Get Ready for the Magic Mushroom Pill
august 2022 Bloomberg

Get Ready for the Magic Mushroom Pill

The medical benefits of psychedelic drugs have gone from Age of Aquarius punchline to solid science, but the startups racing to market might still be getting ahead of themselves.

Under the pale light of a laboratory flow hood, clad in a cleanroom suit, hat, and booties, Sarah Neumann gingerly unfolds an aluminum foil packet. An irislike pattern in dark brown powder reveals itself on the surface inside. It’s a fingerprint of sorts: Separate a mushroom cap from its stem and wrap it, gills down, in foil overnight, and the next morning you get this. For mycologists collecting samples from the wild, spore prints like these are aids to identification. For Neumann, whose work is in cultivation, they are repositories of genetic information.

In this case, the print belongs to a species called Psilocybe cubensis. Scattered in rich soil, or, better yet, manure, these genetically unique dots will develop into networks of delicate, branching threads called mycelium. Feeding on decomposing organic matter, the mycelium will eventually send up fruiting bodies—the familiar capped forms most of us know as mushrooms—laden with a new generation of spores. For reasons that remain mysterious, the fruiting bodies of P. cubensis and some of its fungi cousins also carry another cargo: chemicals that interact with the neurotransmitter receptors of the human brain to dramatically unmoor us from everyday perception and cognition, in ways that can feel like a waking nightmare, an awe-inducing glimpse of the universe’s most basic truths, or both.

Neumann is the lead mycologist at Numinus Wellness Inc., a Canadian company that’s a leader in the pharmaceutical industry’s least likely new subfield. For centuries, humans have foraged forest floors in search of the wild and glorious unpredictability of a psychedelic trip. Neumann’s job is to tame that chaos. In the spring of 2022, deep in a nondescript warren of lab spaces in a strip mall on Vancouver Island, she opens a refrigerator full of petri dishes and Mason jars with mycelium at varying stages of development. “That’s what I am looking for,” she says, holding up a sample with particularly thick strands.

That initial appraisal is the first step in a painstaking winnowing. From her spore prints, Neumann will cultivate mycelium, growing promising candidates into mushrooms to analyze their vigor and chemical payloads, repeating this step over and over to eliminate any doubt and adding the best specimens to her company’s cell bank. This six-month-long verification is just one step in Numinus’s magic mushroom optimization process. Researchers there are experimenting to find what makes the best food for their P. cubensis; when it’s best to extract the primary psychoactive compound, psilocybin; and how finely to grind the fungal tissue when turning it into a shelf-stable powder. The extract will be tested for impurities, then go into a capsule with a proprietary mix of stabilizers and other ingredients. If all goes according to plan, a version of this pill will be swallowed with a sip of water in a clinic under a therapist’s watchful eye and paid for by health insurance.

Even a decade ago, psychedelic drugs were limited to a fringe of mystics and experiential adventurers, just as they had been in Western societies for most of modernity. Today they’re approaching mainstream acceptance. It’s been a dizzying turnabout. Veterans organizations and former Texas Governor Rick Perry are among their champions. The US Food and Drug Administration has classified psilocybin as a “breakthrough therapy,” a designation intended to speed the process of getting especially promising drugs to market.

Helping to drive the shift is a growing scientific literature that ratifies what the mystics have long said: These compounds can heal. Psychedelics have shown promise treating conditions as diverse as alcoholismeating disorders, and migraines. A small February study in the Journal of Psychopharmacology by researchers at Johns Hopkins University found that psilocybin-assisted therapy relieved symptoms of depression for at least a year in 75% of participants and effectively eliminated the symptoms in more than half of them during the study period.

Equally exceptional results have been found with MDMA, an amphetamine derivative that’s the active ingredient in the club drug ecstasy. A clinical trial conducted from 2018 to 2020 gave MDMA-assisted therapy to war veterans, sexual assault survivors, and other sufferers from severe post-traumatic stress disorder, a notoriously treatment-resistant condition: After three sessions, two-thirds no longer met the diagnostic criteria for PTSD, an unheard-of finding. The FDA has issued breakthrough status to MDMA, as well. All of this comes at a time when the pandemic and the resulting societal disruptions have sharply driven up rates of depression and anxiety and laid bare the inadequacies of the current tools and institutions available to treat them.

