At a time when the stock market is feeling the brunt of the COVID-19 economic impact, there is one sector that is seeing an interesting escalation of activity and investor speculation. While medical cannabis continues to enter mainstream medicine and is legalized in 33 American states, another type of prohibited substance is undergoing a similar shift towards medical and public opinion. You may know it as shrooms, or magic mushrooms, however, the technical term is psilocybin mushrooms.
Only specific types of mushrooms that are found in the tropical regions of Mexico, South American, and sub-tropical areas of the United States, contain psilocybin. These mushrooms have been classified as a Schedule 1 drug under the Controlled Substances Act and are currently illegal to cultivate, possess, or use.
Several countries, including Canada, have started to create a buzz about the potential therapeutic benefits of psilocybin for mental health treatments. Researchers are defining controlled therapies for diagnosed conditions like depression, clinical anxiety, eating disorders, schizophrenia, and trauma. As a result, many believe psilocybin can be used as a possible medical intervention to curb the growing rate of suicides.
What are the benchmarks in the regulatory activity that has investors paying close attention to the potential legalized medical use of psilocybin (psychedelic mushrooms) for clinical care? Will the next wave of business growth in the healthcare sector come from clinics that can provide controlled and safe psychedelic therapies for patients?
Understanding the Potential Therapeutic Benefits of Psilocybin: How Does it Work?
Psilocybin is an entheogen, which is a psychoactive compound that alters perception, cognition, mood, and behavior for the duration of the effect or ‘trip.’ We know that entheogens, specifically certain strains of mushrooms, have been used medicinally and in spiritualism practices since the Pre-Columbian era.
When a human ingests or absorbs psilocybin, it is converted to psilocin. Hallucinogenic effects typically occur within 30-minutes and last 4-6 hours depending on the dose. Psilocybin is not chemically addictive, and there are no physical withdrawal symptoms after a patient stops using it. Patients may develop a tolerance to psilocybin with extensive therapeutic use.
Psilocybin derived from mushrooms can create an elevated sense of happiness, relaxation, and wellbeing for patients who are administered small doses in a controlled and safe environment. Therapeutic testing has included a “safe room,” which is designed to promote relaxation for the patient. It comes complete with comfortable furnishings, dimmed lights, a blanket and pillow and/or aroma, and sound therapy for a spa-like experience.
In a treatment setting, the patient would sit in a comfortable reclined chair in the “safe room.” After an injection of psilocybin, the patient is permitted to relax and enjoy the psychedelic cognitive experience of the hallucinogenic drug. A therapist is required to monitor the patient throughout the “trip” for safety purposes.
Some psilocybin treatments can involve a psychotherapeutic session immediately following the end of the psychedelic effects of the drug. The reason for this is that the patient is more relaxed and open to cognitive behavioral therapy techniques after the effects of the psilocybin have passed.
Cancer treatment with psilocybin remains a promising therapeutic application. Patients with a life-threatening cancer diagnosis have a higher than normal rate of severe depression, which further reduces immune system response and recovery rates.
What is not completely understood, however, is whether medications and treatments administered to cancer patients increase their risk of developing depression and other mood disorders. Approximately 40% of cancer patients are diagnosed with moderate to severe depression.
Researchers Have Been Evaluating Psilocybin Mushrooms for Decades
From 1960 to 1962, the “Harvard Psilocybin Project” researched the therapeutic benefits of psilocybin for the treatment of depression and psychiatric disorders. The “Berkley Foundation” was established in 1998 to champion global drug policy reform, and conduct research into psychoactive substances and the potential of Schedule I drugs as a non-traditional treatment resource for mental and physical wellness.
Psilocybin was banned from clinical research in the United States from 1970 to the early 1990s when the international medical community began reporting trials and suggesting clinical applications for patients with treatment-resistant health diagnoses.
Today, there are more than 3 million pages on Google about psilocybin research. Most clinical research is focused on determining how psychedelic mushrooms may breakthrough treatment-resistant medical conditions such as severe depression, drug addiction, schizophrenia, and trauma therapies.
Why Are Investors Watching the Regulatory Progress of Psilocybin Mushrooms in the US?
In 2016, the global antidepressant drug market was valued at $13.7 billion, with a projected growth to $15.9 billion dollars by 2023 at a compound annual growth rate (CAGR) of 2.1% or more. Pharmaceutical drugs within this category treat patients with major depressive disorder (MDD), schizophrenia, obsessive-compulsive disorder, severe anxiety, and post-traumatic stress disorder (PTSD).
One study, published in the Journal of Clinical Psychiatry, estimated that treatment-resistant depression cost American employers more than $48 billion per year. The figure summed the loss of productivity, absenteeism, and healthcare costs for employers. With increasing awareness of the side-effects of long-term opioid use, a natural alternative like psilocybin could reduce reliance on opioids and harmful psychotropic medications.
