🫠 Psychonaut POV

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When Josh Hardman first discovered there were companies trying to commercialize psychedelic medicine, he wrote the whole thing off. But his skepticism quickly turned to curiosity, and it’s been driving him ever since as editor of Psychedelic Alpha.

We spoke to Josh about the most common concerns around Big Pharma and psychedelics, the psychedelic boom-and-bust cycle, and his optimistic vision for 2024 and beyond.

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How did you first become interested in the intersection of psychedelics and business?

I was studying government at the London School of Economics, when I realized the culture was too corporate for me. Most of my peers were heading to banking or consulting jobs. So I thought about transferring to a liberal arts school, but my advisor suggested an exchange program at UC Berkeley instead. She made a deal with me: if I got into the Berkeley exchange, I would finish up my studies at LSE afterwards. I applied, thinking I wouldn't get in, but I did. I was frustrated but also excited; I was the first in my family to go to university, so I didn't know much about these places!

Berkeley was amazing for me, considering my interest in social movement history and countercultural politics. My advisor, Sean Burns, got me into oral history. I interviewed people from the Black Power movement, the hippie counterculture—not the famous ones, but those whose stories aren't usually told. That's where my interest in psychedelics started.

After a great year there, I returned to London to a boring job in economic research. That's when I came across clinical trials of psilocybin in London, including Compass Pathways'. My first thought was skepticism. How can you recreate a psychedelic experience in a lab? And that got me thinking about the different groups historically involved with psychedelics—ravers, hippies, indigenous people—and how different they are from the current biotech scene.

I originally wanted to explore this topic academically, maybe with a PhD at Berkeley, but then I started thinking about the medical model. I realized the only way some people, like my parents, would try psychedelics is through a doctor's recommendation and the NHS. They'd be more comfortable with that government seal of approval. So I became interested in how to integrate psychedelics into conventional medical practices, despite the challenges with equity and access.

Many of our readers are concerned about how psychedelics may be integrated into a pharmaceutical model. What’s your take? Are they right to be worried?

Firstly, I absolutely validate those fears. They’re warranted, and vigilance is needed to ensure that these therapies don't just replicate existing issues. There's a positive aspect, though, in that even biotech companies are open to discussing different approaches. Whether they'll adhere to these ideals when commercial pressures mount, especially for companies like Lykos Therapeutics (formerly MAPS PBC), remains to be seen.

One major concern is that medicalization might limit recreational, spiritual, or legal state-level use of psychedelics. It's a valid worry, especially if biotech firms start enforcing patents in places like Oregon. However, I'm optimistic that medical and recreational uses can coexist. We could see FDA-approved therapies alongside more widely accessible, decriminalized, or legalized options like those in Colorado and Oregon.

Another common point of contention is the synthetic vs. natural debate. Some argue that synthetic psychedelics lack the ‘magic' of natural ones. While there are spiritual and chemical arguments for this, like the entourage effect, it's not so black and white. Synthetics can have value, too, and I believe there’s a place for both.

As for broader concerns about psychedelic pharma, many are rooted in general skepticism towards the pharmaceutical industry. Early on, we scrutinized companies like Compass Pathways, examining their shift from nonprofit to for-profit and their patenting strategies. To be sure, this was years later than journalists like Olivia Goldhill. I stand behind that scrutiny, especially considering Compass’s size and influence in the psychedelic space. However, it's important to acknowledge the nuances rather than painting companies as one-dimensional villains. Some of our early reporting might have contributed to creating 'bogeymen,' but the reality is more complex and deserves a nuanced understanding.

Around 2021, the psychedelic industry saw a meteoric rise in attention and invested capital. What were the main factors that contributed to this “bubble,” and why did it eventually deflate?

The psychedelic industry's boom and bust has mirrored wider stock market trends, particularly in 2020-2021. That was the era of Wall Street Bets and ‘diamond hands’ if you recall. Fueled by fear of missing out on the next GameStop, retail investors were chasing riskier options, and that class included psychedelic stocks. Canadian companies quickly capitalized on this craze, which allowed them to raise millions with nothing but a pitch deck.

