MindMed moves psychedelics into a new area

MindMed, the psychedelic medicine biotech company, recently announced the launch of Project Angie, which will study the application of lysergic acid diethylamide (LSD) for treating chronic pain. MindMed already has a number of clinical trials in progress for psychedelics such as LSD and methylenedioxymethamphetamine (MDMA) to treat mental health disorders.1

The announcement emphasizes the potential that psychedelics could hold to treat conditions such as chronic pain as well as mental health disorders such as depression, anxiety, and PTSD, which have been poorly served by traditional pharmaceutical solutions. The fact that the global market in analgesics (painkillers) is predicted to grow at a compound annual growth rate (CAGR) of 1.1% between 2021 and 2026, reaching $23 billion by 2026, shows how much demand there is for effective and accessible pain relief2. Currently, the most readily available pain relief is either non-steroidal anti-inflammatory drugs (NSAIDS), or opioids for more severe pain that can’t be improved by NSAIDs.

The US is gripped by an opioid epidemic that underlines how inappropriate that drug is for chronic pain relief. Over 87,000 Americans died from opioid overdoses in the 12 months leading up to September 2020, a rise of 29% from the previous year3, partly due to an uptick in usage sparked by the stress and fear of COVID-19 and its associated economic downturn, and partly because social distancing and lockdown requirements forced many states to close their addiction support services. Long haul covid, or long covid as it’s also known, will only add to the need for safe, non-addictive, long-term treatments for chronic pain. Around 32 million Americans have been infected with the novel coronavirus so far, and it’s estimated that approximately 10% will experience long haul covid4. These 3.2 million new patients will need an alternative to harmful opioids and ineffective NSAIDs, and the companies investing in R&D for psychedelics intend to answer that need.

Psychedelics are a next generation treatment approach using psilocybin, the psychoactive ingredient in magic mushrooms, as well as LSD and MDMA. Companies like MindMed are picking up where research suddenly left off in the 1970s, when these substances were classified as Class 1 drugs and viewed as ways for hippies and anti-war protesters to get high and flake out. Companies like MindMed are inspired by recent research, such as that undertaken by Roland Griffiths at the Johns Hopkins Center for Psychedelic and Consciousness Research in 2016, which showed that when applied correctly, psychedelics compounds do not harm the brain and can actually have a healing effect on the mind and mental health5.

With the demand for alternative mental health treatments rising, the regulatory climate in the US is also changing. Municipalities and states are slowly following each other to decriminalize psychedelics, an important step towards legalization and possibly even the incentivization of research and development within the field. Although psychedelic medications occupy a different use case to cannabis-based treatments, the same change of mindset towards medical marijuana may well usher in more support for today’s psychedelics. In November 2020, Oregon became the first state to decriminalize psilocybin and legalize it for therapeutic use6, while a bill to similarly legalize psychedelics has passed its second Senate hearing in California7. Other cities including Santa Cruz, CA; Ann Arbor, MI; Washington DC8; and 3 cities in Massachusetts9 have passed decriminalization bills.

Next generation psychedelics could be seen as a new competitor in the massive market over which big pharma reigns. Analysts at Data Bridge Market Research predict that the US market for psychedelics will grow at a CAGR of 11.5% between 2021 and 2026, reaching $6.4 billion by 202810.

A graph showing the North American psychedelic market growth

Jason Spatafora, head trader at truetradinggroup.com, predicts that “Within the next six to 12 months, we will see an arms race in the psychedelic space as companies try to innovate and get their drugs to trials and to the market. These psychedelic companies can cut into the multibillion-dollar industry that is completely dominated by pharmaceutical companies.”11 2020 saw Compass Pathways become the first psychedelics stock to list on the NASDAQ, but MindMed followed it in April this year and a third company, Atai Life Sciences, will join them shortly12. MindMed’s stock rose more than 10-fold13 after it began trading on the Canada-based NEO stock exchange in March 2020, and it currently has a market cap of $1.3 billion14. Although MindMed saw its stock price fall15 immediately after it appeared on the NASDAQ, dropping close to 30% on the first day of trading, its co-founder and CEO JR Rahn is not concerned. Rahn places far more weight on the significance of the soon-to-be-achieved milestone of having 3 psychedelic stocks listed on the NASDAQ, and what that says about the staying power of the psychedelics market. “Three is a trend, he says, adding “This is not just a one-off thing anymore—this is going to stay and there are clearly large problems we’re solving and investors are willing to allocate capital. Let’s not forget we as an industry and as a company, have listed psychedelic substances on the Nasdaq. That in and of itself, to me, is an achievement. That goes far in de-stigmatizing the substances we’re working on.”16

MindMed’s Project Angie opens up a new field of research and development for psychedelic compounds and is testimony to the company’s commitment to expanding its range of drugs and treatments. A clinical study co-authored by MindMed researchers Prof. Dr. Matthias Liechti and Dr. Kim Kuypers suggests that psychedelics could have analgesic effects, although scientists are still exploring how those effects are expressed in the body. The company is preparing to submit a pre-IND briefing for its Phase 2a Proof of Concept study for Project Angie to the FDA in the second half of 202117.

