2021 psychedelic studies on track to beat 2020 peak

The wave of interest in psychedelics for treating mental health issues is showing no signs of waning. On the contrary, it’s growing stronger every month. The last few months saw 2 important research studies report on their findings, a rash of new studies gain approval, and a number of psychedelic companies announce new developments that advance the psychedelic sector, while public approval for psychedelic-based treatments is all pointing upwards. It looks like psychedelics’ good trip isn’t ending anytime soon, which could be reflected in the performance of psychedelic ETFs.

Research shows psychedelics are moving in the right direction

The past 10 years or so have seen a marked jump in the number of clinical trials taking place for various psychedelic substances, such as psilocybin, MDMA (methylenedioxymethamphetamine), LSD, and more, for mental health issues like anxiety disorders, PTSD, and depression. 12 have taken place in 2021 so far, more than any year bar the previous one. 

A graph showing the increase in clinical psychedelic trials
Source: “How ecstasy and psilocybin are shaking up psychiatry,” Paul Tullis, Nature, 27 January 2021. https://www.nature.com/articles/d41586-021-00187-9

Among this wealth of research, 2 important studies recently ended and reported their findings. MAPS (the Multidisciplinary Association for Psychedelic Studies) in California ran a phase III study testing the efficacy of MDMA for treating people with severe PTSD, involving 90 participants at 15 locations. It found that 2 months after their last experimental session, 67% of the MDMA group no longer met the diagnostic criteria for PTSD, compared with just 32% of the placebo group. The results have been hailed as highly significant for psychedelic treatments, even though experts warn that MDMA-based therapy still needs to be tested against established psychotherapies and existing antidepressants currently used to treat PTSD. 1

Meanwhile, the phase 2b trial run by COMPASS Pathways and Imperial College, London, using different dosages of psilocybin for treatment-resistant depression, also reported positive results, with those who received psilocybin showing a greater drop in symptoms of depression. Researchers agree that more, larger studies are needed, but these positive results indicate that psychedelics show potential. 2

Fortunately, psychedelics companies aren’t resting on their oars. Leading psychedelic biotech company MindMed just received approval for a phase 1 study into mescaline, a less-explored psychedelic substance. MindMed wants to investigate it to see if it could become another effective treatment vector alongside LSD and psilocybin. The study will take place in Switzerland, at the University Hospital Basel Liechti Lab, which regularly works together with MindMed. 3

Cybin likewise just announced approval for its phase 2 study, trialing its sublingual psilocybin CYB001 formulation for patients with major depressive disorder (MDD), at the University of the West Indies Hospital, in Jamaica.4 Cybin also recently completed pre-clinical trials for its 51st psychedelic compound. It has developed more psychedelic compounds than any other company, and the sheer number of compounds hints to the large potential waiting to be unlocked. So far, 4 compounds have been approved to go on to clinical trials.5

More studies are being led by non-profit organizations. Veterans Exploring Treatment Solutions (VETS), a non-profit created to help US veterans access psychedelic treatments, just formed a study partnership with Stanford University to research the use of ibogaine to treat traumatic brain injury (TBI) in special forces veterans. VETS already ran a retrospective study on the topic, and saw significant improvement in cognition after TBI, with 96% of participants saying it was far better than any previous treatment.6

The foundations are being laid for psychedelic treatment infrastructure

While research forges ahead, psychedelics companies are also forming new partnerships and establishing new treatment centers that create the infrastructure needed to test, produce, refine, and deliver psychedelic-based treatments on a large scale. 

Red Light Holland, which focuses on the production and distribution of medical-grade “magic truffles” to legal and recreational markets, recently joined with the medical cannabis company Creso Pharma to create a single global psychedelics and cannabinoid company called The HighBrid Lab, with an implied pro forma equity value of C$347 million.7 The HighBrid Lab aims to focus on expanding the production, marketing, and sales of both medical cannabis and pharmaceutical-grade psychedelics in America, Canada, and Europe.8 Red Light Holland also previously announced its intent to acquire two expert mushroom producers in Canada – Acadian Exotic Mushrooms (AEM), and Happy Caps Urban Gourmet Mushroom Farm – so that they can use these connections when psychedelic mushrooms become legal in Canada.9

