Dina Burkitbayeva, MBA. February 2024

May 14, 2024

Information

Title: An overview of the current psychedelic business and investment landscape

ID11671

To CiteDCA Citation Guide

00:03All right. So thank you, Chris.
00:06As Chris mentioned, I wear,
00:09I've been involved in the
00:10psychedelic industry in a few ways.
00:12So the 1st way I got
00:14involved is as an investor,
00:16first as an Angel investor.
00:18So I was one of the first Angel investors
00:21to start supporting the psychedelic space.
00:24And you know this was sort of 20/16/2017.
00:28And then as the industry grew,
00:30I became a venture investor forming my
00:33own venture fund called Simon Ventures.
00:36It's actually one of a handful of venture
00:40funds that we say mushroomed as as the
00:44psychedelic boom started and started
00:47investing in this very rapidly growing space.
00:52And then in 2020,
00:53I met Doctor John Crystal doing actually due
00:56diligence on another psychedelics company.
00:59And then obviously once I learned what
01:02incredible work has been done at Yale,
01:05I knew that I wanted to be
01:06involved in a bigger way.
01:07And so Simon incubated Freedom
01:10Biosciences and I became acting CEO,
01:13transitioning to be full time CEO and
01:17eventually leaving as an active kind of
01:20fully operating partner at Simon Ventures.
01:22So there's there's one other way
01:26that I'm involved in the psychedelic
01:28space is is I'm doing a very part
01:31time PhD at a California Institute
01:34of Integral Studies which is a school
01:38in in San Francisco which is very
01:40different from I would say Yale.
01:43And the focus there is really how
01:46it it it's it's the first school
01:49where they launched the Psychedelic
01:51Research Center on Training Therapists.
01:53So most of the therapists in the MAPS
01:57trials for example are coming out
01:59of CIS and it's it's it's a focus
02:01more on the kind of the therapy
02:03modalities and how to support patients.
02:06So it was it was kind of important
02:07for me not to just sort of stay
02:09at high level on the investing and
02:11the operating side,
02:12but also sort of what's happening
02:15in the room with with a patient and
02:18how do patients get supported and
02:21how do therapists get trained.
02:24So kind of a Broadway that I've been
02:27involved in in the psychedelic space.
02:29It seems that probably the most
02:33helpful topic to cover here is what's
02:35happening on the investing side.
02:40And I have a few slides prepared here,
02:43but then would love to take your
02:46questions and and answer those.
02:48So some of the slides that I will be showing
02:51are those prepared by Simon Adventures,
02:54which is which is the fund that I Co founded.
02:57Let's see if I can manage to share. While
03:02you're pulling those up,
03:03could you, for this group,
03:04could you define the different?
03:06You said you started out as an Angel vest,
03:08Angel investor and then you
03:09then started the venture front.
03:10Could you define
03:11those terms? Sure, absolutely.
03:14So an Angel investor is someone
03:17who's investing personally,
03:18not kind of representing a group of
03:24investors and not doing it professionally,
03:26I would say, right.
03:27So an Angel investor is someone who's
03:29taking their own money and investing
03:31versus a professional investor,
03:33someone who would form a fund would
03:36need to have certain qualification
03:39certifications and then form a a
03:42venture fund in this particular
03:44instance and pull money from
03:47various investors and then do due
03:49diligence and invest into companies.
03:52Thank
03:52you. We're seeing your slides,
03:54but we're seeing the presenter view.
03:55You may want to swap displays.
03:57How do I do that?
03:59At the top there's well,
04:02go go back to to sharing and there's
04:06a swap displays button at the top.
04:09Oh, there, there.
04:10We're good. Perfect.
04:12All right. So I think, you know it's it's no,
04:21this is something that we usually cover
04:24with with potential investors and I
04:27don't think this is news to anyone.
04:30But mental health is one of humanity's
04:33biggest crises and I think COVID-19 has
04:38a kind of contributed to to
04:41the growth of this crisis but
04:44also putting a spotlight on it.
04:46So one thing that I think is usually
04:50very interesting for investors to
04:52know is that psychedelics, right,
04:57are something that have been around
05:01for millennia and these have been
05:05indigenous practices that were practice
05:08across across the world in different
05:11pockets of the world and have been
05:13big parts of different cultures.
05:15So psilocybin and peyote in Mexico,
05:19ayahuasca and Peru and and the Amazon
05:23and Iboga in Gabon, Africa, right.
05:26And so this is something that's
05:28usually very interesting for people
05:30who are not close to the medicine to
05:33know because a lot of the knowledge
05:35of psychedelics is more from,
05:37you know starting the 40s and
05:38the 50s in the Western world.
05:43Again, I think this is a group
05:45that a lot about this already.
05:47So Chris, let me know if we're we
05:50should kind of Fast forward from this.
05:54You could be be efficient with this but
05:56it's efficient. OK.
05:59So there's you know the way kind
06:02of the investing world looks
06:04at it is there's three pockets
06:07in within psychedelics, right.
06:09There's the, there's the traditional
06:11psychedelics which are the
06:12five HT two based tryptamines.
06:14There's the intactogens such as MDMA
06:17and different derivatives of that.
06:19And then there is kind
06:21of ketamine S ketamine,
06:22the NMDA receptor modulators and the
06:26psychedelic assisted psychotherapies
06:28based on these three kind of groups
06:33of molecules are are similar and
06:36different in in other ways as well.
06:40So I think you know based on
06:44what the slide suggesting,
06:46there's different,
06:48there's different assisted
06:50psychotherapy modalities that go
06:52with these different molecules
06:55and MDMA is one that is due to
07:00be approved just a few days ago.
07:03It got a priority review from the FDA
07:08and you know most likely there will
07:11be approval by August of this year.
07:14Ketamine and escetamine are
07:15obviously already on the market.
