Ask Us Anything
Given the fast pace of change in this space, it’s only natural to have questions. That’s why we created this page. It’s a space for you—our readers—to ask your burning questions. We’re open to a broad range of queries: they may be related to the psychedelics supply chain, legalities and regulation, individual companies, R&D, science, etc., etc.
If we don’t know the answer, we will work with our network to have your query addressed.
Please note that we do not provide financial or legal advice.
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How long do you think it would take for the psychedelic market to establish itself globally?
In a broad sense, timelines depend on whether we’re conceptualising a ‘global psychedelic market’ as one in which psychedelics are delivered via a medical model (as a result of clinical trials, regulatory approvals, etc.) or via decriminalisation/legalisation initiatives like those seen in Oregon and D.C. this year.
In terms of the medicalised, regulatory-focused route to market for psychedelic therapies, timelines are generally dictated by the demands of clinical trials and regulatory reviews. Two examples of psychedelic therapies undergoing this process are MDMA- and Psilocybin-assisted psychotherapy.
In terms of the former, MAPS raised $30 million in less than six months earlier this year to fund their final research toward FDA approval of MDMA-assisted psychotherapy for PTSD.
Remember that the FDA designated MDMA-assisted psychotherapy for PTSD a Breakthrough Therapy in 2017. The purpose of this designation is “to expedite the development and review of drugs that are intended to treat a serious condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over available therapy on a clinically significant endpoint(s).” (FDA).
Once the Phase 3 trial has concluded, it could take as little as 6 months to receive approval from the FDA for the therapy. This means that it could be approved by 2023. Once MDMA-assisted psychotherapy is FDA approved, off-label uses may be possible which could present opportunities to use this therapy for further indications.
In terms of Psilocybin-assisted psychotherapy, the timeline is slightly longer. Both the Usona Institute and COMPASS Pathways are currently in Phase 2 of their trials for psilocybin-assisted psychotherapy for Major Depressive Disorder and Treatment-Resistant Depression, respectively. Results from COMPASS’ Phase 2b trial are expected in 2021, and (if these results allow) the company will move into Phase 3. Phase 3 trials can take some time, and as such we don’t expect psilocybin-assisted therapy to be available via the FDA approval route until around 2025 (as discussed in our interview with COMPASS co-founder Lars Wilde).
However, the legalisation route could bring psychedelic therapies involving drugs such as psilocybin ‘to market’ far earlier than the clinical/medical model described above. In Oregon, for example, Measure 109 allows for the provision of psilocybin-assisted therapy after a developmental period of 2 years.
Decriminalisation in localities such as Santa Cruz, meanwhile, allows individuals to use psychedelics without criminalisation. In these areas, a grey market of sorts tends to operate. Here at Psilocybin Alpha we generally don’t cover these markets or ecosystems.
The pace of change in terms of decriminalisation and, particularly, legalisation in North America has surprised many, and may mean that this route brings psychedelic therapies to society in a shorter timeframe than the medical, regulatory route. However, many companies – such as COMPASS Pathways and MindMed – have stated that they are committed to the regulatory route, as they claim this allows for greater access to these therapies due to factors such as insurance and health system coverage.
It will also vary by jurisdiction, of course. Canada’s Health Minister Patty Hajdu has shown openness to psychedelic therapy in her granting of Section 56 exemptions, and the proposed changes to Canada’s Special Access Program (which we explain here).
From a more global perspective: psychedelics are already legal/available in some countries, such as the Netherlands where psilocybin may be consumed via magic truffles. Psilocybin retreats have also created a budding industry in countries where the psychedelic is legal, such as Jamaica. So, it’s likely that psychedelics, and psychedelic therapies, will look different across the globe; as opposed to one coherent, homogenous ‘global psychedelic market’. And, that’s most likely a good thing, given the rich and diverse histories of these substances and their potentially broad applications.
How will psychedelic companies generate revenue?
The context for most psychedelics companies is that psychedelic therapy/medicine will take some years to pass through clinical trials and ultimately be approved (see our answer above for more on timelines). Clinical trials are incredibly expensive, and as such, companies seeking to follow a medicalised, regulated route will often accrue heavy losses for many years.
In response, many psychedelic companies seek to – at least outwardly – realise shorter-term revenue streams, such as operating clinics or bringing nutraceutical products to market.
