New Zealand has a chance to attract venture capital, with ATAI Life Sciences among the biotech firms investigating the use of the once-ostracised drugs to treat mental illness and addiction.
From the Reddit boards of WallStreetBets to pundits on CNBC, there’s a growing investor buzz around the prospects of a slew of new psychedelic biotech firms.
Last week, the Peter Thiel-backed ATAI Life Sciences became the third such company to list in the United States, joining MindMed and Compass Pathways on the Nasdaq.
It’s understood German-based ATAI has shown interest in bringing clinical trials to New Zealand as it seeks a broader international base to conduct studies, which are already taking place at some of the top medical research facilities in the US, Israel, Australia and Europe.
There are nine companies currently seeking to raise billions of dollars to undertake clinical studies into psychedelic drugs such as LSD and psilocybin mushrooms to treat mental illness and addiction.
MDMA and ketamine, while not technically psychedelic, are also among the group of controlled drugs showing enormous potential to treat conditions like depression, PTSD, acute alcoholism, as well as provide relief from the psychological distress to advanced cancer patients.
Suresh Muthukumaraswamy, a neuro-psycho-pharmacologist at the University of Auckland, says New Zealand has the scientific knowhow to hold psychedelic clinical trials, and reap the dual benefits of attracting some of the vast sums of venture capital while also offering a promising form of treatment to people living with mental illness.
"This should be a political no-brainer. There’s benefit to patients, there’s benefit to the economy. There’s benefits to infrastructure and development but no one is taking the lead on it. Because we’re stuck in a backwards way of thinking about drugs and drug policy." – Dr Suresh Muthukumaraswamy, University of Auckland
But rather than turning on and tuning in, he says New Zealand is at risk of dropping out.
"This should be a political no-brainer. There’s benefit to patients, there’s benefit to the economy. There’s benefits to infrastructure and development but no one is taking the lead on it. Because we’re stuck in a backwards way of thinking about drugs and drug policy."
In March, the Australian Government committed $15 million to a contestable fund to kick-start clinical trials of psychedelic drugs in Australia.
The project has high-powered support from former federal trade minister Andrew Robb and retired chief of the defence force Christopher Barrie, with armed forces members likely to be prime candidates for the treatment.
Muthukumaraswamy previously worked on the first research project to produce images of the brain on LSD, and is conducting microdosing trials on healthy patients using LSD at Auckland University.
However, he says attempts to attract Government support have fallen on deaf ears.
"What we’re seeing is international moves towards investment towards capability and infrastructure.
"They’re going to look for places to run trials. They’re going to look at Australia and say ‘let’s go there’. It’s a bold and really smart move. In a couple of years time it will be a base whereas little old New Zealand is letting it pass by."
He says New Zealand needs to show a similar commitment whether it be through grants, tax breaks or even legislative changes to encourage companies to hold clinical trials in New Zealand.
"Medsafe accepts applications from sponsors for these types of medicines for these indications and will consider approval based on the strength of the evidence provided of efficacy, safety and quality." – Andrew Little, Minister of Health
Health Minister Andrew Little is taking a wait-and-see approach before looking to ease the classifications of Class A drugs like LSD and psilocybin mushrooms under the Misuse of Drugs Act.
"Trials do not need to be run in New Zealand in order for the medicine to be approved for use here," he told Newsroom.
"Medsafe accepts applications from sponsors for these types of medicines for these indications and will consider approval based on the strength of the evidence provided of efficacy, safety and quality."
Clinical trials in the United States have been showing highly promising results.
A study published in Nature Medicine in May found 67% of participants in an MDMA clinical study no longer suffered from PTSD two months after beginning treatment.
Last year Oregon became the first US state to legalise magic mushrooms. In March the state set up a Psilocybin Advisory Board to oversee the necessary infrastructure to allow its use for therapeutic purposes.
In California, a bill to decriminalise the possession and sharing of psychoactive agents such as psilocybin mushrooms, LSD, ketamine, MDMA (ecstasy), is gathering momentum, passing its first hurdle in the state Senate earlier this month.
And the US Food and Drug Administration has granted “breakthrough therapy” status for psilocybin, the active ingredient in magic mushrooms, for the treatment of post-traumatic stress disorder and major depressive disorder.
Headlines like ‘Can Magic Mushrooms Heal Us’ in the New York Times, and fawning coverage on sites like the Motley Fool and CNBC are attracting significant investor interest. Day-traders who helped push so-called meme stocks like Gamestop and AMC to stratospheric gains this year are also trying to generate excitement.
Shares of ATAI jumped Friday on their first day of trading on Wall Street. The stock opened up 40% on its listing price of around US$15 before pulling back to close up nearly 30% to US$19.45 each.
The IPO will generate the company proceeds of US$225 million from the sale of 15 million shares.
"There are initiatives that are underway but are not ready to launch as Covid has caused delays and budget issues for delivery." – Julie Jones, Association of Clinical Research
Mindmed was trading for under US$1 in November, and reached as high as US$4.69 in April and closed at US$3.74 last week.
ATAI is one of nine companies currently looking to raise billions of dollars IPOs for research into psychedelic treatments.
The companies are years away from revenue from their experimental treatments, let alone profits.
But the wide-ranging use, from people with head injuries to end-of-life care, has seasoned observers saying the potential far exceeds the investment potential of cannabis companies.