07:16Ketamine is being administered
07:19off label for mood disorders.
07:22Esketamine was approved for two
07:25indications in 2019 and then sort
07:29of the next after MDMA in probably
07:33around three years time would be
07:37psilocybin assisted psychotherapy
07:39that would be approved by the FDA
07:42followed by various other programs and
07:45there's there's quite a few of them.
07:48Again,
07:49I think this is something that
07:50this group knows very well.
07:52We don't have to cover this,
07:58so important things here are for for
08:02psychedelic assisted psychotherapy, set and
08:05setting are very important, and usually
08:11this is something that is offered in
08:17A single room that's noise insulated.
08:21There's one or two psychotherapists
08:25or guides that are in the
08:28room supporting the patient.
08:32There's usually a blindfold and
08:34music that's being played, but again,
08:38it differs between the different modalities.
08:41So this would be something that
08:44would be offered with psilocybin
08:46and MDMA and not something that's
08:50usually required with ketamine,
08:52Norse ketamine.
08:55So I think just transitioning more over
08:59to the topic of sort of how does the
09:03investment world look at it, right.
09:07So the there's no question about
09:12whether this is a large market, right.
09:15So as as we already said,
09:18mental health is a huge problem right now.
09:23And if we were to put dollar
09:25amounts right on this,
09:27if we had to put dollar amounts on this,
09:29each one of these indications is,
09:31is a really big potential opportunity
09:35for investors, biotech companies
09:38and pharma companies to address.
09:42So you know,
09:45psychedelics are being obviously
09:48studied for various mood disorders,
09:52but there's also interest and there
09:57are studies that are going on for
09:59neurodegenerative diseases, pain,
10:00traumatic brain injury etcetera.
10:04So these are just some of the indications
10:08that psychedelics are being considered for.
10:10And I think this the the number
10:14of indications is due to grow in
10:17terms of where investors have been
10:20deploying capital and there's around
10:23$2 billion plus that's been deployed
10:26in psychedelics since I would say
10:28around 2017 and $2 billion is,
10:32is is obviously a lot of money,
10:33but by pharma standards it's
10:35it's really not a lot.
10:37It's a it's kind of a nascent,
10:40very niche industry so far.
10:46So you know within psychedelics
10:50where investors have been putting
10:51in money is a few sectors.
10:53Obviously drug discovery,
10:55this is by far the largest
10:59sector where psychedelics investments
11:02have gone. You know you you,
11:06you've probably seen this in the headlines.
11:08There's some really big companies
11:10that have raised hundreds of
11:11millions of dollars. Some of these,
11:15the largest ones have been Attire,
11:17Life Sciences, Compass, Pathways,
11:20Siben, Mind Med, etcetera.
11:22It takes around you know 4 to 500 million
11:27to bring a single drug to approval.
11:31So if you look at you know sort of 2 billion
11:36or so that's been invested in psychedelics,
11:39it it's really not a lot, right.
11:41If we kind of say 2 billion
11:44has been invested,
11:44takes about half a billion to bring a drug
11:47to market that covers just about four drugs.
11:51But obviously a lot of the capital
11:54has gone towards other things
11:56than just drug discovery.
12:02Drug delivery is also something
12:08is is where capital has gone into as
12:13well as clinics retreats and telehealth.
12:15What we mean by clinics,
12:17retreats and telehealth here is
12:19primarily has been ketamine clinics.
12:21So the number of ketamine clinics
12:23has grown 10X between 2015 and now.
12:28So in 2015 there were 60 ketamine
12:30clinics across the US and now
12:33there's over 600 of them.
12:35This was primarily driven by actually the
12:40discovery that was made by John Crystal,
12:42Rob Berman and their collaborators
12:43in the late 90s,
12:45the Berman 2000 paper that showed
12:47that ketamine is an antidepressant
12:50in humans and you know,
12:53more and more clinics started
12:56offering IVIM ketamine for depression.
13:00And as Sprobato started moving
13:03through the clinic and there was
13:06more and more sort of clinical
13:08evidence that ketamine is a
13:13is is a potent and fast acting
13:16antidepressant, individual doctors,
13:18most of whom are anesthesiologists,
13:21started forming their own
13:23private ketamine clinics.
13:25And that number has really, really
13:27grown fast in the last 8-8 years or so.
13:33Obviously retreats is another one.
13:35There's many retreats,
13:36most of which are outside of the US
13:39because a lot of psychedelics are
13:40still schedule one are not allowed.
13:42But in places like Mexico, Costa Rica,
13:46the Netherlands, Portugal,
13:49I think there's been a few that
13:52have been founded in Spain as well.
13:55Telehealth is another one.
13:57We've made a few investments
14:00in the telehealth space,
14:01but this is again primarily around
14:06ketamine because that's the only
14:10one that's that can be administered
14:16via telehealth these days.
14:18So there's companies and there's
14:21many of these companies that are
14:26providing ketamine via mail order.
14:29So you can call in, have a, you know,
14:34a few minutes conversation with
14:36a doctor that will prescribe you
14:39ketamine and then a compounding
14:41pharmacy will ship that to you.
14:44And we have not made actually any any
14:48investments into companies like that.
14:50We've only supported companies
14:53that continue to ask for A to have
14:57a relationship with a therapist.
15:01There's also companies in
15:03the software space that are
15:08getting formed around the psychedelic space.
15:12These are software companies
15:13that are primarily supporting
15:15the growing number of clinics.
15:17So clinics need EHRSEMRS and other
15:21types of support to to do booking,
15:25scheduling, etcetera.
15:27And there's a few companies that have
15:29been formed and are doing quite well.
15:31There's obviously education,
15:32especially on the therapist front.
