2023: The Psychedelic Industry Report (PRO REPORT)

2023— the year that everyone in the psychedelic industry prepared for takeoff. Well, theoretical (but probable) take off. And, just a few weeks before 2023 came to an end, MAPS announced that it had submitted its much anticipated New Drug Application (NDA) to the Federal Drug Administration (FDA). 

You’ll probably be sick of hearing about MAPS and its MDMA program by the end of our 2023 Psychedelic Industry Report. However, we can’t properly assess 2023 without mentioning it. And, mentioning it a lot. Even if the drug is approved for the treatment of PTSD, there won’t be another psychedelic drug ready for commercialization for another four years or more. So, the short-term growth of the industry depends greatly on this one not-so-little FDA approval. It is no wonder that the psychedelic industry has been celebrating every step of the FDA approval process so fervently. 

We’ll take a much deeper look at what MAPS did this year, and its industry-wide effects later in the report. For now, the most important thing to know is that this affects all areas of the industry. The positive progress of this treatment through the FDA process signals to other psychedelic drug development companies that there is hope for their own drugs to become pharmaceutical treatments. The positive clinical trial results built further confidence among the public and governing bodies concerning MDMA, and psychedelics in general, as a legitimate medical treatment. This boost in confidence was largely facilitated by the acceptance of these results by the mainstream media. And, that has resulted in an influx of new decriminalization and legalization efforts by cities, states, and countries around the world. The promise of high demand for psychedelic treatment then incites companies to begin preparing to offer supply in return. And lastly, investors see the value in an industry that is increasingly active across the board. Despite what you may think of the term, ‘trickle down’ appears to be the most accurate description of how the industry is developing— with the success of MAPS handing down positive benefits for everyone else in the industry. 

It is important to acknowledge, however, that while the overall trajectory of the industry is promising, it is facing some serious obstacles. That was never more apparent than in 2023. The previous year ended with many companies declaring that they were undergoing changes to reduce cash burn and (hopefully) weather the economic storm. Some companies did this successfully, while others will not quite make it to the promised pot of gold at the end of the psychedelic rainbow. 

Our full 2023 Psychedelic Industry report will be available for PRO Members next week. Make sure to stay tuned for data, insights, and analysis that will help sharpen the picture of what happened within the industry this year, and what it means for the future of psychedelics. In the meantime, here are the top highlights of 2023!

The year started with the Phase IIa trial results of Small Pharma’s SPL026 and ended with a bang when MAPS released its second Phase III trial results of MDMA for PTSD. But, we will have plenty of time to talk about that in a moment. In between, there were dozens of milestones regarding psychedelic clinical trials. All signs point to the pharmaceutical market being heavily saturated with various psychedelic drugs for a large number of different medical conditions over the next few decades.

The majority of these clinical trials showed positive enough results that the companies are moving forward in the drug approval process (with only a few exceptions). Of all the indications being targeted by these companies, mental health and neurological disorders, such as depression, brain injuries, and Parkinson’s, are the most abundant, but certainly not the only ones. Clearmind Medicine, for example, is using its novel drug (inspired by psychedelics) to target the obesity epidemic. Another drug program is testing psychedelics on Irritable Bowel Syndrome.

Instead of offering you a list of every single one of the MANY clinical trial milestones and results that took place this year, we have summarized the top programs and compiled a list of all the indications, drugs, and companies that had psychedelic drug development milestones this year.

MAPS: MDMA for Post Traumatic Stress Disorder

Let’s talk about what the MAPP2 data is and what it tells us. 

This was the second phase III clinical trial that MAPS did, testing the efficacy of treating PTSD with MDMA-assisted therapy. This study confirmed the results of the first phase III study, MAPP1. This treatment is effective in treating PTSD, with 85% of those treated having a reduction in symptoms after 18 weeks, and 71.2% no longer meeting the criteria to be diagnosed with the disorder.

