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"It's Coming Faster Than You Think": Takeaways from The Economics of Psychedelic Investing Conference
Welcome to The Trip Report, a newsletter for the builders of the emerging psychedelic ecosystem on the business, policy, and impact of psychedelics.
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Last Friday, a few hundred folks gathered in NYC to hear from companies making moves in psychedelic infrastructure and biotech.
There were the usual suspects, including Field Trip, ATAI, MindMed and Eleusis and two companies new to me, Back of the Yards Algae Sciences and Green Sky Strategy.
The event was graciously hosted by Green Market Report and cannabis-focused communications firms KCSA and MATTIO.
The event was a series of panels with a moderator and a few founders/reps from the above companies with the following topics:
Introduction to psychedelic markets
The market for microdosing
Business strategy for psychedelic companies
Parallels between cannabis & psychedelic companies
It was great to meet a bunch of Trip Report readers and experience the excitement in the room.
Here are some takeaways from the event:
Psychedelic Markets are Coming Faster Than Most Expect
Most people have overlooked the plodding progress of psychedelic science and the recent developments of investment, acquisitions, Expanded Access
When I talk to people about The Trip Report and how I am following the news and helping inform the builders of the psychedelic system I am usually met with befuddlement.
"Don't psychedelics make you crazy?"
"But they're illegal?"
Most people are just unaware.
This includes people in the field.
I had a conversation a few months ago with my brother-in-law, a psychologist who HAD NO IDEA that this research was underway and he works with patients with addiction, depression, suicidal ideation, anxiety. Furthermore, he's super progressive, has all the right stances on drug policy, and laments the system that he works in— you would think he would be in tune with this, but it was a revelation.
Field Trip Prepares for Whatever Comes
Ronan Levy, CEO of Field Trip, noted that regardless of legalization or medicalization, they are getting prepared by creating a network of clinics (in addition to other assets) that will start by offering ketamine very soon and having built the infrastructure will capitalize on MDMA, psilocybin as they are made available, presumably by prescription, but if they come via ballot initiative they’ll be ready for that too.
Political Winds are Shifting
At least two politicians have already publicly recognized that this is part of a rational and evidence-based response to opioids, addiction, and the breaking of society, Andrew Yang and Oregon Congressman Earl Blumenauer.
Jon Kastopolous whose company, OptoSom, is working with lawmakers at the state and federal levels to educate and inform them of this rapidly evolving space, told me that coming out in support of psychedelic medicine and challenging the prohibitionist status quo is politically risky, but the winds of change are howling and people are taking notice.
Addiction Services That Actually Work
Investment and R&D have stayed away from addiction because pharmaceutical approaches have been hugely embarrassing failures.
Psychedelics are changing this.
The only substantive investment in addiction lately has come from Private Equity firms taking over rehab facilities. ObamaCare required health insurance plans to cover treatment for substance abuse disorders and as a result, investment in residential drug and alcohol rehab skyrocketed.
From a cynical perspective, this is a great investment because coverage for addiction services is required by law and the treatment doesn't work so patients come back again and again.
Can ‘transformative medicine’, as psychedelics are being described, uproot the rehab industry?
Regulators are Not the Barrier
There is a well-trod path laid by Rick Doblin and MAPS and followed by Usona/Hefter and Compass who have been in conversation with the FDA for over a decade about the unique features of Psychedelic Assisted Therapy trials, study design, safety, efficacy, and results.
More than once a panelist told the audience that the regulators are more familiar with psychedelics than many of the scientists hired to do the work.
So the fear of a nefarious government body, influenced by politics, plotting to shut down psychedelic science is not accurate.
If the evidence holds up, there will be no problem approving psychedelic based drugs.
Institutional investors & Traditional Biotech/Pharma are Finally Taking Notice
Comments made by Florian Brand, CEO of ATAI lead the room to understand that until very recently institutional investors and traditional biotech investors have been reluctant to look at psychedelics. That appears to have changed.
The argument that Sholomi Raz, CEO of Eleusis, made on this point is that the anecdotal evidence of traditional use dating back thousands of years and a history of underground use is a boon to the R&D process and actually attractive to investors.
The average cost to bring a drug to market is something like $2 billion. 40-50% of drugs fail before phase 1 - with psychedelics phase 1 failure is very unlikely which brings the cost/risk down substantially.
The Kevin O'Leary effect
"Can we get him to shut up?"
This was asked of MindMed CEO, JR Rahn during his time on stage (O’Leary is an investor in MindMed). The implication being that O'leary's hijinks and pumping up of psychedelics will only serve to expose the movement to a harsh response from federal agencies.
Rahn's response was well made.
He pointed out that ‘tech elites’, the prominent voices promoting psychedelics like Tim Ferris, Steve Jobs, etc are eschewed in the flyover states.
Kevin O'Leary is not.
This is the region affected by opioids, this will be the region most affected by automation, this is the region where shit is already hitting the fan. This is the region suspect of psychedelics.
Kevin O'Leary is well regarded in this area and can help shape perceptions amongst communities that might overlook this form of treatment.
MindMed is Going Public Very Soon
Mindmed is going public by the end of February and project to have a New Drug Application to the NDA within two years for 18-MC, whic Rahn dscribed as “an antibiotic for addiction”
He also mentioned a pharmacy/addiction clinic that has invested - I wonder who that might be.
Medicalization vs Legalization/Decriminalization
The event was heavily focused on the traditional pharmaceutical route for delivering psychedelic medicine.
Florian Brand said something along the lines of taking an “outcomes-based approach vs wanting to change the world”.
Perhaps a slight dig at the idealists in the space, but an indication of their approach: treating diseases.
Eleusis, CEO Shlomi Raz said the biotech perspective is purely utilitarian.
Where is the largest unmet need?
What is the fastest, safest and most effective way to meet that need?
Eleusis' perspective is that inflammation is the undergarment of 60% of known diseases in addition to aging. Their strategy is to address conditions associated with systemic inflammation and they are starting with ophthalmology and by treating the eye they can then show the effect of LSD on neural tissue (the eye is the opening to the brain) and then be in a better position to pitch LSD for Alzheimer’s— a condition notoriously difficult to treat with many failed attempts.
We’re in the midst of a revolution in consciousness, medicine, and health.
The transition, already underway, from underground, illegal and sacred to commercialized, legal and profane is fascinating, scary, and hopeful.
If you’re as fascinated by this transition as we are, The Trip Report has you covered.
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Written and toiled over by Zachary Haigney