Musings on Psychedelic Medicines: Part II: Investment, Indigenous Inclusion, & Innovation
December 16, 2022 • Publish by Mind Musings
This is Part II of a series evaluating the rise of psychedelics from scientific, societal, investment, and innovation perspectives. The below focuses on investment, indigenous inclusion, and innovation. See Part I for more on what psychedelics are, how research is evolving, and societal shifts that have occurred over the years.
Money
Historically, psychedelics research and innovation has been privately funded. Johns Hopkins Center for Psychedelic and Consciousness Research was formed with $17mm in private funding largely fueled by the Steven & Alexandra Cohen Foundation. Half of the initial $10mm given to the NYU Langone Center for Psychedelic Medicine in 2021 came from MindMed (NASDAQ: MNMD) to develop a clinical training program, support salaries, and provide research funds to 4 faculty members. However, we’re now at an interesting inflection point where investment is expanding beyond the walls of research labs.
Psychedelic Invest reports that ~$700mm was invested in private psychedelics companies in 2021, +100% from the $350mm of capital deployed in 2020. To give broader context, 2021 global venture funding into startups was $643B, +90% from 2020. $200B – roughly 1/3 of that – was in early-stage companies, which has doubled YoY. In 2021, $44B of private funding was invested in global health tech, also doubling YoY. While figures are certainly coming in lower for 2022 given current economic challenges, compared to prior years, we’re still seeing tremendous interest not only in health innovation but in startup investing generally.
As momentum grows, new venture capital funds have emerged focusing on psychedelics and mental health, including re.Mind Capital, What If Ventures, Palo Santo, Noetic Fund, Neo Kuma Ventures, and The Conscious Fund. We are even seeing increased interest in brain health from massive investment shops, like iShares (owned by Blackrock), who are considering the merit of neuroscience investments. The idea of “brain capital” as an area of opportunity for investment and societal welfare is flourishing in ways we have never seen before.
In the public markets, there have been a flurry of IPOs since the first publicly traded psychedelics company, MindMed, IPOed in March of 2020. There are now nearly 60 psychedelics stocks with combined market caps of ~$3B. Psychedelics and mental health indices have emerged, with 4 ETFs dedicated to the space (2 are pure plays, the other 2 have exposure to cannabis and neuro biotech as well).
As a supporter of health care innovation, I can’t help but be thrilled by this. It’s so exciting that I’m spending hours writing about industry trends and bringing up research advancements during dinner table conversations. However, when putting my investor hat on, I’m taking a step back and evaluating the entire landscape with less emotion.
We are heading into (if not already in) a recession that will impact the US, UK, and Europe in profound ways. Labor market data is what’s mainly stopping the Fed from bringing up the dreaded “r” word at FOMC meetings but that can change very quickly. Interest rates are the highest they have been in 30 years, elevated food prices are causing unrest in developing nations, UK energy costs are ~4x higher than they were a year ago, and a tragic war continues to batter Ukraine. Following yesterday’s 50bps rate hike (4.25-4.50% target), officials also revised the expected US unemployment rate to 4.6%, up from Sep’s 4.4% forecast (currently 3.7%).
My morning meditation sessions that were once firmly focused on gratitude affirmations are now being laced with an additional mantra: “The intelligent investor is the disciplined investor.”
Deep breaths.
What does this type of environment mean for new psychedelics companies? How do we determine the opportune time to invest?
Most public psychedelics companies IPOed at a unique moment when markets were rebounding in mid-2020 through 2021 and the S&P was +16% and 27% YTD, respectively. At the time, valuations of unprofitable companies with high growth potential were quite high, young tech firms were trading at 20-30x multiples, startups were raising feverously, and interest in health care was booming. Small positive steps in regulation sprinkled hope for a bright future and a surge of supportive press on psychedelics began to flood the public eye.
There were many who thought the tide was turning, regulation would move quickly, and they were ready to ride a bountiful wave while ignoring the myriad of complexities surrounding the industry. However, those days have been followed by a series of economic pressures, challenges to reverse legal psychedelic-assisted therapies (PAT) in the state of Oregon, and increased understanding that change may take a lot longer than once expected. Through mid-Dec, the S&P is -17% and publicly traded psychedelics companies have been suffering over the past year.
Psychedelic Invest’s Index and AdvisorShares Psychedelics ETF are -55% and -65% respectively as of 14 Dec 2022. The top 3 largest stocks by market cap – GH Research, ATAI, and COMPASS Pathways – are similarly down between 55-60% and MindMed has seen its shares tumble -88% amid investigations. These companies may need quite a bit of time to get back to peak levels and they will also swing around a lot. They’re high risk, heavy capex, long duration plays with lots of volatility.