Additionally, the treatment group had a significantly lower dropout rate compared to the placebo group. People undergoing treatment for PTSD often have a high drop-out rate, in part because available treatments are lacking in effectiveness. The treatment can also trigger symptoms from the traumatic events. 

Having a therapy that can effectively treat PTSD is significant because there is currently a lack of viable options for people who suffer from this disorder. Current treatment options include traditional medications such as anti-depressants, anti-anxiety drugs, and psychotherapy. As shown in the study, the effectiveness of therapy alone is much lower than it is when coupled with MDMA dosing, and the drop-out rate is far higher. 

For all these reasons, and the fact that adverse effects were minimal, it is likely that the FDA will approve this treatment around mid-2024. The FDA is most concerned with the data presented, not the stigmas around this drug. The clinical trials met every critical end-point that the association will look for when reviewing the New Drug Application, which was submitted in December. 

Compass Pathways COMP360 for Treatment-Resistant Depression

The star of the psychedelic industry has had a lot of news this year— with multiple studies, collaborations, and a significant amount of incoming cash in 2023. However, the program that garners the most attention is its Clinical trials testing COMP360 for Treatment-Resistant Depression. And, for good reason. 

COMP360 is the company’s synthetic psilocybin formulation. They aren’t the only company to be pushing a magic mushroom-inspired drug through the pipeline but they will probably be the first to make it over the finish line. The company will be the first to bring a psilocybin drug to market if the phase III trials go well. The phase III trial testing the efficacy of the drug for treatment-resistant depression is underway, but that isn’t what made a lot of noise this year. It was a study testing the drug alongside the common anti-depressant, SSRIs.

It has long been believed that consuming any kind of psychedelic drug while simultaneously taking anti-depressants will have harmful effects. There has never been any research to support this. It was more of a stance taken from a widely believed hypothesis, which is not a bad thing. Those offering psychedelics wanted to ensure that their patients were safe. However, this new research shows that it is not dangerous, and may even be advantageous.

More research is needed to confirm whether it is more beneficial for patients to stay on their antidepressants or not when undergoing psychedelic treatment. However, the fact that it is safe to do the former is significant for patients. Many of the people seeking out psychedelic treatment are on some kind of medication for their mental health (often SSRIs), and it can be very difficult to come off this type of medication. 

Awakn Life Sciences: Ketamine for Alcohol Use Disorder

Awakn Life Sciences is another one of the companies that is set to have a psychedelic drug on the market before the turn of the decade. The company is currently moving into Phase III trials of its ketamine drug for the treatment of alcohol use disorder. This is the first phase III psychedelic clinical trial in history to receive government funding.

Currently, Sprovato is the only ketamine drug that is approved for use outside of anesthesia. The drug is often prescribed off-label for a variety of indications, including addiction. Without the ability to charge insurance, however, treatment is very costly. So, getting ketamine approved for additional indications will help drastically grow the market for treatment by making it more accessible to lower-income populations. Awakn will accomplish this by becoming one of the first companies to get a ketamine drug approved for an additional indication.

MindMed: Deuterated LSD (MM-120) for Generalized Anxiety Disorder

Data on MindMed’s MM-120 was long-awaited and finally delivered in 2023. The deuterated LSD drug is going through clinical trials for the treatment of generalized anxiety disorder. There are several psychedelic drug programs focused on this indication because of the growing demand for new treatments. The drugs often prescribed for this issue are highly addictive and can be harmful to health— both physical and mental. 

According to the Phase 2b trial, the drug was well tolerated, with only mind adverse events. Additionally, the treatment had a statistically significant improvement compared to the placebo group.

Non-Hallucinogenic Psychedelics

The programs highlighted above are likely to be some of the first to hit the market. These companies will have an advantage in that regard. However, there is an experimental class of drugs that is further off from an FDA-approval, but has significant potential in the long-term market: Non-hallucinogenic Psychedelics.

