Investing in psychedelics (e.g., magic mushrooms, psilocybin, etc.) has became a hot topic during 2019. Following Peter Thiel’s investment in Compass Pathway in 2018, several high-profile investors entered the psychedelic space during 2019. Tim Ferriss helped launch the world’s first research center (“Imperial Center for Psychedelic Research”) dedicated to turning psychedelics into medicines. Shark Tank investor Kevin O’Leary joined former Canopy Growth CEO Bruce Linton by investing in the new psychedelic company MindMed.
Aside from high-profile investors, many new psychedelic entities emerged in 2019. Entities working in the space have also illustrated an increased focus on intellectual property. Taken together, all of this activity demonstrates continued momentum towards developing a psychedelic industry.
Below, we have listed some key developments leading into 2020, which provide clues about the future of the psychedelic industry.
Big Opportunity for Investing in Psilocybin Technology
In 2019, we posed the question “Are magic mushrooms (or psilocybin) going to be the next big investment opportunity after cannabis?” Now, considering developments from 2019, the answer appears to be “yes.” Former CEO of Canopy Bruce Linton succinctly explains this sentiment: “The therapeutic potential of psychedelics is greater than cannabinoids, for sure.”
In view of the surge of available capital from investors and the rapid emergence of new business, one might ask where the greatest opportunities lie. What research and development activities are pushing the state of the art forward? Here, it is interesting to note that most players in the space are conducting research and development almost exclusively on two types of products: (1) Single Active Ingredients, like psilocybin; and (2) Natural Organisms or extracts.
There has been almost no work done to develop products that include a full spectrum of active ingredients (found in natural organism or their extracts) with the chemical precision typically associated with a pharmaceutical product. Experts in both chemistry and mycology have stressed the value of investigating the non-psilocybin components of magic mushrooms and harnessing the potential benefits of compositions comprising multiple active mushroom ingredients in a standardized form. Although a few entities have hinted at this technology, most still appear to be focused on either pure single molecules (like psilocybin) or natural mushrooms.
Although many entities have started filing patents directed to psychedelics, the space is still relatively new and uncrowded. As the space develops, the importance of good intellectual property will increase; and the likelihood of creating meaningful intellectual property will probably decrease. Accordingly, investing in companies developing new, broadly applicable technologies with a strong commitment to intellectual property seems to be the best strategy as we enter 2020.
Pure Synthetic Psilocybin – Everyone’s Current Focus
Most research and innovation pertaining to psilocybin has focused on the therapeutical potential of synthetic psilocybin. In 2019, clinical trials run by King’s College London showed that patients taking 10mg and 25mg doses of pure psilocybin experienced no adverse side-effects. Compass Pathways has been developing pure psilocybin as a treatment for Treatment Resistant Depression (“TRD”); Usona has been developing pure psilocybin as a treatment for Major Depressive Disorder (“MDD”).
Progress in both scientific research and product development has raised concerns about access to psilocybin (e.g., pure psilocybin costs $7000-8000 per gram) and sparked conversations about less expensive bioequivalent alternatives like psilacetin. Others have pursued alternative methods of making psilocybin, such as bioengineering.
CB Therapeutics is addressing the need for supplying psilocybin and its analogs by genetically modifying yeast to make these compounds. According to their press release, CB Therapeutics has achieved the successful biosynthesis of psilocybin, psilocin and related tryptamine-based compounds typically found in plants and fungi. Similarly, in 2019 scientists at Miami University of Ohio published the first example of psilocybin production in prokaryotic host.
Growing Recognition that Psilocybin is Only One of the Active Ingredients in Magic Mushrooms
Given the promising results for using psilocybin as a medicine, some chemists and mycologists have pointed out that psilocybin is only one of several active ingredients found in magic mushrooms. Through 2019, there was a growing appreciation that psilocybin is only one of many active molecules in “magic mushrooms.” Magic mushroom expert, Paul Stamets believes that psilocybin is just “the tip of the proverbial iceberg” in view of many unstudied psilocybin analogs or derivatives. See Stamets & Rogan Podcast #1385.