As a result, what once was a scene is now an industry. There are more than 50 publicly traded psychedelic companies listed on US exchanges alone, and startups, like fruiting bodies, are sprouting all the time. One recent report from Data Bridge Market Research projects that the global market for pharmaceutical psychedelics, led by companies such as Johnson & Johnson, will reach $6.9 billion by 2027. At such a pace, an opinion piece in the journal JAMA Psychiatry pointed out, the industry “may even outpace the legal US cannabis market.”

Proving the drugs work, however, may turn out to be the easy bit. In some ways, money and mainstream acceptance have divided the psychedelic world. Some champions of the drugs, having spent their lives trying to bring them in from the fringes, are now questioning how they’re seeing things unfold. “The concern that I have,” says Payton Nyquvest, the co-founder and chief executive officer of Numinus, “is that if we’re too quick to just open up access, knowing human beings and the way that we operate, we could miss the therapeutic opportunity.”

Modern psychedelic research began in 1938, when LSD was created in Switzerland at Sandoz (now a division of Novartis AG). A few years later, Albert Hofmann, the young chemist who’d synthesized it from a grain fungus, discovered the chemical’s euphoric effects when he accidentally ingested some through his skin. In 1955 a mycology-obsessed American couple named Valentina Pavlovna Wasson and R. Gordon Wasson traveled to a village in Oaxaca, Mexico, where they became the first outsiders to participate in magic mushroom ceremonies dating to pre-Columbian times. Gordon Wasson’s account of the experience in Life magazine two years later was a sensation.

Over the next few decades, more than a thousand scientific papers would be written about the mysterious chemicals, and everyone from Cary Grant to Charles Mingus to Alcoholics Anonymous co-founder Bill Wilson evangelized their therapeutic potential. (The CIA, hoping to find a truth serum, infamously carried out its own “research” into the drug.) In the 1950s and early ’60s, tens of thousands of patients would receive psychedelics for depression, alcoholism, and other conditions. Research centers arose in California and, improbably, Saskatchewan to study and train people in new therapeutic methods. The Czech psychiatrist Stanislav Grof argued that psychedelics could be as valuable for psychiatry and psychology as the microscope and telescope were for biology and astronomy.

But with the backlash against the drugs in the late 1960s, the opportunity to prove (or refute) Grof’s claim disappeared. The Controlled Substances Act of 1970, signed into law by President Richard Nixon, effectively outlawed studying the human effects of these compounds in the US. When people talk about the psychedelic renaissance, these were the preceding dark ages. The monastics guarding the flame were a small network of therapists who continued to work in secret—what Michael Pollan, in his 2018 bestseller, How to Change Your Mind, called “the psychedelic underground.” By the 1990s, a few determined researchers in the US, Germany, and Switzerland had managed to find ways around the barriers to working with psychedelics. One of them, the psychiatrist Rick Strassman at the University of New Mexico, argued to regulators that studying these drugs could help characterize and perhaps even treat psychotic disorders such as schizophrenia.

Over time, scientists have begun to build a better understanding of the biological mechanism of psychedelic chemicals. Studies have shown similarities in how the brain responds to drugs including psilocybin, LSD, DMT (the active ingredient in ayahuasca), and mescaline, a psychedelic compound derived from the peyote cactus. They all bind with receptors for serotonin, a neurotransmitter that affects mood. This is how traditional antidepressants work, too. But unlike those drugs, a single dose of psychedelics, in combination with therapy, can seemingly relieve the symptoms of mental illness for months.

One of the leading researchers in the field is Robin Carhart-Harris, a professor of neurology and psychiatry at the University of California at San Francisco. In a series of recent papers, Carhart-Harris and his team have used brain scans that track blood flow and electrical activity to monitor the mind on psychedelics. Their work suggests that something called the default mode network—a collection of brain areas that together function as the command-and-control apparatus—is quieted by psychedelics. The tight, efficient choreography of neuronal communication that comprises normal thought becomes temporarily disorganized, allowing for patterns of connection that an active and alert default network would forbid. This cross-wiring can spark hallucinations, or it can just lead to new kinds of thoughts. (Of course, in defense of the default network, the behaviors associated with tripping Homo sapiens were probably best kept to a minimum in the Stone Age savanna.)

