7 Psychedelic Therapy Companies Addressing Mental Health

March 26. 2020. 7 mins read

Remember that time where after sipping a little too much Electric Kool-Aid you ripped the bathroom sink out of the wall as you suffered through a self-inflicted bout of schizophrenia – only to emerge mentally refortified after watching Willy Wonka and the Chocolate Factory (the version with Gene Wilder, of course)? Oh, that was just us? It turns out that tripping balls can have positive therapeutic benefits. A number of ancient cultures had shamans who used natural psychedelics like mushrooms and ayahuasca to not just expand the mind but to heal it. Naturally, modern entrepreneurial gurus are working on ways to commercialize psychedelic therapy by developing drugs based on active ingredients such as psilocybin in shrooms.

Brief History of Modern Psychedelic Therapy Research

There are a few names you should know when getting the nickel tour of the history of modern psychedelic therapy research. One of them is chemist Albert Hoffmann, who in the mid-1950s discovered LSD. He also isolated the active ingredients of mushrooms, psilocybin and psilocin. If you’ve watched the Wizard of Oz and listened to the “Dark Side of the Moon” by Pink Floyd and found the experience transcendent, you can thank Mr. Hoffmann. Another Hoffmann, Abbie Hoffman, helped launch the counterculture movement of the 1960s after first being exposed to LSD in some early military-sponsored experiments. Psychologist Timothy Leary is probably the most famous and controversial figure to suggest psychedelics could be good medicine for the mind. He also liked to trip. A lot.

Chart shows increasing number of research studies on psychedelic therapy.
Credit: CB Insights

That first trip into psychedelic therapy pretty much ended with the Controlled Substances Act of 1970. The latest wave in psychedelics research appears to be following in the wake of getting people to take cannabis seriously as a beneficial drug. The commercial success of GW Pharmaceuticals (GWPH) in developing an FDA-approved commercial drug for rare forms of epilepsy certainly opened up the CBD industry. Studies suggest CBD oil can help ease anxiety and reduce inflammation. Similarly, there’s growing scientific evidence that psychedelics like mushrooms can cure addiction, relieve anxiety and depression, and even treat PTSD.

How Does Psychedelic Therapy Work?

Most, if not all, of the active ingredients identified in psychedelics affect the brain’s various neurotransmitter receptors, particularly the serotonin receptors, which can alter emotion, vision, and the physical reality of your body. (Check out Rolling Stone for more on how psychedelics work.) Combined with a little targeted therapy, a dose of mushrooms can do wonders. For example, in one particular study, 80% of hardcore smokers kicked the habit after going through 15 weeks of smoking cessation treatment, compared with the average of 35% who quit through other means. A broad review of psychedelic-assisted therapy published just last month found clinical evidence that psilocybin, for example, can treat depression. An earlier review found evidence for treating addiction and substance abuse

Studies show the power of psychedelics.
Credit: CB Insights

Where most antidepressants and anti-anxiety drugs just suppress the symptoms, psilocybin and other psychedelic chemicals appear to change the way the brain processes memory and information, treating the disease directly. To grossly paraphrase Aldus Huxley, the doors of perception have been thrown wide open to help people deal with the “stuff” that’s keeping them stuck. And now that the door is slightly ajar for the potential commercialization of psychedelic therapy drugs and treatments, a few companies are slipping through.

A Publicly Traded Psychedelic Therapy Stock

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Certainly, one of the most famous of the bunch is Toronto-based MindMed (MMED), which earlier this month became the world’s first publicly traded psychedelic pharmaceutical company through some kind of hocus pocus reverse merger. Founded just last year, the company had raised about $30 million before its debut on the Canadian-based NEO stock exchange, which has become the refuge of hundreds of cannabis companies. Among its Angel investors is Canopy Growth Corp. (CGC) co-CEO Bruce Linton and Shark Tank star Kevin O’Leary. You’d have to be really high to invest in this high-risk stock, especially after watching cannabis stocks crash back down to Earth.

MindMed drug pipeline.
Credit: MindMed

That’s not to imply that MindMed isn’t working on legit science; we just like holding on to our money. The company has a couple of Phase 2 clinical trials ramping up. Its lead drug candidate is 18-MC, a non-hallucinogenic drug based on Ibogaine, the psychedelic substance found in Iboga, a Western African shrub. MindMed is testing whether 18-MC can help curb addictions, particularly around opioids, with oversight from the FDA. The company is also preparing to test LSD microdosing for adult ADHD. The latter was probably an easy sell to Silicon Valley investors who already microdose shrooms to get through the workday.

