Seizing the Moment: Psychedelic Startups Offer a Masterclass in Capitalizing on Market Readiness

Psychedelics have had a hard time finding their way to commercial markets. Starting in the 1970s, cultural and political pressure led to the cancellation of most serious studies, and as recently as 2015 the BMJ was writing that legal restrictions were “making [medical] trials almost impossible.”

Over the last few years, the regulatory environment started to change with dizzying speed. In the US, UK, Europe, and elsewhere, shifting political environments have prompted re-evaluation of earlier results, and large-scale projects are now ongoing using both natural and synthetic psychedelic compounds to target conditions as varied as major depression and severe headaches.

A wave of ambitious, focused startups have been turning that research into biopharmaceutical success. The psychedelics- focused firm atai Life Sciences sold $225 million in shares during its first day of trading following its IPO, justifying its $2.3 billion valuation and ending the day with a share price more than 30% above its high-end estimate. MindMed and Compass Pathways both beat them to market in the United States, with similar results. Other companies are in early stages of testing truly innovative products, including novel delivery mechanisms for known drugs and safer alternatives to existing compounds like MDMA.

Areas of Focus
One company we’re especially interested in is the UK-based Beckley Psytech, a child company of the Beckley Foundation, which has been a leader in psychedelics research for decades.
Like atai, they’re a private company with a broad focus on neurological and psychiatric disorders and ongoing projects involving a wide range of potential drugs. Their lead research program  deals with synthetic 5-MeO-DMT, a traditional entheogenic medicine and close relative of DMT. Simultaneously, the company recently obtained Clinical Trial Authorization for the UK, and raised £14m to explore the effects of psilocybin on Short-lasting Unilateral Neuralgiform Headache Attacks (SUNHA).

Another firm we’re watching found the spotlight in a slightly different way: Aphrodite Health is combining psychedelics with an emphasis on women’s health. Founded and run
by a team of all women, the company was led by former CEO Tesla La Touche, who brings more than two decades of international success as an executive at high-profile healthcare companies. She has a clinical background and specializes in market access and commercialization, making her a good fit for Aphrodite Health’s emphasis on “value-based outcomes, population health and socio-health economics.”

The company is new, having launched early in June, but it has a clear differentiation strategy. La Touche says that the focus on women’s health includes building equity and accessibility into the company’s foundations. They believe that psychedelics offer cost-effective and potentially less harmful alternatives to traditional treatments for pain, depression, and both hormone-related and menopausal mood disorders. With backing from the Consciousness Fund, Aphrodite Health is undertaking both a long- term drug discovery program aiming to bring an FDA- approved drug to market by 2025, as well as a shorter-term goal of an over-the-counter product they hope will be available in 2022.

It’s always exciting to see a new segment of the biotech market take off like this. We expect opportunities in psychedelic therapeutics to expand rapidly over the coming decade, for investors and researchers as well as consumers.