In the two years since the Food and Drug Administration approved the first synthetic ketamine treatment, drug developers, VC investors, and rich guys who like Burning Man have been scheming for ways to convert psychedelics from a stoner pastime into a private enterprise.
On Tuesday, New York-based company MindMed will start trading on the Nasdaq, becoming the second psychedelic company ever to go public on a major American exchange. The debut comes six months after Compass Pathways, a drug developer focusing on the psychoactive compound in shrooms, became the first, reaching a market cap of $1.33 billion.
A third company is set to follow suit. Just last week, self-described “drug growth platform” Atai Life Sciences filed an S1 application with the Securities and Exchange Commission, announcing plans to raise $100 million in an initial public offering. The German developer was founded by prodigious meme investor Christian Angermayer—a COVID skeptic who has psilocybin’s molecular structure tattooed on his forearm. In something of a mind-bending ouroboros, Atai is also the largest shareholder in Compass Pathways.
In May, Atai Life Sciences closed a financing round of $24 million backed by billionaire right-wing donor and Trump backer Peter Thiel. The German American PayPal co-founder, who later launched the big data firm Palantir, has funded a range of controversial projects––research into seasteading, various experiments in “life extension,” and the lawsuit that bankrupted Gawker.
“ATAI’s great virtue is to take mental illness as seriously as we should have been taking all illness all along,” Thiel told CNBC at the time. “The company’s most valuable asset is its sense of urgency.”
Like Thiel’s Atai, MindMed is ultimately a biotech company, focused on developing medicines derived from the compounds in shrooms (psilocybin), acid (LSD), molly (MDMA), DMT, and Ibogaine, which some believe may be useful in treating opioid addictions. It has been trading as a penny stock under the ticker “MMEDF” and for the past year, on the NEO Exchange in Canada, after arranging a reverse takeover with a British Columbia-based gold mining company.
The IPOs are riding a wave of increasing interest in developing long-restricted substances for medical application, particularly in the treatment of mental health disorders. In 2018, the FDA granted “breakthrough” status for a psilocybin-derivative called COMP360, just months before they approved Johnson and Johnson’s ketamine-derived treatment. Last year, the state of Oregon legalized psilocybin use for therapy, and several states have passed bills to decriminalize it.
Matt Zemon, who co-founded a health platform called Psychable, which connects users to legal medical providers of psychedelic treatments, told The Daily Beast that the FDA had opened the door to more research into their efficacy.
“From our perspective, we believe we’re in the middle of a psychedelic renaissance,” Zemon said. “Research now shows the transformative power of psychedelics...The response to ketamine has been showing us that people want something different, there hasn’t been a drastic change in medical treatments for mental health treatments in decades.”
But the psychotropic trading rush also arrives in the second year of what writer David Nickles dubbed, in the academic drug outlet Psymposia, the “Corporadelic Era”—a transition from an open science approach to psychedelic research to a private one, circumscribed by proprietary concerns and patent competition.
“There are groups that believe that this should be done all under a nonprofit or an open source philosophy,” Zemon said. “There are other groups that feel like to invest what needs to be invested, they need to have patents and the ability to have long term profits from them.”
This transition has been poorly received by many proponents of psychedelic treatments. A major flashpoint in the debate took place in February, when Compass Pathways filed a patent application for psychedelic therapy using the shrooms compound psilocybin. The developer attempted to stake ownership on a range of basic uses to “treat depression and other various disorders,” suggesting to some that almost any outside application of the drug might violate the patent.
As reporter Shayla Love noted in VICE, Compass had tried to claim ownership of aspects of psilocybin therapy that went beyond the chemical composition of its drug to the basic ways the psychedelic might be administered. If other providers offered shroom therapies in “a room with a substantially non-clinical appearance,” or one that comprised “soft furniture,” or was “decorated using muted colors” ––they’d risk running afoul of Compass’ patent. Other potential violations included rooms with “high resolution sound systems” or “a bed or a couch” or “wherein the subject listens to music.”
The other psychedelic developers have signaled support for Compass’ approach. In an open letter to VC investor Tim Ferriss from March, Atai Life Sciences co-founder Christian Angermayer defended the use of patents in psychedelic drug development. Patents, he wrote, “represent the best means of accelerating patient access and optionality in the midst of a mental health crisis.”
MindMed has made similar moves. Last year, the company announced a multiyear partnership with a Swiss lab, granting them exclusive rights to the lab’s research into LSD and related compounds. When co-CEO Jamon “JR” Rahn derided the movement to decriminalize psychedelics in an interview with Forbes, prominent psychedelic commentator Mike Margolies suggested the executive wanted to restrict others’ access to the compounds.
“@JamonRahn, Director of @mindmedco, wants to ‘develop IP’ securing his company's exclusivity to sell LSD and simultaneously maintain prohibition,” Margolies wrote, in a tweet later noted by Psymposia.
MindMed and Atai Life Sciences did not immediately respond to the Daily Beast’s requests for comment.