You might associate psychedelics with recreational use and abuse, but a growing number of scientists, entrepreneurs and investors are working to bring these experimental substances into the mainstream. Psychoactive substances have been shown to have significant benefits for a range of debilitating mental health disorders, even those that have been resistant to conventional therapies and medication so far.
Here, we explore some of the high-growth companies that are driving this renaissance in psychedelic research in the UK, and how they hope to transform the lives of millions of people.
According to mental health charity Mind, “approximately 1 in 4 people in the UK will experience a mental health problem each year”, and it’s estimated that around 20-60% of mental health patients have treatment-resistant disorders. Not only does this cause prolonged distress for patients and their families, it can also cost up to 10 times more to care for individuals with treatment-resistant psychiatric disorders than other patients. And so, there’s a significant need for alternative treatments for mental health disorders that give sustained relief to patients.
Psychedelics are psychoactive substances that induce altered states of consciousness, impacting mood, perceptions and processes in the brain. They can also cause auditory and visual hallucinations. It is this aspect that’s thought to treat the symptoms of depression, addiction and anxiety, and has the potential to treat other conditions too.
The term ‘psychedelic’ was first used by the psychiatrist Humphrey Osmond in 1957, and is derived from the Greek words ‘psyche’ (soul, mind) and ‘delein’ (‘to manifest’). For centuries, humans have experimented with naturally-occurring psychedelic compounds, including psilocybin and DMT, to induce mystical experiences. In the 20th century, scientists began synthesising these substances and started to uncover mental health benefits.
But socio-political developments in the 1960s and 70s, and the criminalisation of psychedelics, put a halt to this work. Psychedelic substances such as LSD, psilocybin and DMT are still heavily controlled by UK government legislation, and categorised under Schedule 1 of the misuse of drugs legislation as having “no medical use”. Since the 2000s, however, there has been somewhat of a renaissance in this area, with an increasing body of evidence showing there are extensive clinical applications for psychedelics, using more rigorous clinical standards than in the 20th century.
Numerous studies have indicated that there could be substantial positive effects of administering psychoactive substances—in conjunction with psychological support—to patients with various kinds of mental health issues. These range from depression and anxiety disorders to addictions, obsessive compulsive disorder (OCD) and post-traumatic stress disorder (PTSD).
With growing evidence that there are real-world, clinical applications for psychedelics, a number of businesses now aim to take these substances through the drug development processes and commercialise them.
Innovation in this sector, as with other pharmaceutical areas, is predominantly driven by small, innovative startups. As such, big pharma has only just begun dipping its toe in the water, so far bringing variants of ketamine to market.
Johnson & Johnson, for instance, has developed a ketamine-like substance called esketamine. It was approved by the Food and Drug Administration (FDA) in March 2019 for the purpose of treating patients with treatment-resistant depression (TRD), in the form of a nasal spray. Sold under the brand name Spravato, the treatment can be self-administered in a clinic, requires a couple of hours of supervision, and must be taken alongside oral antidepressants.
Ketamine isn’t actually a psychedelic, but it can induce altered states of consciousness in a similar way to psychedelic compounds. For this reason, ketamine is often grouped with psychedelics in the context of treating mental health conditions. Ketamine already has well-established medical uses, including as an anaesthetic, so is far more readily available to researchers.
It remains unclear, however, whether ketamine’s psychedelic properties are what treat the symptoms of depression or if it’s down to its biological function in the brain. Spravato, for example, does not cause a trip in the same way that psilocybin and LSD treatments do, which some researchers say is essential to their effectiveness as mental health treatment.
Neurocentrx is one high-growth company that’s exploring the impact of ketamine on various mental health disorders. Its oral ketamine capsule, Keticap, is currently in the research and development phase. The company aims to carry out human clinical studies to test the formulation’s ability to treat patients with Major Depressive Disorder (MDD) safely and effectively.
Based in Edinburgh, Neurocentrx is currently operating in the venture stage of evolution, having raised £3.35m in equity and debt funding, across seven rounds. The University of Edinburgh spinout was co-founded by Carmel Reilly (CEO) and Ronald Lindsay.
Psilocybin is a psychoactive substance found in psilocybe mushrooms, more commonly known as “magic mushrooms”. It is the most-researched psychedelic in a clinical setting, and has been found to improve symptoms of depression, addiction and anxiety. The hallucinogenic effects (or ‘trip’) from psilocybin can last between six to eight hours—much shorter than the effects of LSD, for example.
For all of the benefits that psilocybin can bring to patients with treatment-resistant mental health conditions, it’s an expensive substance to study. This is not only due to regulations around the compound, which can slow down the process massively, but also because therapists are required to watch over patients while it is in effect, which means costs add up fast.
