Hi friend,

Vheda, Onix and CONNECTA Therapeutics all announced fundraising deals last week — Onix’s “AI digital twins” is particularly worth your attention.

Flow Neuroscience officially launched in the US — nine months after receiving FDA approval for their tDCS headset; Quel Health launched a teletherapy GLP-1 offering for Substance Use Disorders; and Definium received FDA Breakthrough Therapy designation for DT120, its LSD-based treatment for major depression. In a busy week for Definium, they also just reported a second positive Phase III trial for DT120 generalised anxiety disorder.

The HHS awarded a further $383.4M in behavioural-health grants, and OpenAI committed $5M to independent research into how generative AI affects teenagers.

We also saw new research outling the prevalence of AI use for social and emotional use cases, a Nature article that shines a light on the reasons for rising youth mental health problems and an interesting review of the potential for ketogenic therapy as a treatment for PTSD.

Let’s get into it!

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What happened in mental health last week?

Industry News:

⏺️ Vheda Health raised $47M to expand its work with high-risk health-plan members. The US company helps health plans engage people with complex health needs, combining care coordination and digital tools across chronic conditions, maternal health and behavioural health. Its mental-health programme supports people with conditions including depression, anxiety and substance use disorders. This is Vheda’s first institutional funding since launching in 2013.(link)

⏺️ Onix raised $5M to build AI versions of health and wellness experts. The Canadian startup works with individual experts, including psychiatrists and nutritionists, to create AI models trained on their content that consumers can pay to consult. For example, psychiatrist Dave Rabin has an “onix”. Rabin works with the company and provides material to train his AI version. This can include his published material or podcast appearances, but also unpublished work that he deliberately gives Onix. I’ve wondered when we would see more “AI digital twins” in healthcare and am cautiously interested in what the impact could be. (link)

⏺️ CONNECTA Therapeutics raised €3.1M to continue testing an experimental treatment for Fragile X syndrome. The Spanish biotech is developing CTH120, a drug designed to modulate neuroplasticity in people with Fragile X, a genetic condition associated with intellectual disability and behavioural difficulties. The funding will support an ongoing Phase IIa trial in adult men, with results expected in mid-2027. (link)

⏺️ Eli Lilly completed its acquisition of AtaiBeckley. The deal, announced earlier this year, has now officially closed. (link)

⏺️ HHS awarded a further $383.4M in behavioural-health grants, including $252M for 988, suicide prevention and crisis services. The largest award is $205.8M to help states and territories strengthen local capacity for the 988 Suicide & Crisis Lifeline, with additional funding going to substance-use treatment and prevention, child-trauma services and integration of primary and behavioural healthcare. The awards are separate from the $77M HHS announced in August, although several of the programmes had previously been announced as funding opportunities and are now receiving awards. It’s getting very hard to keep track of what is net new funding here versus rehashed press releases… (link)

⏺️ Beacon Behavioral Partners acquired Prime Psychiatry, expanding its network of psychiatric practices in Texas. Prime provides outpatient and interventional psychiatry across six locations in Dallas–Fort Worth and Austin. It will become part of Beacon, a national network that partners with independent psychiatric practices and provides central business and operational support. (link)

⏺️ Flow Neuroscience launched its at-home brain-stimulation treatment for depression in the US, nine months after receiving FDA approval. FL-100 uses transcranial direct current stimulation (tDCS), delivering a weak electrical current through a headset that patients use at home under clinician supervision. The FDA approved it last December for adults with moderate-to-severe major depression who are not considered treatment-refractory, either on its own or alongside antidepressants. US clinicians can now prescribe the device and have it shipped directly to patients. The treatment will cost $2,200 for an initial 10-week course and $325 for every additional four weeks of treatment. (link)

⏺️ Quel Health launched as a telehealth service that can prescribe GLP-1 drugs off-label for addiction and compulsive behaviours. Researchers are investigating whether the effects of GLP-1s on reward and craving could also reduce substance use. Quel offers virtual assessment and treatment for problems involving alcohol, drugs and nicotine, among others. No GLP-1 is currently approved to treat addiction. (link)

