Atai: Psychedelic mushroom startup studying depression

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• A new biotech startup backed by Peter Thiel has raised
  $25 million to
  study the effects of psychedelics like psilocybin, the
  active ingredient in
  magic mushrooms, on depression.
• Called Atai Life Sciences, the company is a spinoff of
  another Thiel-backed company called
  Compass Pathways.
• German entrepreneur and investor Christian Angermayer
  will head up Atai with a focus on studying and producing
  psychedelics
  for mental health.
• Angermayer also has plans to study drugs designed to
  fight aging and extend life.

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In June, an under-the-radar startup backed by Silicon Valley tech
mogul Peter Thiel made enough psilocybin — the active ingredient
in magic mushrooms — to send 20,000 people on a trip. It was part
of a larger effort by the company, called
Compass Pathways, to study how psychedelic drugs could be
used to treat depression.

It was just the beginning.

On Wednesday, German entrepreneur and Compass investor Christian
Angermayer launched a new Thiel-backed startup focused
exclusively on studying and producing psychedelic drugs for
mental illness. Called Atai Life
Sciences, the initiative has already raised $25 million from
investors like Thiel, ex-hedge fund manager Mike Novogratz, and
film producer Sam Englebardt.

Alex Tew and Michael Action Smith, founders of the popular
meditation app Calm, also invested. Former National Institutes of
Health director Tom Insel, who previously served as an advisor to
Compass, will stay in that role.

Atai’s parent company, Compass, laid the foundation for Atai’s
work on psychedelics, which will now be expanded to more studies
and potentially more drugs. It raised an additional $33 million
as part of the latest funding round, bringing its total to more
than $38 million.

Earlier this summer, Compass received regulatory approval to
begin one of the
first large studies looking at the effect of psilocybin on
treatment-resistant depression, a severe form of the illness that
does not respond to other medications. Compass also secured a
patent on a form of the drug that it makes in a lab.

Atai and Compass are already the world’s leading producers of
psilocybin, Angermayer told Business Insider. He hopes the new
initiative can catalyze a “virgin market of for-profit
psychedelics.”

In other words, Atai might create a medical pathway for
psychedelics similar to what the marijuana industry has seen in
recent years.

In addition to its work on drugs for mental health, Atai will
also study treatments designed to fight aging and extend life,
Angermayer said. To do so, the company is partnering with
German-based Innoplexus, which uses AI to develop drugs.

A resurgence of psychedelic research

Reuters/
DEA

Psilocybin has become a promising candidate for anxiety and
depression treatment because it appears to
disrupt the sorts of engrained brain activity patterns that
are the hallmark of those diseases. One recent study looked at
the compound’s potential to help
alleviate anxiety in cancer patients; others have looked at
psilocybin’s potential effect on
depression, PTSD, and alcoholism.

Compass Pathway’s study, which got FDA approval in August, looks
at the effect of three different doses of psilocybin (1 mg, 10
mg, and 25 mg) on treatment-resistant depression. A “standard”
dose of dry magic mushrooms is roughly 2 grams, or about 20 mg
pure psilocybin, according to nonprofit educational organization
Erowid. The clinical trial involves 216 people enrolled across
several research sites in Europe and North America.

The magic mushroom isn’t the only psychedelic drug getting
renewed attention. There’s been a steady trickle of scientific
research on psychedelic drugs’ potential therapeutic benefits for
at least the last five years.

A study in 2017 indicated that
ecstasy could help veterans cope with PTSD symptoms; one in
2012 hinted that
ketamine might curb major depression. That spate of research
finally seems to be leading to
the development of promising potential treatments that could
get
government approval.

David Nutt, the
former chief drug advisor for the British government and a
current advisor to Compass Pathways, is optimistic about the
federal approval process. He
told Business Insider last year that he expects to see
psilocybin approved as a treatment for depression by 2027.

Capitalism comes to psychedelics?

Not everyone is thrilled about the idea of a for-profit company
leading the research on psychedelics. So far, the bulk of work in
the field has been pioneered by researchers and nonprofits. Now
that could change.

“Is this going to be the Eli Lilly of psychedelics? No one ever
imagined that,” Charles Grob, a professor of psychiatry at the
University of California, Los Angeles and an author on one of the
first studies of psilocybin in cancer patients, told Business
Insider. Grob is also affiliated with the nonprofit research
institute LA Biomed.

“Capitalism comes to psychedelics? I don’t know what kind of fit
that will be,” Grob said.

Angermayer thinks the results of his company’s studies will speak
for themselves. He estimated that by the time the clinical trial
results come out in the fall of 2019, it won’t be more than two
years until psilocybin becomes the first medically-approved
psychedelic for depression.

“After that, there will be no doubt” that the drug works to treat
depression, he said.