With depression, some research suggests that this profusion of connections leads to feeling better. The writer Patrick Leigh Fermor once compared the mind to a wax writing tablet—soft and imprintable in childhood, it hardens over time. Psychedelics may soften the wax back up and allow a person to write on it anew.

And some of these new patterns seem to stick, at least for a while. One Carhart-Harris study this year found that, for people with depression, increased brain connectivity and flexibility from psilocybin were still present three weeks after the therapy, as were the improvements in symptoms. Other studies found effects lasting longer. “We’ve now got out to 100 days after a single treatment, and we see really no decrease in outcome measures,” says Charles Nichols, a pharmacologist at Louisiana State University, referring to his lab’s animal studies. “We’ve moved now from sort of just characterizing the clinical effects. We’re delving deeper into the cell.”

Work like this costs money. For years, much of that came from the Multidisciplinary Association for Psychedelic Studies (MAPS), an organization founded by an indefatigable man named Rick Doblin, who unsuccessfully petitioned the US Drug Enforcement Administration to stop the criminalization of MDMA in the mid-1980s. In 2000, MAPS began its first clinical trials to test MDMA’s efficacy for treating PTSD. (MDMA isn’t considered a psychedelic in the strictest sense because of how it works in the brain, but it powerfully affects perception and mood.)

The current popular embrace of psychedelics, and the gold rush that’s accompanied it, is a vindication of Doblin’s once-quixotic quest. But it’s also a time of adjustment. One of Doblin’s great gifts to the cause has been his ability to raise money. Today, however, he’s finding that donors are less interested in giving. Now they want to invest. “For 36 years, we have been entirely powered by philanthropy and grants. And that is now changing,” Doblin says. “You could say that we’re a victim of our own success.”

Buoyed by their dramatic PTSD results, MAPS has started raising money for a second Phase III clinical trial that’s set to wrap up in the fall—the final hurdle before the FDA will consider MDMA for medicinal use. To do so, the organization has created a $70 million special purpose investment vehicle in collaboration with Vine Ventures, one of a host of specialized venture funds with names such as Palo Santo, PsyMed, and Neo Kuma trying to get in early on the psychedelic boom. In June, Vine enlisted the auction houseChristie’sto raise $1.6 million for MAPS through the sale of a batch ofnonfungible token art.

In a community long dominated by true believers, however, the possibility of profit is a new and destabilizing force. Hence the controversy around Compass Pathways Plc. Initially founded as a nonprofit mental health company in 2015, Compass funded important early research projects and had the vocal support of Doblin and several prominent psychedelics researchers. Then, in 2018, it began taking out patents, mostly concerning a specific form, or polymorph, of synthesized psilocybin. It also filed patents for a psychedelic therapy technique, going so far as to claim that aspects of clinic decor—“soft furniture,” “muted colors,” “a high-resolution sound system”—are, because they are key to Compass’s proprietary therapy, therefore proprietary themselves.

The company’s executive chairman and co-founder, George Goldsmith, defends these moves as the best way to bring a promising treatment to the masses. Compass, he argues, has the potential to transform mental health, but not if it can’t make money. “The cost of doing that at scale through a regulated model is unfortunate but true,” he says. “There’s no way to do discounted clinical trials.” The company’s critics, he argues, are part of a “cult.”

For those critics—among them former supporters—this newly aggressive intellectual property strategy threatens to throttle the nascent market. “This is a bit like somebody saying we’re going to patent the phrase ‘Hail Mary,’ ” says the investor and philanthropist Carey Turnbull, who founded a nonprofit called Freedom to Operateto contest the company’s claims. Experts in physical chemistry and crystallography his group hired found that Compass’s synthesized molecule was not, in fact, new, but a patchwork of older polymorphs. In June of this year, the US Patent Trial and Appeal Board denied Turnbull’s petitions for “post-grant review” of Compass’s patents.