Between R&D, regulatory approvals, and all the in-betweens needed to get a drug to market, average development timelines range from 12-15 years, cost $1-3B, and neuro drugs historically take longer to develop and approve. Failures also pose risk given that the success rate of neuropsychiatric drug candidates in human testing effectively reaching the market is dramatically lower (8%) than all drugs combined (15%).
Mix this with the uncertainty of legality (psychedelics are still Schedule 1 substances, even with recent advancements in research) and the need for formalized processes around ethical, evidence-based clinical care models, there are many questions that remain answered. Only time will tell what the future holds…
This is one of the biggest factors – time. The majority of psychedelics companies are focusing on drug development and have long timelines before reaching profitability or even revenue generation. This is something that is well understood by institutional and experienced health/bio investors but gets overlooked by those who are following a novel trend without a patient capital mindset. Investors entering the market while it is in an infantile stage need to be comfortable with having capital locked up, the discipline to wait out ups and downs, and the ability to do both for many years.
Private companies have the advantage of holding their cards closer to their chests, being careful about who they bring onto their cap tables, and explaining these nuances clearly during due diligence processes. However, they also need to give very compelling pitches on why to invest now – in a challenging market environment where safer alternatives are favored – or they won’t be able to advance innovation. Early-stage companies are running out of cash, later stage companies are facing down rounds as valuations tumble, and many need to run expensive operations in an extremely lean fashion to keep the lights on. It is quite a conundrum.
I would argue that things are likely going to get worse before getting better. But don’t abandon all hope ye who enter here. While past performance is not indicative of future results, we know that this is not a static state. We’re even seeing some startups, like Gilgamesh Pharma, developer of rapid-acting compounds with less hallucinogenic properties, close a hefty funding round while others are closing up shop.
The need for new medications to support brain health is imperative. Considering our growing global mental health crisis (see Part I for more data on this) and a lack of treatments for cognitive ailments like dementia and Alzheimer’s that will inevitably impact elder populations who are living much longer, the modern psychedelics movement is not a matter of “if,” it’s a matter of “when.”
Us and Them
The recent resurgence of psychedelics research and interest have led many to believe that these are new medical treatments, however, natural, psychedelic, and plant medicines have been used for thousands of years across a variety of cultures. Indigenous rituals from North, Central, and South Americas are the main influences for current Western practices, with aspects of entheogenic sacred tradition and beliefs leveraged in modern underground and research-based protocols. Note that entheogen(s) is a term used to describe psychedelics utilization in the context of religious and ritualistic ceremony, delineating from experimental drug use.
While specific practices vary amongst indigenous communities, there is commonality in having the guidance of a well-respected leader (typically a shaman) that connects individuals with the spirit world to treat sickness or obtain knowledge. Ceremonies use psychoactive substances to connect deeply with spiritual forces and holistically diagnose/treat illness via methods that are passed down carefully across generations. These interventions are revered for their power and often involve the broader community for ongoing support in vastly different ways than Western models of physical examination and pharmacological intervention.
For example, Santo Daime and Barquinha religions practiced by indigenous people of the Amazon use ayahuasca as a sacrament, a living plant teacher, that can identify illness and eliminate pathogens. The brew also aids in problem solving, connecting with loved ones, and inspiring artistic creativity. During ceremonies, a series of rituals are implemented, including the singing of songs known as icaros, to create a safe environment and facilitate healing. Similarly, Mexican and indigenous Americans have used peyote for thousands of years as a sacrament in spiritual and medicinal practices, hence the legality of its use by the Native American Church in the United States and ongoing battle to have it not included in decriminalization policies.
Lately, pop culture has glorified indigenous leaders such as Maria Sabina, a Mazatec curandera (traditional healer) from Oaxaca, Mexico, who famously allowed American banker R. Gordon Wasson to participate in a psilocybin mushroom ceremony after he deceived her by claiming that he wanted to find his missing son. Wasson later published his experience in a 1957 Life magazine article that was first-of-its-kind in the Western world, albeit the content included misinformed views and contexts. These aspects get lost from the narrative of Sabina’s story, including how horribly she was persecuted by her community when predominately White visitors flooded Oaxaca in search of “enlightenment,” plundering rural areas. Trust had been broken, outsiders were not respecting entheogenic traditions, and Maria was ultimately jailed, her house was burned down, and she died in poverty.
While this ostracization of a once honored healer may seem harsh, it is a reflection and reaction of the long history of discrimination and maltreatment of indigenous peoples. While Netflix documentaries are covering the excitement of the psychedelic renaissance, contributions and expertise of those who have sacrificed, protected, and transformed lives in long-standing traditional settings go unnoticed and unrewarded in Western medicine. In some cases, cultural appropriation has twisted revered spiritual practice into entertainment, diluting communities deserving of respect and value.
So, what can we do about it?