COMPASS Pathways specialises in developing psilocybin-based drugs for mental health disorders. It was founded by George Goldsmith (CEO and Chairman), Ekaterine Malievskaia (Chief Innovation Officer) and Lars Christian Wilde (Chief Business Officer and President), with a dual goal of providing better mental health treatment for patients and easing the burden on healthcare providers.
Incorporated in mid-2017, the company is developing a synthesised form of psilocybin called COMP360, to tackle treatment-resistant depression (TRD). It is currently in late-stage clinical trials in Europe and North America.
Just a few months after its launch, the pharmaceutical company secured £3m from PayPal co-founder Peter Thiel, prominent psychedelics (and founder of fellow psychedelic firm Atai Life Sciences) Christian Angermayer, and the CEO of Galaxy Investment Partners, Michael Novogratz. COMPASS went on to raise a further £100m in the private markets, before exiting in September 2020.
The company’s initial public offering (IPO) on the NASDAQ stock exchange saw it reach unicorn status, with a $1.6b valuation, and raise a total of $147m—27% more than expected. Since November 2021, however, COMPASS has fallen victim to the psychedelic bear market, with its share price declining 54% from its IPO value.
DMT (Dimethyltryptamine) is a naturally occuring substance that’s found in various animals and plants. It has been used in religious rituals in South America for centuries but was first synthesised in the 1930s. It is a short-acting, rapid-onset psychedelic, making it a more viable option for mental health therapies. There is a smaller body of research into DMT than psilocybin, however, and it is currently categorised as a Class A drug in the UK and remains under Schedule 1.
Small Pharma is a biotech company developing a pipeline of pharmaceuticals from known compounds for the treatment of mental health conditions. After spending 2016 to 2018 working on a ketamine-focused research and development programme, in 2019, Small Pharma initiated its R&D programme for DMT-assisted psychotherapy. And last year, the company was granted an innovation passport designation by the UK regulator, MHRA. This will potentially facilitate a faster time to market for DMT-assisted psychotherapy. In terms of regulatory oversight, the company has found regulators to be receptive.
The company initially raised private investment from various angels and venture capital funds, before going public via a Reverse Takeover (RTO) in May 2021, listing on the TSX Venture Exchange in Canada. Small Pharma’s CEO, Peter Rands, tells us that “there was a greater opportunity in the Canadian public markets, where other psychedelic medicine-focused companies have listed.”
Rands reports that the public listing has been largely positive for the company, but not without its challenges. Small Pharma raised a total of C$63m in 2021, providing sufficient funds to complete its proof of concept trial (anticipated to complete in 2022) and progress its preclinical pipeline. But it’s now exposed to public market sentiment which has since been bearish for the psychedelics industry. According to Rands, adapting the company strategy to weather the bear market conditions is a challenge right now.
Drug development is a very capital-intensive business, and the peak of the psychedelic medicine market is likely around a decade away.
Small Pharma currently has four R&D programmes and three medicines in development, with one active clinical trial investigating the potential of DMT-assisted psychotherapy to treat patients suffering from Major Depressive Disorder. And with a greater number of people developing mental health conditions during the pandemic, there is a huge unmet need. Rands notes that drug development is a very capital-intensive business, and that the peak of the psychedelic medicine market is likely around a decade away.
Beckley Psytech is developing psychedelic compounds into licensed pharmaceutical products for patients suffering from psychiatric disorders. It is currently focused on a specific DMT compound, 5-MeO-DMT. This derives from the dried venom that is secreted by the Bufo alvarius toad and various South American plants.
Like psilocybin, 5-MeO-DMT is a serotonin receptor agonist, meaning it activates serotonin receptors in a manner similar to serotonin itself (a neurotransmitter associated with improved mood, emotions and sleep patterns). But the effects of 5-MeO-DMT last for a much shorter period of time than other psychedelic compounds—just one hour, compared with up to eight hours for psilocybin, keeping overall treatment costs lower.
Beckley Psytech is led by CEO Cosmo Feilding Mellen and built on the lifelong work of his mother, Lady Amanda Feilding, Countess of Wemyss and March, who is Co-Founder & Chair of the Scientific Advisory Board. Lady Feilding has spent over five decades researching psychedelic compounds and campaigning for drug reform. She notoriously performed a self-trepanation in 1970, drilling a hole into her own skull in order to increase blood flow to the brain—a practice she now advises against performing on oneself.
In 1998, Feilding set up the Foundation to Further Consciousness—later renamed the Beckley Foundation (after her 16th-century family home, Beckley Park). The Beckley Foundation is focused on furthering research in the areas of psychedelics, including psilocybin, and driving evidence-based drug policy reform. It has helped fund and operate various studies, including a 2016 study with Imperial College London, which found that “relative to baseline, depressive symptoms were markedly reduced 1 week and 3 months after high-dose treatment [10 mg and 25 mg of psilocybin, 7 days apart]. Marked and sustained improvements in anxiety and anhedonia [the inability to feel pleasure] were also noted.”