As all this unfolded, Compass went public on Sept. 18, 2020. On the first day of trading, it attained a market value of nearly a billion dollars. Last December, after the company presented the results of its largest trial of psilocybin therapy to date, its stock price peaked at $58. The trial results, however, at least in the heady context of other recent studies, were mixed. Patients with treatment-resistant depression who received a dose of Compass’s psilocybin drug COMP360 all saw a significant improvement in symptoms. About one-third of patients in a high-dose group showed a decline in the severity of their depression after 12 weeks. But so did 10% in a control group. (A quarter of patients in the high-dose group no longer appeared to suffer from depression at all.) The trial also raised safety concerns, with some participants experiencing suicidal impulses. “There’s been theoretical fears that the nature of the ‘trip’ might be beneficial for many but problematic for a subset,” Paul Matteis, the managing director for biotech equity research at Stifel, wrote in a research note at the time. Compass’s stock has steadily declined over the past year and a half and was worth about $17.50 a share in mid-August.

People in psychedelics tend to be there because of their own transformative personal experiences. The first three decades of Payton Nyquvest’s life were characterized, in equal measure, by chronic pain and extraordinary powers of compartmentalization. The pain he traces to his birth, which was premature and marked by multiple complications. His childhood, in his description, was “traumatic,” and he developed constant, mysterious gut pain.

Nonetheless, by his late 20s, he was well along in a successful career in finance, running the Vancouver office of a brokerage firm and focusing on investments in novel industries—at the time, cannabis was particularly hot. And yet his pain was landing him in the emergency room two or three times a week, where he received the only intervention that ever seemed to help at all: injections of the powerful opioid hydromorphone. He eventually realized that his body had grown dependent on them.

In 2018, having come across accounts of people with similar symptoms who claimed to have been cured by psychedelics, Nyquvest booked a stay at Rythmia, in Guanacaste, Costa Rica, for a healing ritual with a plant-based hallucinogenic brew called ayahuasca. An “all-inclusive, luxury, medically licensed plant medicine center,” Rythmia offers yoga and a restaurant featuring locally sourced food. Its website features video testimonials from the star surfer Kelly Slater and the famously troubled singer-songwriter Bobby Brown. For Nyquvest, the stakes were very high. “When I flew down, I made up my mind that if this wasn’t going to work, then that was it,” he says. “I was going to take my own life.”

Along with 90 other Rythmia guests, he dressed in white, lay on a mat in a large, open-air room, and drank the potion for four straight nights. On the second, he recalls, everything suddenly went dark. He looked down to see his stomach and intestines exposed to the open air, and he felt a hand reaching down his throat and rearranging his insides. Then, he recalls, he had a vision of himself as a newborn, “back in the incubator and healed.” He says he’s been symptom-free since.

In starting Numinus, Nyquvest says, “all I really wanted to do is create more access.” But, lifesaving though it may have been, his own experience—a modern simulacrum of a divination ceremony—is far different from the kind of therapy he’s trying to bring to the masses. He is sitting in a therapy room at one of the three Numinus locations in Vancouver—there are others in Montreal, Toronto, Utah, and Arizona. The modern furniture is soft, the lighting is muted, and the sound system seems high-resolution.

Nyquvest is critical of the Compass approach, albeit in the nonconfrontational tone one might expect from a Canadian mental health and psychedelics entrepreneur. “My concern is that it’s getting in the way of accessibility,” he says. “There’s a lot of resources that have flowed into the space to try and create some novel product to be controlled and exploited for, you know, financial benefit.” But there’s another end of the spectrum, and he’s leery of that, too. Some longtime therapists and activists believe that medical authorities and regulators shouldn’t have the power to keep these compounds from people who believe they need them. “I’ve experienced very deep healing and spiritual insight,” David Bronner says of his own extensive psychedelic experiences. Bronner leads Dr. Bronner’s Magic Soaps, the organic soap and personal-care company his grandfather founded, and he’s a longtime supporter of MAPS research. “It helped me grapple with and rise above some toxic masculinity and just be a more empathic, connected, compassionate person.” He thinks just about everyone should have the same chance.

