Will Mydecine's Move Make the Market for Pharmaceutical Psilocybin Mushroom?

There are more than 10 publicly traded companies that are associated with the psychedelic industry, including Mind Medicine (MMEDF)  , Champignon Brands  (SHRMF) , Revive Therapeutics  (RVVTF) , Mydecine Innovations Group Inc. (MYCOF)  and Numinus Wellness (LKYSF) . There are even more private companies and the number is growing. Some stock jocks call this the "mush rush," as they try to be clever with the word mushroom. Clearly, the cannabis industry was more adaptable to silly puns that psychedelics.

It was also way cheaper to get cannabis product to study even though most legitimate researchers had to go through the NIDA (National Institute on Drug Abuse) Drug Supply program. This is an onerous effort where researchers conducting trials of Schedule I substances are required to submit a research protocol to the DEA (Drug Enforcement Agency) that includes details regarding the security provisions for storing and dispensing the substance. All of NIDA's cannabis comes from the University of Mississippi, although NIDA is looking to change that.

NIDA was asked whether it provided psilocybin for drug research, but had not responded by the time of publication. According to drugs.com, there are over 180 species of mushrooms that contain the chemicals psilocybin or psilocin. Both psilocybin and psilocin can also be produced synthetically in the lab.

Psilocybin for Research

Scientists wanting to study psilocybin extracted from mushrooms face a challenging landscape. It is also a Schedule 1 drug and the companies that are hoping to capitalize on a surging interest in psilocybin treatments are finding limits to procuring product to test. Like the NIDA and its one college for cannabis, psychedelic companies have been limited to one source, Compass Pathways, for research-grade psilocybin. Until now.

Mydecine Innovations Group said this week it will exercise its cGMP capabilities under a special license to legally produce, transfer, sell, and export pharmaceutical-grade psilocybin, naturally derived from whole-mushroom extraction. This will disrupt the current monopoly of the product with Compass. The price for research-grade psilocybin is so high at this time, that capturing some market share could prove to be lucrative.

In a Quartz story, Matthew Johnson, a psychiatry and behavioral sciences professor at John Hopkins University who's conductedextensiveresearch on psilocybin, says he and his colleagues pay between $7,000 and $10,000 per gram. Johnson said that "it typically takes academics around a year to get psilocybin for their studies, as they wait for local institutional review board approval, FDA approval, and DEA approval." This is a situation that is similar to cannabis.

Compass Takeover

So how did it come to pass that Compass cornered the psilocybin market?

In 2015, the company was created as a nonprofit charity organization focused on the effects of shrooms on end-of-life anxiety. The founders were a husband and wife team, George Goldsmith and Ekaterina Malievskaia, and it was called C.O.M.P.A.S.S. (Center of Mental Health Pathways and Support for Self-directed care.)

Then in 2016, Compass Pathways was created as a for-profit company, which supposedly annoyed some of the original people associated with the non-profit. Six of these experts told Quartz they chose to no longer work with Compass. In 2017, Silicon Valley bigwig Peter Thiel became a huge investor in the company and that set the company on its pathway to capturing market share.

Quartz has reported that Compass has created 250 grams, which is the largest supply of GMP-standard psilocybin according to co-founder and chief medical officer Ekaterina Malievskaia. "The approval process was arduous, Malievskaia says it took the company six months to synthesize psilocybin in a powder form that would meet GMP standards for drug trials."

According to Quartz, contracts from Compass state that if a researcher uses its psilocybin, then Compass can block the publication of research if it is determined to interfere with the company's interests and that Compass gets exclusive commercial rights. The Quartz story says, "Compass has an exclusive contract with Onyx Scientific, one of the few laboratories in the world that has the capacity and approval to create GMP psilocybin. The contract prevents Onyx from working with Compass' competitors."

Protecting a drug compound is normal business in the pharmaceutical industry, but in the worlds of cannabis and psychedelics, these natural drugs are not seen as being owned by any one specific company.

Mydecine Disrupts the Psilocybin Monopoly

"We believe the reason current psilocybin-based research initiatives come with a very high cost using inefficiently produced synthetic psilocybin is simply due to a lack of capabilities and legal restraints," said CEO and Director of Mydecine, Joshua Bartch. "Mydecine's legal capabilities through the dealer's license incorporate our range of remarkable abilities, which are incredibly valuable for naturally-sourced medicine paired with new-age technology. We believe our achievement is the first-of-its-kind in recorded history."

Mydecine believes that synthetic psilocybin is not as effective as the natural substance. The company suggests that mushrooms have an entourage effect, not unlike cannabis. The entourage effect means that there is more than one ingredient in the plant and all are needed to be more effective -- that if only one ingredient is pulled out and synthesized, it won't work as well.

The company said it also has the ability to conduct the most advanced techniques to produce purified pharmaceutical-grade extract, then legally export its finished byproducts to its various research partners throughout the world, including but not limited to the Imperial College of London and Johns Hopkins University.

The demand for psilocybin is sure to grow. Health Canada recently approved four terminally ill patients to consume psilocybin mushrooms to ease their distress. If this proves to be successful, there is no doubt that more demand will increase for this substance and the market will want more than one option for purchases.

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

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