The scientific community agrees that taking pure psilocybin is different from consuming “magic mushrooms” because mushrooms (or mushroom derived products) contain a cocktail of active ingredients instead of just one active molecule. The naturally occurring combinations of active ingredients found in mushrooms unquestionably produce different clinical and pharmacological effects compared to pure psilocybin. Expert mycologist Paul Stamets told Joe Rogan that the “wave of the future” will be harnessing the “entourage or symphony effect” that comes from combining multiple active ingredients from magic mushrooms in a “standardized form,” rather than myopically focussing on pure psilocybin or ignoring the variability incident to natural mushroom compositions. See Stamets & Rogan #1385, above. Entering 2020, there appears to be a substantial opportunity for developing standardized formulations that include combinations of multiple magic mushroom compounds.
Despite the recent attention for psilocybin therapies, our understanding of magic mushroom compositions is still in its early stages. According to the American Chemical Society, even “the biosynthesis of psilocybin was a mystery” until 2017. Aside from legal impediments to research, our poor understanding of magic mushrooms is due to an unmet need for chemical rigor within the magic mushroom space. For example, prior to 2017, methods for characterizing the chemical composition of magic mushrooms were inherently flawed because those methods altered the chemical compositions under analysis and resulted in errors of +/- 300%. See Journal of Natural Products, 2017;80(10):2835-2838(“quantitative differences of the indole alkaloid profile were observed…”)(“Previous research showed that different [biomass] extraction methods heavily impact the [indole alkaloid] profile….”).
Responding to these problems, Hoffmeister developed “a simple and artifact-free extraction method that … helps reflect the naturally occurring metabolic profile of Psilocybe mushrooms in subsequent analysis” in 2017. Using these methods, Hoffmeister discovered norpsilocin in magic mushrooms in 2017. In late 2019, Hoffmeister identified several β-Carboline monoamine oxidase inhibitors in magic mushrooms. Chem. Eur. J.. In late 2019, Hoffmeister identified several β-Carboline monoamine oxidase inhibitors in magic mushrooms. Chem. Eur. J.. When interviewed about the work, Dr. Hoffmeister highlighted the ongoing need to “study fungi from a chemistry perspective.” Chemistry World.
Despite some progress studying magic mushrooms from a chemical perspective, the non-psilocybin components of magic mushrooms (aka psilocybin analogs or derivatives) remain largely ignored. This lack of chemical understanding raises safety & efficacy problems for products derived from natural sources, like magic mushrooms because it prevents consistency in dosing and fails to account for unwanted side effects like temporary paralysis.
Studying the non-psilocybin components of magic mushrooms presents an enormous opportunity for creating drug products superior to pure psilocybin. Drawing from the analogy to cannabis, the effects of full-spectrum products have proven far better and more diverse than single isolated compounds, like pure THC (aka Marinol).
Paul Stamets described the situation in late 2019: “The problem with natural products is how do you standardize them to the active constituent when you have more than one active constituent, you know, how do you standardize them all?” Stamets & Rogan #1385. Bruce Linton of MindMed agrees: “What I want to know is what amount, in what way, to get what outcome?” As we enter 2020, scientists recognize that the ingredients in magic mushrooms offer advantages over pure synthetic psilocybin; but there is still an unmet need to make formulations with standard amounts of particular ingredients.
As we enter 2020, there appears to be an opportunity for chemotyping magic mushrooms, correlating clinical effects with chemotypes, and cultivating varieties that provide the most desirable properties.
Natural Psychedelic Products – Magic Mushrooms
Throughout 2019, there has been increasing support for the idea that people have the right to use natural medicines, especially if people have access to safe/standard doses of known ingredients. Denver became the first city to decriminalize magic mushrooms in May of 2019. Oakland and Chicago followed shortly thereafter. Now, almost 100 other cities are seeking decriminalization at some level. In 2020, California may vote to allow for the sale of magic mushroom derived products, including formulations. See “11395.120 Psilocybin Mushrooms.” See also here and here.
As discussed above, using magic mushrooms as a means for administering psilocybin and other active ingredients results in considerable ambiguity regarding the amount and chemical composition. In 2019, several companies began work towards solving this problem.
