A Quick Look at 8 Small Caps in the Growing Psychedelics Space

12/14/2021

Health

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	Image Credit – Pixabay - TherapeuticShroom

Psychedelic Medicine – The Next Breakthrough in Mental Health Treatment?

A Quick Look at 8 Small Caps in the Growing Psychedelics Space

After decades of restrictive regulation and social stigma, psychedelics are gaining headwinds as a potential treatment for various mental health conditions.

The term “psychedelic drugs” holds different meanings to different people. In counterculture, the term may refer to “magic mushrooms” or other drugs, such as ecstasy. Purposely used to trigger hallucinations or altered states of consciousness, psychedelic drugs became popular in the 1960s, which led to harsh restrictions not only on possession and use for recreational purposes, but also on medical research.

Legal Hurdles

Research on the use of psychedelics was returning promising results in the early 20^th century. The Controlled Substances Act of 1970, following the increase in recreational use in the 60s, put up a barrier to researching the potential benefits, even for medical usage. A roadblock that the industry is only now starting to find a way past.

In recent years, the Food and Drug Administration (FDA) has granted psychedelic compounds Breakthrough Therapy status, which has opened the door to new research studies and the potential development of new medications. Recently, research and approval of new drugs has progressed past phase 2 trials for the use of psilocybin – the naturally occurring psychedelic prodrug compound produced by numerous fungi species – as treatment for depressive disorder. In another example, a drug proposed for the treatment of certain PTSD diagnoses is heading towards a second phase 3 trial, with full FDA approval possible as early as 2022.

Beyond FDA Approval

Potential FDA approval is just the first step. The United States Drug Enforcement Administration (DEA), and, by proxy, the Controlled Substances Act, are next in line. Psychedelic compounds generally fall into Schedule 1 classification: the most restrictive. By law, Schedule 1 drugs cannot be prescribed to treat any condition under any circumstances. While this may seem insurmountable, full FDA approval of a drug would likely force the DEA to reevaluate their position.

Beyond Federal regulation, there’s also individual state laws. Consider the current state of cannabis and marijuana legalization and decriminalization from state to state. While some have fully approved the use of marijuana both recreationally and medically, others have varying levels of restriction on either use-case. The same is likely to be true for the use of psychedelics for medicinal use.

Prescriptions

Proposed psychedelic treatments often run in-tandem with hours of mental health therapy sessions. In fact, more than 90% of the cost associated with the entire regimen is attributed to therapy in some cases. While this exceeds the costs associated with the current treatment schedule for these conditions, proven increased efficacy of psychedelics, especially in treatment of previously untreatable conditions, would reduce third-party payer expenditures.

Considering the toll the opioid epidemic has taken, there is also likely to be increased scrutiny on the prescription of psychedelic therapies, even if the DEA adjusts their classification.

Even with numerous hurdles, several doctors, organizations, and companies see the potential of psychedelics as treatment for various mental health issues, including depression, PTSD, anxiety, eating disorders, and substance use disorders. In most cases, early research has shown efficacy surpassing any currently available treatment schedule. In some, psychedelics may represent a portion of the first truly effective treatment schedule.

The psychedelic medicine market is expected to grow exponentially as FDA approvals start to come in, with some speculating the market will reach a value of over $3 billion by 2026.

Companies Involved in Psychedelic Medicine

PsyBio
Therapeutics – PSYBF

PsyBio is a biotechnology company focused on discovery and development of psycho-targeted therapeutics to potentially improve mental and neurological health. They are currently researching and developing treatments based on psychoactive tryptamines originally discovered in hallucinogenic mushrooms, as well as other tryptamines, phenethylamines, and combinations thereof.

PsyBio has built a portfolio of more than 80 molecules. Their development focus is “cheaper, faster, greener psychedelic inspired compound discovery and production.”

Recently, the company announced the successful completion of their initial pre-Investigational New Drug application meeting with the FDA as part of the regulatory submission process

View the most recent research report on PSYBF at the link
above for applicable disclosures

Filament
Health – FLHLF

Filament Health is an exclusively natural psychedelic drug discovery and extraction technology company. Their focus is in bringing safe, approved, natural psychedelic medicines to market as soon as possible. Filment’s wholly owned subsidiary Psilo Scientific propagates psychedelic plants, conducts research, performs extraction, runs in-house trials, and distributes IP and drug candidates.

Recently, the company announced FDA authorization to initiate its first clinical trial using psychedelic substances, a first for the direct administration of psilocin (rather than its prodrug psilocybin). The Translational Psychedelic Research Program at the University of California San Francisco will lead the phase 1 trial.