In 2023, Oregon will become the first state with widely legalized psychedelics. A November 2020 ballot initiative gave the state’s health agency the task of overseeing magic mushroom consumption at “service centers” in the presence of “licensed facilitators.” At present, California, Colorado, New York, and Washington are all considering some form of legalization, while several others are enacting decriminalization. And ketamine therapy is already legal. Like MDMA, ketamine isn’t a classic psychedelic—its dissociative, trancelike effects have made it popular as both a legal anesthetic and an illegal club drug. But a robust research literature has also shown that ketamine-assisted therapy can reduce the symptoms of depression. Some companies now offer at-home ketamine therapy, mailing the tablets to patients who are supposed to take them under remote supervision.

The risks are obvious. Ketamine is addictive. According to the best available evidence, MDMA, psilocybin, and LSD are not—and the classic psychedelics also seem to carry a very low risk of side effects. But psychedelics can nonetheless be dangerous. Those at risk of a severe psychiatric disorder should avoid them, and even perfectly healthy people in the midst of hallucinatory moments of clarity can, if unchaperoned, get themselves into bad trouble. “All we need is one story of some minor that did a bunch of psilocybin and got behind the wheel of a car and killed somebody,” Nyquvest says. “One story like that, and it’s over, right?”

Numinus itself offers ketamine therapy in its clinics. It also offers drug-free talk therapy and something called “psychedelic integration”: helping patients who are seeking out the drugs on their own prepare for the experience. And Numinus is technically allowed to offer true psychedelic therapy in rare cases under Health Canada’s Special Access Programme, which as of this year allows physicians to request the treatment for patients with serious or life-threatening conditions. The company remains small—clinic revenue in the most recent quarter was less than a million dollars. More than the money Numinus generates today, though, Nyquvest is focused on having the necessary infrastructure in place as soon as regulators give their final blessing to the new treatments.

A typical Numinus ketamine treatment cycle has three components, beginning with a prep session, usually a week before dosing, where the therapist and patient discuss everything from what music to play to what the drug will feel like to the patient’s therapeutic goals. The cycle ends with an integration session after the drug’s effects have worn off to try to make some sense of what has happened. In between, there’s the medicine session itself, when the patient takes the drug and puts on an eyeshade and headphones, and the prediscussed music plays.

“Emotions will arise, images will arise, thoughts will arise that are bigger, deeper, broader, more meaningful than a regular therapy session,” says Joe Flanders. A psychologist and investigator in the MAPS MDMA clinical trials, he’s worked at Numinus since 2021, when it acquired his Montreal-based company, including two clinics offering ketamine therapy. As vice president for psychology, he’s in charge of training Numinus’s therapists. The company employs 110.

In Flanders’s description, the goal of the therapy is not to unearth Rosebud-like insights for the therapist and the patient to talk through. “We’re relying much less on active, conscious, cognitive processes,” he says. Psychedelic therapy, rather, is an “experiential modality,” where what happens—whether it be a newfound sense of self-acceptance or a lessening of existential fears—happens at an emotional or even sensory level. (This may explain why descriptions of the life-changing realizations brought back from trips often sound so banal.) “Getting underneath verbal processes is really important,” Flanders says.

The psychedelic therapist’s job, therefore, consists largely of helping someone incorporate these strange and intense new sensations. The patient needs to feel comfortable enough, despite the flood of surreality, to actually surrender themselves to it. “You are going into a state of consciousness with lots of vulnerability,” Flanders says. “And so you really need to make sure you’re going to trust the person sitting across the room.” At Numinus, as elsewhere in the industry, everyone is acutely aware of the importance—and risks—of trust. In 2019, MAPS announced that it was terminating its relationships with two of its trial investigators, a married couple who allegedly had a sexual relationship with a participant after working with her. More recently, reporting by New York magazine revealed that the couple also engaged in nonsanctioned behavior such as cuddling the participant during therapy.