15:35There's a lot of interest from
15:38therapists who would like to work with
15:42psychedelic assisted psychotherapy,
15:44and there are a few companies
15:47that are providing platforms for
15:50existing licensed psychotherapy
15:52psychotherapists to be trained with
15:55ketamine and to start providing
15:58ketamine assisted psychotherapy
16:00as part of their practice today.
16:03And obviously some media companies as well.
16:07So this number is, is now more,
16:11it's over 2 billion that have
16:14been invested now through 2023.
16:16And as you can see this is a number
16:20that's you know that just exploded.
16:23If we're looking at around
16:2510 million in 2017,
16:26this grew to you know 6700 million in 2021.
16:35So the interest has been really tremendous.
16:39So
16:42you know I think what it is not really
16:47a surprise to this group but a lot of
16:50times when we speak at with investors
16:54assignment people usually equate
16:56or you know they find similarities
17:00between psychedelics and cannabis.
17:03And we have to make the point
17:06that the psychedelic therapeutics
17:08that we support through the fund
17:12and there's a huge industry built
17:15around are the are the teams that
17:20are taking psychedelics through FDA
17:23approval rather than having it be a
17:26recreational for recreational use right.
17:28And so this is
17:35just sort of a graphic to show based
17:38on where a a drug developer is,
17:41what the probability of of
17:44of their approval could be.
17:46And this is obviously across
17:48industries and in different companies,
17:50but kind of gives you an understanding
17:54a lot of the psychedelic,
17:57the there's there's sort of three
18:00waves of psychedelic drug development
18:03companies that we've identified.
18:06The first ones are obviously the
18:09ones that came first and it's it's
18:12companies such as Compass Pathways where
18:15they take an existing compound that
18:18they synthesize such as psilocybin.
18:21There is there's some IP that
18:23can be built around that,
18:25but it's it's really around kind
18:28of this existing first generation
18:33psychedelic drug that they're developing
18:36and trying to take through the FDA.
18:39There was a second and there still is.
18:43There still are companies that are
18:45being built and programs that are
18:47being developed in the second wave.
18:49And the 2nd wave is basically derivatives
18:52of these existing psychedelics.
18:57And these most of the time are new
18:59compound entities and they live in sort
19:02of this drug discovery preclinical space.
19:05A few of the companies,
19:06oops apologize,
19:10a few of these companies have now
19:13are now in phase one.
19:17But there were you know 10s of
19:21thousands of molecules that were
19:24derivatives of these existing
19:26psychedelics created in in in the last,
19:31I would say 6 or so years.
19:33And just a few of these new compound
19:36entities are now in phase one.
19:37We're very excited to see sort of
19:40where those go And there's the third
19:46wave of psychedelics is and those
19:50are non holosinogenic psychedelics.
19:53Those could be combos or
19:56new compound entities.
19:57And there's a lot of interest
20:00currently in the non holosinogenic
20:02psychedelics that are hoping to take
20:04advantage of the neurogenesis but
20:06sort of engineer out the side effects.
20:09And you know sitting where I sit
20:12and having spoken to various
20:15investors including those from sort
20:17of you know strategic large pharma,
20:20venture arms,
20:21business development arms as well
20:23as large biotech healthcare funds.
20:25There is a lot of interest in non
20:29hallucinogenic psychedelics because
20:31that would comply more with the
20:33the large pharma model of you know
20:36people being able to take a drug,
20:38a pill a day and and not sort
20:44of have to incur the burdensome
20:47administration and the cost of needing
20:49to go into a clinic and doing kind
20:52of the the the treatment session
20:53with with the holosynogenic trip.
21:00I think we've talked about this already.
21:04These are just some of the
21:07examples of the various clinics and
21:11retreats that are that are that have
21:15been formed in the space and these
21:19companies are continuing to grow and
21:22their numbers are increasing as well.
21:25However, one thing that I will say
21:29is that the funding sure let me
21:35stop sharing the funding in the
21:38psychedelic space has been very
21:40challenging in the last two plus years.
21:42I think this is in line
21:44with what's happening,
21:45you know across biotech,
21:48the biotech winter that started probably
21:52late fall of 2021 and is definitely
21:58affected psychedelics therapeutics as well.
22:00So those numbers of investment
22:02that you've seen,
22:03they kind of hit a peak in 2021 and
22:06they've been on the decline in 22 and 23.
22:13Yeah. I I'm wondering, I know
22:16we're about halfway through now
22:20if there's anything that's more
22:24of interest that I can go into.
22:28Maybe we can start out by a few
22:30people have questions or reactions
22:32to what you've shared up till now
22:34about the overview you've given,
22:35which was really helpful.
22:36We can start there and then we can
22:39open it up more broadly for anything
22:41else folks want to talk about.
22:45I mean I'll start with a question
22:48just to get things going which is
22:51the something that's kind of unique
22:53about this space relative to other
22:55drug developments is some this
22:57development space is that some of
22:59the early big players have been non
23:02profits Usona and MAPS obviously are
23:04what I'm thinking about and I wonder
23:06if you can that which is weird right.
23:08The idea of a non profit pharmaceutical
23:10company or having a non profit bring
23:12a drug try to bring a drug through to
23:15approval And and I wonder if you can
23:17speak to what that what that means what
23:18it does to the space and then what
23:20what challenges they've had because I
23:21know that hasn't been smooth as they
23:22try to scale up into phase three.
23:25Sure absolutely.
23:26So actually yes, absolutely.
23:29So MAPS is you know is a is a non
23:36profit that they then kind of
23:39created APBC that did a lot of
23:42the development for MDMA for PTSD
23:46and now it's Lichas Therapeutics
23:49that has been formed as a fully
23:52for profit company right because
23:54of the enormous capital demands
23:59that this would take and they
24:01recently closed $100 million round
24:03that would focus on helping get
24:05the NDA and then commercialize
24:07the drug I mean Usona as well.
