Opportunities in a crowded space
As decriminalization+therapeutic use of psychedelic medicine continues, the large amounts of ethically supplied psychedelics will be required to meet the demand.
The repurposing of party drugs to legitimate and transformative therapies has is a paradigm shift in society’s understanding of mind-altering substances. The most common psychedelic substances include ketamine, psilocybin, ibogaine, lysergic acid diethylamide (LSD), dimethyltryptamine (DMT) and 3,4-methylenedioxymethamphetamine (MDMA).The first FDA approval of a party drug was Spravato (esketamine) in 2019, which is a nasal spray for the treatment of depression. MindMed currently has LSD in trials in Phase IIB trials with psilocybin and MDMA in the pipeline. Atai Life Sciences, GH Research, Cybin, Compass pathways, Psycheceutical Bioscience, and Seelos Therapeutics are the most prominent public companies in the space. As clinical trials and approvals expand, so does the sheer requirement of psychedelics. Product-based synthetic biology companies have sought to fill the niche via pshychedelic production via microbes. Fermentation is a very good option for endangered species (like peyote) to prevent species extinction. Synthetic products are set to capture 85% of the market share by 2026, overtaking natural products. Indeed, many psychedelics were made in the lab (LSD, MDMA, ketamine). However, some companies are building out natural psychedelic production which is cheaper (Numinous Wellness, and PsyRx).
Companies with a cannabinoid angle (CB Therapeutics and Hyasynth) could be more interesting due to the large recreational use market, although the margins would not be as high. Although thought leaders from ‘How to change your mind’ envisage healing centers around the country in the next 10 years which facilitate safe, widespread use of psychedelics. Moreover, many cities and Oregon have decriminalized psychedelics. This is an increasing trend with Detroit decriminalizing just last year:
Companies which focus on psychedelic production include:
However, companies which make a suite of their own psychedelics are more interesting from a venture viewpoint, like Enveric (formally MagicMed) and Octarine Bio. These companies tailor psychedelic compounds, patent them, and take them through clinical trials.