MindMed revealed that it had signed a Memorandum of Understanding (MOU) with Nextage Therapeutics, an Israeli drug development startup, to explore new delivery options for psychedelics that would circumvent the side effects that can arise with oral delivery. The collaboration will begin by focusing on noribogaine derivatives, and then move on to other ibogaine-based drugs.10 Meanwhile, Numinus has filed a provisional patent application for their new psilocybin production process11, which CEO Payton Nyquvest says “has the potential to transform the sector“ by drastically scaling up therapeutics production.12 

The delivery side of things hasn’t been neglected either. Compass Pathways has ambitious plans to establish 3,800 psychedelic treatment centers across Europe and the US13. A network of ketamine-assisted therapy centers is growing across the US, with an eye to adding psychedelic-based treatments as they become legally approved. Field Trip Health currently runs 6 such clinics, in Toronto, New York, LA, Chicago, Atlanta and Houston, and plans to expand to 75 in the US by 2024. It has stated that it will add MDMA therapy in those clinics as soon as possible.14 Researchers predict that the FDA will approve MDMA for the treatment of PTSD by 2023, and psilocybin for depression by 2025.15

Public opinion is changing

 It would be too much to expect everybody to endorse the therapeutic use of psychedelics, but it’s clear that support is growing. Much of this is due to COVID-19, which increased public discourse about mental health. “Covid has done a lot of terrible things, but it has elevated mental health visibility, and as a result of that there is lots of interest,” said Dick Simon, psychedelics entrepreneur.16

It’s also connected to the increasingly desperate need for effective treatments for depression, anxiety, and similar disorders. First Trip Health just ran its first annual State of Mind survey, which found that 81% of Americans have at least one symptom of depression. They’re looking for ways to cope, with 37% saying they turned to alcohol, 20% using prescription medications, and 12% using dangerously addictive opioids. In that context, perhaps it’s not surprising that 37% say they’d support psychedelic-assisted therapies and 24% would consider trying them to treat their mental health, compared with the 42% who said they’d talk to a therapist.17 An unrelated study in the UK found that 55% of the population as a whole is in favor of legalizing and opening up access to psychedelics.18

A graph showing a Poll in the UK voting on attitude towards the medicalization of psilocybin and support for policy changes
Source: “TDR’s Top 5 Psychedelic Developments For The Week Of June 14,” Benjamin A. Smith, June 19, 2021 https://thedalesreport.com/psychedelics/tdrs-top-5-psychedelic-developments-for-the-week-of-june-14/

 To help encourage this attitude, Compass just launched a podcast called “Everyone has a story: talking about mental health”, to remove the stigma and increase discussion around mental healthcare.  

The changing legislative climate both reflects and hastens altered public attitudes. So far Ann Arbor, Michigan, Denver, Colorado; Oakland, California, Santa Cruz, California; Washington, D.C.; and the state of Oregon have all decriminalized psilocybin, and in November, Oregon voters passed a measure approving a program for the medicinal use of psilocybin19. It’s widely believed that Michigan, as the US’ 2nd largest market for medical marijuana, will become the next state to legalize psilocybin. In California, lawmakers are debating a bill to decriminalize psychedelics for personal use20, and the Texas House is reviewing a bill to fund research into the use of psilocybin for treatment-resistant PTSD in veterans21. In Canada, the government has authorized 19 health professionals to self-test psilocybin for research purposes, and announced that it intends to create a Special Access Program for doctors to request the use of restricted drugs, including psychedelics, in emergency situations.22 

The market shows long term potential

In response, the psychedelics market is trending upwards, even though currently, very few companies have much to show by way of revenue. We believe that’s mainly because the emphasis at the moment is on research and development, so few people appear worried. The market for psychedelic drugs is projected to grow from a little over $2 billion in 2020 to approximately $6.9 billion by 2027, at a CAGR of 16.3%. 23