There isn’t a straight answer and frankly, I’m just at the beginning of the learning curve. However, I can’t imagine writing about psychedelic medicines without acknowledging the roots of their existence, appreciating the complex history and injustices faced by underrepresented indigenous cultures, and encouraging readers to think critically about these concepts as the industry develops.
Certain organizations are aiming to bring indigenous leaders to the table as decision makers and contributors as psychedelic medicines make their way into mainstream medicine. However, creating an environment of trust and unity will require ongoing effort and reparations to the communities impacted. Scientific research also needs to include diverse populations, as participants of color are grossly underrepresented in psychedelics studies where over 80% identify as non-Hispanic White. Unequal access to care is a broader health care problem that has resulted in increased mortality and chronic conditions in non-majority populations, but especially overlooks racial/ethnic/social traumas that are not included in screening and treatment models.
The RiverStyx Foundation recognizes these issues by working with a group of indigenous partner organizations to decolonize the current psychedelic renaissance and advise companies on mindful business models that allocate profits to reciprocity and conservation causes. The Chacruna Institute has similarly developed an Indigenous Reciprocity Initiative to bring donations to local communities, preserve traditional ecological wisdom, and educate the public about psychedelic justice. Dr. Beatriz Caiuby Labate leads this initiative and speaks more about a range of topics - including acknowledging interspecies communication with plants, compensating indigenous speakers at industry events, and broader inclusion of women and people of color - in this detailed presentation given at the Harvard Divinity School.
Any Colour You Like
Can we ever really bridge traditional ceremony with new PAT models? What is the best way to leverage modern thinking and tools, such as technology, to facilitate medicinal treatment and ongoing care?
Digital health has exploded alongside a pandemic that forced society to remote interaction while concurrently increasing awareness about personal health and the systems that support care. This convergence was inevitable, as health care is the last industry to be truly disrupted by technology whereas every other sector began this transformation 25 years ago. We are finally at a point in time where clinically effective digital health models are being implemented outside of research and integrating into consumers’ everyday lives. Societal shifts and adoption were always the key catalysts to catapulting health tech into mainstream health services (alongside investment, of course), and having that come to fruition opens up a world of opportunity for stigmatized fields like mental health.
Digital health solutions for mental health are advancing quickly with telemental health use growing and a myriad of new startups launching. In psychedelics, tools are emerging ranging from practice management software to real-world evidence platforms as well as virtual reality (VR) and digital therapeutics (DTx) applications. We may even see novel tech from other areas, such as AppliedVR’s FDA cleared VR program for pain management (which includes a breathing device attached to a headset to help with breathwork), get integrated into psychedelic and harm reduction training. There are also initiatives aimed at facilitating entrepreneurial innovation, including a Psychedelic Therapy Accelerator program by Founders Factory and Woven Science that invests in and supports early-stage start-ups.
A few interesting companies focused on supporting psychedelic care models with technology:
Maya Health is the market leader in PAT software management. Founded by David Champion, a campaigner from the team that spearheaded Denver’s decriminalization of psilocybin mushrooms, Maya’s clinical practice platform is designed for practitioners to coordinate care, streamline practice administration, and track session data. Their APIs also support a suite of tools for care professionals and researchers to use when administering psychedelic medicines, including digital assessments, communication, and uncovering insights through real-world data.
Introspect, a division of ATAI Life Sciences, is building a suite of DTx solutions and simultaneously testing them alongside their pipeline of drugs. In 2020 they brought in David Keene, who previously created an Alzheimer’s reminiscence therapy DTx tool, to lead these efforts. Introspect aims to create apps to support therapeutic care models and understand how combination therapies can be best used in PAT protocols. They continue to study their tech with patients in research facilities such as Kadima Neuropsychiatry of California. ATAI is also supporting additional tech-driven programs, including EntheogeniX (AI drug discovery) and PsyProtix (precision psychiatry biotech).
People Science is a for-profit Public Benefit Corp. building a data-driven scientific community to test alternative medicines such as psychedelics and cannabis while validating treatments and informing best practices. Their platform provides support for clinical research, participant recruitment, data analysis, and generating insights from various research areas in collaboration with patients, physicians, and scientists. They also conduct studies on the preferences of consumers and manufacturers to help brands differentiate themselves with legitimate scientific backing and real-world data.
Mind Med is mainly a drug developer focused on LSD for anxiety, LSD microdosing for adult ADHA, as well as researching MDMA, DMT, and psilocybin through a partnership with University Hospital Basel in Switzerland. They’re also working on tech-enabled treatment models, research support, and DTx, while evaluating AI-informed dose optimization following their 2021 acquisition of HealthMode. Mind Med continues to build-out of their digital medicine platform called "Albert" (named after Albert Hoffman, the scientist who first synthesized LSD) and is actively recruiting for multiple trials that will use digital health solutions such as passive sensors and digital diagnostic tools.