In 2019, Silo Wellness developed a magic mushroom based nasal spray designed to administer standard doses of active ingredients. According to Silo Wellness’s CEO Mike Hartman, “We addressed the age-old trouble with plant- and also fungus-based medicine: Exactly how do you understand just how much is a dose?” “The nasal spray being created is not pure psilocybin, but rather, Arnold tells New Atlas is a “full myco-spectrum extract of Jamaican magic mushrooms in an aqueous solution.” Notably, Silo Wellness’s product recognizes limitations of pure psilocybin and need for “full spectrum” compositions in precise dosage forms. At this point it is unclear how Silo Wellness formulates its nasal spray to ensure consistency across batches of the product. It is also unclear whether Silo Wellness simply uses full spectrum mushroom extracts; or whether their compositions are formulated with particular ratios of ingredients designed to optimize the polypharmacology of magic mushrooms. Notwithstanding Silo Wellness’s work, there appears to be an opportunity for creating formulations that include optimized combinations of psilocybin analogs and also exhibit little or no variability between batches.
In 2019, Field Trip Ventures announced “the world’s first legal research and cultivation facility for psilocybin-producing mushrooms.” According to their President, Mujeeb Jafferi, “One of the goals is to build a library of psychoactive fungi and developing scalable commercialization options.” He explains, “We know of a few alkaloids based in these mushrooms but there’s a lot we don’t know yet.” According to Bloomberg, “Field Trip’s Jafferi believes the Jamaican research lab could provide a better understanding of how some of the 180-odd mushrooms known to contain mind-altering molecules work as it aims to enter them into clinical trials.”
Another new company, OLP Therapeutics appears to recognize the importance of both consistency and full spectrum mushroom products. OLP’s stated vision is “Creating standardized, pharmaceutical-grade, natural mushroom products.” They explain, “Critical to our work is chromatography that allows for analysis and labeling of percentages of active ingredients,” including “maintaining strict standardization of psilocybin products.”
Another relatively new company, Orthogonal Thinker has announced a psilocybin product called Psilly. The company explains that “Psilly differs from other psilocybin products in development as it consists of a proprietary formulation that uses natural, rather than biosynthetic, alkaloids.” Like Silo Wellness’s product, Psilly appears to utilize naturally produced ingredients rather than synthetic compounds; and it is unclear how Orthogonal addresses consistency and precision in the dosage formulations. Presumably a “proprietary formulation” would include a deliberately chosen collection of active ingredients; but it is unclear whether Psilly was formulated based on any polypharmacology data.
Another new company, Frontier Neurochem describes itself as “a global life sciences focusing on researching, developing and commercializing novel therapeutics based on serotonergic 5-HT2a agonists including previously overlooked psychedelic compounds for the emerging field of Psychedelic Medicine.” The company has also developed a storefront for selling psilocybin analogs.
Also established in 2019, ThinkMyco, a mycology and mushroom-derived product company focuses on “discovering and commercializing fungal derived bio-pharmaceuticals” by “developing next-generation bio-pharmaceuticals and unique delivery systems by studying naturally occurring neurogenic fungal compounds for the treatment of central nervous system indications.”
Despite the growing support for increasing access to magic mushrooms and other natural sources of psychedelic drugs, we still have a poor understanding of the chemical composition of mushrooms. But, there is an increased recognition of the problems created by a general lack of chemical precision with natural psychedelics, like magic mushrooms. In 2019, several companies entered the space with the goal of developing standardized formulations that include precise amounts of ingredients, where the ingredients are selected to harness the entourage effect.
New Psychedelic Compounds
In 2019, the Cheong group at the Uimyung Research Institute for Neuroscience at Sahmyook University designed and synthesized four novel synthetic tryptamine analogs and demonstrated their activity at the serotonin-2a receptor.
In 2019, CaaMTech scientists published work describing the chemical synthesis and characterization of several synthetic psilocybin derivatives.