Psilera is one company researching non-hallucinogenic psychedelics. Through its drug discovery engine, Psilera has sorted through thousands of compounds and recently announced its lead candidate produced through this discovery engine which is a novel, non-hallucinogenic psilocybin derivative. Psilera’s in vivo studies have shown strong potential for its lead candidate.

Another recent study out of UC San Diego also suggested that a non-hallucinogenic version of LSD could be beneficial for treating mood disorders. Once again, this data is very preliminary. However, we are closer than ever to finding out the answer to the question that so many are wondering— will non-hallucinogenic psychedelics be a positive addition to the growing number of novel psychedelic compounds promising to enter the market over the next ten years?

United States

The United States was busy with talk of psychedelic reform in 2023. This happened on a City, State, and Federal level. 

In 2023, Congress passed a spending bill that funds research into psychedelics. It also helps veterans suffering from PTSD and Traumatic Brain Injuries get access to clinical trials. This is the first piece of legislation to be passed on psychedelics since they were initially banned over 50 years ago.  

Lawmakers in over a dozen US states had at least one conversation in 2023 about psychedelics. Some states, like California and Massachusetts, seriously considered, and even came close to, legalizing psychedelics. Other states are still a ways off from legalizing them— like Colorado and Oregon have— but are having discussions about how they might increase access to these medicines. Some are even allocating money to research psychedelic treatments for PTSD and depression.

California had a particularly busy, but ultimately unsuccessful year when it came to reform. The state nearly passed a decriminalization law, that would have been the first time that this type of legislation was passed by the state lawmakers (rather than a voter initiative). The law made it all the way to the Governor’s desk, where it was ultimately vetoed. A few days before Newsom gave it the boot, he did sign a law that says the state will automatically reschedule any psychedelic drug that is FDA-approved. This means that once MDMA is FDA-approved, there will be no additional steps to make it accessible in California. 

The state also had a multi-billion dollar voter initiative, TREAT California, which would have assisted in getting additional psychedelic drugs approved by the FDA and simultaneously built out the infrastructure needed to roll out these treatments across the entire state. The initiative was ultimately scrapped because of polling that suggested it would not pass. Several other decriminalization initiatives have been put forth. It is possible that the November 2024 election will bring with it some trippy outcomes, but it is certainly not a given at this point.

Massachusetts will be taking to the polls in November to decide the outcome of psychedelics. The state’s own citizen-lead initiative initiative collected enough signatures in 2023 to get on the 2024 ballot. Massachusetts will definitely be voting on psychedelics, and California may be doing the same. 

Kentucky also made headlines for its consideration of Ibogaine as a treatment for opioid use disorder. The committee responsible for assessing this option held several hearings during Q3 and Q4, where experts spoke on the benefits of using this drug to help addicts overcome their physical and emotional dependence on opioids. The man leading this effort was eventually removed from the committee, which led to this project being tabled. But, not before it made months of national headlines. 

Canada

Canada had very little change on a legal level. However, an influx of psychedelic dispensaries were opening across the country in 2023. Several of them were raided by police, who took all of the products and made several arrests. These stores were generally operational again within a week’s time. Canadians simply do not care that psychedelics are illegal. They have become easy to access, especially in big cities. This is not unlike how the cannabis market acted before it became legal in the country. 

UK & Europe

There are discussions in the UK and Europe about the potential benefits of psychedelics. However, there is yet to be any meaningful legislative change. In the UK, Parliament had a debate in 2023 about whether psilocybin should be rescheduled (it is currently scheduled as Class A— the most dangerous drug). Though this makes it more difficult to access, the UK has become the location of some of the most important research on psychedelics, with Imperial College London leading the way.

Psychedelics remain primarily illegal in Europe except for in The Netherlands, where psilocybin truffles are legal through a loophole in the law. There were no changes to the law in 2023. However, the EU and several of its countries have shown that they are open to considering these drugs for medical use. 