24:11And actually one thing to note is
24:14that COMPASS Pathways actually formed
24:16as a non profit as well in 2017 and
24:19then it was and then it was converted
24:22to for profit in a year or so.
24:24And I think it it,
24:26it makes sense because while Rig Doblin
24:30and MAPS were able to do it but it
24:33took them more than 30 years to get here.
24:36MDMA started being developed in the late 80s,
24:39right.
24:39And what they've done is,
24:41is just tremendous and incredible and
24:44they've pioneered the space in many ways.
24:46But it's it's just incredibly
24:48difficult to raise hundreds of millions
24:51of dollars like I said that that
24:54that are required for development.
24:56So ultimately I think if we wanted
24:59to if if you want to move fast which
25:03many drug development companies do,
25:08you need to be a for profit company.
25:10So you can be raising these amounts
25:12of capital. The reason why you want,
25:14the primary reason why you want to be
25:16moving fast is obviously to get the
25:19drug to patients as soon as possible.
25:21And being a schedule one drug,
25:22it's hard for patients to get access
25:25to it in a kind of legal Safeway.
25:28But the other reason is patent life, right?
25:31Patent life is so important,
25:33but patents are only granted for 20 years.
25:36And usually because it takes companies
25:38about 10 to 12 years to get to approval,
25:41You have, you know,
25:43at best companies are left with 810
25:46years of patent life during which
25:48they're able to recoup the investment
25:51that they've made for development.
25:53And so, you know,
25:55every few months means hundreds of
25:57millions of dollars potentially if you're
26:00a very successful drug and patent life.
26:03So you know,
26:04companies want to move as fast as possible.
26:06They're trying to get to market
26:10as as as soon as they can.
26:12So I guess the answer to my answer to
26:17this question is that it's it's just been
26:20incredible what MAPS has been able to do.
26:23But I think it's it's almost impossible to
26:29think to to be able to do this in in now.
26:35And one of the reasons and this is
26:38something that we've seen in the
26:40last two to three years as a drug
26:43development company at Freedom is
26:46that because so much capital has been
26:49raised between 2020 and 2022 by drug
26:52development companies because you know
26:54there's been so much capital being
26:58invested in biotech during those years,
27:01the cost of development has
27:04gone up significantly.
27:05So if you, you know,
27:07I don't have the exact numbers,
27:08but I would say that CRO costs
27:13and other vendors in the drug
27:16development space have significantly
27:17increased their prices just because
27:19there was inflation of course.
27:21But also there was a lot more
27:24biotech funding which has kind of
27:28you know disturbed the demand supply
27:33with CR OS which made it even more
27:37expensive to to bring drugs to market.
27:39I think it's coming down now as the
27:42funding hasn't been as as available,
27:45but that's definitely something that's
27:47that's been a problem for smaller
27:49biotechs in the last few years.
27:56Chris I don't know if that did
27:57that answer your question.
27:59Yeah it did it did and it's it it
28:00is interesting to see how you know
28:02they did both both maps and then
28:03more recently Usona you know did
28:05did did so well on the nonprofit
28:07model and then kind of hit a wall
28:09when they when the the capital needs
28:11became greater as you as you planned.
28:14Yeah.
28:17Shouldn't you, you mentioned that
28:19non hallucinogenic psychedelics
28:21is an area where
28:22people you know investors are interested
28:24or or you know optimistic about
28:27potential treatments. Are there other
28:29areas that have come up with
28:31in your interactions with
28:32investors either as far as the
28:34clinical population or the mechanism that
28:36people have you know people have been more
28:39excited about of of late.
28:42Yeah you know it's interesting it's it's
28:46sort of like ebbs and flows and I would
28:49say like as probably in many industries
28:54like venture tends to be kind of fatty
28:59where you know something is is is
29:01really attractive and everyone kind of
29:03like runs to that And you know then if
29:06there was if there was sort of some
29:09disappointment there then everyone
29:11turns away and goes somewhere else.
29:13But there's there's been a few of these
29:16waves in psychedelics you know the the
29:20two latest ones that I that come to mind
29:23is the non hallucinogenic psychedelics.
29:25There's there's was a lot of excitement
29:28there still continues to be and sort
29:30of right now I think everyone's
29:32just sort of sitting and waiting
29:33to see what actually shakes out.
29:35I think there's the constant
29:37question that I get is basically,
29:40do you need the holosinogenic effect,
29:42right, for psychedelics to be effective?
29:44Like can you have a non holosinogenic
29:46psychedelic and it will still give
29:48you the antidepressant effect.
29:50And I think certain groups say yes,
29:52other groups say no,
29:53and it's just sort of a waiting
29:56game to see how how this shakes out.
29:59The second one that got a lot of excitement,
30:04but I think the investment
30:06community's feeling less
30:10certainty about now is the
30:13five MEODMT drug, right.
30:15So I mean I think the excitement
30:19started in mid 2021 when a
30:23company called GH Research,
30:26which is an Ireland based company
30:29seemingly came out of nowhere
30:31and had kind of an explosive
30:36debut on the IPO markets.
30:39They raised the substantial Series
30:42B and then they went public a few
30:46months later at a billion dollar
30:49valuation and all they had was
30:52an inhalable 5 MEODMT phase one
30:58study with eight patients, right.
31:02And so I mean, I think part of it
31:06speaks to kind of the fluffiness
31:09of of the public markets in 2021,
31:14but also to the excitement around
31:16psychedelics and five MEODMT in particular.
31:18The reason I think 5 people and
31:20investors were especially excited about
31:225 MEODMT is because yes the data was
31:25interesting for those eight patients,
31:28but also it was a short acting drug, right.
31:32So you know people sort of said listen,
31:35if this can have comparable effects
31:37to psilocybin which is 6 potentially
31:408 hours and you need 2 therapists.