Atai Life Sciences just became the 3rd psychedelics stock to float on NASDAQ24, following MindMed in April 2021 and Compass in September 2021, and there’s speculation that Cybin could follow soon.25 With 3 psychedelics companies on NASDAQ, it seems hard to claim that it’s just a flash in the pan. Additionally, Numinus received Tier 1 Issuer status on the TSX Venture Exchange in June, which means it has fewer compliance obligations and improved access to institutional investors.26

Taking a long-term view, analysts at OTC Stock Review predict that while much of the revenue will come from licensed psychedelic medications, the real winner in the psychedelic market “will be the companies that are building their own platforms, technologies, and apps to not only provide better patient outcomes, but also provide research and data to medical professionals.” Examples include MindMed, which built the Albert integrated digital platform for delivering psychedelic-based medications together with digital therapeutics; Compass, which created an online learning platform to train therapists to administer psychedelic treatments; and Ehave, which is developing the KetaDash data-driven platform for ketamine-based therapies.27

Together, we believe these trends show that there’s a great deal of potential for companies involved in various aspects of psychedelic-based therapeutics, even though there’s still significant risk due to the youth and immaturity of the sector. In the words of Bryan McGovern, who covers life sciences news, “As with any new sector, there’s already plenty of excitement surrounding psychedelics — the industry has been touted as the new age of medicine set to revolutionize treatments for people across the world. But it will be critical for investors to look deeper into company mechanics and learn about the very real risks and potential pitfalls for companies hitting the public markets.”28  

1 “A psychedelic drug may help treat PTSD. But questions remain on how best to use—and regulate—it” May 19, 2021 https://www.sciencemag.org/news/2021/05/psychedelic-drug-may-help-treat-ptsd-questions-remain-how-best-use-and-regulate-it 

2 “Magic mushroom compound performs as well as antidepressant in small study” April 14, 2021 https://www.imperial.ac.uk/news/219413/magic-mushroom-compound-performs-well-antidepressant/ 

3 “MindMed Announces the Approval of Mescaline Study” May 20, 2021 https://www.prnewswire.com/news-releases/mindmed-announces-the-approval-of-mescaline-study-301295710.html 

4 “Cybin Granted IRB Approval for Phase II Clinical Trials of its Sublingual Psilocybin Formulation for the Treatment of Major Depressive Disorder” May 18, 2021 https://www.businesswire.com/news/home/20210518005402/en/ 

5 “Cybin Announces Completion of its 51st Pre-Clinical Psychedelic Molecule Study” June 22, 2021 https://www.businesswire.com/news/home/20210622005438/en/ 

1 “Studying Ibogaine and 5-MeO-DMT for Traumatic Brain Injuries: Interview with Amber Capone of VETS” June 3, 2021 https://psychedelictimes.com/studying-ibogaine-and-5-meo-dmt-for-traumatic-brain-injuries-interview-with-amber-capone-of-vets/  Link to the trial https://clinicaltrials.gov/ct2/show/study/NCT04313712?term=Nolan+Williams&draw=2 

7 “TDR’s Top 5 Psychedelic Developments For The Week Of June 14” June 19, 2021 https://thedalesreport.com/psychedelics/tdrs-top-5-psychedelic-developments-for-the-week-of-june-14/ 

8 “Creso Pharma and Red Light Holland Merge” June 17, 2021 https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02385462-6A1037153?access_token=83ff96335c2d45a094df02a206a39ff4 

9 “Red Light Holland CEO Todd Shapiro Speaks on Bruce Linton and The HighBrid Lab” June 28, 2021 https://thedalesreport.com/psychedelics/red-light-holland-ceo-todd-shapiro-speaks-on-bruce-linton-and-the-highbrid-lab/ 

10 “MindMed Announces Launch of Collaboration with Nextage Therapeutics’ Brain Targeting Liposome System” May 24, 2021 https://www.prnewswire.com/news-releases/mindmed-announces-launch-of-collaboration-with-nextage-therapeutics-brain-targeting-liposome-system-301297517.html 

11 “Numinus Files U.S. Provisional Patent Application for a Proprietary Rapid Production Process for Psilocybe and Other Psychoactive Fungi Species” June 24, 2021 https://thedalesreport.com/psychedelics/numinus-files-u-s-provisional-patent-application-for-a-proprietary-rapid-production-process-for-psilocybe-and-other-psychoactive-fungi-species/ 