The NZ Health Research Strategy 2017-27 delivered under the previous National Government sought to increase the impact of Government investment in health research.
The strategy is to be implemented through a three-way partnership between the Ministry of Health, Ministry of Business, Innovation and Environment, and the Health Research Council.
One of its goals is to provide capital to fledgling projects, especially once proof of commercial potential has been shown.
NZ Association of Clinical Research president Julie Jones told Newsroom a lot of work is being done to try to deliver the strategy.
"There are initiatives that are underway but are not ready to launch as Covid has caused delays and budget issues for delivery."
A report by the NZ Institute of Economic Research in May 2020 found clinical trials contributed more than $150 million per year between 2013 and 2018.
New Zealanders participated in at least 100 such clinical trials each year and these trials employed in excess of 700 people.
"Mr Thiel states that being a New Zealand citizen would enable him to represent the country on the international stage and give him greater confidence in mobilising New Zealand’s talented entrepreneurs." – Department of Internal Affairs
The report authors cited numerous benefits to universities, hospitals and students, and also saved money by removing patients from the health system during their trials.
Peter Thiel’s multi-billion dollar investment with ATAI provides another possible link with the country he occasionally calls home.
When his Kiwi citizenship was revealed in 2017, a release from the Department of Internal Affairs said: "Mr Thiel states that being a New Zealand citizen would enable him to represent the country on the international stage and give him greater confidence in mobilising New Zealand’s talented entrepreneurs."
Muthukumaraswamy hopes that LSD and magic mushrooms could one day be rescheduled as prescription medicines.
However, the Australian Medical Association and Royal Australian and New Zealand College of Psychiatrists say more research is needed to assess their safety and efficacy.
A psychedelic renaissance
Swiss biochemist Albert Hofmann first discovered lysergic acid in 1938, but it would be another five years before the father of LSD actually sampled his creation.
On 19 April 1943, Hofmann took 250 micrograms of the drug at a lab in Basel, and noticing strange things happening to his sensory perceptions, he biked home. (Bicycle Day, a celebration of all things psychedelic, is still marked by LSD enthusiasts on the same date each year).
Hofmann’s discovery was used effectively in psychoanalysis for ten years, especially among members of the armed forces.
But in the early 1960s, LSD and by extension psychedelic drugs became a scourge of the establishment and synonymous with the counterculture movement.
Rather than advance the cause, Timothy Leary’s attempts to push psychedelics on America set off a moral panic that blew up decades of existing research into the area.
The fallout culminated in US President Richard Nixon declaration of a War on Drugs 50 years ago this month on June 18, 1971; a disastrous policy that led to civil wars, mass incarceration and the rise of the Latin American drug cartels, and still continues to limp along to this day.
But in the last 15 years, a psychedelic renaissance among public health clinicians has been taking place.
One such convert is Auckland University health psychologist Dr Lisa Reynolds, the director of the Postgraduate Diploma in Health Psychology, who also provides psychological support and therapy to cancer patients and their whānau at Counties Manukau DHB.
Reynolds became interested in psychedelic treatment after reading Michael Pollen’s exceptional 2018 book How to Change Your Mind: What the New Science of Psychedelics Teaches Us About Consciousness, Dying, Addiction, Depression, and Transcendence.
Pollan’s book shone a light on a community of dedicated and well-intentioned researchers and psychedelic therapists who had continued to work quietly with the drugs for decades, convinced of their potential healing properties.
Reynolds was recently awarded $250,000 from the Health Research Council to conduct LSD microdosing clinical trials on patients with advanced cancer.
The 30 patients will be evenly split between Māori and non-Māori, half will be given small amounts of LSD, combined with talk therapy, the other half will take placebos.
Reynolds says the aim is to work out if LSD micro-dosing allows patients to be more open to new ideas and more receptive to psychotherapy.
“There’s this idea that LSD seems to create a more open mindset, more open to new ideas,” says Reynolds.
“That kind of mindset alongside talk therapy allows the therapist to work better and more quickly. In the context here people have advanced cancer, timeliness is really important. You need therapy that works, and works quickly. At the moment there’s a whole lot of anecdotal reports. We need to do solid research.”
“People draw on anecdotal evidence of people taking psychedelics in a really risky way. In those kinds of contexts dangerous things can happen. We’re talking about looking at the potential for psychedelics to be administered in a clinical environment, where things like setting are managed well to ensure safety.” – Dr Lisa Reynolds, University of Auckland
Reynolds says the project will involve a multidisciplinary team of pharmacists, psychiatrists, oncologists, and her own field of health psychology.
There’s a “whole lot of myths around the danger of these kinds of substances”, mostly due to risks associated with taking them recreationally, and consuming them with other drugs or alcohol.
But she says there’s no evidence they’re addictive.
“People draw on anecdotal evidence of people taking psychedelics in a really risky way. In those kinds of contexts dangerous things can happen. We’re talking about looking at the potential for psychedelics to be administered in a clinical environment, where things like setting are managed well to ensure safety.”
Reynolds said she is aware of the enormous financial interest and investment in the drugs.
“My priority as a clinician and a researcher is not getting swept up in that, and not to influence the quality of our research. But also recognising that funding is really important in getting things off the ground.”
