Over the past three years, a flood of newly listed public companies all raised capital under a compelling promise: to turn psychedelic compound into therapeutic medicines.

In a frenzy that saw dozens of IPOs and hundreds of millions in fresh growth capital committed, suddenly the psychedelic medicine space was a public markets opportunity, attracting analyst coverage and billionaire investors.

The thesis was simple: psychedelic molecules have proven therapeutic effects for mental health conditions that are difficult to treat, including PTSD, treatment resistant depression and unresolved trauma.

‍There Was One Problem:

‍While the euphoria of a new biotechnology opportunity being born was exciting, the difficult reality soon set in. Bringing brand new drugs through FDA approval is deeply challenging, extremely capital heavy and a multi year process. While the underlying science of psychedelics was sound, the business models of the vast majority of psychedelic public companies was not. They had too little cash, too little scientific IP and too far of a regulatory pathway to navigate.

‍What Happened Next:

As quickly as the psychedelic medicine space was born into the public markets, it was soon forgotten about. Of the dozens of companies that raised new public offerings, many soon became insolvent, sold clinical trail assets off for scraps or simply became inactive.

‍Yes, but:

‍ In the aftermath of psychedelics and capitalism gone wrong, something interesting has quietly been transpiring in the background.

• MAPS is closer than ever to FDA approval of their Phase III MDMA assisted therapy for PTSD. If approved, this would represent the single largest catalyst in the history of psychedelics, ushering these treatments into clinics and patients
• Australia legalized MDMA and psilocybin to be able to be prescribed by psychotherapists to treat certain mental health conditions, a landmark setting precedent from a regulatory perspective
• The FDA recently released new guidelines around clinical trial design for regulatory approval for psychedelic medicines
• Blake Myscokie, the founder of TOMS, pledged the largest ever private donation to psychedelic research of $100M

‍The Big Picture:

• Psychedelic medicines are closer than ever to FDA approval and as a result significant traction as a therapeutic and assisted therapy
• The private and public markets have soured on psychedelic companies as a segment, leaving a few well positioned and well capitalized companies at the forefront (Nasdaq: ATAI, Nasdaq: CMPS)
• While the initial wave of psychedelic startups and public companies may have been too much too soon, the potential of psychedelics to transform mental healthcare is looking more promising than ever

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