The fundraising dynamic is like a pendulum. In a free-flowing market, founders set the terms, but in tighter economies, like today's, investors gain control. As a psychedelic VC then, I saw inflated valuations and fierce competition among investors to participate in deals, which the market crash later corrected. Our 2022 year-in-review analysis showed that pullbacks and changing sentiment, especially among retail investors, were major contributors to the downturn.

Many companies that raised funding during this period, like Field Trip, faced a reality check. Unlike cannabis, biotech has higher risks and longer timelines, and the shift to higher interest rates has made fundraising even tougher.

Looking ahead, investors need to be more diligent. A belief in psychedelics' efficacy led many to overlook commercial viability. It can’t just be about proving a drug works; it's also about making it accessible and cost-effective for healthcare systems. Investors should ask: Is this sustainable? Can it be integrated affordably into healthcare?

What does “bifurcated scheduling” mean? Why have you been warning psychedelic advocates to pay closer attention to this possibility?

You're pointing out an important regulatory nuance in drug scheduling and approval. Just because a medicine containing a Schedule I substance is approved by the FDA, that doesn't mean the substance itself gets rescheduled.

For instance, when Xyrem, a medicine containing GHB, was approved and rescheduled, GHB itself remained a Schedule I drug. This sets a precedent for psychedelics where even if a therapy is approved, the base substance could still be heavily restricted.

In the case of psychedelics, it’s possible that only specific drug products, like COMP360 for psilocybin or Lykos’s specific formulation for MDMA, might be rescheduled. The conditional rescheduling might depend on the formulation or the intended use, as seen in Australia where psilocybin and MDMA were rescheduled under strict conditions. Outside medical contexts, in places like Oregon and Colorado, the base substance might remain in Schedule I. This outcome would be contrary to what many, including Rick Doblin, initially hoped for—rescheduling the substance itself through medical approval.

Bifurcated scheduling affects research, too. If only approved drug products are rescheduled, it simplifies research with those products. The ease of access, relative to generic versions, could lead researchers to favor approved products. Then, the company that owns the approved drug might want to control how the research data is used or even restrict its use for further research.

One practical example of this issue is the difficulty in obtaining Spravato, Johnson & Johnson’s ketamine product, for studies today. Such control by pharmaceutical companies could hinder head-to-head comparative trials and limit the scope of psychedelic research and the development of more cost-effective or competitive medicines.

What developments in the psychedelic space are you most excited about for 2024 and beyond, and how might they shape the industry's trajectory?

I’m excited to watch Colorado's approach to psychedelics take shape. It's promising that they might offer a more accessible model than Oregon, perhaps with lower costs and simpler licensing. The discussions in Colorado, particularly around creating an accelerated licensure pathway for those with indigenous lineage and experience working with these medicines, are a significant step forward. Recognizing traditional knowledge in this way is a progressive move.

On the clinical research front, the exploration of non-hallucinogenic psychedelics is also fascinating. This research could reshape our understanding of psychedelics, if it challenges the notion that a subjective or mystical experience is necessary to receive therapeutic benefit.

On the regulatory side, I’ll be watching the progress of Lykos’s new drug application for MDMA-assisted therapy. The prospect of public FDA advisory committee discussions is exciting, especially considering the psychotherapy component of these treatments, which fall somewhat outside the FDA's typical domain.

State-level policy reforms, like Senator Wiener's renewed push for psychedelic access in California, are also key areas to watch. These initiatives reflect the evolving landscape of psychedelic policy and public opinion.

It’s unfortunate that the mainstream media is allergic to nuance. Last year, a few incidents brought a shift in the tone to the public discourse around psychedelics. In 2024, it'll be interesting to see how these conversations evolve and which issues capture public attention.

Finally, the delicate balance between staying mission aligned and adapting to today's healthcare system, as seen in discussions around Lykos’s recent funding, proves that nuanced conversations are still possible in the psychedelic space. As the industry grows, let’s keep raising these issues and asking the hard questions.

Want more from Josh?

Read his data-driven analysis and commentary at Psychedelic Alpha, or find your next career move on the Pα job board.

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DISCLAIMER: This newsletter is for educational and informational purposes only and is not intended as a substitute for professional medical advice. The use, possession, and distribution of psychedelic drugs are illegal in most countries and may result in criminal prosecution.