Issue No. 174: Psychedelics as Medicine

Illustration: Courtney Powell

Moving into the mainstream, psychedelics are showing promise as the next big thing in mental wellness.

Filtering through the noise, today, we’re exploring the path forward, the substances to know, and the legal hurdles ahead.

Trip Advisor

Until recently, psychedelic therapeutics were still fringe. From Timothy Leary’s unorthodox experiments to the decades-long war on drugs, stigma lingered.

But as the mental health crisis intensifies, psychedelics have reemerged.

Without significant intervention, the WHO predicts that mental illness could cost the world economy a staggering $16T. Things have only gotten worse with COVID — prescriptions for anti-anxiety medicine soared 34% during the pandemic.

Distinct from medicines like antidepressants, experts say psychedelics target the root of disorders. As the authors of Psychedelic Psychiatry’s Brave New World explain:

“Standard antidepressants protect against the stressors… but don’t directly access and remedy underlying biopsychosocial causes [of depression]. In contrast, psychedelic therapy [facilitates] insight and emotional release and… a subsequent healthy revision of outlook and lifestyle.”

Shedding stigma, psychedelics are getting a second chance.

  • Legalization: Across the country, states from Colorado to Washington are steadily moving to decriminalize psychedelics; Oregon, meanwhile, decriminalized nearly all hard drugs.
  • Research: Last October, the NIH awarded Johns Hopkins University the first federal grant for psychedelic treatment research in half a century, while Texas launched its first-ever psychedelic research center.
  • Culture: From festivals like Wonderland: Miami to Austin’s SXSW, psychedelic therapeutics are wedging themselves firmly into the zeitgeist.

With powerful tailwinds, the medicinal psychedelic market could eventually cross $100B according to a Canaccord Genuity report.

The potential industry is huge, says Dillan DiNardo, CEO of Mindstate Design Labs, adding:

“Mental health is by far the biggest market in the life sciences, far bigger than cancer or cardiovascular disease.”

Eager to cash in, venture capitalists put an unprecedented $700M into psychedelic medicine companies last year, up 8x from 2019, per CB Insights. And the industry shows no signs of slowing:

  • Psychedelic startup Eleusis announced plans for a $450M SPAC merger with Silver Spike this January.
  • Around the same time, PsyMed Ventures launched a $25M fund for startups working on medicinal psychedelics.
  • Mindset Pharma secured a $5M deal with Otsuka Pharmaceutical in February.
  • Drawing up the infrastructure, Fluence just closed $3M to train the next generation of psychedelic therapists.

Prescription Psychedelics

As funding piles up, there’s a lot to keep track of, but not all psychedelics are created equal. Analyzing the trends, the following substances are leading the way.

Ketamine. A clear head start, ketamine is already legal and available for medical use. Another benefit, unlike 10-hour LSD- or psilocybin-induced trips, ketamine is short-acting, lasting an hour or two. And startups offering ketamine-assisted therapy are booming:

  • Ketamine therapy clinic Field Trip Health closed $95M last year and is looking to scale to 75 clinics by 2024.
  • Dr. Bronner’s partnered with Enthea this February to offer free ketamine therapy to its employees.
  • Nue Life Health, a telemedicine platform for at-home psychedelic therapy, raised $3M last June and has plans to integrate data from wearables into its ketamine infusions.
  • ATAI Life Sciences received FDA approval this January to study R-ketamine as a treatment against depression.

MDMA. Known as ecstasy/molly, experts think MDMA could receive FDA approval as soon as 2023. An effective treatment for PTSD, more than two-thirds of patients who underwent MDMA-assisted psychotherapy no longer met a PTSD diagnosis.

  • Gearing up, Mindstate Design Labs raised an $11.5M seed in February for its MDMA-based drug.
  • With FDA clearance, the Multidisciplinary Association for Psychedelic Studies (MAPS) anticipates a $750M windfall for its guided MDMA treatments for PTSD.

Psilocybin. Once MDMA gets the green light, expect psilocybin (aka “magic mushrooms”) to follow closely behind. Just this February, Johns Hopkins University published a landmark study where patients suffering from treatment-resistant depression (TRD) reported immediate effects after just two doses of psilocybin therapy — and some saw substantial improvement last up to a year.

This has spurred a patent race of sorts, with companies from Revive Therapeutics to Mydecine to COMPASS Pathways battling for rights. The latter, which IPO’d at $1B in late 2020, has faced scrutiny from lawyers, activists, and journalists alike.

