Of all the applications for psychedelic medicine, treating substance abuse will likely prove to have the greatest long-term commercial potential. We explain why.
Investors in psychedelic stocks will be familiar with many of the current and potential medicinal uses for psychedelic drugs in treating mental health disorders.
Probably the two applications that currently have the highest profile in psychedelic drug R&D are depression and Post-Traumatic Stress Disorder (PTSD). And there are two reasons why these mental health applications enjoy the highest profile.
- The most-advanced clinical research
- Enormous need and great potential for saving human life
The MAPS Phase III clinical trial on MDMA-assisted therapy for PTSD is the most-advanced current clinical trial for a psychedelic drug.
Mydecine Innovations Group (CAN:MYCO / US:MYCOF) is preparing to enter a Phase IIa clinical trial for a psilocybin-based therapy for PTSD.
With depression,
Compass Pathways (US:CMPS) just completed its Phase IIb clinical trial on a psilocybin-based therapy for Treatment-Resistant Depression (TRD). It’s expecting to report results before year end.
Cybin Inc (CAN:CYBN / US:CLXPF) is preparing to enter a Phase IIa clinical trial on a psilocybin-based therapy for Major Depressive Disorder (MDD).
Collectively, PTSD and depression have total treatment populations in the hundreds of millions, globally. Depression has a much larger percentage of that patient total, but PTSD is the deadlier mental health disorder – although both result in large numbers of deaths, primarily via suicide.
In the U.S. military alone, 22 veterans commit suicide every day, primarily due to PTSD. Overall, a person commits suicide in the United States approximately every 10 minutes, primarily due to depression.
Substance abuse: the largest treatment populations, the most fatalities
As great as the need is in treating depression and PTSD, the need to treat substance abuse is greater than both of those disorders
combined.
Let’s start with the treatment populations.
Many people, even in the healthcare industry, don’t include nicotine addiction as part of the “substance abuse” problem.
This is tragic and shocking. Nicotine addiction leads to
7.1 million smoking-related deaths per year globally, and roughly
500,000 deaths per year in the United States alone.
It’s shocking that we, as a society, accept such an atrociously high death toll: far more deaths annually
than from all other drug use combined. It’s tragic because most of these deaths are
preventable.
According to the CDC,
more than two out of three American cigarette smokers want to quit smoking (and kick their nicotine addiction), but they can’t.
Nicotine is a deadly poison and one of the most strongly addictive substances. Existing “smoking cessation” products have such a low rate of success that some tobacco companies actually
invest in them.
Other drug use also exacts a huge death toll.
Over 350,000 people are killed from drug overdoses each year (
2017 data). The vast majority of those deaths occur among addicts.
The Opioid Crisis (the single largest source of overdose deaths) continues to worsen. And stress from oppressive Covid-19 lockdowns has caused a further surge in deaths. In the United States,
nearly 100,000 people died from drug overdoses in 2020 – a 30% increase.
Alcohol use disorder leads to another
185,000 deaths per year.
That’s
over 7.6 million deaths per year directly attributable to substance abuse/addiction. In comparison, depression and PTSD lead to approximately
800,000 suicide deaths per year – still a shockingly high number, but dwarfed by the death toll from substance abuse.
As with depression and PTSD, clinical testing with psychedelic drugs is yielding spectacular results.
- Using psilocybin to treat nicotine addiction, 80% of smokers were still fully abstinent 6 months later (2014 study)
- Using ibogaine to treat opioid addiction, 50% of addicts had stopped consuming opioids after one month (2017 study)
Some clinical work using psychedelics to treat addiction shows that psychedelics-based therapy can sometimes break the addictive cravings in a single therapy session. But this research is not (yet) as advanced as with depression and PTSD.
Clearly, as part of the overall Mental Health Crisis, substance abuse is an even larger problem than depression or PTSD – or both combined. And this larger problem translates into greater commercial potential.
Substance abuse offers the greatest commercialization opportunities for psychedelic drugs
A combination of factors make substance abuse the most potentially lucrative long-term treatment market for the psychedelic drug industry.
- The greatest overall need in mental health care, both in terms of overall treatment populations and preventable deaths
- A potentially enormous improvement over the existing standard of care if early research results are confirmed
- A multitude of drug development opportunities
- Strong potential for insurance coverage/reimbursement
We’ve already seen the numbers on the huge treatment populations for substance abuse. Conventional “drug rehabilitation” is a bad joke.
For alcohol and hard drug users, drug rehab clinics tend to be revolving doors. In the U.S. alone,
$35 billion per year is spent treating addiction – with minimal results. So-called “12 steps” based programs help
control addiction for some, but cure no one.
Nicotine addiction treatments offer such low success rates that we accept the massive numbers of smoking-related deaths each year, with barely a raised eyebrow.
Psychedelic medicine can be just as revolutionary in transforming addiction therapy as it is proving to be with depression and PTSD. And there are many treatment markets up for grabs.
As explained in a
recent Psychedelic Stock Watch article, each form of substance abuse is a separate treatment market – with separate drug development opportunities. Opioid addiction, nicotine addiction, alcoholism, cocaine and heroin addiction, prescription drug addiction: all separate opportunities.
For investors with a strong focus on the bottom line, perhaps the most important factor supporting the commercial potential of addiction therapy is the high degree of insurance coverage and/or other reimbursement available for substance abuse therapy.
Addiction therapy is widely covered in the United States
The U.S. is, obviously, the largest single treatment market for psychedelic medicine. Addiction therapy is already
widely covered by private health insurers despite the extremely mediocre success rates.
Insurers are often required to pay out multiple times to treat addiction because the therapies don’t work, and because they are prohibited by law from “discriminating” against people with substance abuse disorders.
The
Americans with Disabilities Act (ADA)
includes substance abuse as a recognized form of disability. As a practical matter, this also
obliges U.S. employers to offer substance abusers the opportunity to seek treatment – as opposed to simple termination.
Not only are employers generally amenable to substance abusers seeking treatment, via the Employer Assistance Program (EAP)
some employers will pay for some/all of these therapies themselves – again, for treatments that are largely unsuccessful.
Some U.S. states (notably California, Vermont and Maine) provide additional statutory protections for employees with substance abuse problems. The bottom line is that especially in the United States, there are lot of mechanisms in place -- and dollars on the table -- to cover addiction therapy.
With psychedelic medicine, insurers and employers will get
the opportunity to cover therapies that actually work and can reduce overall payouts.
The treatment populations are here. The treatment markets are here. The treatment
dollars are here.
All that is necessary is for companies to execute on the necessary drug R&D to bring (successful) psychedelic drug-based therapies to the treatment of substance abuse and addiction. Some psychedelic-based therapy is already potentially available for addiction treatment, via legal ketamine-based therapy.
Over the longer term, addiction therapy likely represents the greatest commercialization potential within the psychedelic drug industry. Many (most?) investors in psychedelic stocks will be looking for exposure here.
One early investment candidate is
Levitee Labs (CAN:LVT). Levitee recently commenced public trading on the Canadian Securities Exchange (CSE). The company
just announced definitive agreements to acquire 5 addiction clinics, 3 specialized pharmacies, and a telehealth provider specializing in addiction services.
Psychedelic Stock Watch sees the psychedelic drug sector as the greatest investment opportunity in life sciences of this century.
Miracle Drugs that can begin to put a dent in the
~2 billion people today with treatable mental health disorders.
While many treatment markets beckon, addiction/substance abuse therapy could easily prove to be the biggest investment driver of psychedelic stocks over the long term.
DISCLOSURE: The writer holds shares in Cybin Inc.
