Psychedelics as Medicine
Be prepared to change your mind
Hundreds of millions of people around the world suffer from drug abuse. Globally, 322 million suffer from major depressive disorders and 264 million from anxiety. One in five Americans suffers from some form of mental illness.
It's a visible problem in society, and it's expensive. The World Economic Forum estimated that in 2010, the global cost to treat all mental health illnesses was US$2.5T (with 2/3 as indirect costs).
The current pharma solutions for depression alone are estimated at a $50B/year industry, and 40-60% of patients don't respond to their first treatment.
Psychedelic pharmacological compounds, when administered in a clinical setting, can be highly effective in treating various ailments, including depression, PTSD, anxiety, bi-polar, drug alcohol dependence, obesity, narcolepsy, OCD, Alzheimer's, ADHD, and inflammation.
What is classified as a psychedelic?
Psychedelic compounds are a class of agents that induce an altered state of consciousness via the serotonin 2A receptor agonism. There are thousands of compounds with distinct chemical properties. Prominent examples include:
The research underpinning the efficacy is credible and increasingly extensive.
Johns Hopkins has established a dedicated center: Center for Psychedelic & Consciousness Research. They write: 'In 2000, our research group at Johns Hopkins was the first to obtain regulatory approval in the United States to reinitiate research with psychedelics in healthy, psychedelic-naive volunteers. Our 2006 publication on the safety and enduring positive effects of a single dose of psilocybin is widely considered the landmark study that sparked a renewal of psychedelic research world-wide.' Multidisciplinary Association for Psychedelic Studies (MAPS) is another researcher body leading the way.
FDA status: Three different psychedelic programs have each been granted Breakthrough Therapy Designation (BTD) by the FDA.
What are some examples of companies that have capitalized on this trend?
On the pharma/biotech side:
MindMed - Publicly traded Canadian company that owns the patents to many LSD compounds used to treat anxiety disorders
COMPASS Pathways - Publicly traded Nasdaq company with patents to many Psilocybin compounds used to treat severe depression. (I wrote up the CMPS IPO S-1 here).
On the clinical side, you can experience psychedelics today from these three companies:
Field Trip Health - Publicly traded Canadian company that has a network of clinics offering treatments. Currently only Ketamine.
Synthesis - Amsterdam retreat facility that uses Psilocybin.
MindBloom - NYC-based company that uses Ketamine.
Where are the legal frontiers of psychedelics?
Jamaica, The Netherlands, and Peru have all legalized forms of psychedelic compounds in therapy. Oakland, Denver, Washington DC, Ann Arbor, and Santa Cruz have all voted to decriminalized Psilocybin. On Tuesday, the state of Oregon voted with 56% approval to legalize Psilocybin and allow licensed providers to distribute it to adults (21+). Washington DC approved a similar measure.
Why are you convinced?
The problem of mental illness and drug abuse is gigantic, and the current treatments are often ineffective and have adverse side effects.
As organized religion and the church take a back seat in many western societies, people still seek a sense of spirituality and meaning of the human experience. Psychedelics have a long history in ancient religions and can help people feel a sense of connectedness and optimism.
These are still early days of psychedelic therapeutic research, but the current efficacy rate will continue to drive a cycle of increased study and knowledge.
Is it addictive? Is it potentially lethal? The research says definitively no.
I believe the regulatory environment in the U.S. will allow the use of psychedelics in medicine, responding to the points above. The demand is huge. The efficacy will continue to be proven. Other countries will lead the way.
How's it going to play out?
Many like to draw parallels between psychedelics and cannabis. I do not think that's the right analogy.
Cannabis is largely a recreational use market. Psychedelics will likely be solidly medicinal. They will be more like biotechnology and with therapeutic and clinical use.
One of the biggest concerns is the stigma of psychedelics as evil substances from the 1960s. My view is the change in public opinion is going to resemble the fast-changing thinking on gay marriage. The appeal is on compassionate grounds. The challenge of mental illness is pervasive. It impacts people you know, people you love. And no one wants to see people they love suffer and struggle. If there is hope, people will grasp onto it. If someone can heal their mind, they can change their life. And everyone knows someone they love whose mind needs to heal for their life to change. Love wins.
As an investment opportunity, there are, of course, a plethora of potential risks:
The regulatory environment could prove difficult.
The intellectual property be might not be defensible.
Big pharma might intervene to protect the existing suite of solutions.
Public opinion may still be negative toward psychedelics and increased recreational use could trigger a reaction.
Science and efficacy don't pan out, and clinical trials can be expensive and lengthy.
There are a limited number of researchers and scientific experts who specialize in this field.
What are the implications?
Psychedelics will go mainstream and form a basis of spiritual experience. People you know will seek out these experiences. Those suffering from debilitating conditions will seek treatment and find it in psychedelics.
If Big Pharma sits this one out, as they already have and are expected to continue to do, there is a big open market opportunity. Canaccord Genuity estimates the total market size for all indications at up to $100B.
Further Psychedelic reading:
COMPASS S-1 Has some great reading on the science of Psilocybin
Market map from Canaccord Genuity here.
Why We Invested in COMPASS by Able Partners
How to Change Your Mind by Michael Pollen