Some investors are concerned that Elon Musk may have partied on acid, ecstasy and psilocybin.
Others are instead betting on psychedelic therapies to upend the multi-billion dollar market for drugs and treatments for debilitating mental health conditions.
The $100 million-plus Series A financing for Lykos Therapeutics, formerly known as MAPS Public Benefit Corp., signals the intense investor interest in pharmaceuticals that backers say have the ability to not only manage, but cure, post-traumatic stress and other disorders. An estimated 13 million adults in the US experience PTSD each year.
San Jose, Calif.-based Lykos recently submitted its new drug application to the Food and Drug Administration, along with results of its Phase 3 clinical trials, for midomafetamine capsules, or MDMA or ecstasy, to be used in combination with talk therapy and other services. FDA approval of the treatment protocol would trigger a reassessment by the Drug Enforcement Administration, which currently classfies MDMA as a Schedule 1 drug.
The 11-week protocol for post-traumatic stress disorder includes three doses of the drug, one month apart, along with “integrative” therapy after each session. That contrasts with what is often a lifetime regime of antidepressants, other medications and psychotherapy for combat veterans, women who have been abused and others suffering from symptoms of PTSD.
“Hearing them say, ‘It’s the first time I have hope’ – not that they felt like everything had changed after the first treatment, their symptoms were still there, but it was the first time they glimpsed the hope that it could be different – that is so motivating,” Lykos CEO Amy Emerson said of her early work with women who had been abused. “That’s when I was like, ‘Yes, this is worth doing.’”
After decades underground, psychedelic therapies and journeys are rapidly becoming mainstream, sparked in part by Michael Pollan’s 2018 book, “How to Change Your Mind.” Oregon and Colorado, along with several cities, have decriminalized the use of psilocybin, the active ingredient in “magic mushrooms” (Oregon also legalized supervised use). Johnson & Johnson in October reported that Spravato, a nasal esketamine drug, was its fastest-growing product, with sales of $483 million in the first nine months of last year.
Musk has said he has a prescription for ketamine, a related compound that is used off-label to treat depression. Former Texas Gov. Rick Perry, who as Energy Secretary in the Trump administration oversaw the nation’s nuclear weapons development and security, has become a leading advocate for the benefits of MDMA, psilocybin and ibogaine, a psychoactive substance originally derived from the bark of the iboga tree.
Investor interest
The nonprofit MAPS, for Multidisciplinary Association for Psychedelic Studies, has pioneered research into MDMA and other psychedelics since the 1980s. It created the for-profit MAPS PBC, now Lykos Therapeutics, in 2014 to commercialize the research and attract financing to bring psychedelic-assisted therapies to market.
“The goal would be net zero trauma and I think by 2070 this is a realistic estimate,” MAPS founder Rick Doblin said at the Milken Global Conference last May.
The financing for Lykos was led by Helena Special Investments, the investment arm of Helena, led by Henry Elkus, Sam Feinberg and Suprotik Basu. Helena also includes Helena Group Foundation for nonprofit projects. Basu, a longtime advisor to billionaire Ray Chambers, will join Lykos’ board along with six appointees from MAPS and Emerson, the CEO.
The lead investor in Lykos’s financing was Helena Special Investments, led by Henry Elkus, Sam Feinberg and Suprotik Basu. The fund is the investment arm of the ambitious Helena network, which aims to tackle major global problems.
Basu said he had to overcome his own initial awkwardness in explaining the opportunity and was surprised how quickly investors have embraced psychedelic-assisted therapy.
“I did have some interesting initial pitches,” he told ImpactAlpha. “But almost everybody has someone they know who is on antidepressants or suffering from trauma. This is really personal stuff… You never leave without people talking about their own experiences. And they’re deeply moved and they’re deeply grateful that there’s something coming down the pike that can do something about it.”
Other investors in the $100 million round include the Steven & Alexandra Cohen Foundation, Eir Therapeutics, Vine Ventures, True Ventures, Unlikely Collaborators Foundation, The Joe and Sandy Samberg Foundation, Bail Capital, KittyHawk Ventures and Satori Neuro.
Psychedelic ecosystem
The investors join a small number of specialized investment funds, including Lionheart Ventures and Palo Santo that have seeded psychedelic startups, including in software, diagnostic tools and therapeutic training. London-based Compass Pathways is a publicly traded biotechnology company currently in Phase 2 clinical trials for its psilocybin-based PTSD treatment.
“We’re investing in the whole ecosystem,” Lindsay Hoover of JLS Fund said on a panel at the SOCAP conference last fall. Psychedelics “really seem to impact the root causes of at least a lot of people’s depression and anxiety, the search for meaning and connection,” she said. “That might be why they are so dramatically different from everything else that we can imagine and why you might not need to take them forever.”
To be sure, none of the clinical trials have determined the long-term efficacy of psychedelic treatments, nor the broader social implications as psychedelic use becomes even more common outside of therapeutic protocols. The possibilities for abuse are well known, most recently in the death of actor Matthew Perry, whose death in October was attributed to the acute effects of ketamine, among other causes.
But the human and social costs of not pursuing available therapies also are high. The economic burden of PTSD in the U.S. amounted to $232 billion in 2018, according to the National Institutes of Health. Nearly 50,000 people died by suicide in the US in 2022, a record.
Helena’s Henry Elkus said PTSD was merely the first indication for MDMA and other psychedelic-assisted therapy.
“We’re not a healthcare country. We wait until people are already struggling, and then we’re very, very good at coming up with market-ready ways to manage those diseases, but not solve them,” he said on the SOCAP panel. “Psychedelics break that mold.”
“It’s a path for us to become a proactive society rather than a reactive society when it comes to healthcare,” he said. “That’s a multi-trillion dollar problem. If you want to really save the world, that’s the kind of stuff you want to get involved in.”
