Startups Seek to Claim Spot in Up-and-Coming Field of Pharmaceutical Psychedelics

With novel, yet promising research and massive high-profile investments, companies like Psygen are hopeful that widespread psychedelic use will be raised from its dormancy and catapulted into the pharmaceutical realm in the near future.

Danny Motyka is the CEO of Psygen, a Calgary business seeking to manufacture synthetic psychedelics for the pharmaceutical industry. On the cusp of early research, Motyka sees a massive market opportunity in the synthetic psychedelic field.

Many companies, like Psygen, have taken shape over the last few years, waging their bets to partake in the revitalization of widespread therapeutic use of psychedelics. Many companies see value in diving headfirst into this sphere, and for some it has already paid off. Companies like Germany-based Atai Life Sciences and U.K.-based Compass Pathways are both startups with a valuation of roughly 1 billion dollars.

Although the recreational use of psychedelics like LSD, magic mushrooms, and other hallucinogens remain vastly illegal, some regulators and public officials are permitting research on psychedelics as legitimate therapies for mental health conditions. Health Canada is among institutions that are taking this cautious yet open-minded approach.

Initially, investors flocked to the potential of pharmaceutical psychedelics, but many rapidly dropped off as the challenging and uncertain road ahead unfolded. For example, clinical trials are still ongoing to determine if psilocybin, the active ingredient in magic mushrooms, is a safe and effective way to treat depression. Though initial results suggest yes, there still remains a way to go to have it approved for therapeutic use.

Peter van der Heyden, co-founder of Psygen, stated that psychedelics for therapeutic uses “have to go through the entire drug approval pathway and demonstrate safety and demonstrate efficacy.” Given the length and rigor of this process, it may be too soon to tell whether or not this venture will be successful

Psygen is seeking approval from Health Canada to be able to manufacture psychedelics for research and clinical trials. Co-founders Motyka and van der Heyden hope that the trials and research will lead to the birth of new therapeutic drugs. This would allow their lab to expand to commercial size, and hopefully be able to produce medical-grade substances.

Motyka stated that psilocybin is the greatest demand from drug development companies. He elaborates that the demand is “reflective of this liberalization of plant medicines.” “It’s easy to go from cannabis as a medicine to mushrooms as a medicine”, he stated.

Many industry observers would argue that the legalization of cannabis for recreational or medical purposes has paved the way to help deflate the stigma around psychedelic use.

Especially given the dramatic rise of mental illness onset by the COVID-19 pandemic, investors are hungry to buy into this industry. As the potential of psychedelics for therapeutic uses becomes more widely accepted, it seems as though researchers, investors, and trial participants will continue to congregate towards this new field in the masses, despite its potential challenges.

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