The emerging psychedelics industry is stuck with a sort of default business model that goes something like this: build a team of entrepreneurial-minded C-suite people, add a few qualified medical people, get a patented psychedelic molecule or compound to test and develop, build a research and development operation, then begin the clinical trials as quickly as possible while keeping antsy investors believing in the long-term value of the tenuous business journey that you and they have all embarked on.
Marketing and selling the psychedelic drug—the actual product that should produce revenue—is still years away for most of these psychedelic companies. So the business developers for now are still ruminating about that next step—actually selling a product—that could complicate their business model even more. There are no ready solutions, no historical methods to rely on.
In other words, there is no real beginning-to-end business model per se for this industry.
And it’s an expensive business to get into. It’s more or less followed the same pathway to developing a business infrastructure that any pharmaceutical company has done. Except that this business is based on a highly controversial Drug Enforcement Administration scheduled substance that presents its own list of obstacles.
In the course of psychedelics business development, just like with any pharma company, there can be twists and turns along the way as companies work to turn their novel substance of choice into the foundation of a viable enterprise through original clinical trial design while managing the ebb and flow of investor money.
But psychedelic companies can’t really follow the pharma companies’ business model lead today. The pharma business model itself is in transition. According to a McKinsey report, Covid has truly thrown a wrench into the standard operating procedures of pharma companies, concluding that the future operating models for pharma companies may not be crystal clear. “But the choices that companies make now will nevertheless influence the models’ performance—speed to market, efficiency, and ability to serve more patients with better treatments. Organizations should therefore prioritize those elements of the model that are most likely to drive success and not be afraid to deprioritize those that aren’t.”
One company, Filament Health (OTC: FLHLF), decided to try its own original route at developing a business model and perhaps work a better speed-to-market approach.
The company partnered with the Translational Psychedelic Research Program (TrPR) at the University of California-San Francisco (UCSF) to progress their drug development efforts. The TrPR director, Dr. Joshua Woolley, acts as principal investigator to lead Filament’s patent-protected drug candidates through FDA investigator-initiated clinical trials.
Ben Lightburn, CEO and co-founder of Filament, told Psychedealia that, five years ago, there were not nearly as many research sites set up that could competently administer these psychedelic substances. “So we do have a bit of like a second mover advantage in that we don’t have to build all this infrastructure from the ground up,” he said. “We can enjoy the benefit of the infrastructure that already existed at TrPR.”
“The whole reason behind the company was to bring pharmaceutical grade natural psychedelics to the market. That had actually never been done before,” Lightburn said. “All clinical research on psychedelics up to this point had been done using synthesized chemicals that are produced artificially in the lab. It’s very strange because they’re all natural compounds. They’re all found in nature.”
Lightburn said that he and some of the other team members at Filament had a lot of experience working on natural extracts for a variety of different products in a variety of different industries. “We thought that we had a pretty good shot at creating the very first pharmaceutical grade psychedelic drug candidates and then getting authorization to study them in a clinical trial. So the whole point of this company was to make those products for the first time and then get the FDA to authorize their administration in a clinical trial for the very first time and, and that’s what we did.”
He said that partnering with UCSF was a good business move and helped shape the business model of the company going forward. “It really helped Filament gain credibility and legitimacy, especially for a young company like Filament which is really just starting out in the drug development pathway working on something that has never been done before.”