Psychedelic drugs take a step toward the mainstream

As they did with shirtless hippies in the ’60s, psychedelic drugs are having a moment—but this time around, it’s investors (with their shirts very much on) swooning over ‘shrooms.

Driving the news: Start-ups developing psychedelic drug treatments had a milestone January, bringing in US$163 million in investments, marking the second-biggest month of fundraising ever recorded for the sector, per the Financial Times

  • Encouraged by clinical trial results and the possibility of regulatory approvals this year, more investors are backing biotech firms developing mental health treatments that involve everything from MDMA to psilocybin, the active ingredient in magic mushrooms. 

Catch up: Psychedelic drugs — while still on the less-than-legal side of most countries' laws — are making a resurgence as a growing trove of data shows they can be extremely effective in treating conditions like PTSD, depression, and anxiety.

  • Clinical trials run by biotech start-up Lykos showed that over 70% of study participants who used its MDMA treatment no longer experienced symptoms of PTSD after 18 weeks.

  • Another trial found that a quarter of patients who were treated with synthetic psilocybin saw their depression go into remission in 12 weeks. 

Why it matters: Psychedelics could soon enter the mainstream as a mental health treatment and carve out a new pharma market that some forecasters expect to be worth over US$6 billion in a decade.  

  • In Canada, B.C. start-up Optimi recently received approval from Health Canada to produce magic mushrooms, a step the company hopes will allow it to become a major supplier in the global market for natural psilocybin. 

Yes, but: While there are exceptions made for medical and research purposes, psychedelics are still illegal in many countries, including Canada, and there is concern that mainstream adoption of the drugs as a medical treatment would lead to a spike in recreational use. 

What’s next: One of the industry’s major players, Compass Pathways, will publish its phase three trial results this summer, the first clinical trials to follow the FDA’s new guidelines for psychedelic drug research. If the results are good, approval for its psilocybin-based depression treatment could follow.—LA