How will mind-bending startups fare on the public markets?

February 28, 2020, 2:52 PM UTC

A psychedelics-drug startup is hoping it can take public market investors on a trip. 

Mind Medicine, a psychedelics-based medicine startup, raised $24.2 million in funding from investors including Bail Capital, Cannell Capital, and Grey House Partners. Additional investors include Toms Shoes founder Blake Mycoskie and Shark Tank’s Kevin O’Leary.

The company plans to go public on the Toronto-based NEO Exchange on March 3, and list directly through a reverse takeover of Broadway Gold Mining. MindMed claims it will be the first psychedelic pharmaceutical company to be listed on a public stock exchange.

MindMed develops something that its co-founder JR Rahn hopes will become the “antibiotic for addiction.” It’s based on a non-hallucinogenic derivative of ibogaine, a psychoactive compound that has been used for more than 50 years to treat addiction. Ibogaine treatment centers exist outside of the United States, but the substance has been illegal in the country for more than 50 years, according to The Wall Street Journal.

Kevin O’Leary told the WSJ that he agreed to back the company as Rahn vowed to focus only on medicinal use. “If this can actually cure opioid addiction, that is a big, big opportunity,” O’Leary told The Journal. “Why wouldn’t I want a piece of that?”

Wow, curing opioid addiction! That’s a lofty goal. With all due respect to Rahn and O’Leary, I’m always skeptical of companies with such promises. 

Last week, Fortune published a fascinating deep dive on why investors are fueling a psychedelics movement. Financiers from Wall Street to Silicon Valley see psychedelic drugs as a potential elixir for all sorts of psychiatric afflictions, including OCD and PTSD, opioid addiction, alcoholism, eating disorders, cluster headaches, and suicidal ideation.

When I shared the article with the readers of my weekly newsletter The Profile, one person raised an important point about psychedelics: “The problem is that mass production will try to blanket every case with it. That’s where we run into issues of people getting addicted to them (for a brain truly unbalanced the drugs provide relief, but for someone not in that severe a state, then can do more harm than good).”

While MindMed may be responsible with the drug, what about the rest of the industry? A lot of questions remain unanswered as psychedelics are still a nascent industry. Private investors have an appetite for psychedelic-drug companies, but I’m very curious to see how the public market investor receives it.

Polina Marinova
Twitter: @polina_marinova


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