31:43Maybe you can get a similar effect
31:45with a 2030 minute treatment where you
31:47know you would have someone in the
31:50room but it's not like you know the,
31:53you know, the patient would really
31:55be able to have a cohesive therapy
31:58session because clearly you know it's a,
32:01it's a, it's a very intense experience
32:03with five MEODMT.
32:05And so there was, there was,
32:08there was and continues to be excitement
32:11around 5 MEODMT and see sort of can
32:14this be an effective treatment.
32:16And I think the question around
32:215 MEODMT now is well,
32:23is the experience too intense
32:25for the patient
32:28and you know what sort of what
32:32the corresponding AES be and can
32:35this really come come to market
32:38and be an effective treatment.
32:39Unfortunately since then GH
32:41research has been on clinical hold
32:45and you know we'll we'll sort of just
32:49have to wait and see whether whether
32:51this program is going to move forward.
32:53There are, there are other programs.
32:56There are other other psychedelic
32:58biotech companies that are continuing
33:01to develop 5 MEODMT Beckley Sci Tech,
33:03which is one of the investments out
33:05of Cym Adventures that is beginning
33:10phase two with five MEODMT and
33:13has recently received a 50 million
33:16investment from a Thai Life Sciences,
33:19which is another investment
33:21from Cym Adventures.
33:22So yeah, those are sort of the two
33:27interests from psychedelics
33:29investors at the moment.
33:32I would say that the biotech and I'm,
33:37I mean sort of the larger biotech funds
33:40have been looking at psychedelics for,
33:44for a few years now.
33:47Some of these large funds have
33:50already started deploying capital.
33:52Some of the bigger names
33:53such as you know RA Capital,
33:56Boston based I think 4 billion
33:59plus under management fund has
34:01made a few investments right.
34:03They've invested in Daleks
34:05Therapeutics which is the non
34:08hallucinogenic NCE Portfolio Co
34:12founded by David Olson from UC Davis.
34:16They also invested in GH Research
34:18which is the company that had the phase
34:21one data with five MEODMT and they
34:24even at some point incubated company
34:27inside RA Capital called Lusaris.
34:30I don't think they could make the PK work.
34:33In the end the company was disassembled
34:35but that is all to say that there are
34:38large biotech funds that are investing
34:41in in psychedelic therapeutics
34:44and doing so pretty actively.
34:47If you're interested in sort of what
34:50the that larger list of investors is,
34:52I would suggest going and looking up
34:54who invested in Compass pathways latest
34:56round which happened just a few months ago.
35:00I think they raised about 200
35:02million and that has a pretty
35:04impressive list of investors.
35:06So it's definitely not so fringe anymore.
35:19Any other questions,
35:22meaning you made reference
35:23to the biotech winter of 2021,
35:26which sounded chilly,
35:29but and it you implied
35:30it was sort of a broader,
35:31not a psychedelic specific thing,
35:33but a broader fluctuation and
35:35enthusiasm in the space.
35:36What is, can you tell us just
35:38a little bit about that without
35:39progressing too much? Sure.
35:42I mean I think in 2022,
35:45which was really kind of the coldest
35:47of the winter of the biotech winter,
35:50the biotech index, right,
35:52which was kind of they take 100
35:56or so biotech companies that are
36:00public and create an index of that.
36:02I think at some point that index was down 70,
36:05potentially 80%,
36:06meaning that you know the public
36:10companies were trading significantly
36:12lower than they were in 2020 and 2021.
36:17I mean there are obviously some individual
36:20reasons like individual to company.
36:21Certain companies weren't reading
36:23out very strong data or some
36:26other individual company news.
36:29But I think the overall
36:31trends were the following.
36:32The first thing is there was
36:34a huge overcorrection, right?
36:36In 2020 and 20, 21,
36:39there was so much capital in the
36:44markets because there was so much new
36:48money being printed that that flooded
36:50the market with all this new capital.
36:53You know,
36:54funds were able to raise and then
36:56they were actively deploying.
36:59And when there's a lot of
37:01new money that's available,
37:02the companies tend to balloon in value,
37:06right.
37:06And so many companies were going public,
37:08they were going public at valuations
37:12that were likely higher than what
37:15the market sustainably could,
37:17could, could, could have them at.
37:21And so there was an overcorrection.
37:23And you know,
37:23even when all of this was happening,
37:25investors continued saying you know
37:27these valuations are too high,
37:28the market's too hot,
37:30but people continue to invest and and
37:34basically further heating up the market.
37:37And So what happened in late
37:382021 is that eventually the the,
37:42the valuation started coming down
37:45and and that overcorrection was
37:47quite fast and it it was very
37:50painful for many public companies.
37:52It took about six months or so.
37:55There's usually a lag,
37:57right,
37:57between what's happening in the public
37:59markets to how that affects and
38:03reflects on the private company's valuations.
38:09And you know,
38:11the public markets in 2020 and 21 were hot.
38:15They were,
38:15you know,
38:16trading at high valuations And
38:17then private companies that were
38:19raising capital that were saying,
38:20hey, you know,
38:21if similar company just went public,
38:24this devaluation let's say is a
38:26billion dollars. I am similar.
38:28I'm going to raise money private
38:31capital at a similar evaluation.
38:34And they were sort of being able
38:37to benchmark against the private,
38:39the public market valuations.
38:41And so when the public markets went
38:44down about six months or so later,
38:47the private valuation started
38:49coming down significantly as well.
38:52I think the the private valuations
38:54went down even further because
38:57investors started favouring buying the
39:00cheaper stock which was fully liquid,
39:03right.
39:03If you're an investor and you have a
39:05dollar and you can buy a dollar that
39:07you can invest in the public markets,
39:08that's fully liquid,
39:09right.
