Psychedelic Drugs Go Mainstream

Promising clinical results, increased corporate/media support, and a regulatory thaw are all contributing to a Renaissance for psychedelic drugs

After a 40+ year detour due to widespread criminal Prohibition, psychedelic drugs are making a big comeback.

Recent Psychedelic Stock Watch articles have highlighted the ways in which these long-reviled substances are “going mainstream”, in different contexts. We thought it was time to compile this into a broader picture of the psychedelic drug industry.

Over the past several years, we have seen psychedelics moving toward mainstream status in four primary areas:
 

1. Scientific research
2. Media coverage
3. Corporate and capital market support
4. Regulation

Medical science embraces psychedelic drugs

Medical science was first to climb aboard the psychedelics bandwagon – for some obvious reasons.

The strong criminal sanctions attached to these substances and the anti-drug phobias that have been stoked by the media made these drugs politically ‘radioactive’ to regulators and the corporate world, as well as Big Media itself.

It has required “hard science” to change these attitudes and drive the ever-growing interest in the research and commercialization of these drugs. And plenty of hard science is emerging.
 

In North America, Johns Hopkins University is a leading hub for medical research that has recently taken a strong interest in psychedelics. In 2019, it launched the Center for Psychedelic and Consciousness Research.

Many other North American educational and medical institutions – of equal and lesser stature – are also commencing psychedelic drug research programs.

Long before this, however, came MAPS: the Multidisciplinary Association for Psychedelic Studies. While this non-profit organization has come to prominence in recent years, it was founded back in 1986.

As a growing number of psychedelics-based clinical studies attract increasing attention, it is MAPS that has spent several decades laying the foundation (in North America) for such research.

In Europe, psychedelics R&D is centered in Switzerland. Albert Hoffman, the researcher credited with the discovery of LSD (lysergic acid diethylamide) in the 1930s was a Swiss chemist.

Because of this historical connection to psychedelics research, Switzerland (alone among Western nations) never fully closed the door on psychedelic drug research. Today, the University of Basel is one of the world’s leading institutions for psychedelic drug research.

The sudden surge in interest in psychedelic drugs – and the wave of new research that has accompanied this – has two primary drivers.
 

Big Media catches on

As medical science began to bang the drum for psychedelic drugs, Big Media started to listen.

At first, coverage was sporadic and rather skeptical. This 2015 CBS News feature typifies such reporting.
 

However, as the impressive clinical results have accumulated, this trickle of mainstream media coverage has turned into a flood. At the same time that the COVID-19 pandemic began to dominate headlines, psychedelic drugs have become the #2 health story in 2020.

Along with this increase in the quantity of coverage has come much more favorable press for psychedelic drugs.
 

As the headlines above indicate, it took more than merely medical results to get Big Media to embrace psychedelics. Regulatory endorsement has been a big driver here, as has increased corporate support – and the dollars that come along with that.

Big Business sees big DOLLARS in psychedelics

As the 2015 CBS article (above) indicates, the psychedelic drug industry has already come a long way in terms of its ability to attract financial support and capital market participation.
 

Five years ago, financing of psychedelics-based research was done in five-figure and six-figure amounts. Today, psychedelics companies and research institutions are routinely raising capital for psychedelic drug initiatives in seven and even eight figures.

The Wall Street Journal headline (above) was referring to the $30 million that was just raised by MAPS to fund its Phase 3 clinical trial of MDMA-assisted therapy to treat PTSD. As the article notes, the bulk of that funding came from Silicon Valley and Wall Street.

Even before this, some notable corporate heavyweights have been lining up behind psychedelic drugs – on both sides of the Atlantic.

Billionaires like PayPal’s Peter Thiel, hedge fund manager Steve Cohen and Iceland’s, Thor Bjorgolfsson have all bought in.

Mega-millionaires like entrepreneur/author Tim Ferris, former Goldman Sachs partner Mike Novogratz, Canadian businessman and pundit Kevin O’Leary, and cannabis pioneer Bruce Linton are also enthusiastic backers.

Wall Street’s interest is simple.

It sees a string of multi-billion dollar treatment markets in need of more effective drugs. Promising clinical results indicate strong potential for psychedelic drugs to become the new standard of care in many of these markets.

Silicon Valley sees the same commercial opportunities. But its interest is augmented by hands-on experience with psychedelics.
 

Major regulatory thaw

All the “support” and dollars in the world won’t result in a single psychedelic drug coming to market without decriminalization (and eventual legalization) at the political level, along with regulatory approval (and drug licensing).

Cannabis companies – and cannabis investors – have already learned this the hard way. The cannabis industry has had to cope with an endless series of obstacles, created by politicians and regulators alike.

With psychedelics, despite their much more potent psychoactive properties, these drugs may actually face less political and regulatory resistance than cannabis.

At the state and local level in the U.S., and at the national level in Canada, we are already seeing steady movement toward liberalizing psychedelic drug laws.

At the regulatory level, the FDA has been a relentless roadblock for most avenues of commercialization for the cannabis industry. However, this bureaucracy is already signaling a softer stance toward psychedelics.

The FDA has granted “breakthrough therapy designation” for Compass Pathways’ psilocybin-based therapy for treatment-resistant depression.  This will fast-track the completion of clinical trials and (potential) commercialization of this drug.

Why the different attitude? Likely it is a combination of political pressure and corporate encouragement.

Governments see a Mental Health Crisis unfolding. A Lancet Commission report estimates the cost of mental health disorders to the global economy (in lost productivity) at $16 trillion between now and 2030.
 

Not only do psychedelic drugs offer great potential to address this crisis, these substances are much more amenable (than cannabis) to our system of drug patents and licensing. Translation: these drugs could be big money-makers for Big Pharma.

From drug enforcement targets to drug development candidates

The Renaissance for psychedelic drugs would likely never have occurred without the worsening Mental Health Crisis that is driving this medical research.

The War on Drugs itself has been an extremely costly failure.

It has generated horrific social and economic costs in terms of increased crime, violence and domestic strife. It accomplished nothing in reducing the problem of drug (ab)use.

Cash-strapped governments are starting to realize that they can’t afford to continue wasting billions of dollars on the War on Drugs as trillions in additional costs from the Mental Health Crisis loom on the horizon.

As this regulatory thaw continues to gain momentum, the stampede of business, academia and the media into psychedelics can only accelerate.

Psychedelic drugs are going mainstream. Investors wanting to capitalize before the retail investing Herd arrives need to position themselves today.