Every young industry eventually experiences jostling for market dominance. In psychedelics, that journey has just begun for a handful of companies.
How they get there in this new industry means working on new, and sometimes novel, strategies for building the team. And for now, that’s been a hit-and-miss proposition.
While the CEO of the company makes the standard moves for company development, enticing investors or looking at mergers and acquisitions, there’s not much else to work with inside the company until a product starts generating revenue.
So how does a psychedelics company stay fiscally safe and still operate successfully in this space?
Here’s a five-part recipe:
1. Start with – and lean on – the heavy hitter. Generally, this means the money guy, a CEO or founder or both, who can help the business weather the hits of development ups and downs.
With that money person behind the business, a million-dollar clinical trial loss won’t kill the business. These are novel drugs. There is an amazing multibillion-dollar future. Failure is expected along the way.
Example: Billionaire Peter Thiel invested heavily in both Atai and Compass Pathways. GoDaddy cofounder Bob Parsons and SpaceX founder Elon Musk also are rumored to be sniffing around the industry as well.
2. Mix in a great medical officer, the new psychedelics business power player. Get someone on board with a deep background in bioscience discovery and development, with a proven business development acumen.
This is an evolving position in the medical field, an important partner of the CEO, requiring greater strategic business building skills that some physicians find challenging but ultimately lead to greater success.
Example: In October, Cybin announced the addition of Dr. Amir Inamdar, who was formerly with AstraZeneca where he led a global program in substance use disorder, successfully progressing a small molecule from a preclinical asset to a first in-human clinical trial. He was awarded a multimillion-dollar grant by the National Institute on Drug Abuse for a project in substance use disorder. At the same time, Cybin announced a new research and development leader with deep experience in clinical trials, a new general counsel, and a communications and public relations firm.
3. Add a patent protection guru who understands the bioscience world. This could be a lawyer on retainer or even a full-time executive. Issues come up all the time in an industry that is still defining itself, and new psychedelic drug innovations or inventions are not easily understood.
Example: There are more than just the usual intellectual property issues about who owns a certain patent, which can by itself take up a lot of time and resources. There are also ethical considerations about some of the psychedelic plants that this guru has to address. Those can be particularly thorny and are just part of the complicated patent process for psychedelics.
4. Sprinkle in a group of clinical trial clinicians and developers. These are not do-it-yourself trials. Far from it. Psychedelic clinical trials need to be carefully structured and carried out, with a focus on safety, especially when experimenting with a drug for the central nervous system, exploring such concepts as consciousness and mystical experiences.
These are uncharted waters for the most part. Vetting of participants is extremely important. Protocol and scientific rigor are essential. Set and setting are important keys to success. Expectations can be unrealistic.
Example: Most psychedelic clinical trial producers are still members of academia, such as the teams at Johns Hopkins Center for Psychedelic and Consciousness Research and the Icahn School of Medicine Center for Psychedelic Psychotherapy and Trauma. And that’s a good thing.
There is a movement to bring more physicians into the clinical trial settings and deepen clinical trial partnerships with various institutions outside of academia as standardization and clinical trial management objectives are created. One study reported that clinical research contributes to the expanding knowledge base of medicine and “provides physicians an opportunity to offer patients latest cutting-edge therapies. Participation opens their eyes to medical innovation, and they are benefited by satisfying intellectual curiosity, increasing research provisions and assisting career advancement.”
5. Adjust adjust adjust. As the industry develops, it’s becoming clearer that investors want better financial direction and better financial scrutiny of what is going on inside the company.
Cash burn appears to be endemic in this industry. That scares investors. But who is calling the shots? And what is really at stake? That has to be spelled out because this is where things can get messy.
Example: A letter from investors, which included the company’s co-founder and former chief medical director Scott Freeman, noted that MindMed’s management had divided its attention among too many different projects resulting in the delayed development of MindMed’s core drugs. They advised selling a recent acquisition, eliminating some positions within the company and reducing board compensation. The next day, MindMed, appearing to be focused on the long-term instead, announcing two new independent additions to “strengthen” the board: Suzanne Bruhn, a research and development specialist with executive leadership chops; and Dr. Roger Crystal, inventor of the Narcan nasal spray who also holds several related patents.
Following this recipe won’t automatically make your company a market leader, but it will definitely give you a leg up on the competition.