Other

Australia made big news in 2023 when it legalized the medical use of two psychedelic drugs. MDMA can now be prescribed for the treatment of PTSD and Psilocybin for depression. This new law went into effect on July 1st. As expected, rolling out treatment has proven to be a challenge. Though the drugs are now legal, they are not widely accessible. 

The year was full of psychedelic events, with MAPS, once again, taking the spotlight. The 2023Psychedelic Science Conference took place in June. All other events paled in comparison. The conference drew over 12,000 people to Denver, including all the biggest names in the industry. 

Rick Doblin, the founder of MAPS, was the face of the conference. He gave his opening remarks sporting an all-white suit— bearing a disturbing resemblance to the leader of a mega cult. Then, the conference ended in controversy when a group of indigenous advocates took the stage and commandeered the microphone. Doblin was gracefully willing to hear them out. Though the first speaker yelled in an angry frenzy, the other speakers were able to express their concerns calmly. The primary one being that their indigenous voices didn’t have the platform in this developing industry that they believed they should. This debate continued to present itself throughout many, though not all, psychedelic events and conferences in 2023.

Wonderland Miami, in particular, gave a platform to the members of the psychedelic movement that have grievances against the Westernisation of psychedelics. However, at Wonderland and other conferences, the people speaking on indigenous issues were rarely indigenous. 

In the past, Wonderland has been the biggest conference of the year, but that was not the case in 2023. In fact, they struggled to find enough speakers to fill out the schedule for the 3-day event in Miami. It got off to a rough start when attendees were forced to stand in line for hours in the humid heat of South Florida, unable to check in due to wifi issues. The rest of the conference was lukewarm at best. 

A few weeks later, the reMind Conference in Las Vegas offered a stronger look at the business side of the industry. Unlike Wonderland, there were no shoe-less conga lines encircling the expo floor. Although a relatively small venue (much smaller than the MJbizcon conference taking place next door), the intimacy served to create strong connections and a greater understanding of the industry. Additionally, a large number of people from MJbizcon (a cannabis conference) were coming over to explore opportunities for their businesses in the psychedelic space. The cannabis and psychedelic industries are vastly different. However, this points out that many of the people working in Cannabis are interested in this new industry.

In addition to these big conferences, there were dozens of smaller events and panels around the world in 2023 that highlighted psychedelics. Some were organized for the sole purpose of discussing psychedelics, while others simply highlighted them while focusing on topics such as business, investing, neuroscience, mental illness, and drug development. 

Psychedelics are being included in an increasing number of non-specialized conferences, which highlights the growing acceptance of these compounds by mainstream institutions. Many of the issues addressed in psychedelic-focused conferences did not, however, make it into these mainstream events. They were far more interested in the legal, drug-development pathways that mark the ‘Western medical’ side of the industry. This is not particularly surprising considering that the businesses and individuals who attend these events would risk their businesses by operating in the black market, or even the legal grey area. 

The heart of the psychedelic movement, however, loves to dance across the spectrum from black to white, and back again. Psychedelic conferences in 2023 were flooded with illicit products that were sometimes passed from palm to palm like we were back in the good ol’ days, but sometimes proudly displayed on the expo tables.

Looking at the psychedelic events that took place in 2023, it is easy to see that this movement is made up of many different people with many different views on what it means to be a part of it. Not everyone agrees on what the goals of the industry should be, or how they should be attained. However, the passion behind this movement and the fascination with these strange compounds is evident. 

There are two different sides to the media discussion to address for 2023. On the one hand is mainstream media coverage of psychedelics, which continued an extremely positive trend throughout 2023. On the other hand, there is traffic to psychedelic-specific media and content companies, which did not do well this year.

