Are Psychedelics Microdosing The NEXT BIG Investment? - Why I'm Investing...| Kevin O'Leary

Hi everybody. As you know, I've been talking about microdosing psychedelics as a medicine for about a year now. I've been intrigued by this new development because it has the potential to become groundbreaking medicine. We don't know that yet. So many companies and initiatives are starting to do research that actually started in the early 60s, but was shut down because a lot of the psychedelics became illegal.

Now, the promise of perhaps fixing huge problems like drug addiction, opioid addiction, alcoholism, depression, and ADHD—all of these metrics put into the basket of maybe what microdosing psychedelics could help. We found companies that are merged. One of them is Mind Med. Now, for full disclosure and transparency, I'm an investor in Mind Med; it's the one I've chosen for a bunch of reasons we're going to find out today.

But I thought the best thing to do, on the eve of some research that actually came out—this is probably the first in-depth research of Mind Med since the company went public—I would get the CEO on, JR Ran, and we could talk to him a little bit about what this company is going to be doing over the next few years and what the initiative of this whole industry is going to be.

JR, welcome to the show.

JR: Thanks for having me, Kevin. Let's talk big picture. Let's go to 30,000 feet and tell me what this whole initiative is about. Let's talk about the industry, why you got involved, what Mind Med is doing versus the others. Let's start there.

JR: So, Mind Med was set up to develop medicines that are based on psychedelics. We saw a great opportunity and a lot of untapped value because these are Schedule 1 substances.

Kevin: You mean they are illegal drugs?

JR: They're illegal, right? That's correct, yeah. So they were made illegal in 1970, and all research really stopped on these substances. But what I think is intriguing is that these substances actually started here. I actually have the original patent for LSD; it was started in the 1930s and 1940s by a modern psychedelic revolution led by a guy named Albert Hofmann who was working at Sandoz Laboratories, which is now part of Novartis, the major pharmaceutical group.

That is where a lot of research was being proposed that LSD and other psychedelics should be medicines. And so, what we're trying to do really is complete that legacy.

Kevin: Now, what's involved in going through this? Because, you know, I want to be clear and on the record about this. When I was first approached by one of your board members over a year ago to get involved in Mind Med, I said absolutely no way. I don't want anything to do with recreational drugs. I never got involved in cannabis for that reason; it's a Schedule 1 narcotic still federally. However, I was assured that this work you're going to be doing is going to be in pursuit of medicine. So, walk me through what stages have to occur when you're dealing with a Schedule 1 narcotic. How do you get that to an FDA-approved drug? What's the process?

JR: The process exists. You can make a medicine that is based on a Schedule 1 substance—there are many examples out there. What we are ultimately doing when we go through an FDA process is proving the safety and efficacy of a substance or molecule. So, in order to do that, you need to have a very, very highly pure version of the substance called GMP. And so, we are producing that for various substances that we are working on. But in terms of how you actually do this through the FDA process, you have to have clinical trials.

And in order to get the exemptions to file what we call an investigational new drug or an IND, you also need to get sign-off from the DEA and other organizations because these are scheduling substances. But it doesn't preclude anyone from doing a clinical trial to prove that there's therapeutic value of a substance.

Now, originally this compound, let's just take LSD for example—a psychedelic that’s well-known in society as a psychedelic drug. It got a very bad rap in the early 60s, obviously. But that was created in Switzerland, was it not? Isn't that the origination, or found or discovered or processed in Switzerland?

JR: That's right, yeah. LSD was discovered by Albert Hofmann, who was one of the most successful chemists at a place called Sandoz Laboratories, which is now part of the pharmaceutical giant Novartis. They were working on LSD for therapeutic potential; that’s why it was sent all around the world to different psychiatrists, one of which was Timothy Leary. And ultimately, what happened was the medicines weren't controlled. Because of that, the 1960s really demonized these substances for political reasons but didn't really focus on the therapeutic benefit that these, you know, LSD could have on society and patients.

So, that is what we are proving now. We need to take the data, conduct clinical trials, and prove that these substances actually can benefit people. And I think if we can do that in a compelling manner to the FDA, they will eventually become medicines.

Kevin: Let's talk about that anecdotal data. Let’s stay on LSD for a moment because I’m an investor in many, many companies in Silicon Valley, and in Boston and Texas, Florida—you name it. Young engineers, and I’m not endorsing this by any means, but it’s anecdotal data they’ve been microdosing LSD or, you know, reportedly doing this and getting some very interesting positive outcomes about productivity and support of ADHD and reducing the symptoms of that, etc. This is all anecdotal, not proven, not legal. So I don’t endorse it, but it is intriguing to consistently hear this buzz out there in the community of those that are using this.

