MindMed is one of those companies. The Toronto-based firm is led by JR Rahn, a former Uber executive whose cocaine addiction led him to try psychedelics as a treatment—an experience he credits with saving his life. Rahn believes drugs like LSD could hold the key to helping the millions of people who have been driven to despair by the pandemic.

“America’s mental health infrastructure is vastly broken. Sixty percent of U.S. counties don’t have a single psychiatrist, and most of those that do don’t accept insurance,” says Rahn.

Rahn points to statistics that report a frightening rise in addiction and anxiety during the pandemic, and says new forms of medicine will be needed to alleviate this.

While LSD—an illegal drug most associated with 1960s counterculture—seems like an unlikely solution to a mental health crisis, MindMed has attracted wealthy investors and prestigious research partners. These include Steve Cohen’s Point72 hedge fund, which is among those who have invested $182 million in MindMed, and NYU Langone Health. The latter recently accepted a $5 million grant from MindMed to help train medical staff in administering psychedelics as treatment.

MindMed is not the only company betting on a burgeoning market for medical psychedelics. The iconoclastic venture capitalist Peter Thiel has also taken an interest in the field, investing in Compass Pathways, a company with a mission similar to MindMed’s but that is focusing primarily on psilocybin—the hallucinogenic compound in magic mushrooms.

As for using such chemicals to treat mental illness, much of this research centers on microdosing, which involves patients’ taking very small amounts of a drug. Microdosing, which is also popular as a recreational activity among tech types, provides a different experience than the intense psychedelic journey of an LSD trip.

According to Miri Halperin Wernli, MindMed’s president, the company’s strategy is not based on finding a single drug but on developing dozens of medicinal molecules, while also creating new digital platforms to deploy the treatments.

A longtime pharmaceutical executive, Halperin Wernli says she expects MindMed to enter partnerships with major drug companies in the future to expand the delivery of LSD-based treatments.

For now, of course, the idea of using psychedelics to treat addiction and mental health is very much experimental. While there is plenty of anecdotal evidence of the drugs’ efficacy—including that of MindMed’s founder—clinical trials are relatively scant. For that reason, MindMed has been purchasing clinical data from places like Switzerland, which are at the forefront of radical or cutting-edge treatments.

Even if the likes of MindMed and Compass Pathways can amass the requisite clinical trials, there is also the question of how to administer the drugs. Given the potent and unpredictable nature of psychedelics, any treatment plans will require trained doctors to supervise—and there are only a handful of physicians and therapists in the U.S. who are able or willing to prescribe substances like LSD.

According to Rahn, the MindMed founder, the company is taking a Silicon Valley approach to the problem. Namely, it plans to use technology to scale the treatments. In practice, this will involve building Zoom-like platforms where a medical professional can supervise from a distance, perhaps with a nurse assisting from the patient’s home.

Rahn describes such a program as “value-based care” and says it has the potential to revolutionize the pharma industry’s current “get the highest price for a daily” business model. The company’s donation to NYU Langone Health is intended in part to help train a new cadre of medical professionals able to facilitate this vision. MindMed this week also acquired a medical A.I. firm called HealthMode in a share-based deal worth $34 million as part of its plan to build digital treatment platforms.

Meanwhile, MindMed is also experimenting with new treatments that combine LSD with MDMA—a practice known as “candy flipping” among recreational drug users, but that Rahn says offers promising therapeutical potential. Rahn also notes that, unlike the multibillion-dollar cannabis industry, MindMed has no intention of developing psychedelics for a recreational market.

This decision, while sensible given the popular stigma surrounding psychedelics, may also increase the business challenges facing MindMed and Compass Pathways. According to Scott Greiper of Viridian Capital Advisors, a firm that has profited from the cannabis business, the lack of a potential recreational market makes the psychedelic industry less attractive to investors.

“I recognize the emerging science supporting the use of psychedelics from a medical and therapeutic perspective, and we’re meeting with companies and analysts,” says Greiper. But he adds that the potential market is tiny compared with cannabis and that the likes of MindMed face a long and expensive path in bringing LSD-based drugs into the mainstream.

Rahn, however, is undaunted. He says MindMed has the capital to build out its long-term vision. Meanwhile, the company’s shares, which are trading for around CA$5 on a Canadian stock exchange, are up 10-fold since its public listing last March.

Rahn also claims the company’s work will help transform the view of psychedelic drugs among governments and in popular culture.

“It’s funny how we look negatively at LSD and mushrooms—which are mind-opening and positive—while cocaine is idealized on Netflix shows,” he says.

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