In July, Health Canada suspended one trial site conducting an independent MDMA investigation for which MAPS supplied the study drug, citing patient safety concerns. (Regulators also found that MAPS was in violation of standards for good clinical practices, though it was allowed to continue its trials with proposed corrective actions.) In addition, MAPS has faced criticism that its research overstates the benefits of psychedelics. Participants in the MDMA trial told New York that despite being counted as successfully treated in the results, they continued to struggle with mental health issues throughout their treatment. And though they did make progress with their PTSD, some still ended up feeling worse than before.

As for Numinus, it does need to make money. Like Compass, it has an intellectual-property strategy, albeit one that tries harder not to offend the ethics of the psychedelic underground. “We think psilocybin will probably just be generic, and clients will have the choice of what product they would like to use,” Nyquvest says. “And we believe that there’s going to be a number of people that would prefer a natural event.” Last year, Numinus filed for a US patent on techniques to rapidly produce natural psychoactive fungi species, and it has also filed a similar patent internationally. The company is studying whether other compounds in mushrooms besides psilocybin may enhance their therapeutic benefit.

Numinus’s next group of patents will focus on the delivery mechanism for the drugs. In addition to a pill, it’s exploring liquid formulations and a tea. (The regulations around working with scheduled drugs mean Numinus employees can’t sample the tea, so they have no idea what it tastes like.) The company is also licensed to work with LSD, DMT, and mescaline in its lab, and it eventually may explore the therapeutic potential of those drugs. “What we’re seeing right now is only the first generation of these drugs,” says David Olson, a neurochemist at the University of California at Davis. “The third generation will be completely new compounds.”

Olson is among those who believe the psychological component of the drugs’ action is not nearly as important as other, subtler biological effects. In a 2018 study, Olson’s lab demonstrated the so-called neuroplasticity of psychedelic compoundsincluding psilocin (the psychoactive compound the body turns psilocybin into), along with LSD, MDMA, DOI, DMT, and ibogaine. The drugs seem to heal brain cells, reforming weakened synaptic connections. That could help explain why they appear effective for conditions as diverse as alcohol abuse, depression, and PTSD, all instances where neurons have atrophied.

But if neuroplasticity is the source of the drugs’ healing powers, that puts in question the role of the trip itself—the mystical communion that has for thousands of years defined the human experience of the compounds. Olson suggests that it might, in fact, be unnecessary. He theorizes that it would be possible to remove the psychedelic qualities from psychedelic drugs and have them still be effective. “I am very supportive of people bringing these to the clinic,” he says of the existing hallucinogens. “People are desperate.” But a pill that people could pop without clinical supervision and without an hourslong ego-dissolving odyssey would, he predicts, be far more popular. A company Olson co-founded, Delix Therapeutics, has several compounds under development that work like psychedelics without a hallucinogenic effect. He hopes to begin trials as soon as next year. In another line of inquiry, Olson, working with Boris Heifets of Stanford, plans to test this hypothesis in humans by giving psychedelic drugs to participants while they’re unconscious under anesthesia.

Olson’s is a minority position among his peers. Matthew Johnson is a psychologist and professor at Johns Hopkins Medicine and a leading researcher in the field. “Obviously I think there’s promise in psychedelic therapy,” he says, “and by psychedelic therapy I mean: high doses, preparation, pay attention to the experience.” Johnson is working with a company, Mydecine, to bring to market a psilocybin-based antismoking product.

There’s a flip side to Olson’s argument, too. One of the people who makes it happens to be his Stanford collaborator, Heifets, a doctor and neuroscientist. In the big psychedelic trials so far, Heifets points out, the placebo groups also had pretty strong outcomes. In other words, just giving psychedelic-type therapy without the psychedelics does a lot of good. Rather than domesticating the compounds to fit more neatly into our existing health-care system, the way Olson proposes, perhaps we should try to do something more like the opposite.

For one thing, that would mean making talk therapy in any form a lot more accessible and affordable. “The psychedelic treatment model is not well-suited to the medical infrastructure that we have,” Heifets says. Therapists are often in short supply in the US, and their care can be difficult if not impossible to receive reimbursement for from insurers. “Why do we have a mental health crisis?” he asks. “I don’t think it’s because we’re missing the right antidepressant drug.”