Psychedelic Therapy: A 2.5t$ Opportunity
Theme Overview
Psychedelic therapy (PT) is a stigmatized space. This may yield some investment bargains, because most people won´t look at it.
PT offers a way for people to actually heal, versus simply manage symptoms. I believe this space is going to be worth trillions in the future, since it offers an effective solution to an otherwise unsolved and pervasive issue.
A New Frontier for Wellness
I woke up in a mood to explore far reaching concepts today and I have ended up re-looking at the psychedelic therapy space. One of my favorite topics to learn more about is the human mind and over the past few years, I have ended up reading a lot about it. I have come to the conclusion that one of humanity´s grandest challenges is going to be going through a sort of collective existential crisis, once automation and other technological advances make work (and hence, the meaning of our lives) as we know it obsolete. I believe that, in fact, this is already happening and is showing up as an abundance of mental malaise, mostly in the form of depression and anxiety, which I also believe are totally misunderstood in today´s society. PT is currently in trials, but seems to offer people a real opportunity to heal versus simply managing symptoms and dragging them on, which is where we are at today. We could be seeing the birth of a entirely new pharma category here.
Anecdotally, I haven´t tried psychedelics myself, but I have had a glimpse at the power of mushrooms by experimenting with Reishi (a non-hallucinogenic mushroom) over the past year or so. Last year, I read and thought so much that my mental model of the world expanded a bit too quickly and left me operating in an excessively abstract plane, so I needed a way to get back in touch with my body, nature and life in general. Reishi has had a remarkable ability to do just that and in general, make me feel good as I continue to push my mind further and further. Since, I have come to believe that mycology may hold many answers, or rather, many of the molecules we need. Check out this amazing graph from $CMPS´presentation, illustrating connections in the brain after taking Psilocybin:
PT consists in therapy as usual, taking a small dose of a psychedelic substance beforehand. PT is very stigmatized due to people abusing psychedelic substances in the 60s, which led governments around the world to clamp down on them. Psychedelics allow you to enter into a state of mind in which the brain is much more plastic and from which you can look at different scenarios in your life from a different, more empowered perspective, if adequately dosed and with the supervision and help of a professional. Apparently, MDMA therapy has the ability to cure treatment-resistant PTSD. Quoting the latest research from MAPS (Multidisciplinary Association for Psychedelic Studies):
“In MAPS’ completed Phase 2 trials with 107 participants, 61% no longer qualified for PTSD after three sessions of MDMA-assisted therapy two months following treatment. At the 12-month follow-up, 68% no longer had PTSD. All participants had chronic, treatment-resistant PTSD, and had suffered from PTSD for an average of 17.8 years.”
Below are some results from Psylocibin therapy, taken from the $CMPS presentation cited above.
The body of evidence that PT works is growing larger and larger. Whilst PT still needs to make its way through plenty of trials, it is not actually new to humankind, because past civilizations of all sorts have been known to do it sustainably, so I believe it is a matter of time before it becomes commonplace in the modern world for a broad range of conditions. There is a big market out there (2.5T$, specifically) waiting for effective solutions and it really looks like psychedelics are going to turn out to be a paradigm shift in this vertical of healthcare. PT is not a panacea, but definitely a huge step forward, coming from remedies that simply do not work. In hindsight, it may look analogous to the discovery of anesthesia - modern medicine was simply impossible before it.
$LKYSF, $MNMD, $CMPS
The above are the leading publicly traded companies in this space. They are all in the very early stages and depend on clinical trials being succesful, so they might be a bit too in the roulette stage to make an investment, but definitely worth keeping in mind as the space evolves. At this point, I am going to give a brief overview of each one. Further on, I might do a deep dive on one of them.
All 3 companies have negative net debt positions, but only $LKYSF has revenue of any kind. FDA approval of PT is about 3 to 5 years out, according to $MNMD´s CEO, so the companies are going to use the cash to try and get there.
$LKYSF
Taken from their website, ”Numinus Bioscience holds a Controlled Drugs and Substances license issued by Health Canada to allow the possession, production, assembly, sale, export, and delivery for a wide variety of psychedelic compounds and natural source materials, including Psilocybe mushroom fruiting bodies and extracts, Psilocybin, Psilocin, Ketamine, LSD, DMT and Mescaline.” In other words, they have one of the major psychedelic labs in the world, if not the most prominent. They offer some services in this area, which adds some revenue to the company.
Numinus is conducting clinical trials with MDMA and Psilocybin.
Numinus also has 2 clinics. One in Vancouver and the other one in Montreal. They currently offer ketamine therapy, which is FDA approved and also delivers some very interesting results. The company has further revenue coming in from these services. Value may stem from the network of facilities and trained personnel the company seems to be building.
$LKYSF also intends to grow its own natural Psilocybin at scale, because it believes there will be a large demand for this in the market versus synthetic Psilocybin. It has filed a “U.S. Provisional Patent Application for a Proprietary Rapid Production Process for Psilocybe and Other Psychoactive Fungi Species”. The CEO believes they can do grow Psilocybin this way, cheaper than synthetic Psilocybin.
$MNMD
Mindmed the broadest set of trials going on, which I believe greatly reduces risk. Trials are obviously full of uncertainty, so a diversification of this kind helps ensure at least one egg will hatch. Kevin O´Leary is an early investor in this company.
Also, the CEO was allegedly cured from alcohol and cocaine addiction through PT (illegal at the time, ofcourse). Powerful story. Listening to him speak, it seems that their goal is obtain as many patents as possible on the space and then monetize them by offering experiential therapies and a platform for healthcare professionals around the world to be able to access and deliver the remedies that stem from the patents.
$CMPS
Compass Pathways is currently “conducting a randomized controlled phase IIb study of psilocybin therapy in 216 patients with treatment-resistant depression in 22 sites across Europe and North America”. They will be reporting on the trial at some point during the remainder of 2021. $CMPS focuses on using a proprietary version of Psilocybin, named COMP360, which allegedly has some added benefits to it.
The son of the company´s founders was also cured from treatment resistant depression through PT, so that´s another powerful story. Peter Thiel is an early investor in the company.
All in all, the above are very risky ventures. However, the solutions they offer seem to work. Both trials and all sorts of anecdotal evidence around the world point to the fact that psychedelics, regardless of their stigma, may be a fundamental step forward for humanity in mental health care. Mental health problems have a direct and measurable negative impact on the economy, so if PT is scientifically ascertained to be effective, I believe key stakeholders (governments, big pharma etc) will engage to deliver it across the world.
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Twitter: @alc2022
LinkedIn: antoniolinaresc
Feel free to leave me any comment! I´m really excited about the community we are building here. We are growing fast and we think different. I´m looking forward to getting a conversation started, so we can all learn from each other and become better investors.