The company also anticipates FDA authorization of a phase 2 trial for PEX010, to test safety and efficacy in the treatment of Major Depressive Disorder by year end.

View the most recent research report on PSYBF at the link
above for applicable disclosures

Levitee
Labs – LVTTF

Levitee Labs is focused on mental health and addiction treatments through the integration of psychedelic medicines and therapies. Leveraging an M&A regimen, they aim to create a centralized network of complementary integrative assets. The company’s current portfolio includes Levitee Clinics – a group of addiction and pain treatment clinics, Levitee Pharmacies – specializing in filling prescriptions for substance use, mental health, and chronic pain patients, BlockMD – an electronic prescription platform in the addiction treatment space, and Earth Circle Organics – a wholesaler of supplements and superfood products.

Revive
Therapeutics – RVVTF

Revive Therapeutics is a life sciences company focused on research and development of therapeutics for rare disorders and infections diseases. Revive boasts a robust cannabinoid pharmaceutical portfolio focused on rare inflammatory diseases. Recently, they acquired Psilocin Pharma. This acquisition positions them to advance psilocybin-based therapeutics. They are also exploring the use of Bucillamine for the potential treatment of infectious diseases, including COVID-19.

On the recent acquisition of Psilocin Pharma, Revive CEO Michael Frank stated: “Psilocin Pharma has the platform, relationships, and know-how to develop psylocibin-based products that are key to this emerging psychedelics industry. We feel this acquisition will complement Revive and be a strong addition to our current clinical initiatives in liver disease and inflammation.”

In November, the company announced it had entered into a research collaboration agreement with PharmaTher Holdings to evaluate the delivery of psilocybin with PharmaTher’s proprietary microneedle path technology for neuropsychiatric disorders.

Cybin
– CYBN

Cybin is an ethical biopharmaceutical company focused on progressing psychedelics to therapeutics by engineering proprietary drug discovery platforms, innovative drug delivery systems, novel formulation approaches and treatment regimens for mental health disorders.

The company’s pipeline currently includes 6 programs, including EMBARK, utilizing psilocybin for mental distress in frontline healthcare workers, currently in phase 1 trial. Other preclinical programs include studying psychedelic effects on the brain and psilocybin as treatment for major depressive disorder and alcohol use disorder.

At the end of November, Cybin announced that the FDA had authorized an investigator-initiated randomized, placebo-controlled phase 2 clinical trial evaluating psychotherapy with psilocybin for frontline worders experiencing COVID-related distress.

Field
Trip Health – FTRP

Field Trip is focused on an integrated, evidence-based approach to healing utilizing psychedelic-enhanced therapies. Their portfolio includes Field Trip Health – technology empowered clinics providing psychedelic therapies, Field Trip Digital – an app & resources platform, and Field Trip Discovery – their drug development division focused on psychedelic molecules.

Field Trip’s treatment regimen includes analysis, therapy session, psychedelic exploration, and integration. Their treatment program is designed to help individuals suffering from treatment resistant mental health conditions such as depression, anxiety, and trauma.

Compass
Pathways – CMPS

Compass is a mental health care company focused on acceleration patient access to psilocybin therapy. COMP360, a proprietary formulation of synthetic psilocybin, is focused on those suffering from treatment resistant depression. They received FDA Breakthrough Therapy designation for the program in 2018 and completed a phase 2b study in 233 patients in late 2021. According to the company, this was the largest randomized, controlled, double-blind psilocybin therapy clinical trial ever conducted. They expect to begin phase 3 in 2022. Compass is also running a phase 2 clinical trial of their psilocybin therapy for treatment of PTSD.

ATAI
Life Sciences – ATAI

ATAI is a biopharmaceutical company focused on highly effective mental health treatments that address the unmet needs to patients. The company utilizes proprietary technology and big-data approaches to accelerate drug discovery.

The company has two programs currently in phase 2: PCN-101 for patients experiencing treatment resistant depression, and RL-007 for the treatment of Cognitive Impairment Associated with Schizophrenia. Recently, Atai announced a successful outcome of the phase 2a biomarker trial of RL-007. They also have two programs currently in phase 1: DMZ-1002 for the treatment of opioid use disorder, and GRX-917 for the treatment of anxiety disorder.

In Conclusion

Mental health awareness has increased significantly in recent years, while the development of medications has not kept up with the demand for treatment. The implementation of psychedelics, in conjunction with a therapy schedule, may create a path to wellness not previously available for many patients. Early efficacy trials have certainly shown the potential that lies ahead.

Investing in an early-stage medical platform company, like any other investment, carries its own risks. Before making an investment decision in any company, make sure you understand the risks associated, and consult your investment advisor.

Chris Patches
Channelchek Contributor

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