Once the purview of the counter culture of the 1960s, psychedelic medicines are becoming mainstream in the 2020s. The concept of making psychedelic medicines a moneymaking endeavor began about a year ago with nonprofits and quirky startups. The enterprise has surprisingly caught on with private investors who have provided hundreds of millions of dollars for their development. As a result of the boom, the Food and Drug Administration is coming closer to approving the use of psychedelic treatments for patients.

Compounds including psilocybin, the active hallucinogenic in so-called “magic” mushrooms that was being studied until the war on drugs pushed it underground, has resurrected back into the research labs.

Some of the most influential venture capital investment firms now have the notion to finance the development of this and other hallucinogenics as treatment medicines. Eleven top venture-capital firms have contributed $139.8 million into startups only recently. Many of these firms report that some major biotech companies are exploring the possibility of getting involved. There has also been talk of a big boom in tech companies and clinics that are ready to jump in once these medicines are introduced into the market. As with the development of any new technology sector, expect to see the creation of new compounds as startups come and go as they try to grab a toe hole in the business.

Startup Business Incubators Looking To Get Involved

What has been the case for development of new technologies during the recent past, a number of mainstream startup business incubators including Woven Science and Founders Factory have partnered to create accelerator programs. These companies are well known for investing in new technologies, the retail space, and healthcare. They as well as others are prepared to create companies in the burgeoning industry.

Another incubator who has been active is Y Combinator. They are just now getting their feet wet in the endeavor. Just in the last few years, the company has taken on as many as four startups into its program.

Companies Taking The Lead

Many companies wishing to expand their business footprint are considering entry into pharmaceuticals and biotech so that they can get onboard with the psychedelic phenomenon. One company is Atai Life Sciences, a clinical-stage biopharmaceutical company that is now focusing on the treatment of mental health disorders. In March 2021, the company compiled a record $157 million to invest in the developing psychedelic drugs and making it a mainstream business.

Some investment firms suggest that psychedelic treatments may be available in some form by 2025.

The Feds And States Jumping Onboard The Bandwagon

It appears that states as well as the federal government are interested in the growth of the new field. In November 2020, Oregon legalized psilocybin for therapeutic use. Companies that have just jumped into the venture reported that they hoped that the Food And Drug Administration would soon approve research into experimental materials.

Startups Appear To Be Driving Things

As noted, startup companies are accumulating big money for the development of psychedelic drugs and the clinics that will dispense them. One startup, Novamind, has collected $7.8 million.

Believe it or not, many of the original players in the new field have already enlisted patients into their ventures and using them to raise more funds as well as protect their future share in the new marketplace.

Compass Pathways is one of the burgeoning companies to already be involved in mid-stage trials of psychedelic treatment. The company has released data concerning its phase IIb trials for its synthetic option of psilocybin as a treatment for depression. Compass has developed a patent strategy and is using it to protect their creations. However, it appears that just about all companies already in the field have adopted a patent strategy. Patent lawyers report to expect an abundance of patent disclosures in the coming months in an attempt to identify the winners and losers in the new industry.

Researchers, Lawyers, And Analysts Getting involved

It is believed that once this new industry is off and running, it could generate as much as a $100 billion market. Thus, it should not be a surprise that educational institutions are getting involved in studies hyping the advantages of psychedelic treatments. Philanthropists are rushing to provide funds to these institutions to create psychedelic research centers

As many of the initial startups in the field go public, lawyers and analysts are also getting involved. Analysts at investment banks are now starting to report on the trade and lawyers who had jumped onto the cannabis bandwagon are now also becoming part of the new field.

Challenges To Overcome

Despite in what appears to be an opening for the use of psychedelic medicines and the development of an industry to monetize it, there are still a number of challenges to overcome for the full acceptance of this type of treatment.

The experience of the 1960s has left a residue of problems including:

• The high potential for abuse
• No current acceptance as a medical treatment
• Safety issues concerning use under medical supervision.

The reason for the hesitancy to accept the use of psychedelic substances for patient treatment is due to the war on drugs.

Still, the interest in investing in the development of this treatment has resulted in what many have called a psychedelic renaissance. There is a growing belief that psychedelics can be used to treat depression, replace the use of opioids in pain management, and can be used for other mental health issues.

Studies on psychedelics including psilocybin and LSD have been performed at Johns Hopkins and in Zurich that show promise for their use in the treatment of depression and drug abuse. Late stage cancer patients with anxiety have been using psychedelics to reduce their anxiety and fear of death after treatment. It has also proved helpful in the treatment of posttraumatic stress disorder.

More Research Necessary

Obviously, with the current boom in investment and creation of startups interested in the development of these treatments and their distribution, more research is necessary.