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Psychedelics May Find Legit Place in Pharma as Pandemic Takes Toll

As crisis turns into one of mental health as well as physical health, some firms are experimenting with use of LSD and 'magic mushroom' compounds.
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The coronavirus pandemic has tested the psychological state of many. Social distancing and staying isolated, as well as general fear of the virus, has wreaked havoc on even those with the strongest mindsets. People who have struggled with mental illness prior to the Covid-19 crisis are finding themselves in an even tougher position.

One promising treatment for depression -- even when traditional drugs don't work -- may turn out to be psychedelics, including possibly, forms of the controversial hallucinogen, LSD.

And the demand for such remedies is likely sizable. According to the World Health Organization, almost 350 million people worldwide were affected by depression in 2016. In the U.S., the percentage of people above the age of 12 using antidepressants rose to 12.7% from 2011 to 2014, the Centers for Disease Control and Prevention reported.

This has created a big market for medications. The antidepressant drug market was valued at $13.69 billion in 2018 and is expected to reach $15.88 billion by 2025, according to MedGadget. Antidepressants were the most commonly prescribed drugs in 2013 and from over 16 million long-term users, around 70% are female, according to the CDC. 

Can MindMed Mend Minds?

In June 2019, the neuro-pharmaceutical company Mind Medicine Inc. (MMEDF)  or MindMed, as it is known, finalized its acquisition of its "18-MC" drug development program, which is an anti-addictive molecule that was previously funded by the National Institute on Drug Abuse, for $6.8 million. MindMed acquired the project from a company called Savant HWP Inc., whose leadership team of researchers and drug developers joined MindMed.

The company also just signed a multi-year deal for an exclusive collaboration with Professor Dr. Matthias Liechti, a psychedelics pharmacology and clinical research expert at University Hospital Basel in Switzerland. Dr. Liechti is considered an expert, too, in LSD, technically known as lysergic acid diethylamide. Through the deal, MindMed will get the exclusive worldwide rights to data, compounds, and patent rights associated with Liechti's lab research on LSD and other psychedelic compounds, including data from preclinical studies and eight completed or ongoing LSD clinical trials. 

MindMed said it is particularly interested in the data and outcome of an ongoing placebo-controlled, phase 2 trial of high dose LSD for the treatment of anxiety. The company said it is considering the creation of a drug development program using hallucinogenic doses of LSD for the treatment of anxiety disorders.

The Potential 'Magic' of Champignon

Champignon Brands Inc. (SHRMF)  -- which focuses on psilocybin and other compounds found in some types of mushrooms -- is also pursuing the development and commercialization of treatments for conditions like depression and post-traumatic stress disorder, as well as substance and alcohol abuse disorders. Late last week, the company announced that it was acquiring Tassili Life Sciences Corp. in an all-stock deal that was valued at roughly $5.2 million.

The acquisition expands Champignon's preclinical trial pipeline and its aggregation of broad intellectual property associated with the development of novel psychedelics that will target psychological diseases. 

Tassili has been working with physicians at the University of Miami who are working to develop effective psilocybin-based therapeutics for the treatment of mild traumatic brain injuries and post-traumatic stress disorder. Its focus is a proprietary combination of psilocybin and CBD.

In addition to the Tassili acquisition, Champignon also said in March that it was buying Novo Formulations. That firm is working on ketamine treatments in a deal valued at approximately $2.1 million. Champignon said it plans to leverage Novo Formulations' existing product development infrastructure and licensed affiliates to pursue psilocybin- and MDMA-based drugs to develop and then commercialize treatments for depression and PTSD.

While business and development are in the early stages for these companies, the demand for their services could amplify as a result of the pandemic. It is a trying time for everyone and if people need help for mental health and these companies are there to provide that help without stigma, then they could benefit along with their customers.

At the time of publication, Borchardt had no positions in any securities mentioned.