Magic mushrooms are turning into big business
It was a Wall Street banker who helped start the psychedelic movement of the 1960s.
Robert Gordon Wasson, a senior executive at JP Morgan, travelled to southern Mexico in 1955 to document the Mazatec people and their ritual ingestion of psilocybin mushrooms.
His essay for Life magazine two years later, which coined the term “magic mushrooms”, inspired thousands of hippy pilgrims to descend on the region and made the psychoactive fungus part of the counterculture.
That is where it stayed for the best part of half a century. But in 2020, psychedelics returned to Wall Street. London-headquartered Compass Pathways pulled off a $590m (£453m) Nasdaq flotation, making it the first psychedelics company to float in the US.
Backers of the company, who include the PayPal co-founder and early Facebook investor Peter Thiel, are betting that synthetic psilocybin, the active ingredient in magic mushrooms, represents a new frontier in healthcare.
Supporters believe psilocybin could be a vital tool in the battle against depression, mental trauma, severe headaches and addiction.
This week, that theory moved a step closer to being established. A study published in the journal Nature Medicine found that psilocybin appears to “open up” the brains of people with severe depression, making them less fixated on negative thoughts.
The researchers said the results showed that the substance could be an alternative to antidepressants, as well as having a longer-term effect than traditional medication.
“These were people that had been suffering for years,” George Goldsmith, chief executive of Compass Pathways, says. “It really helped us understand that a single dose can lead to enduring benefits.”
Goldsmith, one half of a husband and wife team, took psychedelics recreationally in the 1960s but started investigating their medical use in the mid-2000s after his wife Ekaterina Malievskaia discovered the idea during a sleepless night researching treatments for their son’s struggles with depression.
Today, their company is among those leading a charge to bring psychedelics into mainstream medicine.
Between the 1940s and 1960s, tens of thousands of patients were treated with LSD and other psychoactive substances for alcoholism and other mental illnesses.
Their increasing recreational use, however, led them to be widely outlawed. “These medicines were used for huge amounts of clinical research,” says Goldsmith.
“And then in the 1960s they got out of the laboratory. The drugs were separated from the therapy. There were all sorts of risks that people ran into and I think the mainstream panicked and kind of made them all illegal, and shut down the research. It was a dark age for about 40 years.”
One person who kept the faith during that period was Amanda Feilding, an English aristocrat who inherited the title Countess of Wemyss and March and who was once known for drilling a hole through her skull, an ancient practice meant to improve blood flow.
Feilding, who lives on a Tudor-era estate in Oxford, set up the Beckley Foundation in 1998 to fund and encourage research into psychoactive substances.
Her son, Cosmo Feilding Mellen, runs Berkley Psytech, a commercial spin-off investigating whether psilocybin can treat chronic headaches.
Last year, the company raised $80m to fund the research from investors including venture capital fund Integrated and Jim Mellon, a businessman who funded the Brexit campaign.
“She [Feilding] had a very firm belief that these compounds were being ignored owing to cultural stigma rather than good scientific reason, at that point that was very much a taboo view of an outsider that was largely ridiculed,” Feilding Mellen says.
“It's been a long road and an awful lot of work was put in 20, 25 years ago to get the ball rolling.”
The cultural stigma fading has helped. The US city of Denver was the first to decriminalise psilocybin in 2019 and other cities have followed, along with the state of Oregon.
In Canada, exemptions have been granted for treating mental health conditions. But Goldsmith says that the technology to research its effects, such as MRI machines, was not widely available until recently.
“Radio waves have existed since the beginning of time. But until the radio was invented, we couldn't make use of them. It's very similar to that,” he says.
In the meantime, Silicon Valley, where people have long experimented with “microdosing” of LSE, became the centre of the world’s financial wealth.
A host of companies have cashed in on rising investor interest. In addition to Compass Pathways, London-based Small Pharma listed in the Toronto Stock Exchange last year, earning a windfall for the UK taxpayer-backed AngelCoFund, which had a 5.5pc stake. New York-based MindMed joined the Nasdaq last year.
The rush of firms bears a resemblance to the rush for cannabis stocks of recent years, although Goldsmith dismisses parallels between the two trends.
“The only commonality is that somehow the substances were made illegal. But the nature of the substance, the experience, and the safety profiles are radically different.
We need much more caution when we look at psilocybin because it's such a powerful tool, and we have to do it at the highest level of care.”
Nonetheless, discussions with medical regulators are proceeding. In 2019, the US Food and Drug Administration approved a Johnson & Johnson nasal spray derived from ketamine, another psychedelic, for treating depression.
It gained regulatory clearance in the UK, but not the green light from NICE, which approves drugs for NHS use.
However, Boris Johnson has said he will examine the latest advice on psilocybin to see if it could be legalised for research purposes.
Last month, Compass announced a tie-up with South London and Maudsley NHS Foundation Trust to speed up research into psychedelic therapies, estimating that 700 patients might be treated over the next five years.
Widespread medical acceptance, not to mention the stigma surrounding a currently-illegal drug, remains years away. But the rush of money into the space suggests psychedelics are not just for hippies and misfits.
“Traditional drug developers are able to see that the evidence is compelling enough to commit their time and energy to this, in spite of the coloured history of some of the substances,” says Feilding Mellen.
“We used to be just the outsiders who were looking at this. Now it really is becoming much more mainstream.”