Let’s start with discussing the latter. Nearly every single psychedelic content website that we tracked saw a decrease in traffic during 2023. Some by up to 80%. This was a huge drop-off from record highs at the end of 2022. This has proven a struggle for many companies. Especially Psychedelic Spotilight, which recently put out a podcast with the CEO of its parent company (PSYC Corporation) about the struggles that the company is currently facing. He didn’t really mention what exactly the company was facing but unconvincingly argued that the company was going to be just fine. On the other end of the spectrum, companies that are focused on providing content for those within the industry, such as psychedelicinvest.com, have only seen a minimal drop in traffic. This suggests that while public searches for psychedelic topics decreased, the industry as a whole continued to grow. 

So, not a great year if you are running a psychedelic content company. However, 2023 was still a great year for coverage of psychedelics. Major media publications, including the New York Times, New York Post, Forbes, Times, and more, have been covering psychedelics on a weekly basis. 

The majority of coverage from major media outlets focused on celebrity use of psychedelics, drug development, and law reform. Psychedelic-specific media companies focused more on the intricacies of the industry, such as strategy or specifics of accessing psychedelics. 

After taking a steep dive in the final quarter of 2022, the psychedelic stock index continued on a steady downward trend for the majority of 2023. There were only a handful of weeks when the index increased. There were no major increases as a result of events within the market. Even the MAPS submission of its NDA cannot be specifically accredited with the slight end-of-year increase that was seen. 

After the initial hype of the industry faded, confidence in psychedelic stocks did as well. It is easy to say that this is a result of the poor economic environment, and that is certainly a big part of it. In 2023, the Dow Jones and NASDAQ saw some positive growth. However, both the psychedelic index and NASDAQ Biotechnology index stayed essentially the same. The Biotech index saw a 1.22% increase, and the Psychedelic Index decreased by 2.34%. Biotechnology is a risky investment, and psychedelics even more so. Since poor economic conditions generally make people more adverse to risky investments, it is not surprising that these indexes performed below the industry average in 2023.

Psychedelic stocks were initially propped up by hype. But, that only lasts so long. And, it doesn’t last as long as it takes to build a profitable business in this complex industry. The Index has stalled, and will probably stay that way throughout much of 2024 as a result of the greater economic climate and the current stage of the psychedelic industry. It will be a few years before the index really picks up. The key to long-term success in this area is patience. 

2023 saw the biggest mergers and acquisitions in the history of the industry. Albeit, not a very long history. There were two major acquisitions that bestowed this honor upon 2023. First, was the acquisition of Mindset Pharma by Otsuka. This was the first time that a big pharma company took a full step into the industry. Otsuka had, before the acquisition, invested money into Mindset and Compass Pathways. However, a full commitment to developing a psychedelic drug takes it to a new level. 

A lot of people in the industry cringe at the mention of ‘big pharma.’ This happens because the people who end up using psychedelics were often first failed by treatments offered by the mainstream medical market. Big Pharma has gotten a bad reputation because of the tactics that are sometimes used to get doctors to overprescribe drugs that aren’t doing much good anyway. Despite these concerns, it is going to be difficult to make psychedelics a mainstream medicine without some input from Big Pharma. 

Difficult, but not impossible. As seen with MAPS, it is possible to get a psychedelic drug to market without the help of an established pharmaceutical company. In fact, it may have been necessary. Getting a new drug to market costs hundreds of millions of dollars, and no pharmaceutical company is going to fork over that kind of cash, or even the fraction of it required to test the viability of a drug, without some assurance that there will be significant returns. So, it took a group of passionate and slightly crazed psychedelic enthusiasts to get things off the ground. And now, big pharma’s interest has been piqued. 

Whether you are for big pharma entering the industry or not, it has already happened, and this is likely just the beginning. The data is clear— psychedelics are extremely effective in treating a range of mental health and neurological disorders. And, once the first psychedelic gets approved by the FDA next year, mainstream pharmaceutical companies will be eager to get their piece of the pie. 

