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Psychedelics as Therapeutics – What Developers Need to Know

Psychedelics as therapeutics are generating great interest from investors and drug developers; however, these investors and drug developers must balance opportunity against the unique challenges developing these therapies pose.

I recently attended the 3rd annual Psychedelic Therapeutic and Drug Development Conference – a conference packed with content and innovative ideas from researchers, investors, sponsors, and even economists, all providing unique but complementary perspectives on psychedelics as therapeutics.

Returning home, I was able to reflect on the presentations, posters, and lunchtime discussions and came up with some key learnings. Hopefully, these insights will prove helpful for drug developers and others interested in this exciting space.

Balancing Hype vs Hope

The renaissance of psychedelics as therapeutics for multiple neuropsychiatric disorders has created a buzz within and outside the industry. Used primarily in combination with therapy (psychedelic-assisted therapy, or PAT), this burgeoning field offers hope for those with intractable disorders such as major depressive disorder (MDD), treatment-resistant depression (TRD), post-traumatic stress disorder (PTSD), eating disorders, addiction, and the existential dread experienced by many patients with terminal illness.

In 2020-2022, this buzz led to the creation of multiple psychedelic-focused companies and to significant investment in this space; however, the initial hype has been tempered by reality from a financial and clinical perspective. More specifically, biotech funding has become more constrained, and the number of suitable sites for clinical trials is limited. More recently, the field has begun to level-set and, companies that did not have the structure, data, or, in the case of ketamine clinics, the appropriate economic model to attract continuing support, are closing their doors.

On the patient side, the development of PAT offered hope to those suffering from disorders inadequately addressed by current therapies; however, patients are increasingly aware that psychedelics are not for everyone and are not for every disorder.

On the plus side, minimal adverse events (AEs) have been reported from controlled clinical trials using psychedelics. But keep in mind one caveat – a recent meta-analysis by Breeksema et al., indicates “In many studies, AEs were not systematically assessed.”

The War on Drugs, which reached its height in the 1980s, demonized all scheduled drugs, including psychedelics. Supporters of the war made outrageous claims, for example, using MDMA made holes in your brain – but data tell a different story. Despite the scaremongering, data to date suggest these substances are generally safe and well-tolerated.

Festina Lente

Some of the key players in the psychedelic therapeutic space believe one of the major errors their predecessors made was in letting their enthusiasm outrun the data, often leading to cut corners. Pressuring graduate students to take hallucinogens in research on psychedelics, an accusation made against Timothy Leary and his collaborators, in order to get results quickly? Not the type of controlled study that produces the quality data needed to persuade the FDA to approve your drug for market.

Researchers and clinicians are recommending a more considered approach this time, ensuring there are solid data to support health claims, gathering reliable documentation on AEs, and conducting studies on interactions with other common drugs and food products. This slower, more considered approach may prevent abuses of the past that led to the demonization of psychedelics. In other words, the industry is hurrying slowly.

Patents, Trade Secrets, and Regulatory Exclusivity; Oh, My!

While we understand drug development companies and investors in the psychedelics space have to recoup their investment, many proponents of psychedelics as therapies are concerned pharmaceutical companies will start patenting these traditional medicines. These specific fears spring from misconceptions about the patent process because patent law does not allow patenting of natural substances.

Companies can, however, apply for patents to protect their novel psychedelics, including analogs of existing substances that have been synthesized in a laboratory. They may also use patents to protect the formulation of these drugs, use trade secrets to protect their processes, and leverage regulatory pathways to obtain exclusivity in the market.

It should be noted neither patent law, the U.S. Food and Drug Administration (FDA), nor the Drug Enforcement Agency (DEA) regulate the psychotherapeutic component of these therapies, making legal or regulatory protection even more challenging.

The Trip as an Essential Component of the Therapeutic Journey

Is the psychedelic trip a necessary component of therapeutic benefit? This is a common question in the field of psychedelics as therapeutics. Researchers are attempting to design new chemical entities that may have the same impact as traditional psychedelics (i.e., that address the canalization, or self-reinforcing rumination that underlies, at least in part, many of the disorders being studied) and are conducting studies using sub-psychedelic trip doses of existing psychedelic drugs (micro-dosing). The results of this research may answer the question.

Some researchers are convinced the trip is essential to the success of PAT. Gul Dölen, for example, discussed her studies at the conference, sharing the efficacy of psychedelics in reopening critical periods to address trauma on which many neuropsychiatric disorders are based.

The concept of the critical period was first promoted by Konrad Lorenz, who noted that snow goose hatchlings have a brief imprinting period soon after they emerge from their eggs. These hatchlings usually form a long-lasting attachment with their mother but, if the mother isn’t around, the hatchlings will imprint on another moving object, in this case, Lorenz himself. Once this imprinting, or critical, period closes, the hatchlings will remain attached to the moving object. The length of a critical period is not always known but, once it closes, the learning from that period – attachment, trauma, etc. – can be intractable.

Dr. Dölen and others hypothesize that psychedelics can reopen the critical period and facilitate relearning. She suggests that an altered state of consciousness – the psychedelic trip – is essential to the efficacy of therapy. Assuming this is true, and because we don’t necessarily know when the critical period closes, the development of shorter-acting psychedelics may be self-defeating.

According to Dr. Dölen, the trip is essential to therapeutic success, but so is the context in which the psychedelic is used. For example, she noted taking MDMA, commonly known as ecstasy or molly, before going to a rave does not necessarily address a neuropsychiatric disorder. Shocking.

Ethical Dilemmas

In the emerging field of psychedelics as therapeutics, there is still a great deal that we don’t know; however, presenters and audience members raised ethical questions relating to what is already known.

Most clinical trials of psychedelics for the treatment of depression require participants to come off any antidepressants, causing ethical dilemmas for both investigator and participant and inciting the following questions:

The Opportunity to Create a Novel Pharmaceutical Model

The development and approval pathway for psychedelics as therapeutics is still largely uncharted, positioning unique challenges for developers. But they are also offered unique opportunities for creating a novel pharmaceutical model – the responsible business. How may we define a “responsible business?” Researcher Charlie Smith, during the conference, proposed the following definition: “Creating customer value through active concern for people, ethics, equity, and environmental impacts while being profitable.” Smith also posited that psychedelic-focused companies should develop the underpinnings of a responsible business early as it is much harder to retrofit.

‘Big Pharma’ has a problem of a few bad apples spoiling the reputation of much of the industry. For example, some companies’ development programs have had missing data (especially data that does not support their development plan), others have been opaque about the origins of their new drugs, and approval for some has been impacted by bad regulators and poorly designed clinical trials, and some companies have developed misleading marketing campaigns.

The field of psychedelic therapeutics, even with its non-traditional investors, lingering stigma, and perceived risk, may promote a novel approach to social responsibility and help to ease the profit-driven reputation many big pharma companies have faced.


Nobody is claiming psychedelics are a panacea for all illnesses, but preliminary efficacy readouts on PAT studies in neuropsychiatric disorders are cautiously encouraging. Whether or not psychedelic-assisted therapy gains regulatory approval, these substances are and will continue to be used. Some of the questions the industry will continue to examine include:

At Halloran, we are developing expertise to support interdisciplinary teams in the nascent field of psychedelic therapeutics. Our work includes educating ourselves on the history, physiology, advantages, and challenges of these substances that have the potential to improve global human health.

To learn how Halloran may help you achieve your goals in the development of psychedelics as therapeutics, please contact us today.