Intellectual Property – Psychedelic Patent Filings Increase
In a previous post on Psychedelic Investments, we pointed out that Intellectual Property would become a key consideration within the nascent psychedelic industry. In mid 2019, we noted that a few early movers, including Compass Pathways, Paul Stamets, CaaMTech, and Tassili Life Sciences had invested in intellectual property related to psychedelics. Now, about 6 months later, the race to patent psychedelic inventions is fully underway.
CB Therapeutics has filed a patent for its production process, which appears to be biosynthesis using genetically modified yeast and a continuous extraction process. According to Sher Butt, CEO of CB Therapeutics, “Our team of talented scientists and engineers are dedicated to developing new methods and systems to advance synthetic genomics and bio-engineering….This has resulted in a rapidly growing IP portfolio as we continue to file patent applications…”. Press Release November 14, 2019.
In July of 2019, Silo Wellness filed a provisional patent application intended “to cover metered dosing formulations of plant and fungal compounds for oral, nasal, sublingual, and topical use.metered dosing.” See Silo Wellness Patent Application.
Kevin O’Leary and Bruce Linton backed “MindMed is building an IP portfolio and undertaking clinical trials of medicines based on psychedelics. MindMed will also grow its pipeline through acquisitions, Joint-Ventures, and collaborative development agreements.”
Tassili Life Sciences, Corp. has four patents pending, all with 2019 priority dates. Tassili appears to be focussed on IP and the company has a section of their webpage dedicated to Intellectual Property.
According to Google Patents, CaaMTech has filed multiple worldwide patent applications directed to psilocybin derivatives, combinations thereof, and methods of treating a variety of conditions.
Compass Pathways has filed patent applications for GMP psilocybin and a specific crystalline form of psilocybin. See also statement from Ekaterina Malievskaia (founder of COMPASS) about Compass’s IP. According to Bloomberg, Compass’s co-founder George “Goldsmith says the cost of the clinical trials forced him and Malievskaia to go for-profit, to protect their specific techniques as intellectual property and give potential investors the confidence to write checks.” Notably, Rick Doblin, the nonprofit psychedelics advocate, says “Compass’s patent applications are narrow enough that they won’t threaten a nonprofit effort in the U.S..”
Yield Growth Corp. and its subsidiary Flourish Mushroom Labs “has filed 13 patents to protect its extraction method and formulas and one patent for the use of compounds in psychedelic mushrooms to treat obesity and diabetes and to aid in weight loss.” See Yahoo Finance. According to their press release on Bloomberg, “Yield Growth earns revenue through multiple streams including licensing, services and product sales.”
According to their press releases, Orthogonal Thinker “has raised approximately over $5 million in total seed capital, with some of the proceeds being used to further develop and pursue intellectual property protection on Psilly, the Company’s proprietary psilocybin product, according to the letter of the law.” The company boasts an “Approximate $90 Million Valuation.” (“Plant Science and Product Development Company Raises Additional Funds to Further Psychoactive Intellectual Property Development.”)
According to their webpage, Frontier Neurochem “has developed patent-pending technologies and formulations of Psilocybe mushroom and Iboga alkaloids extracts meeting cGMP Pharma-grade standards for safe and effective pharmaceuticals.”
ThinkMyco describes its business focus as the “development of unique technologies and IP spanning the whole range of fungi based growth industries.”
Future of Psychedelic Industry
In 2019, investors began to enter the psychedelic space and companies increased their focus on intellectual property. This momentum grew throughout 2019 and promises to build into 2020. Against that background, investors and scientists agree that there is still an unmet need for fundamental scientific research. Despite the promising results, we still don’t understand the chemical composition of naturally occurring psychedelics or how variations in that composition correlate with clinical properties. These unmet needs create opportunities for entering (or investing in) the space in 2020.
Given technological landscape and the state of the art, the future of the psychedelic industry will require rigorously characterizing natural sources of psychedelic drugs and correlating their variable clinical effects with chemical composition. This work will support the development of next generation psychedelic formulations that provide improved properties (compared to single active ingredients) in standardized dosage forms.
Based on the above, in 2020 one might expect investors to seek out companies that are developing (and patenting) technology that supports the development of standardized psychedelic formulations that have multiple active ingredients in reliable dosage forms.