⏺️ NovaOne launched a behavioural-health platform designed to bring prevention, care navigation and specialist treatment into one health-plan benefit. Rather than members navigating separate digital-health products, NovaOne combines self-guided support, clinical assessments, an AI care navigator and a network of specialist providers, while tracking outcomes over time. The company says six health plans already use the system, covering more than 15M members. (link)

⏺️ Australian startup CogTx launched to commercialise technology for personalising TMS treatment. Its software analyses a patient’s MRI scan to help clinicians identify where in the brain to deliver TMS, without relying on more expensive mapping equipment. The technology was developed at the Bionics Institute and is intended to make personalised TMS easier for clinics to deliver. CogTx has also secured seed funding from Swinburne Ventures Ltd. and other seed investors. (link)

⏺️ Emyria is opening its first Sydney mental health clinic, expanding its psychedelic and interventional psychiatry services beyond Western Australia. Emyria is a publicly traded Australian mental-health company developing and delivering emerging treatments. Its Empax clinics provide specialist care for complex conditions. The new Sydney clinic will offer treatments including TMS, as well as MDMA-assisted therapy for PTSD and psilocybin-assisted therapy for treatment-resistant depression to eligible patients under Australia’s Authorised Prescriber framework. Emyria already operates an Empax clinic in Perth and plans to build a national network. (link)

⏺️ Two New Zealand psychiatrists received permission to prescribe pharmaceutical-grade MDMA to eligible adults with PTSD. MDMA remains an unapproved medicine in New Zealand, but the psychiatrists can now prescribe it as part of supervised treatment for people whose PTSD has not responded to conventional approaches. Access will initially be very limited: one approved psychiatrist expects to treat no more than around 15 patients a year, and treatment is not publicly funded, with costs estimated at around NZ$15,000. Australia has allowed authorised psychiatrists to prescribe MDMA for PTSD since 2023. (link)

⏺️ Definium received FDA Breakthrough Therapy designation for its LSD-based treatment for major depression and reported a second positive Phase III trial in generalised anxiety disorder. The designation follows a 149-person depression trial in which a single 100µg dose of DT120 produced an 8.1-point greater improvement than placebo on the MADRS depression scale after six weeks. Separately, the 245-person Panorama trial found the same dose reduced anxiety scores by 9.8 points after 12 weeks, compared with 4.7 points for placebo. Definium now has positive Phase III results in both depression and anxiety and plans to meet with the FDA ahead of an application for approval in 2027. (link)(link)

⏺️ BetterHelp released new data on client outcomes. The company analysed US clients who completed at least two standard PHQ-9 or GAD-7 assessments, showing that 78% of clients with elevated depression symptoms and 75% with elevated anxiety improved within 12 weeks. “Improvement” meant any reduction in symptoms; the analysis only included people who completed a follow-up assessment and there was no control group. (link)

⏺️ UK youth suicide-prevention charity PAPYRUS entered administration and stopped operating its services, including HOPELINE247. PAPYRUS had worked for almost 30 years, and its helpline supported both young people experiencing suicidal thoughts and people worried about them. Its closure removes a specialist national suicide-prevention service for young people. (link)

⏺️ The Royal Foundation launched a suicide-prevention toolkit specifically for sport. “On Your Side” gives clubs and sporting organisations practical guidance on recognising warning signs, starting conversations, responding to crises and building suicide prevention into everyday practice. Developed with the British Standards Institution and Chasing the Stigma, it is being adopted by organisations including the FA, Premier League and Team GB. (link)

⏺️ California introduced new child-safety rules for AI companion chatbots, including specific protections when children show signs of suicidal thinking. Governor Gavin Newsom signed “Adam’s Law”, which requires chatbot companies to have crisis protocols for suicidal ideation, provide parental controls and notify parents if a child disables safety settings. Companies will also have to conduct annual risk assessments and independent child-safety audits. The law strengthens California’s existing regulation of AI companions amid growing concern about children turning to chatbots for emotional support. Newsom also signed a wider package of online-safety laws, including restrictions on autoplay and personalised social-media feeds for users under 16. (link)