39:10You could go and sell it tomorrow
39:12versus tying up that same dollar in
39:14a private company which may never
39:17go public right and may go down,
39:21may may go down under
39:23or it would be tied up for 10 years.
39:26Even if the company were to
39:28be eventually successful,
39:29the investors are starting really
39:32favouring buying the public
39:34stock over the private stock.
39:35And so this is what sort of
39:39further made funding difficult
39:42for private companies as well.
39:47We're seeing a light at the
39:48end of the tunnel after these
39:50sort of two almost 2 1/2 years.
39:52I think there's there's a few
39:55things that happened in the last two
39:58months that are very encouraging.
40:00There were a few really large
40:03acquisitions in the neuro psych space.
40:05So ABB Vie bought Cerebell for 8.7
40:10billion in December and then BMS
40:14acquired Corona for 14 billion, right?
40:18And so?
40:19These are really large acquisitions
40:21in the neurosite space and that's
40:23been just encouraging to see
40:26that M&amp;A activity is picking up.
40:29Another thing that happened is
40:32that you know can be considered
40:34this opening of the IPO markets.
40:36If if you look at the last sort
40:38of 18 to 24 months,
40:39almost no companies have been
40:41going public just because there's,
40:43you know, even if they do go public,
40:45there's probably not going to
40:46be many investors who are buying
40:48the stock or trading the stock.
40:50So,
40:50but just two weeks ago one of my
40:54investments from Cy Med Alta Neuroscience,
40:57which is a Stanford neuroscience
41:00company went public and you know
41:02has done decently well and there
41:03have been a few other IPOs that
41:05are outside of the neuroscience
41:07space but in biotech.
41:08So we're seeing these as very positive
41:11signals that the markets are opening
41:14up and probably more investment
41:16is going to be going into this.
41:19However,
41:19you know both kind of CE OS and teams
41:23of biotechs as well as investors
41:25are not expecting anything as sort
41:29of active and hot as it was in
41:322020 and 21 in the near future.
41:37Thanks.
41:40I have a quick question.
41:41Yep. Thank you so much.
41:42Dina, some say that the current
41:44model of psychedelic assistant
41:46therapy are too complex and costly
41:48and need a lot of infrastructure.
41:50And so that even if they are to be approved,
41:55it would be really hard to implement
41:59them widely and make them accessible.
42:02What's your opinion on that?
42:04You know, as an investor,
42:05can we make them accessible,
42:07easily accessible to everyone?
42:09Yeah, That's a great question.
42:11Thank you so much.
42:12I think it really depends on the
42:15modality in the protocol, right.
42:17So I think the most burdensome
42:21protocols are that of MDMA and
42:24psilocybin assisted psychotherapy.
42:25The reason why I say that it's,
42:27you know, 6 to 8 hours.
42:29You need a single room and you need,
42:33you may need up to two therapists,
42:35right, Or like a therapist and a
42:37guide for the whole day in addition
42:40to also therapy sessions in
42:44between the administration, right.
42:46So that's kind of the most burdensome
42:49protocol that I I think will exist.
42:53However, at the same time you look
42:56at sort of what are the options
42:58like what do people with treatment
43:01resistant depression or untreatable
43:03PTSD have available to them?
43:06If you look at PTSD,
43:07there's no approved treatment
43:08as far as I understand, right.
43:10MDMA would be the first FDA
43:13approved treatment for PTSD.
43:14It's not like there's some other
43:16easy way to treat this and then
43:18all of a sudden this is you know,
43:21the only other available treatment.
43:23So and for treatment resistant depression,
43:26if you know we're already talking about
43:29patients who are you know their other,
43:32their other options are ketamine S,
43:37ketamine, TMSECT,
43:39all of which are pretty burdensome, right.
43:41So this is a patient population that
43:43has failed other treatments and is
43:46probably in in need of some pretty,
43:49you know, big interventions.
43:51So it might push
43:53back to that as they're all reimbursable.
43:55Sorry, I said, my push back to that
43:57is all of those are reimbursed.
44:00I think it's the reimbursement model.
44:02The reimbursement model
44:03is what determines whether a patient
44:05can get care, not access well,
44:06not physical accessibility
44:09because once it's paid for,
44:11it'll be paid for.
44:12My push back to that is TMSECTS,
44:15ketamine and ketamine.
44:16You'll get some
44:18version of reimbursement.
44:18So it's a piggyback off of that.
44:21My question is, is there
44:23scope for these for is, is,
44:25is the reimbursement model
44:27being investigated, I guess in
44:29tandem with the investments?
44:33Sure. So I I think what you're
44:36saying is if psilocybin MDMA
44:40get insurance reimbursement
44:43then you know that determines
44:45accessibility to patients, correct.
44:47It doesn't matter how burdensome,
44:49the like the REMS and Sprovata
44:50is the most burdensome
44:51ever, but we get it done
44:53because you get it paid for.
44:55So even if you have the two therapists,
44:57if it's reimbursed, then you can
44:59give it to a patient. So I think,
45:01yeah, I think I'll agree with you that
45:03if the reimbursement makes it easier,
45:04right, at least financially.
45:06But actually one of the biggest
45:08bottlenecks that I see for
45:10psilocybin and MDMA is actually
45:12the availability of therapists.
45:14There's not going to be enough
45:16therapists if if the FDA requires
45:19A licensed therapist or two,
45:21no matter how much pair reimbursement is,
45:24there's just not going to be
45:26enough therapist to do the work.
45:28So I think there's there's
45:29a few things at play.
45:30I have completely agree with you that
45:32reimbursement will help accessibility,
45:34but it's not.
45:35It's not the only thing that stands between
45:39like being able to have it and not.
45:42I think what the other point that
45:43I was trying to make is sort of
45:45like MDMA and psilocybin's probably
45:47the most burdensome protocols.
