The popularity of psilocybin is fast-rising, with an estimated 8 million American adults using it in 2023.
The percentage of US adults who have used psilocybin at least once in their lifetime, meanwhile, as reported by the annual nationally representative survey on drug use and health conducted between 2015 and 2018, was 9.68%. This figure has since increased to 12%, according to a more recent survey.
This story is similar in the UK, where the Office for National Statistics has stated psilocybin to be the only illegal drug growing in popularity in 2024. With a 37.5% increase, it reached 1.1%, which represents about 300,000 16- to 59-year-olds.
In the past few years, psychedelics have actually entered the mainstream in a big way. From usage to scientific research, there’s a growing interest in the drug.
According to a RAND report, psilocybin mushrooms are actually the most often used psychedelic substance in the US. The popularity of this psychedelic drug is outpacing that of MDMA, which is known as ecstasy.
Yet another report has suggested that psilocybin-containing mushrooms are currently the most popular choice among people, with many opting to microdose, which means consuming only a fraction of the usual dose.
By tracking the internet search history on microdosing as a proxy for public interest, the study found a 1,250% increase since 2015. Meanwhile, searches for psilocybin began to exceed those for LSD in 2019.
Now, the reasons behind the booming psilocybin market, as per the survey respondents, were social enjoyment, which was followed by mental health, and then personal development and existential exploration.
So, what is psilocybin? It is a naturally occurring psychoactive alkaloid with hallucinogenic effects found in ‘magic mushrooms.’ Commonly known as mushrooms or shrooms, psilocybin is the key psychedelic compound in these fungi.
Psilocybin can be obtained from both fresh and dried mushrooms and even created in a lab. Synthetic psilocybin looks like a white crystalline powder.
When one takes psilocybin, it gets converted into psilocin in the body, which is a chemical with psychoactive properties. As a psychedelic drug, psilocybin affects all the senses and can alter a person’s emotions, thinking, and perception. It induces hallucinations, causing one to see or hear things that are distorted or simply do not exist.
It is used in spiritual rituals in parts of Mexico and Central America and recreationally worldwide. But the most promising use case of the drug is as a medicine.
It’s nothing new, though, as psychedelic substances have long been touted as holding a lot of potential for treating various mental health conditions, including anxiety, depression, migraines, and post-traumatic stress disorder (PTSD).
Back in 2018, the US Food and Drug Administration (FDA) granted “breakthrough therapy” designation to psilocybin-assisted psychotherapy for treatment-resistant depression and, the year after that, for major depressive disorder.
However, safety concerns remain about psilocybin’s use, with the effect of taking psilocybin varying from one person to another. Experiences can also be unpredictable. Some of the adverse effects of taking psilocybin can include headache, nausea, dizziness, fatigue, poor sleep and mood, anxiety, increased blood pressure and heart rate, paranoia, hallucinations, and persistent psychosis.
While microdosing psilocybin can lead to insomnia, low energy, poor cognitive functioning, increased anxiety and depression, and physical discomfort, when taken in very high doses, it can even cause death.
Despite the enthusiasm around the substance continuing to grow this past decade, as well as clinical research, there’s still not much attention on changing the policies about these psychedelics. Psilocybin remains illegal under federal law in the US and is classified as a Schedule I controlled substance.
However, with some states and localities beginning to loosen laws and policies on the substances, some experts are of the view that the US has reached an inflection point, while others believe it’s still early to “draw any conclusions” from available data.
“The current situation with psychedelics reminds me of where we were with cannabis policy 12 years ago.”
– Beau Kilmer, a senior policy researcher at the nonprofit research organization RAND
He added:
“Now is the time for federal policymakers to decide if they want to shape these policy changes or stay on the sidelines.”
Using Psilocybin to Treat Psychological Disorders
Over the years, there has been an explosion of research on psilocybin’s use to treat mental and psychological disorders such as addictions, depression, and PTSD.
Given that an estimated 40% to 60% of people with PTSD do not respond to the first-line medications for the condition (SSRIs) and about a third of people diagnosed with major depressive disorder (MDD) experience treatment-resistant depression, it makes sense that psilocybin’s emerging use case is medicinal.
Psilocybin is needed as an “option” because, as Alan Davis, PhD, director of the Center for Psychedelic Drug Research and Education (CPDRE), said:
“The current pharmacological treatments don’t work for everyone and are not well tolerated by many people.”
Last year, multiple research delved deep into the subject, with one such study diving into just how psychedelic drugs like psilocybin alter brain activity to change users’ perception of space, time, and the self.
To track the changes in brain activity, researchers from Washington University in St. Louis made use of functional magnetic resonance imaging (fMRI). The study, which “didn’t have trouble finding participants,” involved seven healthy young adults taking part in regular fMRI sessions before, during, and after a carefully controlled high dose of psilocybin.
Funded in part by NIH, the study reported psilocybin caused major changes in functional connectivity (FC) throughout the brain, 3x more than those caused by methylphenidate. FC is a measure of how activity in different regions of the brain (cerebral cortex, hippocampus, thalamus, and cerebellum) is correlated.
