Wall Street is betting tens of millions of dollars on psychedelic drugs that backers say could treat mental illness for a fraction of what it costs to do therapy with better-known treatments.
Transcend Therapeutics Inc. raised $40 million from venture-capital investors in January to develop a post-traumatic stress disorder treatment that its 29-year-old CEO Blake Mandell says would require about half the amount of therapy as MDMA, or ecstasy, a popular hallucinogen. Gilgamesh Pharmaceuticals Inc. and Lusaris Therapeutics Inc. have announced capital raises of about $100 million since November for similar products addressing depression.
The companies’ fundraising—and their focus on more cost-effective psychedelic therapy—coincides with a sharp selloff in biotech stocks last year that blunted some of the enthusiasm surrounding the commercial potential of hallucinogens.
All three companies say their drugs will kick in faster and wear off faster than MDMA and psilocybin, the psychoactive component of magic mushrooms. That could lift one of the biggest roadblocks to delivering psychedelic treatment to a mass market.