MindMed was established in 2019 in New York City, with the intention of creating a multi-disciplinary team that would develop best in class mental healthcare through experiential psychedelic-derived therapies. To that end, it works together with the University Hospital Basel Liechti Lab, in Basel, Switzerland, as well as the Maastricht University in the Netherlands, to create strong partnerships that result in trustworthy clinical data, while also training psychiatrists at NYU Langone Health to understand and correctly administer a new generation of treatments. The collaboration with Maastricht University was announced in January 2021 as part of an expansion of MindMed’s R&D capabilities, specifically to explore the potential of microdosing, overseen by Dr. Kim Kuypers, a leading international expert in the microdosing of psychedelics.18 The new microdosing division is part of the Albert unit for digital medicine, launched in November 202019. Ultimately, MindMed envisages a new wave of treatments for mental health disorders like depression, anxiety, and chronic PTSD, as well as chronic pain and alcohol, nicotine, or opioid dependence. The company is focusing hard on clinical trials to develop new and innovative psychedelic compounds which will be far more effective at treating mental health disorders than current psychedelics, and has an exclusive license to nine completed clinical trials of MDMA at the Liechti Lab. It’s currently investigating four compounds – LSD; NDimethyltryptamine (DMT), the active ingredient in the ayahuasca plant; 18-MC, a non-hallucinogenic derivative of ibogaine; and MDMA. MindMed’s goal is to produce a range of psychedelic medications which can be prescribed by doctors, distributed through pharmacies, and administered at home.20

In January of this year, the company announced a new trial to evaluate the effects of using LSD and MDMA together as a compound. The Phase 1 trial is examining whether the MDMA would help balance the impact of LSD and help reduce the negative emotions which can be associated with it. It’s hoped that a better understanding of the ways that the two substances interact will help the company expand its drugs pipeline and refine the effects of existing and future therapies.21

MindMed also has a number of Phase 2 trials in progress, including one to develop a better treatment for adult ADHD. The Phase 2a trial has passed initial safety assessments and is evaluating the efficacy of micro-doses of LSD for adult ADHD.22 Alongside that, MindMed is running a phase 2b clinical trial to examine the benefits of LSD-derived compounds for people suffering from anxiety disorders, which passed its pre-IND preliminary meeting at the end of 2020,23 and is working on a trial for treatment for opioid addiction. The trial uses a substance derived from ibogaine, which is another hallucinogenic shrub.24 Another MindMed study aims to evaluate the effects that low doses of LSD can have on cognitive performance, mood, immune system response, and sleep quality.25 Rahn is at pains to emphasize that his company has nothing in common with cannabis stocks, insisting that there are no plans to develop recreational psychedelics and that MindMed is only investigating their effects for therapeutic use. Although analyst Scott Greiper of Viridian Capital Advisors has voiced concern that the lack of a recreational market could harm the financial future of psychedelic companies26, other investors have shrugged it off. It’s notable that Peter Thiel, one of the leading venture capitalists, has invested heavily in Compass Pathways, while Shark Tank investor Kevin O’Leary has a large stake in MindMed. However, O’Leary is among analysts who warn investors to spread their risk when it comes to psychedelics stocks. O’Leary himself also owns shares in Compass Pathways, and noted that “the psychedelics sector needed indexing because it’s too risky for institutional investors to bet on just one early-stage company or drug trial.”27 A psychedelics ETF like Defiance’s PSY offers a way for curious investors who are interested in being part of a potentially disruptive new pharma-related sector to mitigate their risk of exposure and spread their investment across a number of the most promising psychedelics stocks.

1 “MindMed Announces Project Angie, Targeting the Treatment of Pain with Psychedelics” May 5, 2021 https://www.prnewswire.com/news-releases/mindmed-announces-project-angie-targeting-the-treatment-of-pain-with-psychedelics-301284096.html

2 “Global Analgesics Market Research Report 2020” April 14, 2020 https://www.marketstudyreport.com/reports/global-analgesics-market-research-report-2020?gclid=Cj0KCQjws-OEBhCkARIsAPhOkIaJX41CIfdNLA7ADF5y2og0mGg4F8mQQQVWj24sI9-994p-DUmoVEAaAiumEALw_wcB

3 “Drug overdose deaths surged during coronavirus pandemic” April 14, 2021 https://www.axios.com/drug-overdose-record-coronavirus-pandemic-opioids-8657bd57-ab9a-4c1b-9666-76ed7254df55.html

4 “A pandemic that endures for COVID long-haulers” April 14, 2021 https://news.harvard.edu/gazette/story/2021/04/harvard-medical-school-expert-explains-long-covid/ “CDC to Issue Guidelines As Long-Haul COVID Numbers Rise” April 28, 2021 https://www.webmd.com/lung/news/20210429/cdc-to-issue-guidelines-as-long-haul-covid-numbers-rise

5 Psilocybin produces substantial and sustained decreases in depression and anxiety in patients with life-threatening cancer: A randomized double-blind trial,” Griffiths et al. (2016) J Psychopharmacol 30: 1181–1197