Looking Ahead

For-profit interests in the psychedelic space ring alarm bells. From aggressive marketing to problematic patents, some say the corporate interest behind psychedelics would be a disaster.

Others think psychedelics would usher in a utopia, making mental illnesses a thing of the past.

But as Emily Hackenburg, clinical director at Field Trip, asserts: Drugs like ketamine are a powerful piece of the puzzle, but they’re “not a magic bullet.” Further, psychedelics aren’t without risks, and they aren’t transformative for everyone.

Takeaway: Will psychedelics transform mental health, or will the movement stall? The answer is somewhere in between — while the road ahead for legalized trips holds promise, they aren’t a holy grail.

🏥 Ending Sick Care

The US healthcare system is broken. But, proactive, personalized care could transform the industry.

On the Fitt Insider Podcast: Adrian Aoun, founder and CEO of Forward, joined us to discuss his plan to reimagine healthcare from the ground up.

We also cover: Forward’s vertically integrated platform of in-person clinics, diagnostics services, and wellness programming.

Listen to today’s episode here.

⛰ Climb On

In the gym or in the wild, climbing for fitness has reached new heights.

Bouldering’s big year. Targeting a $500M market, in 2021, more indoor climbing gyms opened in the US than any other time in history.

  • 53 new facilities opened, while only 8 shuttered.
  • 63% were bouldering (rope-free) gyms.
  • Total climbing gyms in US and Canada surpassed 700.

Due to long construction lead times, most newly opened gyms were in development before COVID — signaling building momentum. Further proof, while 25% of gyms and studios closed from the pandemic, only 3% of climbing facilities folded.

Climbing content. The surge in participation has been linked to a number of factors, including documentaries like 2018’s Free Solo and sport climbing’s premiere at the Tokyo Olympics. El Cap, the parent company of Movement gyms, reported a 45% increase in web traffic the week Olympic climbing debuted.

Skyward. Known for its supportive and social community, climbing outdoors has taken hold as pandemic-drained exercisers seek a breath of fresh air.

According to El Cap, first-time shoe and harness sales noticeably increased after the Olympics, and the market for rock climbing gear is expected to add $583M in value by 2025.

Americans are putting their new gear to use, too. Running parallel with the booming outdoor economy, traditional climbing havens in California, Colorado, and elsewhere are being overrun.

Organically grown for years, the outdoor climbing community has been spurred by digital resources.

  • TheCrag and Mountain Project (which was acquired in late 2020 by digital outdoor navigation company onX) provide crowdsourced routes and community tips.
  • KAYA added $2.5M in seed funding last year to become the Strava for climbing.
  • As the hobby grows, camping platforms The Dyrt ($11M) and Sēkr ($2.25M) are trying to improve the accessibility issue.

A different approach: Connected vertical climber maker CLMBR looks to make capitalize on the cardio aspect, while Brooklyn Boulders is gamifying the climbing gym experience with its Arcade Climbing partnership.

Punchline: In 2022, 48 new climbing facilities are expected to cut the ribbon in North America, challenging just how juiced the market for climbing really is.

Share this headline.

🚲 Rent-a-Bike

Rethinking its strategy, Peloton is piloting a new pricing model.

Shifting gears. Replacing founder John Foley after the company cut 2,800 jobs, Peloton’s new chief executive Barry McCarthy is attempting to engineer a turnaround.

Step one: testing a new kind of connected fitness bundle.

Members only. From its inception, Peloton paired hardware and content, charging a premium for its smart bike, plus a $39/month subscription for classes.

In search of profitability, McCarthy is shaking things up, unveiling One Peloton Club. For a $60–100 monthly subscription, members receive their workout equipment and access to Peloton’s fitness content.

If a customer cancels their subscription, Peloton takes the bike back free of charge. Members also have the option to purchase the bike outright.

Peloton-as-a-service. Likening it to the “Apple of fitness,” equipment was central to Foley’s vision for Peloton, generating twice as much revenue as content subscriptions.

But, during the pandemic, hardware margins sank as the company struggled with production and logistics costs.

Now, according to the WSJ, the role of hardware is up for debate: “Mr. McCarthy said it isn’t yet clear the role Peloton machines will play in the company’s future.”

Instead, McCarthy is emphasizing content and software in an effort to reach new customers and maximize subscription revenue.

Between the lines. As the pricing pilot plays out, it will be interesting to see how companies running the Peloton of ‘X’ playbook are impacted.

Punchline: As the future of fitness takes shape, the bundling and unbundling of exercise has only just begun.

