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While many people will look back on the pandemic as a dark time, it has also spurred some positive developments—most notably in the field of drug development, where miraculous breakthroughs like mRNA vaccines are transforming immunology. Now, a handful of companies believe the pandemic could lead to a profound change in how we address mental health.
“America’s mental health infrastructure is vastly broken. Sixty percent of US counties don’t have a single psychiatrist, and most of those that do don’t accept insurance,” says Rahn.
Rahn points to statistics that report a frightening rise in addiction and anxiety during the pandemic, and says new forms of medicine will be needed to alleviate this.
While LSD—an illegal drug most associated with 1960s counter culture—seems like an unlikely solution to a mental health crisis, MindMed has attracted wealthy investors and prestigious research partners. These include Steve Cohen’s Point 72 hedge fund, which is among those who have invested $182 million in MindMed, and NYU Langone Health. The latter recently accepted a $5 million grant from MindMed to help train medical staff in administering psychedelics as treatment.
Even if the likes of MindMed and Compass can amass the requisite clinical trials, there is also the question of how to give out the drugs. Given the potent and unpredictable nature of psychedelics, any treatment plans will require trained doctors to supervise—and there are only a handful of physicians and therapists in the US able or willing to prescribe substances like LSD.
According to Rahn, the MindMed founder, the company is taking a Silicon Valley approach to the problem. Namely, it plans to use technology to scale the treatments. In practice, this will involve building Zoom-like platforms where a medical professional can supervise from a distant, perhaps with a nurse assisting from the patient’s home.
Rahn describes such a program as “value based care” and says it has the potential to revolutionize the pharma industry’s current “get the highest price for a daily” business model. The company’s donation to NYU Langone is intended in part to help train a new cadre of medical professionals able to facilitate this vision. MindMed this week also acquired a medical AI firm called HealthMode in a share-based deal worth $34 million as part of its plan to build digital treatment platforms.
Meanwhile, MindMed is also experimenting with new treatments that combine LSD with MDMA—a practice known as “candy flipping” among recreational drug users, but that Rahn says offers promising therapeutical potential. Rahn also notes that, unlike the multi-billion dollar cannabis industry, MedMed has not intention of developing psychedelics for a recreational market.
This decision, while sensible given the popular stigma surrounding psychedelics, may also increase the business challenges facing MindMed and Compass. According to Scott Greiper of Viridian Capital Advisers, a firm that has profited from the cannabis business, the lack of a potential recreational market makes the psychedelic industry less attractive to investors.