12 “Newest Numinus Production Process Has “The Potential To Transform The Sector”” June 24, 2021 https://thedalesreport.com/psychedelics/newest-numinus-production-process-has-the-potential-to-transform-the-sector/ 

13 “A psychedelic drug boom in mental health treatment comes closer to reality” May 10, 2021 https://www.cnbc.com/2021/05/10/psychedelic-drug-boom-in-mental-health-treatment-nears-reality-.html 

14 “In Canada, psychedelics re-emerge in treatment of depression” April 16, 2021 https://medicalxpress.com/news/2021-04-canada-psychedelics-re-emerge-treatment-depression.html 

15 “Turn On, Tune In, Feel Better: The Rise of Psychedelic Therapy in Texas” May 14, 2021 https://www.texasmonthly.com/news-politics/psychedelic-therapy-texas/ 

16 “A psychedelic drug boom in mental health treatment comes closer to reality” May 10, 2021 https://www.cnbc.com/2021/05/10/psychedelic-drug-boom-in-mental-health-treatment-nears-reality-.html

17 “More than 80% of Americans report one or more symptoms of depression, and many have turned to substances to cope with negative emotions during COVID-19 Pandemic, according to Field Trip Health’s First Annual “State of Mind” Survey” May 18, 2021 https://www.globenewswire.com/news-release/2021/05/18/2231476/0/en/More-than-80-of-Americans-report-one-or-more-symptoms-of-depression-and-many-have-turned-to-substances-to-cope-with-negative-emotions-during-COVID-19-Pandemic-according-to-Field-Tr.html 

18 “TDR’s Top 5 Psychedelic Developments For The Week Of June 14” June 19, 2021 https://thedalesreport.com/psychedelics/tdrs-top-5-psychedelic-developments-for-the-week-of-june-14/

19 “Market For Psychedelic Drugs Expected to Reach $6.9 Billion By 2027” April 14, 2021 https://www.prnewswire.com/news-releases/market-for-psychedelic-drugs-expected-to-reach-6-9-billion-by-2027–301268400.html 

20 “Will California Decriminalize Drugs? California Senator Previews Coming Psychedelics Bill” June 27, 2021 https://thedalesreport.com/psychedelics/will-california-decriminalize-drugs-california-senator-previews-coming-psychedelics-bill/ 

21 “Turn On, Tune In, Feel Better: The Rise of Psychedelic Therapy in Texas” May 14, 2021 https://www.texasmonthly.com/news-politics/psychedelic-therapy-texas/ 

22 “In Canada, psychedelics re-emerge in treatment of depression” April 16, 2021 https://medicalxpress.com/news/2021-04-canada-psychedelics-re-emerge-treatment-depression.html 

23 “Market For Psychedelic Drugs Expected to Reach $6.9 Billion By 2027” April 14, 2021 https://www.prnewswire.com/news-releases/market-for-psychedelic-drugs-expected-to-reach-6-9-billion-by-2027–301268400.html 

24 “New Psychedelic Drug Stock Jumps In Debut After Upsized IPO Prices At High End” June 18, 2021 https://www.investors.com/news/atai-ipo-new-psychedelic-drug-stock-atai-life-sciences/ 

25 “TDR’s Top 5 Psychedelic Developments For The Week Of June 21” June 26, 2021 https://thedalesreport.com/psychedelics/tdrs-top-5-psychedelic-developments-for-the-week-of-june-21/ 

26 “TDR’s Top 5 Psychedelic Developments For The Week Of June 14” June 19, 2021 https://thedalesreport.com/psychedelics/tdrs-top-5-psychedelic-developments-for-the-week-of-june-14/ 

27 “The Power of the Platform in Psychedelic Medicine” April 20, 2021 https://www.globenewswire.com/en/news-release/2021/04/20/2213081/0/en/The-Power-of-the-Platform-in-Psychedelic-Medicine.html 

28 “Red Flags for Psychedelics Investors” May 24, 2021 https://investingnews.com/daily/life-science-investing/psychedelics-investing/red-flags-psychedelics-investors/