counseling platform that provides access to a network of thousands of licensed professionals.
While telemedicine has grown in recent years, the COVID-19 pandemic has accelerated adoption, supported by various regulatory changes.
Popular telemedicine providers such as Teladoc, Amwell, Doctor on Demand, and MDLive host virtual appointments that are increasingly covered by insurance. While telemedicine has grown in recent years, the COVID-19 pandemic has accelerated adoption, supported by various regulatory changes. Beyond even the current set of circumstances, this shift has the potential to improve access going forward for those who are distant from care providers and/or don't seek treatment because of stigma. This is particularly important in treating mental illness and could also help address the industry's high no-show rates.
The unwelcome challenges of 2020's multiple crises may increase the need for behavioral health treatment and other forms of telemedicine, and shifts in regulatory restrictions may ease some of the challenges, leading to potential continued growth for companies like Teladoc, Amwell, and others.
As of 12/31/20 Teladoc was held at 1.51% in Putnam Sustainable Future strategy and is not held in Putnam Sustainable Leaders strategy. At the same date, Johnson & Johnson, Sage Therapeutics, Livongo Health, Happify, Headspace, Akili Interactive Labs, Pear Therapeutics, Click Therapeutics, Teladoc, Talkspace, Amwell, Doctor on Demand, and MDLive were not held in either strategy.
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