And it’s almost like some kind of a counterculture, but it’s not for psychedelic reasons. It’s not for tripping and hallucinating; it’s for helping them with their day-to-day problems. What evidence do we have of that? What have you heard about it? Why is that making—why is that a constant buzz in the background of this industry?

JR: Well, you know, I come from Silicon Valley. I was an early employee at Uber. I went through the Y Combinator program where, you know, companies like Airbnb and Dropbox came out of. And I can tell you that microdosing in Silicon Valley is a very big trend. It's an illegal trend, but it is, you know, vastly growing.

There are also many Reddit groups out there that you can view, you know, people that are microdosing LSD and psilocybin for their potential increased focus, you know, changing their mood, just overall mood disorder. That’s very interesting and compelling anecdotal evidence. But the issue, Kevin, is that it’s anecdotal. And what Mind Med, our company, is trying to do is say, okay, right, there’s all this compelling anecdotal evidence; now we want to take it and prove that the data works.

And so we are actually doing the first Phase 2 trial for microdosing of LSD, and we will be looking at it for adult ADHD. There are millions of adults; I was one of them. My parents, you know, brought me to the psychiatrist, and I was 13 years old, and they sent me out with a bottle which is the equivalent of, you know, a substance very close to methamphetamine.

So it’s an industry that is huge; ADHD also is an industry where you have my generation looking for alternatives to the stimulant-based medicines that we’ve been on for most of our lives, which have terrible side effects. And I think I’m seeing a lot of promise in microdosing of LSD for that.

I was sitting in Toronto shortly after you invested and actually in the same restaurant that we met in. I was wearing my Mind Med t-shirt, which I like to wear everywhere, and it says “psychedelic-inspired medicines” on the front. The waitress comes up to me, and she goes, “What are you doing in psychedelics?” And I said, “Whoa, hold on a second. Is this—I mean, you know, we do everything federally legal that we conduct. Is this a raid?”

She goes, “No, no, I microdose LSD. I've been on Ritalin since I was six years old, and I’m using it to get off of my Ritalin, and I found profound effects on my ability to focus and think creatively.”

And so that’s when I had the real “aha” moment that, you know, this can be huge. I mean, there are a lot of people affected by ADHD, and we can help them get off of these stimulants.

Now, I read this research today while I was on my bike in the morning. That’s my routine is to read research while I’m working out. I think I read this at 5:30 a.m., and I want to talk to you about there are two trials referenced in this research that you are getting involved in.

The first—let’s start with the first, the LSD trial. Where is that taking place? When is it taking place? What is the timeline investors should think about in terms of that research, and what is the hopeful outcome in terms of just what is the scale or value of a drug like that should you be successful in turning it into a medicine?

JR: What's really interesting about this Phase 2 microdosing of LSD for adult ADHD is it’s the first Phase 2 trial to really look at microdosing. There have been plenty of Phase 1 trials that have looked—actually not plenty; there are about three—which is not much in the context of medicine.

But we are ultimately looking to prove that there’s a therapeutic benefit of microdosing LSD on a weekly regimen in various doses that can help you focus and help with the symptoms of ADHD. We’re going to be beginning that in the fourth quarter in Europe, and we will be making more announcements about enrollment and how that trial is progressing.

But really, what we’re looking for here is the first data-driven efficacy signal that microdosing has a therapeutic benefit. And I think with that it broadens what we can do in our microdosing division. This is our first trial of microdosing of LSD. I think we're going to look at other potentials for microdosing, that the anecdotal evidence is extremely compelling.

It’s very rare that you go into a drug trial where you know the substance has been, you know, just in the U.S., I heard that psychedelics have been used by 30 million people, right? It’s very rare as a drug company that you know something is not toxic, like that it’s not killing people. That’s, you know, part of one of the biggest parts of moving the safety of something.

And so we just find that as an investment thesis amazing because it’s de-risked the proposition significantly knowing that we’re not going to kill people as we put the substance into the research.

The research also makes reference to a compound or molecule called 18-MC. Talk to us about that. What is it? What are the trials on that? What is the hopeful outcome of that medicine?

JR: Well, that 18-MC is dealing with the opioid crisis. I mean, we have a huge problem in the United States right now. The opioid crisis costs the country five hundred billion dollars a year. There are 11 million people misusing opioids.

This is having a very bad impact on society. Not to mention that, you know, now with COVID-19 and people in isolation, the rates of addiction are going to skyrocket when this whole thing shakes out. I mean, there is compelling data around rat models that were isolated and that were looked at versus rats that were not in isolation, and the rats in isolation increased the consumption of addictive substances by 1900%.

