What can be lost in all of this news and excitement is that there are two dramatically different modes of treatment under research.
Much of the original and current psychedelics-based research and development centers around guided therapy sessions. Patients are given an “experiential” (and sometimes hallucinogenic) dosage of the psychedelic and then are coached and monitored by trained therapists through extended sessions.
More recently, a growing number of new R&D initiatives are based upon micro-dosing of the particular psychedelic drug being researched.
The Seed Investor recently tackled the subject of micro-dosing in a full-length feature article.
For investors who haven't had the opportunity to read that previous feature, we summarize those investment drivers below.
Micro-dosing applications for psychedelic drugs – much smaller dosages at non-psychoactive levels -- offer several advantages over R&D applications that require larger dosages (and guided therapy sessions).
- Speedier drug approval
- Higher adoption rates by patients, physicians and insurers
- Greater profit potential
Because of the much smaller dosages, micro-dosing applications will generate significantly less safety and tolerance issues in the drug development process. Potential side effects can be expected to be fewer and less severe.
Clinical trials begin with safety and tolerance testing. Many of these psychedelics are non-toxic and thus at micro-dosing levels of medication safety and tolerance issues will be rare.
Today, multinational drug companies claim that it costs roughly $1 billion to bring a new drug to market, with most of that expense (and time) eaten up in the clinical trials process to get a new drug licensed and approved.
With micro-dosing generating minimal safety/tolerance issues, this not only expedites the first phase of testing.
As a clinical trial advances to actual testing of efficacy, part of that process involves identifying optimal dosage levels. With psychedelic drugs that are administered at higher dosages, drugs that have psychoactive and often hallucinogenic side effects, researchers must be much more cautious in experimenting with different dosages.
In contrast, micro-dosing research will likely be more efficient at this stage as well as researchers can adjust dosages significantly without introducing safety concerns.
Higher adoption rates
Bringing a new drug to market can be a pyrrhic victory if patients are reluctant to take the drug and/or physicians are leery about prescribing it.
With psychedelics-based medicinal applications at “experiential” dosage levels, this is a genuine concern. Even industry advocates acknowledge that this form of therapy is not for everyone.
With micro-dose psychedelic medications that are non-psychoactive, those reservations should largely evaporate. Social stigmas attached to using these drugs recreationally lose relevance.
Micro-dosed psychedelics can be self-administered by patients, without supervision. This is both more convenient and much less expensive. This will also boost market penetration.
Similarly, insurance companies will more readily cover micro-dose medications. Without the need for therapy sessions that range in price from $600 to $1,000, these will be cheaper therapies. And as a less controversial mode of treatment, this will also make insurers more receptive.
Greater profit potential
As noted, guided therapy sessions for psychedelics range in cost from $600 - $1,000. The psychedelic drug itself is only a small revenue component in the overall treatment.
Drug companies that try to impose exorbitant drug costs for the drugs used in these therapies could easily price themselves out of the market.
With micro-dosing applications, the psychedelic medicine is the entire treatment. This should make it easier to capture and preserve larger margins as these drugs are commercialized.
Combine that with much higher adoption rates for such medications and this should lead to far superior profit potential for micro-dose psychedelic drugs.
With those thoughts in mind, here are two psychedelics companies that are leading the way in pursuing micro-dose based psychedelics R&D.
Mind Medicine Inc (CAN:MMED / US:MMEDF)
MindMed earns top spot on this list for a few reasons.
First of all, it has the most-advanced clinical research program for a psychedelics micro-dosing application. MindMed has recently expanded on its Phase 2a clinical trial using micro-doses of LSD as a treatment for ADHD.
Backed by cannabis industry icon Bruce Linton, who is a Director for MindMed, it currently has the largest market cap among publicly-listed companies.
MindMed earns an additional honorable mention for its research on 18-MC (a derivative of Ibogaine) for the treatment of opioid addiction. As a non-hallucinogenic form of ibogaine, 18-MC is not a controlled substance.
MindMed is expecting to commence a Phase 2 clinical trial on 18-MC later this year.
As a non-hallucinogenic psychedelic, 18-MC should also benefit from a higher adoption rate versus psychedelic drug therapies that produce significant psychoactive effects.
We’ve already seen this in the cannabis industry. Non-psychoactive CBD products have enjoyed broader market penetration than cannabis products that contain (mildly) psychoactive THC.
Eleusis Ltd (private company)
Right behind MindMed in the charge to commercialize micro-dose applications of psychedelics is another private player in the industry, Eleusis Ltd.
Like MindMed, Eleusis has a psychedelics micro-dosing drug in a clinical trial. In the case of Eleusis, it is seeking to treat Alzheimer’s Disease with micro-doses of LSD. It has completed Phase 1 and is preparing for its own Phase 2 clinical trial.
Eleusis is very enthusiastic about the potential of LSD to address this complex disease. Indeed, Eleusis believes that psychedelics such as LSD may have general applicability in the treatment of diseases associated with chronic inflammation.
Both MindMed and Eleusis are chasing multi-billion dollar treatment markets with their psychedelic drug clinical trials. Here again MindMed has the slight advantage.
The global market for treatment of ADHD is estimated to reach $24.9 billion by 2025 according to Grandview Research, based on a CAGR of 6.4%. Global Data estimates that the Alzheimer’s treatment market will reach $14.8 billion by 2026, but with a higher CAGR – 17.5%.
Other psychedelics companies have also reached clinical trials with psychedelics-based drugs administered at higher dosages. Indeed, Compass Pathways has received “breakthrough therapy” designation from the FDA for its psilocybin-based drug to treat depression.
This means that Compass could very well be first in bringing a new psychedelic drug to market. Even so, for reasons previously mentioned, it will likely be micro-dose psychedelic drugs that lead the way in market penetration.
Psychedelic drugs offer great potential as medicinal therapies for numerous medical disorders, especially those related to mental health issues. Some have hailed this as a pharmaceutical revolution.
At this point, no one can predict the long-term upside for this emerging industry. For investors looking for short- or medium-term success in psychedelics investing, micro-dosing may be best starting point for your due diligence.
DISCLOSURE: The writer holds shares in MindMed Inc.