How Capital Markets Are Fueling the Growth of Psychedelic Medicine

The opinions expressed are solely those of the author and do not reflect the views of Rolling Stone’s editors or publishers.

The psychedelic medicine industry is growing. 2011 was a pivotal year for space, with advances in various sectors. There was a wave of new psychedelic companies go publicwith big names like MindMed and Atai Life Sciences listed on major exchanges like NASDAQ, and increased acceptance of psychedelics by institutional investors.

As 2022 kicks off, I expect the coming year to continue to contribute to the evolution of the industry. But what will catalyze this continued growth? From my point of view, a variety of forces. I have managed public relations for the largest publicly traded companies in the psychedelics space for two years now and own a trade publication that focuses on psychedelics. We are seeing a seismic shift in the industry, from grassroots advocacy for decriminalization to media educating the public and destigmatizing psychedelics. And then, of course, there is capital.

In our capitalist world, few things open doors like access to funds. It’s the fuel that lights the way, enabling scientists, researchers and entrepreneurs to build an entirely new industry.

Investors are driving the ‘mushroom boom’.

A recent market study report published by CB Insights showed funding for psychedelic medicine companies was on track to exceed $700 million in 2021, more than eight times higher than 2019 figures and approaching double 2020 figures.

Here are some of the top public company 2021 top financing deals:

• Atai Life Sciences raised $225 million with its $2.3 billion IPO this summer.

• MindMed collected a total of approximately $202.7 million.

• Compass Pathways raised another $144 million in 2021adding to his already healthy bank account.

Private companies also raise capital.

Although most industry news and market headlines are dominated by publicly traded companies, they are not the only source of capital investment. Private psychedelic medicine companies are also attracting a lot of attention from investors.

• In August 2021, Beckley Psytech, a private company “dedicated to combating neurological and psychiatric disorders through the innovative application of psychedelic drugs”, announcement an $80 million Series B funding from venture capital (VC) investors.

• In September 2021, Delix Therapeutics farm a $70 million Series A funding round. Delix is ​​a private neuroscience company specializing in “psychoplastogens” or therapeutics for neuroplasticity.

• In April 2021, GH Research announcement the closing of a financing of 125 million dollars, an impressive figure for a private preclinical company. GH has since made public on NASDAQ.

These are just a few recent corporate fundraisers (not to mention that Atai Life Sciences raised approximately $360 million from private investors before going public). This funding is driven by innovative and forward-thinking investors and venture capital firms like the Founders Fund, Negev Capital and Mayfield. So we are seeing major developments on the capital side.

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What does all this capital mean for the industry?

These capital raises give the companies the funds to continue the costly drug development work. It also has a snowball effect, giving investors confidence that companies will have enough cash to do the job, which further boosts confidence and invites more investment.

The psychedelic industry is focused on getting new drugs approved by regulatory bodies like the FDA, which is a time-consuming and expensive process. Getting a candidate compound through clinical trials can cost tens of millions of dollars, and that’s usually to bring a single product to market. Without these major capital investments, there would probably be no future for the industry, and therefore less hope for developing alternative treatments.

A recent industry transaction highlights this. MagicMed Industries, a private Canadian drug development company, was bought by Enveric Biosciences, a company focused on alleviating the mental and physical health issues of patients with cancer and other conditions. (Full disclosure: The author has previously done public relations work for Enveric.) MagicMed was a small company and Enveric was already listed on the prestigious NASDAQ stock exchange, giving it access to a base of international and institutional investors.

This influx of capital not only helps individual businesses grow, but catalyzes the growth of the entire industry. In November 2021, the psychedelic medicine space hosted one of its first major in-person events with Wonderland, produced by Microdose Psychedelic Insights. (Full disclosure: The author is helping Microdose with the events.) With industry leaders from business and research (including a headlining appearance by boxing champion and psychedelic drug advocate Mike Tyson), this conference was a milestone for the industry. Dozens of psychedelic medicine companies were there as sponsors and speakers, a concrete example of the industry’s impressive growth.

The more investment and progress there is in the space, the more motivation there will be for others to join in and get things done. These are just a few examples of how capital is fueling innovation in this new industry. 2022 should give us even more examples. Stay tuned.