It’s hard not to associate the word psychedelic with the trippy, tie-dyed hippy movement of the 1960s, or the dance scene of the 90s.
However, drugs such as ecstasy and magic mushrooms are now becoming part of the pharmaceutical mainstream.
Last year the Food and Drug Administration (FDA) approved esketamine to treat depression, making it the first ever psychedelic drug to receive the regulatory green light in the US, with UK authorities giving their approval for the ketamine-like drug a few months later.
MDMA, meanwhile, has been given breakthrough therapy designation by the US regulator for post-traumatic stress disorder (PTSD), as has psilocybin, the psychoactive found in mushrooms, which is being developed as an alternative to traditional antidepressants.
It is against this backdrop that a flourishing, new and vibrant sub-sector of the life sciences industry is emerging.
While there are many parallels with the development of the cannabis industry, the trailblazers in the field of psychedelics are keen to stress the differences, particularly with reference to the recreational element of the former.
“Psychedelics weren’t born of the counterculture. They were killed by it,” says a report by investment bank Canaccord Genuity, authored by Tania Gonsalves and Scott McFarland, which provides some of the first in-depth analysis of the sector.
The pair point out the proliferation of recreational use spurred government intervention and by the early 1970s psilocybin, LSD, ibogaine, mescaline, peyote, MDA and DMT were all illegal.
“The industry won’t make that mistake again,” the Canaccord analysts point out.
Research on psychedelics has continued, albeit slowly and on the fringes of medicine, though this is starting to change.
The FDA’s actions backing the clinical development of esketamine, MDMA and psilocybin speaks to the acceptance of psychedelics by the medical establishment. At the same time, demand is growing.
Traditional central nervous system (CNS) drugs to treat anxiety and depression have changed little in decades – but for many millions around the world, the meds just don’t work.
Taking the active ingredients of psychedelics and clinically proving their efficacy offers hope for those with post-traumatic stress disorder, alcoholism, anxiety, deep-seated depression and addiction.
“Given psychedelics’ uncertain safety profile, researchers, executives and the general public have for the most part agreed that the optimal path to market is through the clinic,” the Canaccord report explains.
That said, years of human consumption means there is a bedrock of data that will perhaps shorten the time-line to the market and in doing so lower the cost of producing a big-selling prescription medicine, which respectively stand at 10 years and up to US$2.6bn.
The psychedelics industry itself is big enough to pique the interest of Big Pharma, with Canaccord estimating the total market size for all indications under investigation to be as much as US$100bn.
However, the smaller, more innovative firms and the not-for-profit organisations are likely, initially at least, to set the pace.
“Psychedelics have shown promising efficacy across a broad range of both mental and substance abuse disorders,” says Canaccord. “Together, the targeted indications affect over one-billion people globally.”
Your need-to-know guide to psychedelics
Found in over 200 species of mushrooms.
Potential uses: Depression, anxiety, addiction, OCD (obsessive-compulsive disorder), anorexia, obesity, cluster headaches, Alzheimer’s disease.
Lysergic acid diethylamide (LSD)
Chemically combined lysergic acid and diethylamide.
Potential uses: Cluster headaches, depression, anxiety, pain syndromes, alcoholism, ADHD (attention deficit hyperactivity disorder)
Found in the root bark of a West African shrub.
Potential uses: Alcoholism, addiction and smoking cessation.
A popular club drug that’s sold in pills (ecstasy) or as a powder (MDMA)
Potential uses: PTSD, anxiety and alcoholism.
Used for starting and maintaining anaesthesia
Potential uses: Treatment-resistant depression PTSD, anxiety, alcoholism, pain syndromes and chronic fatigue syndrome.
UK and European companies
ATAI Life Sciences (Germany/UK): An investment company whose remit is to find new alternatives for mental health disorders such as depression, anxiety and addiction where treatment hasn’t change in decade.
Eleusis (UK): Focused on the anti-inflammatory properties of psychedelics.
Red Light Holland (Netherlands): Production, growth and sale of recreational-grade truffles and potentially EU-GMP medical-grade truffles to the adult use market in the Netherlands.
Small Pharma (UK): Psychedelic drug developer.