45:49And then it kind of I think where
45:52the industry in in terms of biotech,
45:54right,
45:55drug developers as well as investors
45:57in the psychedelic space are
45:59they understand that the easier
46:01we make the protocol,
46:03the less burdensome the protocol,
46:05the more likely it is to to be adopted,
46:11right.
46:11And so there's there are many programs
46:15now that are trying to shorten the,
46:19the trips,
46:20right.
46:21So there are now multiple programs in
46:24phase one that are that have a derivative
46:27of psilocybin that is only 2-3 hours,
46:30right.
46:31So can you have a comparable
46:34experience and effect?
46:35But then instead of needing only
46:37being able to do one session a
46:40week with these two therapists,
46:42you could do 2 sessions.
46:44So you could be treating twice
46:46as many patients.
46:47The non hallucinogenic psychedelics, right?
46:49Can you entirely get rid of the R.E.M.
46:52so people can, you know,
46:54just just take a pill and it will work?
46:57Yeah.
46:58I mean,
46:58here's this is something that I've
47:01personally thought a lot about as
47:03an investor and ultimately what led
47:05me to want to start Freedom Bio,
47:07right.
47:07I I do believe that other other
47:13molecules like psilocybin can can
47:16be therapeutically efficacious.
47:18But I always had a concern about
47:21can they ultimately be accessible
47:23to a large patient population,
47:25right, If they're approved,
47:27even if they get insurance,
47:29reimbursement is still so burdensome
47:33and expensive that they might not have,
47:35you know,
47:36the number of therapists or the
47:38infrastructure like clinics to do it.
47:40So that's why we focused on ketamine,
47:44right, and what we do at Freedom Buy.
47:45And this is based on Chatty
47:48Abdullah's study from I think
47:50it was 2019 and the paper that
47:53was published in 2020 is that
47:55the combination of ketamine and
47:57rapamycin extends the efficacy of
47:59ketamine to potentially 2 to 3 weeks.
48:01So for a patient rather than
48:02needing to come in twice a
48:04week for ketamine as ketamine,
48:06they could potentially only come come
48:07in every two to three weeks, right.
48:10And the model there is, is a lot more,
48:14it allows for a much higher throughput,
48:17right, of patients.
48:18You have one large room,
48:20You have, you know, I don't know,
48:245-6 patients in one room.
48:26You have one medical provider who can,
48:30who can kind of monitor everyone.
48:32And then if you wanted to be
48:34really efficient about it,
48:35potentially you could have what,
48:363-4 cohorts a day.
48:39So I think there's different
48:42models that that could work.
48:47The other thing that I think I remind
48:50investors is spravato is it hit a
48:53billion dollars in ARR and is expected
48:55to be a blockbuster this year, right.
48:58So they would make a billion dollars in
49:01revenue to hit a billion dollars in revenue,
49:03the only need to treat 50,000 patients,
49:0850,000 patients is point O 5% of the entire
49:13treatment resistant depressed populations,
49:15point O 5%.
49:16So when investors come to me and they
49:18say can you compete with Sprovato,
49:21like how are you.
49:22I was like I don't need
49:24to compete with Sprovato.
49:25Psilocybin is not going to
49:27need to compete with Sprovato.
49:29The mark,
49:30the the problem is so big,
49:32there's so many patients that
49:34don't have treatment that like we
49:36can have another thousand similar
49:39treatments approved and everyone
49:41can be a billion dollar drug.
49:43And so I just,
49:44I really love what you know,
49:46Yale's been doing and Yale's been
49:48working on because this problem
49:50is just so big and we really need
49:54treatments at work and they can,
49:56like I said,
49:57I believe we can have another
49:58thousand treatments and they
49:59can all be successful.
50:04Dina, it's it's Jerry.
50:05How how are you?
50:06Hi, Jerry, I, I do just want to
50:09go back a little bit with the,
50:11the idea of access though.
50:13And it seems like you're sort of
50:16diminishing the need for reimbursement
50:20which for 95% of people is so critical.
50:26Patients just can't get these
50:29treatments without coverage.
50:33And and I don't know how much that's been
50:37thought of in the process in terms of
50:41thinking about the actual implementation.
50:44I mean it's one thing if a drug works
50:45and you know there are perfect examples
50:47where there are gene therapies that
50:48work 100% but nobody can afford them,
50:50so nobody gets them.
50:52And you know example here is how
50:56how much has the implementation,
50:58the cost of implementation been
51:00built into the the models,
51:03the business models because I I
51:05don't know if we can absorb another
51:08thousand of these treatments.
51:09The the insurers are panicking
51:12even with something like bravado
51:14how expensive this could be if
51:16you open the lid on it you know
51:18it'll it'll break the insurance
51:19companies they they can't afford
51:21to cover all of this is the is the
51:24implementation cost being considered
51:28And by implementation costs do you
51:29mean the fact that like you need to
51:32reimburse nurses time and then therapist
51:34time and then build new infrastructure
51:36like individual rooms. Exactly
51:38that was. I mean the the there was
51:40a lot of reasons why the delay in in
51:44Spervato's uptake I think came yeah
51:47that took almost four years to get
51:49to the point where it was gonna be a
51:52blockbuster almost and partly 'cause
51:53it launched into an infrastructure
51:55that just wasn't prepared. They didn't.
51:58The Jansen just didn't understand that,
52:01yeah, the drug was covered,
52:02but the delivery,
52:03if it wasn't so nobody could
52:06figure out how to actually provide
52:08the treatment and get real.
52:10So how how much effort is going into
52:12thinking about the delivery part
52:14because that's the real expense.
52:16I mean for ketamine,
52:17if you do it in a place like
52:19the Ellen even hospital,
52:20it's almost $1000 per treatment.