Enosis Therapeutics is a VR platform founded by a team of Australian researchers that uses bespoke modules to help therapists guide patients through preparation, dosing, and integration journeys. They have also developed a program, RescueVR, aimed at calming and removing a participant from a negative psychedelic experience. While research will need to uncover more, it is interesting to evaluate these unique options and think about when an immersive setting is a beneficial adjunct vs. detrimental distraction from necessary personal, internal experiences uncovered in the therapeutic process.
While these tools mainly support care models and research, they may eventually give individuals and broader communities powerful autonomy over how their care is managed. For example, moderated open research platforms like Stuff That Works aggregates public opinions on treatments for a range of issues, including mental health conditions. Across a sample of >100k community contributors for PTSD, depression, and borderline personality disorder, all 3 categories list a plant medicine, cannabis, in their top 5 treatment options. You see platforms such as PatientsLikeMe and HealthUnlocked also garnering community opinion on their conditions, moods, treatment options, and gaining the benefit of peer support.
Brain Damage
Although there’s a myriad of merits to highlight around the psychedelic medicine movement, I would be negligent to not mention areas of risk and concern. Grim accounts have been surfacing about predatory neoshamanism, exploitation of vulnerable individuals, and unethical practices from underground and public-facing organizations.
Not a classic psychedelic but rather an anesthetic with similar dissociative properties, ketamine is approved by the FDA and has been used legitimately for 50 years as off-label treatment for depression, bipolar disorder, and PTSD. It can be incredibly helpful for certain individuals and is generally administered in a clinical setting with professional supervision. However, under the 2020 temporary relaxation of online controlled substance prescribing during a state of emergency, a host of clinics and at-home ketamine services were launched by those with limited to no clinical backgrounds, promising relief from vague descriptions such as “feeling blocked” while advertising “affordable” care ranging from $1-3,000. Advertising practices have also come under scrutiny, as certain websites target those who may not need or understand what treatments entail and videos have appeared on social media of attractive young people testifying about their lives being completely transformed in a few sessions.
Online posts are even encouraging political leaders and authority figures to try psychedelics in hopes that large scale change can “heal the world,” bringing forth a more fair and peaceful society. However, these notions of a future utopia are far fetched and could potentially undermine psychedelics progress, diverting attention from important medicinal benefits while reintroducing the political fears that stunted research in the first place. Will everyone who tries psychedelics suddenly adopt liberal views in a profound moment of clarity? Well, self-proclaimed “QAnon shaman” Jake Angelini, who stormed the US Capitol on 6 Jan 2021, certainly didn’t (he has also since been sentenced to 41 months in prison).
Even more concerning are women stepping forward to report sexual misconduct and rape occurring in both traditional and modern settings. Predatory “neoshamans,” especially those delivering personal 1:1 sessions in remote locations, can take advantage of those who are emotionally and physically vulnerable after ingesting powerful substances.
Accounts are also being uncovered of traditional shamans viewing foreign visitors as promiscuous “others,” albeit South American women have reported sex abuse by culturally similar healers. Sexual awareness education and reporting these types of encounters is extremely important for the broader community, even if there is fear of admitting to partaking in drug use or the shame that often follows such traumatizing events.
Protect yourself, get educated, read the evidence, and evaluate these medicines with careful consideration. Be a responsible consumer of your health care and vet the facilitators of your treatments as best as possible. Think of all stakeholders and how we can work together responsibility to give this space the fighting chance it deserves. Who knows, maybe we can even bring a fresh wave of health and happiness to our planet.
Eclipse
Speaking with grandmother, I asked her about the secret knowledge of the plants. She gave me the privilege of glimpsing into their ancient wisdom, explaining that they rule the earth because they have mastered two important concepts to thrive – adaptation and resilience.
This also reminded me that psychedelic medicines have existed for a very long time and there have been many people who have experimented, sacrificed, and held space to share this incredible knowledge. I am grateful to them and hope that my small contributions to the field reflect this gratitude.
It’s a fundamental part of our human evolution to survive, thrive, and expand intellect. As social-emotional creatures, it is inevitable that we will find ways to explore our consciousness, build on past learnings, and innovate through modern advancements. With interdisciplinary collaboration, psychedelic medicines will eventually reside in a sub-sector of health that encompasses an array of fields and tools. From compounds to clinics to health technology solutions, a diverse and interconnected ecosystem will emerge.
Hopefully we can work together to implement change in a strategic way that is fair and equitable to all, especially indigenous teachers, while acknowledging the deeply personal, human element that sits at the core of medicinal use. As an advocate for supporting brain health and alleviating our global mental health crisis, I believe that psychedelic medicines undeniably hold exceptional promise and will continue to follow the field with excitement for the future.