6 “Lawmakers prep tweaks to Oregon’s voter-approved drug decriminalization effort” April 13, 2021 https://www.opb.org/article/2021/04/13/lawmakers-prep-tweaks-to-oregon-drug-decriminalization-effort/

7 “California Bill To Legalize Possession Of Psychedelics Clears Second Senate Committee” April 14, 2021 https://www.marijuanamoment.net/california-bill-to-legalize-possession-of-psychedelics-clears-second-senate-committee/

8 “Awaiting Awakening: States Next on the List for Psychedelic Legalization” April 21, 2021 https://thedalesreport.com/psychedelics/states-next-on-the-list-for-psychedelic-legalization/

9 “A Third Massachusetts City Decriminalized Psychedelics” April 23, 2021 https://www.benzinga.com/markets/cannabis/21/04/20585751/a-third-massachusetts-city-decriminalized-psychedelics

10 “North America Psychedelic Drugs Market – Industry Trends and Forecast to 2028” March 2021 https://www.databridgemarketresearch.com/reports/north-america-psychedelic-drugs-market

11 “More Psychedelic Companies Are Going Public” February 2, 2021 https://money.usnews.com/investing/stock-market-news/articles/more-psychedelic-companies-are-going-public

12 “Peter Thiel-backed psychedelic drug maker aims to raise $100M in IPO” April 21, 2021 https://talesbuzz.com/peter-thiel-backed-psychedelic-drug-maker-aims-to-raise-100m-in-ipo/

13 “Psychedelics ETF to Launch After Sector Attracts Thiel’s Money” January 26, 2021 https://www.bloomberg.com/news/articles/2021-01-26/psychedelics-etf-world-s-first-seizes-on-mental-health-uses

14 Yahoo finance stocks tracker https://finance.yahoo.com/quote/MMED.NE/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAK0a5suXvT0c9QW-uX6vwcbpNNa_oVxv0Ezs-6tbRInt015_3cbS7xa0nkiR2JoON2rNgqjIBuPixRR3dd6oIDxA5ygMwf08PCdZrNp3-t2KtllqsKGIzNejT7OmEI8BXjp1ow9-opt_hRLCZ49fQHhcowa7CZivrU38-h8lufFY

15 MindMed stocks tracker on Google Finance https://www.google.com/finance/quote/MNMD:NASDAQ

16 “Psychedelics Company MindMed Trips In Nasdaq Debut” April 27, 2021 https://www.forbes.com/sites/willyakowicz/2021/04/27/psychedelics-company-mindmed-trips-in-nasdaq-debut/?sh=4b2d0eff1ac2

17 “MindMed Announces Project Angie, Targeting the Treatment of Pain with Psychedelics” May 5, 2021 https://www.prnewswire.com/news-releases/mindmed-announces-project-angie-targeting-the-treatment-of-pain-with-psychedelics-301284096.html

18 “MindMed Expands Psychedelic Microdosing Division, Adds Groundbreaking Study Evaluating LSD Microdosing Through Next-Gen Digital Clinical Markers” January 12, 2021 https://money.yahoo.com/mindmed-expands-psychedelic-microdosing-division-123000166.html

19 “MindMed to Launch Albert, A Digital Medicine Division for Psychedelic Medicines” November 24, 2020 https://mindmed.co/news/press-release/mindmed-to-launch-albert-a-digital-medicine-division-for-psychedelic-medicines/

20 Our Philosophy, MindMed https://mindmed.co/our-focus/#philosophy

21 “MindMed Announces the Start of the First-Ever Clinical Trial Combining MDMA and LSD” January 20, 2021 https://www.prnewswire.com/news-releases/mindmed-announces-the-start-of-the-first-ever-clinical-trial-combining-mdma-and-lsd-301211436.html

22 “MindMed Launches Project Lucy Focused on LSD Experiential Therapy For Anxiety Disorders” June 4, 2020 https://mindmed.co/news/press-release/mindmed-launches-project-lucy-focused-on-lsd-experiential-therapy-for-anxiety-disorders/

23 “MindMed Announces Successful Completion of Pre-IND Meeting with the FDA for Project Lucy” December 14, 2020 https://mindmed.co/news/press-release/mindmed-announces-successful-completion-of-pre-ind-meeting-with-the-fda-for-project-lucy/

24 “MindMed seeks to harvest the power of psychedelics to treat mental health disorders” February 12, 2021 https://www.proactiveinvestors.com/companies/news/924866/mindmed-seeks-to-harvest-the-power-of-psychedelics-to-treat-mental-health-disorders-924866.html

25 “More Psychedelic Companies Are Going Public” February 2, 2021 https://money.usnews.com/investing/stock-market-news/articles/more-psychedelic-companies-are-going-public

26 “Can LSD cure our pandemic anxiety? MindMed is spending big to find out” February 18, 2021 https://fortune.com/2021/02/18/covid-19-pandemic-anxiety-relief-lsd-mindmed/

27 “Psychedelics ETF to Launch After Sector Attracts Thiel’s Money” January 26, 2021 https://www.bloomberg.com/news/articles/2021-01-26/psychedelics-etf-world-s-first-seizes-on-mental-health-uses