Canada looks for answers in the "magic mushrooms"

After decades of government shutdown, some hallucinogenic substances have been re-studied to treat mental ailments. Tests carried out in different research centers show optimistic figures about its effectiveness in reducing anxiety, depression and post-traumatic stress disorder, as well as in combating alcohol dependence.

Experts work with LSD, Mescaline and DMT, although much of their research is focused on psilocybin, the psychoactive molecule present in some 200 species of mushrooms. Several Canadian companies are betting on the healing power of so-called "magic mushrooms".

Alexandre Lehmann, Professor of Neurosciences at McGill University, explains that the consumption of these substances is carried out under the supervision of an expert and within the framework of psychotherapeutic work.

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"We still ignore several aspects related to the way they act. Neurosciences reveal that they have a remarkable ability to modify the structure and function of brain networks and, therefore, can catalyze the psychotherapeutic process making the person more 'malleable' to changes and, thus, more susceptible to abandoning a dysfunctional psychological state."

Between 30% and 40% of people with depression do not respond to conventional treatments. "The potential for depression in general and, in particular, for treatment-resistant cases is very promising with these therapies," Lehmann says.

He cites a study published in The New England Journal of Medicine by academics at Imperial College London (both this institution and Johns Hopkins University have centers specialized in psychedelic research). "The results show that psilocybin-assisted psychotherapy is at least as effective as new generations of antidepressants, possibly with fewer side effects and no need for repeated doses."

Producing psilocybin in laboratories and growing hallucinogenic mushrooms is banned in Canada, as is its sale and consumption, as is the case in almost every country in the world. However, since last year, the federal ministry of health has granted some production and use permits for therapies and research. Its intake is not yet allowed for ceremonial purposes (although Ottawa has already given the green light to five religious associations in the case of ayahuasca, which contains DMT).

Different peoples have consumed hallucinogenic mushrooms for thousands of years. Especially in Mesoamerica, as numerous vestiges have shown; also the chronicles of the conquest underline the importance of theonanácatl ("flesh of the gods", as these mushrooms are called in the Nahuatl language).

Its consumption was forbidden by the missionaries, but it survived in certain areas. In 1957, R. Gordon Wasson published in Life magazine a text that had a worldwide impact, where he told his experiences with fungi in the mountains of Oaxaca (Mexico). The Swiss Albert Hofmann – father of LSD – managed in 1958 to identify and synthesize psilocybin for the first time.

Following special permits issued by Ottawa, Cybin became the first listed company to receive authorization to manufacture synthetic psilocybin. The company obtained in October 2020 about 30.6 million euros in a financing round; a month later, it arrived at the Stock Exchange. Today it has a value of 195 million euros. The start-up Psygen, which has the same permit, works in conjunction with a laboratory at the University of Alberta.

Other companies opt for mushroom cultivation to extract psilocybin. In December, Numinus became the first listed company (it has a stock market value of 136 million euros) to legally extract the molecule from its cultivated mushrooms.

"We focus on people who are looking for a natural product, who want to explore possibilities other than pharmaceutical companies. We extract psilocybin and other substances. We studied how psilocybin can be supplemented with other compounds present in mushrooms to offer various health benefits," says Payton Nyquvest, its CEO. "Moreover, this method is cheaper." The cost of producing the psychoactive molecule synthetically is still high due to the accumulation of regulations.

"Access to therapies is critical. This requires developing the necessary infrastructure," says Nyquvest. Last February Numinus acquired for 2.5 million euros Mindspace, a therapeutic services company that works with different hallucinogens. In December, Cybin bought Adelia Therapeutics for more than $13 million. Analysts stress that the success of the sector will depend on a model that combines the production of substances with their administration by experts.

Optimi Health harvests mushrooms for different uses; awaits ministerial authorization to start the cultivation of magic mushrooms. On its advisory board is Chip Wilson, founder of Lululemon. Havn Life seeks to obtain the same permit, although it has already started growing these mushrooms in Jamaica thanks to an agreement with Hypha Wellness. The country's regulation is one of the most lax in the world. Havn Life is worth €42.9 million on the stock market.

7,000 million

The global market for psychedelic drug treatments could be around US$7.6 billion by 2028, according to Bridge Market Research. "It will be a revolution in the way of treating various ailments, considering that we are in a period where the mental health crisis has never been so severe," nyquvest predicts. Tania Gonsalves, an analyst at Canaccord Genuity, noted in a note: "The companies that will emerge as winners will have extensive resources, patentable products and a well-planned reimbursement strategy."

Gonsalves also highlighted certain changes south of the Canadian border. Last year, Oregon approved the legalization of psilocybin therapies. In Oakland, Denver and Washington DC, psychedelics from plants and fungi were decriminalized. And some stock market movements follow this line, with companies such as the British Compass Pathways (today valued at 1,390 million dollars) or the New York MindMed landing on the Nasdaq (it was already present on the Toronto and Frankfurt Stock Exchanges).

Investor interest, acquisitions and development strategies evoke the scenario that occurred with the legalization of recreational marijuana in Canada in 2018 (therapeutics have been licensed since 2001). And several cannabis executives (such as Bruce Linton, former CEO of Canopy Growth, and Vic Neufeld, former director of Aphria) have moved into the hallucinogen industry.

However, this comparison is distant, at least for the time being. In Canada, production permits and therapies are few in number. "The real money to make from psychedelics will come when the FDA approves these drugs for the treatment of mental health problems," OTC Stock Review reported.