The ASX 200 Health Index (XHJ) is trading flat at the time of writing, compared to the broader index which is up by 0.47%.

In an announcement this week, Australian medicines regulator the TGA ruled that psychedelic drugs cannot be used to treat mental health conditions.

The TGA ruled against having MMDA and magic mushrooms downscaled from their current Schedule 9 prohibited substances category, arguing they could be misused and abused by users outside of a medical research setting.

The ruling comes at a critical time as the world grapples with an ever-increasing rise in mental illness cases since the pandemic began.

It also goes against the grain of contemporary research into psychedelics, where the latest study from Yale University determined that one dose of psilocybin could immediately increase neural connections in the brains, helping the brain to “reorganize and adapt” to different situations.

However, the TGA’s decision is consistent with the US FDA, which had designated MDMA as a ‘breakthrough therapy’ as early as 2017, but has so far not legalised its use beyond scientific purposes.

The latest development has sent a big blow to some of the ASX psychedelic players like Emyria (ASX:EMD) and Little Green Pharma (ASX:LGP).


In other ASX health news this morning

Fertility stock Virtus Health (ASX:VRT) has decided not to pursue the acquisition of Adora Fertility as announced in August.

The company cites ACCC’s response, which said the acquisition of the clinics in Brisbane and Melbourne would result in a substantial lessening of competition.

Virtus says it has co-operated with the ACCC over the past three months to address the regulator’s concerns, but as of to date, the ACCC has still not provided clearance.

Because of this uncertainty, Virtus has today decided to terminate the sale agreement with Adora.

Separately, Virtus is also being pursued by a takeover offer from BGH Capital. BGH already owns a 9.99% stake in Virtus, and seeks to buy the rest at $7.10 a share.

Meanwhile, healthcare services company, Healius Limited (ASX:HLS), wants to acquire leading bioanalytical laboratory, Agilex Biolabs, for an all-cash value of $301.3 million.

Agilex is one of Australia’s leading bioanalytical laboratories, with 25 years’ experience in providing bioanalysis services that help biotech and pharmaceutical companies conduct clinical trials.

Healius likes Agilex’s high margin and capital-light business model, which it said could provide it with a platform into the global clinical trials sector.

Agilex’s CY22 revenue and EBITDA is expected within the range of $36-40 million and $14-16 million respectively.

Virtus and Healius share prices today: