When last we checked in with Stephen Hurst, the veteran biotech entrepreneur was trying to raise venture capital for a new drug to treat opioid addiction, but finding no takers. Then Hurst relaunched his company as MindMed, added LSD to its pharmacopeia, and the money poured in.

“We opened the doors on May 30, 2019, we took the company public in Canada on March 3, 2020, and [we] raised $100 million in capital in 19 months,” Hurst said. “After we went public, there were at least 30 new psychedelic companies founded. We definitely started something. We were the first publicly traded psychedelic company; we certainly won’t be the last.”

LSD has been illegal in the United States since 1968, but MindMed is conducting its clinical trials in Basel, Switzerland. Lysergic acid diethylamide was first synthesized there by Albert Hoffman, a chemist at Sandoz, in 1938. He discovered its psychedelic properties in 1943.

LSD is not broadly available in Switzerland, but research has continued. MindMed is partnering with Matthias Liechti, whose psychedelics pharmacology and research group at University Hospital Basel has conducted clinical trials for a decade.

For MindMed, those trials include micro-dosing (which typically involves about one-tenth of a normal hallucinogenic dose) as a treatment for adult ADHD, as well as an ongoing trial for anxiety, using a full dose administered by a psychotherapist. MindMed is also funding a Psychedelic Medicine Research Training Program at NYU Langone Health, preparing a new generation of psychiatrists to work with what it calls “experiential therapies.” The company’s work with psychedelics comes under the heading Project Lucy — like the one in the sky with diamonds.

Its fundraising success has allowed MindMed to also proceed with its anti-addiction drug, 18-MC, which is derived from ibogaine, another psychedelic, but with the hallucinogenic properties removed. That’s Project Layla.

“We are looking at everything from medically supervised hallucinogenic experiences to non-hallucinogenic analogs and micro-dosing at sub-hallucinogenic levels,” said Hurst. “It’s a brave new world, but not the one that [Aldous] Huxley was talking about.”

Are You Experienced? Have You Ever Been Experienced?

Despite coming of age in the early ’70s, the author would have to answer Jimi’s question in the negative. The traumatic experiences I witnessed others having outweighed the entreaties of my turned-on friends.

Ayelet Waldman, the Berkeley-based author, had similar feelings back then. But five years ago, beset by mood disorders and chronic pain that defied legal pharmaceuticals, she decided to try micro-dosing LSD. The journal of her month-long experiment became a best-seller, A Really Good Day: How Micro-dosing Made a Mega Difference in My Mood, My Marriage and My Life.

Berkeley being Berkeley, a few subtle outreaches to friends led to a vial of LSD in Waldman’s mailbox, which she tested for purity with a kit purchased on Amazon.

As her book’s subtitle makes clear, Waldman had a pretty good time ingesting a tiny dose of LSD every three days, which she has parlayed into frequent speaking engagements and a forthcoming Showtime series. “I have felt different and I have been different,” she writes. “Whether it’s the micro-dose, or the placebo effect, over the past month I have had many days at the end of which I looked back and thought, That was a really good day.” (Italics hers.)

But a little time spent on Reddit’s Micro-dosing subreddit suggests that while Waldman’s experience was not unusual, it is by no means universal. There are accounts in which micro-dosing actually triggered anxiety or depression, inexplicable instances of “tripping” on nominally sub-hallucinogenic doses, physical effects including heart palpitations — and more than a few people who have experienced nothing at all. 

Search and Research

Waldman’s positive outcome may be partly explained by her choice of James Fadiman as guide. Fadiman didn’t invent micro-dosing, which Hoffman and others had dabbled in decades earlier. But his 2011 book, The Psychedelic Explorers Guide, helped kickstart the current wave. Fadiman had known Timothy Leary and Richard Alpert at Harvard and had himself became an articulate if less messianic advocate of LSD and psilocybin at Stanford. Among others, he gave a first dose to Stewart Brand of Whole Earth Catalog fame, who went on to produce the first Trips Festival with Ken Kesey’s Merry Pranksters.

Fadiman told me that he first heard of micro-dosing from Robert Forte, author of two books about psychedelic drugs, who said it had helped him deal with a difficult new relationship. “When Forte told me about it I got curious,” Fadiman said. He doubted the tiny doses would do anything. So he conducted his own informal study, which he calls search rather than research because there is no placebo or double-blinding, as in a conventional drug trial. Nevertheless, he developed a protocol for micro-dosing, which has become a standard.

“There are enough people around, who if you say ‘will you try this?’ they’re very happy to do so,” Fadiman said. The results changed his mind. “About 80 percent find they’re no longer depressed. But our stuff, nobody’s going to publish that. So micro-dosing has had this peculiar acceptance because people have found it useful.”

Fadiman is skeptical of the startup companies jumping on his bandwagon. “Many companies have a large basket of promises and press releases, but very little else and almost no experience. They’re looking to find a way to monetize it, and maybe they will; they probably will,” he said. “On the other hand, the money pouring into it is doing well.”

Groovy Psychedelic Stocks

Consider Compass Pathways, a former not-for-profit that went public on Nasdaq last September at $17 a share and then soared above $60. It’s currently trading at about $45, giving the now for-profit company a market cap of over $1.5 billion. And it’s one of “5 Groovy Psychedelic Stocks to Buy,” as recommended on the InvestorPlace website and in other boosterish articles.

Compass is in Phase 2 trials using psilocybin, the active ingredient in so-called magic mushrooms, for treatment of resistant depression. Many victims of depression have found that the benefits of selective serotonin reuptake inhibitors (SSRIs) like Prozac, Zoloft and Paxil fade over time, while side effects such as weight gain and sexual dysfunction remain.

In November, researchers at Johns Hopkins reported that in a small study of adults with major depression, two doses of psilocybin, given with supportive psychotherapy, produced rapid and large reductions in depressive symptoms. Adding to the sense that the times have a-changed, psilocybin has recently been decriminalized in the state of Oregon, following similar moves by the cities of Denver and Oakland.

But Compass has gained notoriety not for its clinical progress, but for its tactics. As a not-for-profit called Compass (“Center of Mental health Pathways And Support for Self-directed care”), a charitable organization based in California, it plied psychedelics researchers with lavish meals and all-expenses-paid trips to the Isle of Man, only to go quiet once it had gleaned their knowledge and expertise.

When the charity became a for-profit enterprise (and now publicly traded corporation), many early collaborators felt betrayed. The affair was the subject of a long investigative series by Olivia Goldhill, then a science reporter with Quartz. Their suspicions only hardened when Compass filed patent applications for its own method of synthesizing psilocybin, a substance that has been used in mushroom form for millennia and that was first synthesized by Hoffman over 50 years ago. Compass’s psilocybin drug, COMP360, received “breakthrough therapy designation” from the FDA, creating an accelerated path through the regulatory process.

Compass’s leaders wouldn’t talk to Goldhill (or me, either), and the psychedelic researchers she interviewed all insisted on anonymity. But Fadiman is less shy: “Compass are the people who nobody likes, the uninvited fairy at the wedding, because they stole everything they know,” he said. As a not-for-profit they received a lot of free advice from experts in the field, and “then they turned around and attempted to patent the synthesis of psilocybin so nobody else could make it.”

Compass has not indicated whether it will operate clinics that dispense psilocybin or manufacture the drug for sale. When asked by Barrons, Compass chief executive George Goldsmith said the question was premature. “Investing in these stocks is probably premature, too,” was the magazine’s tart comment. But that hasn’t stopped some deep-pocketed traders: Compass’s shareholders include Peter Thiel, a cofounder of PayPal and early backer of Facebook, and the German financier Christian Angermayer.

Small investors can now buy a basket of groovy stocks through a new exchange-traded fund, the Horizons Psychedelic Stock Index, which started trading on January 27 under the ticker PSYK on Canada’s NEO Exchange. Companies included are listed on a stock exchange in Canada or in the U.S. and are engaged in research, production or distribution of psychedelic compounds and medicines. Compass is a major holding. But the ETF also includes big pharma like Johnson & Johnson and AbbVie, which own ketamine (or analog) products in their portfolios, as well as Greenbrook TMS, the country’s largest provider of transcranial magnetic stimulation, a noninvasive alternative method for treating mental health disorders.

Implicit in the rush to psychedelic stocks is an expectation that drugs like psilocybin and MDMA (a k a ecstasy, a k a molly) which is in clinical trials for PTSD, will follow the trajectory of legal cannabis. Legal pot began as “medical marijuana” before spawning a multibillion-dollar recreational market. But some early investors are quick to throw cold water on that assumption, noting that the market for depression therapies alone would provide them an adequate ROI.

“Certainly I can see the mainstream Robinhood investor might be piling in, for the story that this is the next cannabis, but I think that’s misguided,” said Nick Haft with OMX Ventures, which has invested in Compass and Delix Therapeutics, a Davis, California–based startup that is working on ibogaine and DMT analogs for mental illness. “Compass Pathways is not pursuing a retail strategy,” he said, while noting that Delix is pursuing compounds that have had the hallucinatory qualities, and hence the recreational potential, removed.

But maybe psychedelic drugs just don’t fit the pharmaceutical profit model. “The problem is you can’t patent something that’s been around for 50 years,” explained Bill Linton, president of Usona Institute, a not-for-profit that is currently conducting Phase 2 trials of psilocybin for depression. “You have a drug that’s inexpensive to make, it’s not patentable, and you give it two or three times in a person’s lifetime. Big pharma looks at that and says, what are we going to tell our shareholders?”

Off Label

Although some cities and at least one state have decriminalized psilocybin and similar legislation may follow for other psychedelic drugs, that does not mean they have been legalized. They can be administered in federally sanctioned clinical trials, as can other controlled substances. But that doesn’t imply your friendly general practitioner can now write you a prescription. Once a drug is approved for a given indication, doctors are free to prescribe them as they see fit. That raises another potential red flag for hallucinogens, because a federal law called the Controlled Substances Act of 1970 bars them from writing prescriptions without a “legitimate medical purpose.”

“Although this prohibition aims to prevent doctors from acting as drug traffickers, the law does not explain which purposes qualify as ‘legitimate,’ nor how to distinguish valid prescriptions from those that merely enable patients’ illicit drug abuse,” Matt Lamkin, an associate professor at the University of Tulsa College of Law, wrote in Scientific American. “Would prescribing a psychedelic drug simply to promote empathy or increase ‘life satisfaction’ fall within the scope of legitimate medicine — or would these practices render the physician a drug dealer?”

One Pill Makes You Larger

The counterpart to Ayelet Waldman’s paean to micro-dosing is How to Change Your Mind, by Michael Pollan, also of Berkeley, which was published a year later to broad acclaim. Pollan is more interested in full doses of hallucinogens, and in the course of his reporting he took LSD, psilocybin and 5-MeO-DMT, also known as “the Toad,” because it is the smoked venom of the Sonoran Desert toad.

In addition to a colorful gallery of trip guides, Pollan spent quality time with veteran researchers including Rick Doblin, the founder and executive director of the Multidisciplinary Association for Psychedelic Studies (MAPS), and Roland Griffiths, a psychopharmacologist at the Johns Hopkins University School of Medicine. But while they left him with respect for the potential of hallucinogens as therapies, Pollan is circumspect, noting that some patients with depression were back on SSRIs within six months of their psychedelic dose.

“We shouldn’t forget that irrational exuberance has afflicted psychedelic research since the beginning, and the belief that these molecules are a panacea for whatever ails us is at least as old as Timothy Leary,” Pollan writes. “None of these psychedelic therapies have yet proven themselves to work in large populations; what successes have been reported should be taken as promising signals standing out from the noise of data, rather than definitive proofs of cure.”

It’s worth remembering that nearly 30 years ago, another bestselling book sang the praises of a psychoactive molecule, one that promised not only to beat the scourge of clinical depression, but to turn shy people into social butterflies and to improve work performance, memory, even dexterity. Its title was Listening to Prozac.