The past few months has seen a flurry of activity to do with psychedelics in North America: US cities and states have legalised psilocybin, and biotech psychedelic-assisted therapy companies have started to raise institutional capital and establish R&D centres overseas.
In November, the state of Oregon decriminalised the possession of all drugs and legalised the use of psilocybin – the naturally occurring compound found in “magic mushrooms” – for medical treatment. This comes as biotech companies developing psilocybin therapy, such as Compass Pathways, look to raise capital funding through IPOs.
On both sides of the Atlantic, guided therapy using psilocybin as a conduit is gaining ground, while investor interest is surging. Psychedelics stocks are fast becoming a hot topic in the biotech sector.
The business potential is not lost on investors. In 2017, the UK’s Centre for Mental Health estimated that mental health problems at work had cost the country £34.6bn, up from £26bn 10 years earlier. Global predictions for the financial cost of mental health run to trillions. With Covid-19 exacerbating the rates of anxiety, depression and addiction, it is little wonder that capital is coming to the rescue.
Indeed, it follows that companies large and small are expanding their operations. Greenfield investment tracker fDi Markets recorded two projects in this sector this year. Despite concurrent legalisation efforts, how companies court investors and acquire regulatory approval remains delicate, however.
Canadian company Mydecine, which develops and produces drugs from mushrooms, has opened a lab in Denver focused on the medical applications of mushrooms of non-psychedelics and is awaiting DEA approval.
“We think that the US is an amazing marketplace,” says Mydecine chief executive Josh Bartch, adding that the decriminalisation in Oregon and lobbying efforts in Washington DC have led to a “wave of acceptance” and “mindset changes”.
In the wake of the pandemic and the second lockdown restrictions across Europe and North America, concerns around mental health and wellbeing are only likely to become more pronounced.
Mr Bartch expects a surge in post-traumatic stress disorder and a spike in substance abuse, for which psilocybin is a unique treatment. “People will be actively seeking out more progressive, innovative and less harmful solutions,” he says.
For J.R. Rahn, CEO and founder of MindMed, a Toronto-based psychedelic medicine biotech company, being federally compliant and distancing oneself from the legalisation path are essential to attracting institutional capital.
He fears that legalisation efforts may ignore the needs of the patients who are suffering, and so priority must be given to the patients before any debate on legalisation.
“Right now, let’s solve the acute problem that tens of millions of Americans are jobless and are probably going to have high rates of mental illness and addiction,” Mr Rahn says. “The whole legalisation thing has the ability to threaten what we’re doing in the therapeutic space.Our objective is not for you to have a better Phish concert. Our objective is to solve the underlying cause of your anxiety or addiction.”
MindMed opened a research and development centre in Basel earlier this year, attracted by the research going on in Switzerland and the infrastructure that is already in place to conduct clinical trials there.
“There is a huge Swiss legacy on psychedelics,” he says, which goes all the way back to Basel-born chemist Albert Hofmann’s discovery of LSD.
It is hard not to make comparisons with the evolution of the cannabis industry over the past 10 years, whereby legal changes have aligned with public acceptance to create a billion-dollar medical industry. Legalisation efforts in the US have removed much of the stigma attached to alternative, psychoactive medicine, and the country’s opioid crisis led to greater openness regarding plant-based alternatives.
Ronan Levy, co-founder and executive chairman of Canadian psychedelic therapeutics company Field Trip Health, which recently expanded operations to the Netherlands, insists that this is distinct from the popularisation of cannabis-inspired medicine in both mission and scope.
“The cannabis industry was driven more through political grassroots activism,” he says. The difference here is that this surge of interest has been triggered by the research coming out of Baltimore’s Johns Hopkins University and Imperial College, London.
“This is not only an incredible business opportunity but an incredible humanitarian opportunity,” Mr Levy asserts. “Research shows that people who have psychedelic therapies have increased creativity and empathy.”
In a divided world, he adds, humanity is evolving in a positive way as the psychedelics industry begins to flourish.