Beckley Psytech has raised £75m of venture capital funding to date, across three rounds, with backing from a long roster of investors. This includes Adage Capital Management, Bail Capital, Bicycle Day Ventures, Delphi Ventures, Integrated VC, Noetic Psychedelic Fund, and Palo Santo Investors. In November 2021, the biotech firm brought on experienced neuroscience leader Dr Frank Wiegand as its Chief Medical Officer.
Clerkenwell Health is a seed-stage clinical research organisation (CRO) that designs and delivers clinical trials for customers looking to accelerate their psychedelic drug development. Clerkenwell Health co-founder Dr Henry Fisher worked at the Beckley Foundation whilst completing his chemistry PhD at Oxford University, and went on to found his own regulatory strategy consultancy. It was here he met his co-founder, Tom McDonald, who has a decade of experience working in big pharma at IQVIA and Accenture.
Launched early last year, Clerkenwell Health still has a relatively small team (with just 15 employees) but has big ambitions. The company tells us it is currently working with three clients, including drug development company Octarine Bio, to design and deliver clinical trials for psilocybin and its analogues, but that it is looking to expand into other substances in the near future. Clerkenwell Health is also developing a patient-facing ehealth app and launching a therapist training programme, all in the hopes of making psychedelic treatments viable at scale. Eventually, it aims to be the go-to partner for all stages of psychedelic therapy and drug development.
Despite lots of activity in the US and Canada, the UK is establishing itself as a central research hub for the psychedelics industry.
The company says that there is more collaboration within the psychedelics sector than in traditional pharma, because there’s a great deal of difficulty in getting the drugs to market, so organisations often find themselves sharing best practices and developing partnerships. It wants to build on this, and sees competition in the sector as a negative at this stage, when information sharing is so valuable and regulators are still trying to establish a clinical infrastructure: “after all, a rising tide lifts all boats”.
When asked about the challenges and opportunities facing the sector right now, the company notes that, despite lots of activity in the US and Canada, the UK is establishing itself as a central research hub for the psychedelics industry. “While some American firms are seeking to legalise psychedelics, which would make it possible for health retreats to use the substances, there is little interest for that on this side of the pond, and the substances will likely remain in clinical settings in the UK”. With that said, there are still many issues with stigma around psychedelic substances, particularly MDMA which—despite its clinical potential—is still seen as a party drug, making it tricky to get medical buy-in.
Backed by various angel investors and family offices, alongside Vine Ventures, Lionheart Ventures and Ayuh Ventures, Clerkenwell Health has so far raised £730k of investment. The psychedelics startup is currently working on its seed funding round, due to close in May 2022.
Also innovating in the mental health treatments space is Awakn Life Sciences, which aims to tackle addiction through psychedelic substances and breakthrough therapies. The company has conducted the world’s first clinical trials of ketamine and MDMA for the purpose of treating alcohol addiction, and is now conducting trials for other kinds of addictions. Founded in 2016 by Anthony Tennyson (CEO) and Jonathan Held (CFO), Awakn raised just one £325k round of equity fundraising before going public in June 2021, via a reverse takeover on the Canadian NEO Exchange.
The Chief Research Officer at Awakn, Professor David Nutt, is at the forefront of research into psychedelic substances for the purposes of treating mental health disorders. He was previously the Government’s Chief Drug Advisor, but was asked to resign for claiming that cannabis, ecstasy and LSD are less dangerous than alcohol. Since then, he has continued to campaign for the easing of restrictions on the use of psychedelics in clinical trials.
The COVID-19 pandemic stalled many clinical trials, and pulled resources away from non-pandemic related research. But the speed with which COVID vaccines were developed, approved and distributed across the UK has shown what’s feasible, and that regulatory frameworks can be vastly improved.
It seems that regulatory bodies are keen to collaborate with startups developing new therapeutics. The Future of UK Clinical Research Delivery: 2021 to 2022 Implementation Plan, published by the Department of Health & Social Care in June 2021 states that: “Our ambition is that the UK will become the premier destination for streamlined, transparent and efficient research – by removing unwarranted variation and setting up studies in record time. This will bring fresh business and investment to the UK to bolster economic growth and job creation. More importantly, it will set the pace for innovation and ensure research translates into improved patient care.”
The policy surrounding psychedelic drug development lies with the Home Office, however, which has been slow to act on making psychedelic substances more readily available for clinical trials. In order to carry out studies using psilocybin, for instance, researchers must first secure a licence—a process which makes research even more costly and lengthy. Reports circulated in October 2021 which stated that PM Boris Johnson was considering legalising Psilocybin, giving it the same status as medical cannabis, but there has been no news since.
In a time where so many in the UK are suffering from severe mental health disorders and health services are overstretched, the sector needs more than just good intentions and hot air. Thanks to the efforts of leading psychologists, entrepreneurs and businesses, there is great potential for the UK to become the central hub for research and innovation in psychedelic treatments.
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