⏺️ The US Department of Labor set out specific health-plan practices it will target in mental health parity investigations. Federal law requires plans to apply comparable restrictions to mental-health and substance-use care and medical care. Regulators will focus particularly on plans that exclude treatments such as residential care or medications for addiction, impose more prior authorisation or medical-necessity reviews on behavioural healthcare, or make it harder for mental-health providers to join networks or receive comparable reimbursement. They will also look beyond written policies at what happens in practice — for example, if behavioural-health authorisations take longer, last for shorter periods or require manual review when medical care is approved automatically. The guidance gives insurers a clearer picture of where federal parity enforcement will concentrate. (link)

⏺️ OpenAI committed $5M to independent research into how generative AI affects teenagers. Researchers can apply for grants of up to $1M to study how 13–17-year-olds use AI and its effects on areas including development and wellbeing. The programme will also support research that could inform safeguards, product design and policy around teenagers’ use of AI. Applications close October 6th. (link)

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Research News:

⏺️ A US survey found 27% of adult internet users had used AI for social, emotional or personal interactions. Researchers then surveyed 1,000 of these users in more detail: 59% said AI provided support they needed, while around half used it to discuss personal problems or feelings. Importantly, this includes social uses of general-purpose systems such as ChatGPT, Gemini and Claude, not just dedicated companion apps. The findings add to the evidence that AI is becoming part of people’s informal emotional-support networks. (link)

⏺️ Researchers documented 185 reports of serious mental health problems associated with AI chatbot use, and found chatbots frequently appeared to reinforce delusional beliefs. More than half of the reports described experiences researchers classified as delusional; among these, 49% described the chatbot validating the beliefs and 24% described it escalating them. Reported consequences across the cases included hospitalisation, relationship breakdown and financial or job losses, while four reports from other people described deaths by suicide. The study deliberately recruited people reporting negative experiences, so it cannot tell us how common these problems are among chatbot users or establish that AI caused them. The paper is a preprint and has not been peer-reviewed. (link)

⏺️ A study of 865 mental health apps found more than half were eventually removed from a major app database. Researchers tracked apps listed in the MIND database and found 53.6% were removed over the study period of five years. (link)

⏺️ A major review concluded that rising youth mental health problems cannot be explained by greater awareness and diagnosis alone. The authors reviewed global evidence and found that changing attitudes, diagnostic practices and help-seeking explain some of the increase, but other indicators also point to genuine deterioration, particularly in high-income countries. They highlight interconnected risks including sleep disruption, digital engagement, cyberbullying and academic pressure, and argue for greater emphasis on prevention rather than waiting until young people require clinical treatment. (link)

⏺️ A new review found early evidence that ketogenic therapy could be worth testing as a treatment for PTSD, but human evidence remains extremely limited. Researchers reviewed 16 studies examining ketogenic diets or ketone supplementation in relation to PTSD, including nine human studies and four animal studies. They found several plausible ways ketogenic therapy could affect processes implicated in PTSD, including brain metabolism, inflammation, oxidative stress and neurotransmitter signalling, while animal studies provided some early evidence of benefit. But only 25 people were included across the human intervention studies reporting preliminary efficacy, and there have been no large clinical trials. The authors argue the evidence is sufficient to justify proper randomised trials, but not to conclude that ketogenic therapy currently works for PTSD. (link)

⏺️ People with schizophrenia, caregivers and clinicians saw potential for AI to provide support between appointments, but worried about trust, privacy and the risk of worsening symptoms. Researchers held focus groups with 17 people with schizophrenia-spectrum disorders, seven caregivers and four clinicians. Participants saw potential for uses such as reminders, information and between-visit support, but generally wanted AI to supplement rather than replace human care. Privacy and the possibility that chatbots might reinforce delusional beliefs were particular concerns. (link)

That’s all for this week.

Keep fighting the good fight!

Steve Duke

Founder of Hemingway

P.S. If you find these updates valuable, consider becoming a Hemingway Pro Member. As a Pro Member, you will get access to even deeper industry insights and will be invited to join our community of over 500 mental health leaders.