Below are some indicators of regulatory movement in the direction of legalized psilocybin treatments in Canada and the United States, and why investors are closely watching the development of the next wave of alternative medicine.
1. The Opioid and Psychotropic Medication Epidemic Commands Better Treatment Alternatives
The myths and bad publicity—created by “the war on drugs”—against natural psychedelics, like mushrooms, are starting to dissipate. This is thanks to growing bodies of research and response to the opioid epidemic in North America. Growing clinical evidence suggests that long-term opioid use can exacerbate and even cause clinical depression when used therapeutically for pain.
The relationship between treatment-resistant depression and opioids is not fully understood. However, we do know that patients with mood disorders are twice as likely to abuse opioids (whether they have chronic pain or not). Approximately 16% of Americans have mental health disorders, but they account for more than 50% of all opioid prescription volume.
Some of the side-effects of long-term use of opioids include respiratory problems, gastrointestinal damage, cardiovascular disorders, endocrine, and immune system impairment, musculoskeletal problems (bone fragility), and central nervous system damage. By comparison, psilocybin is not addictive and has no physiological withdrawal symptoms.
2. ‘Numinus Wellness’ Received Regulatory Nod for Psilocybin Mushrooms Research in Canada
In June 2020, Numinus Wellness (CVD: NUMI)announced that Health Canada had approved an amendment request to the existing company license to allow research to standardize the extraction of psilocybin from mushrooms.
Numinus Wellness has been testing psychedelic therapies (Numinus Bioscience) that address mental health needs and addiction step-down therapies for patients. The Numinus R&D division is creating global partnerships with leading research groups to advance clinical psilocybin treatments and define treatment length, dose strength, and patient support modalities.
The goal is to document results for patients with depression, post-traumatic stress disorder (PTSD), moderate to severe anxiety, and other mental health conditions. This is the first step in standardizing approved therapies for patients at the Federal level.
Numinous, based in Vancouver, Canada, has a license for cannabis testing through its subsidiary company, Salvation Botanicals. The company has been awarded an expanded dealer’s license. This allows the company to purchase inventory and test MDMA, psilocybin, psilocin, DMT, and mescaline.
The expanded license awarded to Numinous in Canada will allow the company to escalate research and trials of psychedelic controlled substances for the therapeutic treatment of physical and emotional health disorders. Once the research is completed, regulators and Federal agencies in Canada may approve patient treatments. The special license also permits Numinus to develop the research into intellectual property exclusively for product development.
3. The FDA Fast-Tracked Three Psychedelic Medicines Through Clinical Trials
The Food and Drug Administration (FDA) fast-tracked three different psychedelic medications to expedite clinical trials. In November 2019, the FDA granted the Usona Institute a “breakthrough therapy designation” for advanced research of psilocybin therapeutic benefits to treat patients with major depressive disorder (MDD).
In fact, this was the second time that the FDA had granted the “breakthrough therapy” designation for psychedelic mushroom research. The first time in American history where a psychedelic drug was fast-tracked for approval by the FDA involved special designation to Compass Pathways, a company in the United Kingdom that is researching mental health treatments involving psilocybin.
Compass Pathways has formulated a synthetic version of psilocybin called COMP 360. The clinical trials are being conducted in North America and in Europe. A Therapist Training Programme is now provided by Compass Pathways for mental health practitioners, to prepare for the regulation and implementation of psychedelic treatment therapies.
The Usona Institute was granted permission for a Phase 2 clinical trial and an 80-person study to determine the efficacy of one-time oral doses of psilocybin for the treatment of depression. Usona provides cGMP psilocybin to qualified researchers at no cost, through the Investigational Drug Supply Program, to advance therapeutic research in the United States.
4. The Investment Potential of a New Psilocybin Healthcare Industry is Lucrative
From psilocybin retreats to in-office psychotherapeutic sessions for trauma and treatment-resistant depression, the commercial potential of legal therapies is limitless. If regulation of psychedelics (including psilocybin) in the United States happens, investors will be looking at pharmaceutical companies, mushroom cultivation, processing and manufacturing businesses, physician training and credentialing, and treatment clinics.
There are several psilocybin stock opportunities that are generating the most interest and investors. Champignon Brands (CSE: SHRM) was the first company to IPO, followed by MindMed (NEO: MMED) completed a successful IPO one day later. In Canada, Revive Therapeutics (which optioned in January 2020) is another company on the investor watch list (CSE: RVV).
Watching the performance of psilocybin research and product development companies in 2020 have been, for the most part, an orbital rise in stock value. The activity in both Canada and the United States in terms of research approvals for therapeutic applications of psilocybin and human trials has so far mirrored the progression of the legalization of medical cannabis in both countries. That may bode very well for early investors, but most importantly patients who want to explore naturally-derived therapeutic alternatives.