After decades of government shutdown, some hallucinogenic substances have been re-studied to treat mental ailments. 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 combating alcohol dependence. Experts work with LSD, mescaline and DMT, although much of their research is focused on psilocybin, the psychoactive molecule present in about 200 species of fungi. Several Canadian companies are betting on the healing power of the so-called “magic mushrooms”.
A plan to take advantage of psychedelic drugs against depression or addictions
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 ignore several aspects related to the way they act. The neurosciences reveal that they have a remarkable capacity to modify the structure and function of brain networks and, therefore, can catalyze the psychotherapeutic process making the person more ‘malleable’ to changes and, thus, more susceptible to abandoning 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 academics at Imperial College London (both this institution and Johns Hopkins University have specialized 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 no need for repeat doses”, he adds.
Producing psilocybin in laboratories and cultivating hallucinogenic mushrooms is prohibited in Canada, as is its sale and consumption, as is the case in almost all countries in the world. However, the federal Ministry of Health has granted some production and use permits for therapies and research since last year. Its intake is not yet allowed 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 consumed hallucinogenic mushrooms for thousands of years. Especially in Mesoamerica, as numerous vestiges have shown, the chronicles of the conquest also underline the importance of the teonanácatl (“flesh of the gods”, as these mushrooms are called in the Nahuatl language). Its consumption was prohibited by the missionaries, but it survived in certain areas. In 1957, R. Gordon Wasson published in Life magazine a text that had a worldwide impact, where he recounted his experiences with mushrooms in the Sierra de Oaxaca (Mexico). The Swiss Albert Hofmann -father of LSD- managed in 1958 to identify and synthesize psilocybin for the first time.
As a result of special permits issued by Ottawa, Cybin became the first listed company to be authorized to manufacture synthetic psilocybin. The company obtained in October 2020 about € 30.6 million in a financing round; a month later, it went public. Today it has a value of € 195 million. Start-up Psygen, which has the same permit, works hand in hand with a laboratory at the University of Alberta.
Other companies choose to grow the mushrooms to extract psilocybin. In December, Numinus became the first listed company (it has a market value of € 136 million) to legally extract the molecule from its cultivated mushrooms. “We focus on people who are looking for a natural product, who want to explore possibilities other than those of pharmaceutical companies. We extract psilocybin and other substances. We are studying how psilocybin can be supplemented with other compounds found in mushrooms to offer various health benefits”, says Payton Nyquvest, his CEO. “Also, this method is cheaper.” The cost of producing the psychoactive molecule synthetically 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. In December, Cybin bought Adelia Therapeutics for more than US$ 13 million. Analysts emphasize that the success of the sector will depend on a model that combines the production of substances with their administration by experts.
‘Optimi Health’ company harvests mushrooms for different uses. It awaits ministerial authorization to start the cultivation of hallucinogenic mushrooms. On its advisory board is Chip Wilson, founder of Lululemon. Havn Life seeks to obtain the same permit, although it has already started growing these mushrooms in Jamaica thanks to an agreement with Hypha Wellness. The country’s regulation is one of the most lax in the world. Havn Life is worth € 42.9 million on the stock market.
A US$ 7 billion market
The global market for psychedelic drug treatments could be 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 crisis in mental health has never been so severe,” Nyquvest foresees. Tania Gonsalves, an analyst at Canac-cord Genuity, noted in a note: “The companies that emerge as winners will have extensive resources, patentable products, and a well-planned reimbursement strategy”.
Denver decriminalizes the use of hallucinogenic mushrooms
Gonsalves also highlighted certain 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 were decriminalized. And some stock movements follow this line, with companies such as the British Compass Pathways (today valued at US$ 1.39 billion) or the New York MindMed landing on the Nasdaq (it was already present on the Toronto and Frankfurt Stock Exchanges).
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 moved into the hallucinogen industry. However, this comparison is far off, at least for now. In Canada, production and therapy permits are few. “The real money to be made from psychedelics will come when the FDA approves these drugs for the treatment of mental health problems”.