Healthcare takes on psychedelics - an emerging market led by Europe

The UK's first investment fund dedicated solely to psychedelic healthcare has launched.

The fund, launched by Neo Kuma Ventures which has already attracted millions of pounds in investment, has no set cap and will continue to draw venture capital through the first half of 2021. 

It comes as recent rigorous clinical trials have demonstrated psychedelics’ potential to treat unmet needs in mental illnesses including post-traumatic stress disorder (PTSD), depression, addiction and anxiety.

The London-based Venture Capital firm, will use the fund to invest in “the most exciting, high quality and scientifically sound players in the industry.”

The newly formed firm has an investment thesis focused on clinically proven psychedelic medicines which it believes will hit the market in the next five years.

Regulators are learning to embrace psychedielics

Neo Kuma Ventures co-founder Sean Mclintock said: “As the medical benefits of psychedelics become more well-known and regulators steadily increase their embrace of these types of drugs, the industry is set for a boom. While much of the conversation on psychedelics is taking place in the US, Europe is the true hub of the burgeoning psychedelic healthcare sector.

“We look forward to investing in the most exciting, high quality and scientifically-sound European players in the industry to facilitate their ground-breaking research.”

Last year Neo Kuma’s founders backed ATAI Life Sciences AG, a part owner of COMPASS Pathways- which recently became the first psychedelic medicine company to float on Nasdaq and is now trading at a market cap of $1.98 billion.

Neo Kuma is investing in the most promising companies from seed to Series C, with prior investments including ATAI Life Sciences, Bright Minds and Beckley Psytech among others, are looking to continue to support market leaders through capital deployment in 2021 and beyond.

The re-emergence of psychedelic healthcare

The fundraising underscores the growing appeal in the re-emergence of psychedelic medicine following the approval of several previously outlawed drugs to treat mental illnesses.

Parallels to the rise of psychedelic healthcare have been drawn to the medicinal cannabis industry which in the US surged from an estimated total value of $2 billion in 2014 to an estimated $35 billion in 2020. [1]

Last year a new ketamine nasal spray by Johnson & Johnson was approved for use in the US and Europe to treat adults suffering with treatment-resistant depression. According to Dr David Nutt at Imperial College London, this breakthrough marked the first major advance in the treatment of depression since the late 1980s. [2] 

In the US, the Food and Drug Administration (FDA) also recently designated psilocybin therapy — a hallucinogenic substance found in magic mushrooms - as a "breakthrough therapy” in treating major depressive disorder (MDD).

Laying out the case for psychedelic healthcare

Last year, in the UK the NHS started prescribing its first cannabis medicine for epilepsy. 

Research by the World Health Organization found that one in four people will be affected by a mental or neurological disorder in their lifetime, and one in 20 will be severe cases.

In England, the Centre for Mental Health has predicted that up to 10 million people – almost a fifth of the population – will need mental health support as a direct consequence of Covid-19. [3]

An estimated 264 million people worldwide suffer from depression.[4]

A report last year by the Lancet Commission, a body of experts, estimated that mental-health disorders could cost the global economy $16trn by 2030. [5]

Sales of antidepressants were $14bn in 2017 and analysts expect them to grow to $16bn-19bn by the middle of the next decade.[6]

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