52:23Just in terms of the hospital charges,
52:26the and and the professional fees.
52:30Is that being considered,
52:31you know, I, I well,
52:33I I mean I know I'm in the
52:34space but how much is that being
52:35considered in the development plan?
52:38Yeah,
52:41it's it's hard to say because
52:46payers aren't not really entering,
52:48they're not really participating
52:49in these conversations right now.
52:51I'm sure they're, you know,
52:52they're having isolated conversations,
52:54especially now that you know a lot
52:56of them covers spirivato and it's
52:58interesting to hear your perspective
53:00that you're saying they're already
53:01panicking about how expensive it is.
53:03It is very expensive.
53:05It's 20 to $50,000 per year
53:09for Spirivato patients.
53:11And you know obviously there
53:13are hurdles to jump through for
53:16patients to qualify for Spirivato.
53:18My guess is that if they're covering it,
53:21that means that the alternative right is,
53:25is, is more expensive,
53:27right having this patient have a
53:29lot of comorbidities and needing
53:31hospitalizations and whatever
53:32else comes with the treatment
53:35resistant depressed patient.
53:36And I think you know,
53:38it's it's hard to know what those
53:41economics look like because I
53:42think only payers have them.
53:45The way the biotech companies think about it,
53:50at least from the ones that I've
53:53spoken with is that these patients
53:55that are not being treated are
53:58very expensive to the healthcare
54:00system and to payers.
54:01And so payers believe that
54:04this patient would eventually,
54:07you know,
54:07be cheaper and it's horrible to sound,
54:09but that's how they think about patients,
54:11right.
54:12If they're being treated with Spirivato
54:14and it's kind of unpredictable 20,
54:17$1000 a year expense and but they're
54:19not paying for all the other issues
54:22that are aggravating that that
54:24that's probably that something that
54:27financially makes sense to the payer.
54:32You know, I think if you look at sort
54:34of what's available in fourth line,
54:37right, 'cause this, these are the
54:39patients that we're talking about
54:41that have failed at least two to
54:44three antidepressants right now,
54:45what's available to them is ketamine
54:47S ketamine, which you know,
54:48we've said is very expensive.
54:50Then there's TMS, right,
54:52which is also in the sort of I think
54:5420 to 30,000 range, and then ECT,
55:00which has pretty severe side effects.
55:03So we're talking about a patient
55:05population that's that doesn't
55:06have a lot of options right now
55:07and is very expensive
55:12Then I completely agree.
55:13I mean, the pharmaco economics is
55:15gonna drive this to a large extent.
55:17So are people using like the
55:19NICE model and stuff like that?
55:20Because you know,
55:22this is gonna have a big thing like
55:23the National Institute of Health
55:25and Clinical Excellence model.
55:26I mean, this is what's gonna determine
55:30whether third party payers
55:31actually want to pay for it or not.
55:33So people are thinking about that
55:34'cause it's one thing it doesn't work,
55:36but the other, is it affordable.
55:38And it sounds like there
55:41there is some thought to this,
55:43but it sounds like maybe not enough
55:46attention being paid to the payers
55:49cause healthcare, especially U.S.
55:51healthcare, is so unique where
55:53the patient doesn't pay for it.
55:55Ultimately at some level they do,
55:56but the person who's paying for it is
55:58a third party payer in the most case.
56:00And it, it may be the best thing
56:02in the world for the patient,
56:04but they're not the one who's
56:07paying the bill.
56:08So I it sounds like there's some work
56:10but maybe not as much as we'd all
56:13like to see communication with the
56:14actual payers asking what they would pay for.
56:20Yes, I think I think that's that's
56:22really the case and they're not really
56:24going to have a communication with
56:26you until you're an approved drug
56:28and they see your phase three data
56:32and they see a long term data and
56:35then they can sort of make you know
56:38make some conclusions off of that.
56:41You know I I know the biotech
56:43companies are trying to have
56:44those conversations but they're
56:46not really being you know met but
56:49but NICE has its, I mean for example NICE
56:52has its outline pretty clearly published.
56:55So you can you can get a sense of what
56:57how they're going to value these are
56:59are the investors looking at these and
57:02considering that as part of their thing,
57:04you know is it meeting the nice
57:06criteria for for approval And
57:10yeah
57:12I I don't know the exact
57:14answer to to that question.
57:16I know that maps when they were
57:20as they've been thinking about
57:22how to price the drug versus how
57:25to price the the psychotherapy.
57:27They've definitely done a lot of
57:29modeling on this end and they sort
57:32of landed on a range of what the
57:35medicine and the psychotherapy could
57:37could could be, could be right.
57:42But what I think their next step
57:44would be is to get approval at some at
57:46some point later this year and then
57:49start working with payers and they
57:51they won't know for at least I think
57:53another year and a half to two years
57:55whether it will be covered or not.
57:57That's how it usually takes.
57:59I think the advantage of well pursuing
58:01the time. So that's maybe
58:03final comment or wrap up.
58:08As you say, there is a quick advantage
58:10that Sparvato has sort of blazed
58:12the trail here so that they that
58:14there's some groundwork to it. Yeah,
58:17yeah, absolutely agree.
58:20All right. I mean, clearly,
58:21Dina, there's a lot of interest.
58:22We're very appreciative of you being
58:24here and this conversation could go on,
58:26but I do know the time.
58:27It's the end of the day on Friday out here,
58:28so I want to be respectful of
58:30people's evenings and of your time.
58:32Dina, thank you again for being here.
58:33You really bring such a rich perspective
58:35to this field and we appreciate this,
58:37this conversation.
58:38Thank you so much. Thanks for having me.
58:40This was great. Feel free to reach
58:42out with more questions. OK, Bye.
58:44Bye. Have a good day. Thank you.
58:46Take care, everyone. Bye. Bye.