An FDA Breakthrough Psychedelic Therapy

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The other leader of the psychedelic therapy pack is London-based Compass Pathways, which has reportedly raised $36.2 million from well-known tech investors like Peter Thiel, when he isn’t trying to suck the blood of the young to live longer. The company has created a synthesized version of psilocybin. In 2018, the FDA gave the company’s drug candidate, COMP360, “breakthrough therapy” status for treating clinical depression. That helps expedite the development process. For instance, Compass Pathways announced in December that a Phase 1 trial found the drug was well tolerated and has already begun a large Phase 2b with more than 200 participants. The company also has a training program for therapists to learn how to conduct psychedelic therapy.

Update 04/27/2020: Compass Pathways raised an $80 million Series B to expand its therapy program for psilocybin. That brings total funding to $116.2 million so far.

A Biotech Builder for Psychedelic Therapy

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Another investor with a large stake in Compass Pathways is a new German biotech company called ATAI Life Sciences, which has raised about $68 million and describes itself as a “global biotech company builder” with offices in Berlin, New York, and Amsterdam. In other words, the two-year-old startup is funding other research efforts, mainly focused on psychedelic therapies for mental health, by investing in other biotech startups and joint ventures. Its most recent JV is with an AI computational drug discovery company called Cyclica, which just landed on the CB Insights AI 100 list for 2020. The new company, Entheogenix Biosciences, will leverage Cyclica’s AI-enabled computational biophysics platform to generate psychedelic-based drug candidates to treat mental health conditions such as schizophrenia and depression. The platform can reputedly help predict side effects during the design phase rather than after someone has dropped down the rabbit hole of the psyche.

Update 04/24/2020: Atai Life Sciences has raised $24 million in a convertible-note round from a group of investors that includes PayPal co-founder Peter Thiel. This brings total funding to $92 million to date.

Ketamine-Based Psychedelic Therapy

Another ATAI company, Perception Neuroscience, is among a growing number developing drugs around a hallucinogenic party drug known as Special K. Like our next two psychedelic therapy startups.

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Founded in 2019, Toronto-based Field Trip raised $8.5 million in February to develop a program that combines psychotherapy with low doses of ketamine, which was originally used as an anesthesia medicine in the 1960s. A WebMD writer describes ketamine working “like a flash mob, temporarily taking over a certain chemical receptor.” (Read this for an in-depth explanation of how ketamine affects depression.) Field Trip says lower doses of ketamine medication, taken in a safe setting guided by a therapist, “can promote better mental health by disrupting thought patterns or loops that may be preventing progress.”

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Founded in 2015, London-based Small Pharma has raised a little more than $1 million in Seed and grant money. The company is attempting to develop a ketamine-derivative called SPL801B that, it says, has a different mode of action to Special K. Early studies “indicate a lack of dissociative and addictive side effects,” but not much news on the company’s progress since 2017 when it took funding.

Fighting Opioid Addiction with Ibogaine

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A 10-year-old pharmaceutical company in Florida is another beneficiary of ATAI Life Sciences, which is investing up to $22 million in a joint venture with DemeRx to develop Ibogaine as a treatment for opioid addiction. The CEO and founder of DemeRx , researcher Deborah Mash, has previously overseen one of the largest studies of Ibogaine to date where 102 opioid-dependent and 89 cocaine-dependent subjects in St. Kitts, West Indies, were given a single dose of Ibogaine. The drug significantly reduced opioid withdrawal symptoms within 36 hours, while also reducing the severity of cravings and depression. A month later, the positive effects continued.

Drug pipeline for DemeRx
Credit: DemeRx

A second drug candidate from DemeRx, Noribogaine, is also intended to treat opioid addiction and could also be used to limit tolerance to opioid pain medications.

Psychedelic Therapy for Inflammation and Alzheimer’s

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London-based Eleusis, founded way back in 2013, has raised $5.7 million in disclosed funding, including an undisclosed Series A last year. The company is testing whether psychedelics can also offer relief from inflammation by acting on those same serotonin receptors that make you think the poster of Brooke Shields on your wall is coming alive. Late last year, the company presented some promising preclinical results on various conditions, including ocular inflammation that could lead to retinal degeneration. Eleusis is also investigating whether micro-dosing LSD could help stave off Alzheimer’s disease, which isn’t as crazy as it sounds. Some researchers speculate that the illness might be caused by bacterial inflammation.


One way to think about these various psychedelic therapy solutions is to imagine that sometimes the brain’s software gets a glitch and it just needs a hard reset or reboot. Of course, there are potential drawbacks, such as losing your isht for up to 12 hours at a time while working through your mommy issues. The industry itself is still very small and at the mercy of government regulators. However, there’s no denying that the science is sound and that people with mental health issues can truly benefit from some of these therapies. Maybe someone will think about combining psychedelic therapy with virtual reality for mental health. Now that would be a trip.


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