Through most of the 20th century, the piobneering research in the use of psychedelics to treat mental health disorders has largely come out of the US.
It was in California that psychiatrists such as Humphry Osmond in the 1950s began experimenting with giving patients the psychedelic drug LSD. The leading US nonprofit MAPS, which researches psychedelics, was born in the US in the 1980s.
But when it comes to the race to actually commercialise psychedelics, in order to treat disorders ranging from depression to addiction, the last 12 months have shown that European companies have become the clear leaders.
Late last year, Compass Pathways, a UK-based biotech company that patented a synthetic version of psilocybin (the psychoactive ingredient in 'magic mushrooms'), listed on the US stock market at a $1.6bn valuation — proving huge investor interest in the space.
Another large player in the global psychedelics world is Berlin-based Atai Life Sciences, which is also rumoured to be looking at an IPO. The company is pursuing a range of treatments for mental health disorders using drugs such as DMT, arketamine and ibogaine.
Even smaller companies such as Oxford-based Beckley Psytech, which recently raised £17m, are not immune to thinking about an IPO given the excitement about the sector. It's a sign of the confidence of European entrepreneurs in investors demand for what they are doing.
[We] can't ignore the excitement in the public markets
Cosmo Feilding-Mellen, founder and CEO of Beckley Psytech, tells Sifted that while nothing is on the immediate horizon, he "can't ignore the excitement in the public markets" adding that Beckley is "definitely, definitely assessing the options at the moment."
While European companies are not alone in this sector (Eleusis, a UK-US company founded in 2013, is also large) their relative dominance is a rare example of Europe being ahead of the US on commercialising a cutting edge area of research.
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The excitement about the therapeutic benefits of psychedelics come from two trends that have gathered pace in the past five years.
Firstly, the amount of research on the impact of these drugs on disorders such as post-traumatic disorder and depression has accelerated amid growing evidence that compounds such as psilocybin and MDMA actually help.
This kind of research was nipped in the bud in the 1960s, when a moral panic about the use of LSD led both the UK and US governments to make it illegal. It started up again tentatively in the early 2000s at Johns Hopkins University in the US. But it is accelerating.
At Imperial College London there is a dedicated Centre of Psychedelic Research, which has as its deputy head the UK Government’s former chief drug advisor — a clear a sign of this field entering the scientific mainstream. Johns Hopkins now also has a specialised centre for “psychedelics and consciousness research”. UC Berkeley in California last year launched a "centre for psychedelic science and public education".
Linked to this, is an increasingly more lax attitude of regulators to drugs for medicinal use. Legal-access loopholes to studying psychedelic drugs in clinical trials now exist in pockets of Europe and the Americas. In November 2020, legal, regulated psilocybin therapy was approved for use in the US state of Oregon.
But despite these two macro trends pushing the sector forward and exciting investors, and the success in new European companies capitalising on this trend, it's still early days. There's still widespread uncertainty, not only about the regulation, but which of these drugs will be the ones to take off commercially.
Generally, only about 12.5% of products that enter clinical trials will make it to manufacturing and a new drug costs around $1bn to bring to market. The history of biotech is littered with examples of drugs that did not quite make it or were pushed out by something slightly better.
Feilding-Mellen, for example, is experimenting with 5-MeO-DMT, a short-acting psychedelic found in South American plants, for treating depression.
The idea is that if it works, it could be a better alternative to psilocybin therapy being pioneered by Compass Pathways to treat depression as it lasts for less time in a patient’s system and therefore makes it easier for doctors to administer.
Requiring therapists to sit with a patient for the entire psychedelic trip is costly.
“Requiring therapists to sit with a patient for the entire psychedelic trip is costly,” Feilding-Mellen says. “We hope to prove that we can induce a healing experience using a drug that only lasts for one hour.”
Others are trying this as well. In December 2020, The Medicines and Healthcare products Regulatory Agency (MHRA) approved London-based Small Pharma’s trial for the use of DMT to treat depression — the company is currently asking for further permission from the UK Home Office. Atai Life Sciences is also researching DMT.
But if DMT works, what will that do to Compass Pathways' business model? Will it be a compliment or a threat?
Tripping 100m people
As well as picking which drugs are going to end up being the winning compounds, there is another challenge for these leading psychedelics companies: how to actually administer these drugs to patients in a scalable way.
One issue is infrastructure. “We are figuring out how to make this reimbursable, and — more practically — where we treat 100m patients,” says Lars Christian Wilde, Compass Pathway’s chief business officer.