So you can only imagine what the great lockdown is doing to our mental health and addiction right now. And so what 18-MC is going to do, and continues with our—will be starting our Phase 2 trial in 18-MC in the fourth quarter—is how do we completely relook at how we treat addiction?

Addiction right now is being treated with a substance for opioid addiction that is like a nicotine patch; it’s something called suboxone or methadone, which you may have heard of. It’s as addictive as heroin and it's not addressing the underlying reason for addiction, which is something in our brain called dopamine.

Dopamine ultimately, when you get high or when you have a drink, that’s a dopamine rush and that is the underlying cause of addiction. There's a lot of research out there; the National Institute on Drug Abuse, Nora Volkow has been pioneering this research. 18-MC has received 6.8 million dollars from the National Institute on Drug Abuse, and so we’re going to be pushing this research forward, getting a Phase 2, and ultimately what we want to do is create the antibiotic of addiction.

We don’t want to put people on a pill a day for the rest of their lives. I think that’s vastly different than most pharmaceutical companies. We actually want to solve the problem.

Kevin: JR, you recently took this company public, and yet it has no revenue; it's an early-stage company. I remember when I was invited to invest in it in a private placement, I looked at it as a binary outcome. In other words, either you're going to prove the effectiveness of one of these or multiple compounds as medicines, real medicines, or this thing is going to zero.

How am I, as an investor—so in other words, either it’s a fantastic outcome because the problems you’re trying to solve are multi-billion dollar markets or it’s a zero. How am I, as an investor, to figure out this now that it’s trading publicly? What is my net worth? How would I know? How can I even guess? Is there anything you can give me as guidance to value this company?

JR: Well, I’d say this: binary outcomes—definitely that’s drug development, right? You have to invest millions into trials to prove that they work. What’s compelling about Mind Med right now is we're assembling a portfolio of many of these different psychedelics-inspired medicines, and there might be a few binary outcomes.

One of them might be a zero; one of them might be, you know, really, really big. So when we look at the space in drug development—and our chief scientific officer and our chief medical officer, we had a conversation a couple of weeks ago, and they said, "Look, when we've been developing drugs for 30 years, we've never seen anecdotal evidence like this going into a trial knowing something might actually work."

A lot of times it’s really just a gamble.

And so I think, you know, we have—there’s definitely a de-risked proposition in the broader psychedelic space and making these into medicines. When you think about valuing the company, well, you know, we’re building a completely new asset class. This is not, you know, a traditional medicine. I mean, these are going to be a whole new industry that’s sprouting up.

So I think if you want to value the company as well, if you’re building a new business segment, how big can that company eventually get if it becomes the leader in the field? And we are one of the leaders in this field. There are only really three companies out there that are doing this: Peter Thiel-backed one that just raised 80 million dollars called Compass Pathways and then there’s a company like us, Mind Med, which is public already and is accessible to all investors.

And I think these are going to become the leading companies in the space, and, you know, we’re fortunate to get smart guys like you to see that early and help us build a very, very big company over the long term.

Kevin: So, the process now of both of these trials—are these the two you're focused on? Are there more? What else can you—what other markets potentially can this industry—and obviously, Mind Med is where I’m putting my bet.

And I’d like to actually get you on the record on this one because many institutional investors share my concerns. I’m going to use that word: that we don’t want to invest in companies. And the example was the cannabis companies that could never give us a path to invest in medicine alone; we always had to get involved in the tremendous controversy of recreational use of marijuana, which I have no interest in backing.

And I don’t want to be caught up in that controversy. I’m not pro or con; I just don’t want to invest in something that doesn’t have a clear path to a medicine and it’s just going to be involved in all the issues that each state has to go through. In the case of this industry, and you know, in the case of Mind Med, you have assured investors like me—because I’m not the only one that has this concern, particularly institutional investors—that the pursuit this company has, Mind Med specifically, will never be into recreational use of psychedelics.

Go on the record, JR.

JR: Yes, sir. Well, I know that, but I want to hear what you say to a broader base of institutional investors who are going to see this. What is that? What is the mandate of the company?

JR: So, Mind Med will never touch recreational psychedelics. We have no intention of getting involved in the politics of that. I think that can get very, very messy. What we’re focused on is helping patients, and the way to help patients with lots of diseases here in the United States—mental illnesses—is to do that through the FDA pathway. There’s a clear way to do that. That’s how every single medicine that has become approved has gone through the FDA. Why reinvent the wheel?

I think this is a really important thing. And by the way, you’re not the only guy that I gave the handshake on to this. There are some pretty big funds in New York that came into the pre-public round that wanted the same handshake because they can’t be seen to investing into recreational Schedule 1 narcotics. I mean, that’s just, it’s not possible for them—for their funds.