The other big acquisition in 2023 was more incestuous. Small Pharma was acquired by Cybin, creating the strongest and most robust DMT pipelines in the industry. Both companies have shown promise in bringing psychedelic drugs to market. With Cybin’s new acquisition and the capital that it secured in 2023, the company has secured its place at the top of the industry and given investors confidence in its ability to bring a drug to market. Only a third of startups will make it 10 years, and that is an especially difficult task for biotech companies, which have so many variables and face so many challenges that could easily cause the company to fail. Having a robust pipeline— as Cybin now does— greatly increases the chances of success by mitigating catastrophic failure if one drug were to fail. 

NASDAQ-traded company Lucy Scientific also had some interesting acquisitions in 2023. The drug manufacturing company has expanded its reach, presumably to mitigate risk and improve the outcome of future revenue streams through diversification. Early in the year, Lucy acquired a drug development asset from Wesana Health, which combines psilocybin with CBD. The program will target major depressive disorder, migraines, episodic cluster headaches, and trigeminal neuralgia. 

Then, the company acquired IP from High Times, giving those interested in the iconic cannabis brand access to its stock, which was not previously available. This acquisition also increased short-term revenue potential for Lucy, giving the company an upperhand in an industry full of companies that currently have little to no revenue. Lastly, was the acquisition of BlueSky Wellness. Lucy Scientific will leverage this E-commerce brand to market its own wellness brand and High Times products, creating an ecosystem of brands that support the growth of the company overall.  

Overall, M&A in 2023 set the stage for what companies will look like in the future. This doesn’t only paint a picture of the companies involved. It sets the narrative about what structures and partnerships will make for a successful company in the psychedelic industry. Of course, the outcomes of these predictions aren’t certain. But, if experts in the industry are willing to bet millions of precious dollars on it, then it is worth considering the long-term value of 2023’s acquisitions.

This year is going to be another challenging one for the industry. The greater economy isn’t showing signs of getting any better. In fact, many experts are predicting things will get worse in 2024. As discussed above, psychedelic stocks and the influx of capital suffer greatly because of the high-risk label attached to the industry. 

The two good things expected to come out of the industry in 2024 is the approval of MDMA by the FDA, the passing of initiatives in California and Massachusetts that would legalize psychedelics in those states, and the implementation of Colorado’s program. However, the passing of similar legislation in Oregon has not proven lucrative for the industry and has only been able to serve a small portion of the people seeking out this treatment. On the upside, the design of Colorado’s psilocybin program allows for more personal autonomy when it comes to the use of psychedelics. 

Back to the first point, MDMA will likely be approved by the FDA about halfway through the year. However, it won’t be till the end of the year, or perhaps the beginning of 2025, that patients will be able to receive this treatment in a clinical setting. So, companies offering education courses for therapists who want to offer MDMA-assisted therapy may see an influx of revenue in 2024. However, this major event will not benefit the cash flow of many companies. Any company planning to offer this service will need a large sum of cash to prepare their clinics for the unique needs of this therapy. And, they will not see significant returns until well into 2025. 

2024 is another test for the industry— who has the creative problem-solving skills to make it through? Capital will be difficult to come by. On top of that, the hype that helped companies without a solid business plan raise money back in 2020 and 2021 is gone. Enough years have passed that investors and lenders have a better understanding of where their money will be well spent. Companies that are already struggling to make ends meet are unlikely to get their big break in 2024. On the other hand, companies that have proven their ability to operate in this market without stumbling head-first into ruin will continue to grow. 

Those in a strong position will continue to solidify it in 2024. Mergers and acquisitions will continue to strengthen those on top and weed out the weaklings. Additionally, as more clinical trial data is released, it will become clearer which types of drugs have the greatest potential, and which companies are utilizing them in their pipelines.

We’re looking at 2024 as a year of sink or swim. There is no doubt that the psychedelic movement and industry will continue to grow. That fleet has sailed, and there is no calling it back now. Some ships will sink, with those aboard going with the vessel or being absorbed by bigger boats. And, some new ships will join in along the journey.