Why Is Silicon Valley Unicorn-Hunting In Big Pharma’s Backyard?

Imagine you’re a Silicon Valley billionaire.

You’ve already achieved major success (at least) once. Now you’re looking for your next opportunity.

Where are you going to put your money?

How about magic mushrooms?

No, that’s not a joke. At least not to people like:
 

• PayPal cofounder Peter Thiel ($3.3 billion)
• Go Daddy founder Bob Parsons ($2.2 billion)

Thiel and Parsons are just two of the many high-profile names from Silicon Valley (and Wall Street) who are leading the charge into psychedelic drug research and commercialization.
 

An ultimate disruption opportunity

Icons like Peter Thiel and Bob Parsons could move into any field of their choice. Why target psychedelic drug research?

What gets Silicon Valley excited?

Opportunities to innovate. Markets to disrupt.

Framed in that manner, psychedelic drugs are an irresistible attraction. Fifty years of drug Prohibition provides decades of pent-up research opportunities.

Then there are the markets.

Psychedelic drug R&D is targeting new drug therapies for mental health conditions. Meanwhile, a Mental Health Crisis rages around us.

More than 1 billion people suffer from assorted afflictions. Mental health services is a $225 billion treatment market in the U.S. alone.

Yet existing drug therapies for (in particular) depression, addiction and PTSD are producing grossly inadequate results.
 

These are all individual multi-billion-dollar treatment markets, desperately in need of more effective drugs. But next-generation treatments for these disorders aren’t going to come from Big Pharma.

Multinational drug companies have largely walked away from R&D on mental health treatments. By 2016 they had already reduced spending in this area by 70%, according to The Guardian.
 

Move over Big Pharma, here comes Silicon Valley

Multinational drug companies have left (almost) an open playing field for entrepreneurs looking to bring new drugs to market to address the Mental Health Crisis.

Psychedelic drugs appear to be the answer. A host of different clinical trials have been delivering spectacular treatment results for depression, anxiety, addiction, PTSD and other medical disorders.

Now Silicon Valley innovators are hunting for unicorns from among formerly reviled street drugs like “magic mushrooms” (psilocybin), “acid” (LSD), and “ecstasy” (MDMA).
And they have already bagged one.

Compass Pathways (US:CMPS) is now in a Phase 2 clinical trial for its psilocybin-based therapy for treatment-resistant depression. It has been granted Breakthrough Therapy Designation by the FDA.

Following the completion of its IPO financing, Compass sits with a market cap of $1.28 billion. Thiel is a major shareholder.

More unicorn opportunities are certain to come. Even in its infancy, this sector has already been raising some serious capital.

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Compass itself has now raised in excess of $200 million. Hundreds of millions in additional funding has been spread across the startups (public and private) and non-profits that are racing to produce the next drug research winner.

Silicon Valley may be leading the charge to capitalize on new opportunities with psychedelic drugs. However, there is plenty of room for retail investors to climb onto the bandwagon.

A huge need, in multi-billion-dollar treatment markets that are ripe for disruption. Unicorn-sized potential.

Well-funded entrepreneurs with a nose for opportunity and a knack for innovation.

Good Hunting!
 

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