And so that’s why they were able to invest into us. What I will say is, we need to really focus on why we are doing this. What are the outcomes? Let’s not focus on the substances; let’s focus on the potential outcomes for some really sick people out there.

There are 40 million Americans that have anxiety; there are 20 million plus suffering from substance abuse disorders. These are big, big problems. And so, to answer your question a little bit further, what else we’ll be looking at besides our opioid addiction-focused trial and our adult ADHD with LSD trial?

I’m very interested in anxiety. We acquired a Phase 2 trial from the University Hospital Basel and Dr. Matthias Liechti, who’s the leading researcher in the LSD space and has been for a number of years. And that will have some potential readouts in the not-too-distant future on that Phase 2 trial.

And I think that when we look at that trial, we’re going to be very compelled to go into the anxiety space and create a whole new drug program around anxiety. And we’re going to need it because COVID-19—I mean, I was in the pharmacy the other day just picking up a prescription, and the woman in front of me was—the pharmacist was talking to her, and she says—he said, “Well, I know this is, you know, your first time getting Xanax. Do you understand what it’s worth?”

And she goes, “Yeah, I was watching CNN, and my doctor said that I probably, you know, needed an anti-anxiety medication, so that’s why I got this.” You know, that’s a big, big problem that’s gonna come out of here.

And I think the next, you know, and I’m gonna probably come back here in a year or two, and we’re going to be talking about this Xanax crisis. So, we need to focus on disruptive technologies and solutions to mental health. That is what we are trying to achieve as a company.

Finally, if I’m an investor in Mind Med—and I am—what should I be looking for in terms of just scheduling or milestones in the road over the next year? What is it that you’re trying to achieve that I should say that is a good milestone to achieve as an investor?

I’d care about just map me out the next 12 months—what matters?

JR: Well, look, I think it’s very important to start Phase 2 trials. And so, we’ll be starting Phase 2 trials very soon on two drug trials. In addition, there is a lot of IP that we can generate out of this acquisition that we’ve done with the University Hospital Basel.

I look forward to further IP filings around what we’re working on there and then some new ideas that might be Phase 1 trials but could be new forms of using psychedelics. So those are the milestones you want to look for because, trust me, Big Pharma is interested in this space. They’ve really stayed on the sidelines to date.

There was one company, Johnson & Johnson, who was working on S-ketamine, which got approved—which is a very similar to a psychedelic experience—and that was approved in Q2 2019. They are going in by 2024; consensus estimates say 1.4 billion dollars a year in revenue. These are big markets.

That’s up for treatment-resistant depression. It’s true; it’s unfortunate they’re big markets. I mean, solving for opioid addiction, which has touched so many families in America in a very bad way, or even alcoholism, or, you know, ADHD, or addiction, or any of these things—if any of these drugs work, then my investment thesis will have been hopefully proven because every market you’re looking at as an industry is huge.

I don’t see small vertical drugs here; I see big, big, big problems that are costing society billions of dollars, and they say huge opportunities. Should it work? It’s just, I don’t know yet; that’s why I asked about milestones and timetables.

And look, I’ve got to tell you, I wish you the best of luck, obviously, as an investor. But I think, you know, the company has a bit of a moral and social mission to, I mean, to solve something so miserable as opiate addiction or even alcoholism, which has touched so many families. If there was a way to solve for that, it would be an amazing outcome and a financially rewarding one for the company, investors, and the people that don’t have to suffer from that misery.

So, JR, I really wish you the best of luck. We’ll be checking in from time to time. Obviously, there’s a lot of interest in this space and a lot of controversy, no question about it. You’re messing with something that, you know, came out of the past in the 60s with a pretty bad connotation on it, and now you want us all to believe it’s a medicine. I think that’s intriguing.

JR: Well, thank you. And we do have a mission at Mind Med. I mean, this is really about how do we help patients that are having problems. And so these are big societal problems, and I think if we can make a dent into them, we’re going to have a better country and a better society.

And I’ll leave you with this: the inventor of LSD, Albert Hofmann, he said, “I hope that one day my problem child will become my wonder child.” And I can’t think of anybody else better to help us with that than Mr. Wonderful.

Thank you so much.

Kevin: The company is Mind Med. It's an intriguing participant in this industry that looks to take formally illegal Schedule 1 drugs—remain illegal in the 70s like LSD and other molecules—and turn them into medicines to solve some of society's biggest problems like opioid addiction, alcoholism, ADHD, you name it, problems of the mind. Hence, Mind Med.

Anyways, JR, thank you so much for your time today. We’ll be checking in again. Take care, everybody. You can go online and learn a lot more about this industry because people are intrigued.

Take care, everybody. Stay safe.