It's very different in the US since they scrapped their mental health care clinic infrastructure in the 1980s and 1990s.
“This is easy in Europe because you already have these large mental healthcare clinics. It's very different in the US since they scrapped their mental health care clinic infrastructure in the 1980s and 1990s.”
Another issue is that the exact way these drugs are taken — for example, the lighting, the colours of the room, the demeanour of the therapist — are thought to have an impact on the outcomes from taking these drugs, making them more complex than prescribing regular antidepressants.
Compass is addressing this problem by using some of the money from its IPO to build a treatment centre with psychiatric hospital Sheppard Pratt, which currently serves 70k patients.
Lars Christian Wilde, Compass Pathway’s chief business officer, says that clinical rooms here will be transformed into calming spaces to avoid triggering a ‘bad trip’ — a frightening and unpleasant experience during a psychedelic episode.
“We know that these experiences can go wrong when they aren’t done in a therapeutic setting,” says Wilde. “So it's important that we figure out how to deliver this therapy safely, in a scalable form.”
We have nice pictures on the wall, the patients put on eyeshades and all listen to the same carefully curated soundtrack.
He adds: “We have to ensure that the treatment rooms are similar across the world. We have nice pictures on the wall, the patients put on eyeshades and all listen to the same carefully curated soundtrack.”
He says music is particularly important.
“There are no lyrics [in the songs] so people don’t get caught up in any narratives, except at the very end. During the peak of the experience, we play ethereal ambient music. After this, the sounds encourages patients to explore different emotions.”
The concern about the ability to actually deliver these drugs at scale and the headache of trying to standardise the process has led many in the field to experiment with digital-first approaches which can harmonise the experience for all patients.
Compass Pathways and Beckley Psytech are all looking into this model, but last year Atai Life Sciences made a big step launching a digital therapeutic platform called IntroSpect Digital Therapeutics to develop these kinds of products.
If things start to go sideways, you could bring in a therapist virtually,
Srinivas Rao, chief science officer at Atai Life Sciences, explains that they are creating a ‘digital guide’ to support the patients during their trip. “This means that if things start to go sideways, you could bring in a therapist virtually,” he adds.
Florian Brand, the CEO of Atai, said that using technology to help with the whole process will also help them gather other data. The company is testing the use of wearables in analysing biomarkers such as blood pressure and body temperature.
“We believe that in five to ten years, there will be very little drugs approved without a digital component,” he says. “Currently, Atai is asking how we can treat patients in a more targeted, precise way.”
As the field develops, there are also going to be growing questions about diversity. Are all settings for drug therapy going to be the same for all people? Do different ethnicities merit different treatment? Do women? Or trans people? Have most studies — like is often the case — been on white men?
The psychedelics sector — and indeed the whole biotech sector — is overwhelmingly white. Fewer than 10% of the 285 therapists initially trained by MAPS were people of colour, something that they are trying to shift.
Brand from Atai says that they are trying hard to recruit a diverse range of people from their trials to make sure they are effective for the maximum number of people.
When it comes to trials, it’s in our interest to recruit diverse participants.
“When it comes to trials, it’s in our interest to recruit diverse participants,” he says. “Our mission is to heal mental health disorders so that everyone can live a more fulfilled life, and this means ensuring that our treatment pathways work for people no matter their cultural background."
According to some, inclusive group therapy could help increase trust amongst marginalised patients, by creating safe spaces which mimic the spiritual psychedelic group sessions of Indigenous tribes. Compass has had promising results with this so far. At King's College London, treating up to six participants at the same time produced much lower anxiety rates than single trials.
Europe in the spotlight
LSD was first synthesised in a pharmaceutical laboratory in 1938 by the company Sandoz in Switzerland, which is now Novartis. Now Europe is once again championing this sector with companies like Atai Life Sciences, Compass and Beckley Psytech.
But despite this more than 70-year-old history of lab-made psychedelics, it is still early days for the sector with challenges of the treacherous clinical trials process and creating a whole new infrastructure for a new kind of treatment.
Still, there has never been more excitement on mainstream interest in the field. Companies such Atai are rumoured to be considering following Compass to supercharge their growth by raising money in the capital markets. Beckley saying they were weighing up the same.
Asked about those rumours of Atai going public, Brand said: “Drug development is expensive. We need a lot of funds to finance those programmes, so we're keeping all options on the table.”