📈 Market Watch

As gym visits rebound, brick-and-mortar operators hope to put the pandemic behind them once and for all.

The latest. On the heels of strong showings from Planet Fitness and Xponential Fitness, Life Time and F45 Training posted positive Q4 and full-year 2021 results.

$LTH. After going public last fall, Life Time is eyeing growth:

  • Q4’21 revenue was $360.5M, a 57.8% increase from the same period of 2020.
  • Comparable gym sales rose 52%, while memberships grew 29.6% to ~650K.
  • Adjusted EBITDA increased to $48M from $(18M), with net losses of $304.8M.

Full-year revenue topped $1.3B, gaining 39% YoY, while net losses neared $580M. Of note, Life Time’s 2019 revenue was $1.9B with $30M net income.

Inside the call. With 150+ high-end health clubs in affluent suburbs, plus three wellness-focused residential complexes and 10 coworking spaces, CEO Bahram Akradi said Life Time would execute a multi-pronged growth strategy already in motion.

$FXLV. Despite missing estimates, global HIIT studio franchisor F45 Training made headway:

  • Q4 revenue grew 242% YoY to $61.8M, with net income of $14.8M.
  • FY21 revenue gained 63% YoY to $134M, missing estimates by $0.71M.
  • Systemwide yearly gym/studio visits in the US rose 103% YoY, hitting 10.8M.

Outlook. In 2021, the Australian-born HIIT concept reached a total of 1,749 open studios and 3,301 signed franchise agreements worldwide. Going head to head with the likes of Xponential and Orangetheory Fitness, CEO Adam Gilchrist envisions 7,000 F45 studios in the US.

📰 News & Notes

💰 Money Moves

  • Legion Health, a B2B mental health marketplace, raised $2M in seed funding from Y Combinator and a host of angel investors.
  • UK-based hybrid fitness studio BLOK added £3.75M ($4.89M) in pre-Series A funding.
  • wOS, a Spanish-language digital fitness platform, raised $1.2M in a funding round led by Noemis Ventures, with participation from Y Combinator.
  • Zygo, makers of underwater headphones for swimming, added $2.5M in seed funding.
    More from Fitt Insider: Zygo’s Sheera Goren on swimming’s streaming problem.
  • Noula Health, a reproductive support platform, raised $1.4M in a pre-seed round led by Muse Capital and Precursor Ventures.
  • UK-based Vira Health, creators of menopause care app Stella, nabbed $12M in a Series A round led by Octopus Ventures.
  • JOCKO FUEL, the namesake nutrition and supplement brand of podcaster Jocko Willink, secured $30M from Goode Partners.
    More from Fitt Insider: The State of Supplements
  • Bicycle component manufacturer SRAM acquired cycling apparel maker Velocio.
  • Once Upon A Farm, an organic children’s nutrition company, closed $52M in a Series D round led by CAVU Venture Partners.
  • Outdoors and endurance sports media company Outside acquired Fastest Known Time (FKT), an online database for speed and race records.
    More from Fitt Insider: Outside CEO Robin Thurston on the podcast
  • Berlin-based not less but better landed €940K ($1.03M) in funding to scale its mental health app addressing smartphone addiction.
  • The Sports Edit, an ecommerce aggregator of athleticwear brands, secured an undisclosed investment from British multinational retailer Marks & Spencer.
  • Better-for-you candy maker SmartSweets added undisclosed funding from actress Nina Dobrev and recording artist Shawn Mendes, among others.
  • UK-based gut health food brand Bio&Me secured €1.6M ($1.75M) in an oversubscribed funding round.
    More from Fitt Insider: Gut Check
  • AgTech startup Big Bold Health, a research platform connecting plant nutrients to immune health, secured $4M in a Series A round led by S2G Ventures.
  • Mikra Cellular Sciences raised CA$8.5M ($6.69M) in funding to launch an orally ingested gel for cellular performance and improved healthspan.
    More from Fitt Insider: The Quest to Live Forever
  • Plant-based and cell-cultured tuna company Finless Foods landed $34M in Series B funding.
    More from Fitt Insider: Alt-fish and the Next Frontier of Plant-based
  • Delfina, a data-driven pregnancy care platform, launched after raising $5M in a round led by Story Ventures.
  • UK-based Ayurvedic meal kit startup FoodHak secured $5M in new funding.

Today’s newsletter was brought to you by Anthony and Joe Vennare, Ryan Deer, and Melody Song.

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