However, decriminalisation and legalisation initiatives are gathering steam and may offer an alternative (and expedited) route to market for some companies. However, it should be noted that some psychedelic companies – such as MindMed and COMPASS Pathways – have stated that they will not participate in markets where legalisation occurs (such as Oregon), so long as psychedelics remain federally illegal. Other companies, such as Field Trip in the case of Oregon, have stated the opposite, and are positioning themselves to enter local markets as-and-when they legalise.
Perhaps the best way to approach this question is to present some of the ways that psychedelics companies may seek to generate revenue…
Patents, Intellectual Property, Drug Development
Some psychedelic companies are seeking to develop novel analogs and derivatives of psychedelic drugs. Such ‘2nd generation’ (and beyond) molecules, plus other aspects of the psychedelic supply chain like methods of synthesis or drug delivery, are often eligible to be covered by a patent. Where a company is successful in applying for patents, they can generate revenue via the licencing of their intellectual property to other companies.
While some of the larger companies in the space (e.g., COMPASS Pathways) are seeking to obtain approval for their psychedelic therapies via clinical trials, it’s worth noting that not all companies are looking to engage across this entire process. Some companies (e.g., CaaMTech) are focussed almost entirely on drug discovery and preclinical trials, and then plan to licence their novel molecules to other companies who will progress them through the clinical trials and regulatory approval processes. Others may bring a drug to Phase 2 of the Clinical Trial process, then licence it out to pharmaceutical companies to conduct Phase 3 trials and obtain regulatory approvals (e.g., Tryp Therapeutics). If you isolate this section of the pipeline, drug discovery and associated IP libraries can be very profitable.
Clinics offer both a revenue stream – via legal ketamine therapy, for example – and a preparatory context that companies may be able to leverage when drugs like MDMA are approved for therapeutic purposes (we can expect MDMA to be first, given MAPS’ clinical trials progress). Having a demonstrable track record of safe and efficacious ketamine therapy delivery may prove beneficial to companies seeking to offer MDMA and other psychedelic-assisted therapies in operational, regulatory, etc. ways.
This combination of benefits may explain why more and more psychedelic companies are establishing clinics, or acquiring clinic networks. Just this month (Dec 2020) Numinus and Eleusis acquired ketamine clinic groups.
Psilocybin Alpha doesn’t cover this small market segment extensively, so we won’t comment in length here. However, a small crop of companies are seeking to market psychedelics in a recreational context, via the sale of magic truffles in the Netherlands for example. It is worth noting, however, that the distribution and sale of magic truffles is an established practice in the Netherlands (via Smart Shops).
Nutraceuticals, functional mushrooms, etc.
A number of psychedelics companies are seeking to gain a near-term revenue stream via the sale of nutraceutical products. Psilocybin Alpha is not in a position to analysis of this segment at this time.
Digital Therapeutics, Telemedicine
Another market segment is telemedicine/health, digital therapeutics, etc. There is scope for companies to create psychedelic therapy-specific applications, operating systems, virtual experiences, integration-focused apps, etc. Some companies are already doing this, such as MindLeap Health Field Trip’s Trip app, etc.
Supply (Cultivation, synthesis, etc.)
One final industry segment we will mention is the supply of psychedelic drugs, which can take many forms: cultivation, chemical synthesis, biosynthesis, etc. Companies like Psygen are already selling out of their limited supply of psychedelics, which are used for research purposes. Other companies are looking at chemical synthesis, and others yet at biosynthesis via yeasts, e.g., Octarine Bio, PsyBio, etc.
These are just a handful of examples of how psychedelic companies may seek to generate revenue. It’s important to mention that many will be unsuccessful in this pursuit, and that potential revenue streams and industry segments will likely morph over time. A pertinent example of this is Oregon’s recent legalisation of psilocybin via Measure 109, which has generated a market for psilocybin in the state on a much shorter timeframe (two years) than the medicalised, FDA-regulated route: see our above answer for more on this topic.
You can visit our Psychedelic Sector Overview for a visualisation of the sector landscape at the moment.
Similar Question(s) covered in the above answer:
- I don’t see psychedelics ever getting the green light for recreational use like cannabis. So, how will psychedelics companies make money?
- Clinical trials are expensive, how will companies who can’t afford them make money?
Are there any psychedelics companies trading on the NASDAQ?
“Since we went public earlier this year, there has been significant interest in the psychedelic medicine industry, as evidenced by the recent, successful COMPASS IPO. We are interested in growing our company in line with that demand, and this will give us further access to U.S. capital markets.”