After decades of government shutdown, some hallucinogenic substances have been reinvestigated to treat mental illnesses. Tests carried out in different research centers show optimistic figures about its effectiveness in reducing anxiety, depression and post-traumatic stress disorder, as well as in the fight against alcohol addiction. Experts work with LSD, mescaline and DMTalthough much of their research focuses on psilocybin, the psychoactive molecule present in about 200 species of mushrooms. Several Canadian companies are banking on the healing power of so-called “magic mushrooms”.
A plan to take advantage of psychedelic drugs for depression or addiction
Alexandre Lehmann, professor of neurosciences at McGill University, explains that the consumption of these substances is carried out under the supervision of an expert and within the framework of psychotherapeutic work. “We still do not know several aspects related to their way of acting. Neuroscience reveals that they have a remarkable ability to modify the structure and function of brain networks and, therefore, can catalyze the psychotherapeutic process by making the person more “malleable” to changes and, thus, more likely to abandon a dysfunctional psychological state.
Magic mushrooms to reduce depression in terminally ill patients
Between 30% and 40% of people with depression do not respond to conventional treatments. “The potential for depression in general and, in particular, for treatment-resistant cases is very promising with these therapies,” says Lehmann. He cites a study published in the New England Journal of Medicine by scholars at Imperial College London (both that institution and Johns Hopkins University have specialist centers for psychedelic research). “The results show that psilocybin-assisted psychotherapy is at least as effective as newer generations of antidepressants, possibly with fewer side effects and without the need for repeat doses,” he adds.
The laboratory production of psilocybin and the cultivation of hallucinogenic mushrooms are prohibited in Canada, as is its sale and consumption, as is the case in almost every country in the world. However, the Federal Ministry of Health has granted certain production and use permits for therapies and research since last year. Its consumption is not yet authorized for ceremonial purposes (although Ottawa has already given the green light to five religious associations in the case of ayahuasca, which contains DMT).
Different peoples have used hallucinogenic mushrooms for thousands of years. Especially in Mesoamerica, as numerous remains have shown, the chronicles of the conquest also underline the importance of teonanácatl (“flesh of the gods”, as these mushrooms are called in the Nahuatl language). Its consumption was banned by the missionaries, but it survived in some areas. In 1957, R. Gordon Wasson published in Life magazine a text that had a worldwide impact, in which he recounted his experiences with mushrooms in the Sierra de Oaxaca (Mexico). The Swiss Albert Hofmann -father of LSD- succeeded in 1958 in identifying and synthesizing psilocybin for the first time.
Following special permits issued by Ottawa, Cybin became the first publicly traded company to be licensed to manufacture synthetic psilocybin. The company obtained in October 2020 around 30.6 million euros during a funding round; a month later it went public. Today, he is worth 195 million euros. The start-up Psygen, which holds the same license, works hand in hand with a laboratory at the University of Alberta.
Other companies choose to cultivate the mushrooms to extract psilocybin. In December, Numinus became the first listed company (it has a market value of 136 million euros) to legally extract the molecule from its cultivated mushrooms. “We focus on people who are looking for a natural product, who want to explore other possibilities than those of the pharmaceutical companies. We extract psilocybin and other substances. We are investigating how psilocybin can be supplemented with other compounds found in mushrooms to provide various health benefits,” says Payton Nyquvest, its CEO. “Plus, this method is cheaper.” The cost of synthetic production of the psychoactive molecule is still high due to the accumulation of regulations.
“Access to therapies is essential. This requires developing the necessary infrastructure,” says Nyquvest. Last February, Numinus acquired Mindspace, a therapeutic services company that works with different hallucinogens, for 2.5 million euros. In December, Cybin acquired Adelia Therapeutics for over US$13 million. Analysts point out that the sector’s success will depend on a model that combines the production of substances with their administration by experts.
The ‘Optimi Health’ company collects mushrooms for different uses. He is waiting for ministerial authorization to start growing hallucinogenic mushrooms. Chip Wilson, founder of Lululemon, is on its advisory board. Havn Life is seeking the same permit, although it has already started growing these mushrooms in Jamaica through an agreement with Hypha Wellness. The country’s regulations are among the most lax in the world. Havn Life is worth 42.9 million euros on the stock market.
A US$7 billion market
The global market for psychedelic drug treatments could be worth around US$7.6 billion by 2028, according to Bridge Market Research. “It will be a revolution in the way of treating various ailments, considering that we are in a period where the mental health crisis has never been so serious,” predicts Nyquvest. Tania Gonsalves, an analyst at Canac-cord Genuity, noted in a note, “Companies that come out on top will have significant resources, patentable products, and a well-planned reimbursement strategy.”
Denver decriminalizes the use of hallucinogenic mushrooms
Gonsalves also pointed to some changes south of the Canadian border. Last year, Oregon approved the legalization of psilocybin therapies. In Oakland, Denver and Washington DC, psychedelics from plants and fungi have been decriminalized. And certain stock market movements follow this line, with companies such as the British Compass Pathways (now valued at 1.39 billion dollars) or the New York-based MindMed landing on the Nasdaq (it was already present on the Toronto and Frankfurt).
Investor interest, acquisitions and development strategies evoke the scenario that occurred with the legalization of recreational marijuana in Canada in 2018 (the therapy has been authorized since 2001). And several cannabis executives – like Bruce Linton, former CEO of Canopy Growth, and Vic Neufeld, former CEO of Aphria – have entered the hallucinogen industry. However, this comparison is far off, at least for now. In Canada, production and therapy licenses are few. “The real money to be made from psychedelics will come when the FDA approves these drugs for the treatment of mental health issues.”