As per the study results, psilocybin induced the biggest changes in areas involved in the default mode network, which tends to be most active when the brain isn’t focused on a specific task and is believed to govern people’s sense of time, space, and self.
Psilocybin actually caused activity within brain networks to become less synchronized. More importantly, the changes were reduced when participants performed tasks needing concentration. While most brain activity returned to normal within days of taking psilocybin, a reduction in FC between the default mode network and part of the hippocampus lasted for at least three weeks.
The study, according to Dr Joshua Siegel, who led the team, can help “determine if a novel drug is hitting the right targets and to decide what the optimal dose is.”
A separate study in Sept. evaluated the effectiveness, tolerability, and safety of psilocybin in adult patients with MDD.
The study took five randomized controlled trials (RCTs) with 472 adult patients with MDD on psilocybin and found that 40% reported mixed results while 60% had a beneficial effect. 80% of assessing psilocybin’s anxiolytic effects for treating MDD found the drug to be “significantly more effective” in improving anxiety symptoms.
This isn’t all; psilocybin even has the potential to help people quit smoking. In a recent study at Johns Hopkins, just one dose of psilocybin and then CBT had higher rates of smoking abstinence in participants than those who received a nicotine patch and CBT.
Yet another controlled study looked into psilocybin’s effect on treating obsessive-compulsive disorder (OCD). This long-term study, which involved a single dose of psilocybin, saw half of the patients experiencing benefits who reported the obsessions still being there, just not bothering them as much.
“Psilocybin seems to universally have a beneficial effect for a variety of mental health conditions. In the next 5 years, it may be possible that a clinic providing psychedelic-assisted therapy could help people with substance use, depression, PTSD, and other conditions all in one setting.”
– Davis
As we shared, researchers have found psilocybin to be really effective in treating depression, anxiety, PTSD, and other mental disorders. But this isn’t all; people are even using psilocybin for alcohol use disorder, and the latest study suggests the drug is actually effective in addressing that issue.
Using Psilocybin to Address Mental Health Concerns in People with Alcohol Addiction
New research from NYU Grossman School of Medicine has found that psilocybin improves mental health in patients with alcohol use disorder and brings lasting positive personality changes.
When observed seven months after receiving the second dose of psilocybin, participants were found to be significantly less depressed, vulnerable, and impulsive than they were before the therapy, compared to those receiving a placebo. These patients were also more accepting of their thoughts and emotions, i.e., openness, and showed extraversion.
For their study, researchers examined previous clinical trials in which 83 men and women were treated with psilocybin-assisted psychotherapy (PAP) to treat alcohol dependence. Participants in the trial were randomly given either an antihistamine placebo or two doses of psilocybin and received psychotherapy before and after each session.
“Since impulsiveness has long been linked to both excessive drinking and relapse after treatment, the personality changes brought about by psilocybin-assisted psychotherapy may help those recovering from alcohol dependence remain resilient to internal and external stressors known to trigger relapse.”
– Lead author Broc Pagni, PhD. Dr. Pagni is a postdoc fellow in the Department of Psychiatry at NYU Grossman School of Medicine
The study also found that while women were more likely to have an increase in openness, men were more likely to experience an increase in positive emotions.
Further research, however, is still required to understand this difference. Interestingly, the gender difference was also observed in another study testing fear memories in adult male and female rats who were trained to associate a tone with an electric foot shock. Some rats in the study received psilocybin, and others a control substance.
The drug increased the rate of fear extinction in males compared with the control group, while females experienced a slowdown in the fear extinction rate, hence showing greater fear in comparison to the control group. “Nobody has been looking at the sex differences in psilocybin, and we need to take that into consideration in clinical trials of the drug,” said Phillip Zoladz, PhD, a psychology professor at Ohio Northern University who presented the findings in late 2023 at the Society of Neuroscience’s annual meeting.
The study from NYU Grossman now aims to explore whether psilocybin can bring personality changes, as observed in patients with alcohol-use disorders and in opioid-use disorders as well.
Yet another study by a different team from NYU Grossman, which was published in October, revealed that just one or two doses of psilocybin may also help improve the mental health of cancer patients.
Scientists from NYU Langone Health found that PAP significantly reduced obsessive thoughts, anxiety, depression, and anger toward others in patients with cancer. Physical symptoms associated with psychological distress were also improved, all of which lasted up to six months.
“Our findings suggest that the mental health benefits of psilocybin therapy for cancer patients may reach far beyond what we have previously understood.”
– Lead author Petros D. Petridis, MD, a clinical assistant professor in the Department of Psychiatry at NYU Grossman
For their study, the researchers analyzed data from two previous clinical trials that used PAP to address anxiety and depression in 79 men and women with cancer. About half of the participants initially received a large dose of psilocybin, while the rest were given either a tiny dose of the psychedelic drug or vitamin B3.
The treatments were then switched between the groups after six or seven weeks. Psychotherapy was provided to participants before and after each dosing session. Researchers caution that in both studies, most participants were able to guess accurately whether they had received a placebo or psilocybin.
Notably, psilocybin didn’t cause any lasting psychosis or paranoia. This, according to senior author Stephen Ross, MD, associate director of NYU Grossman’s Center for Psychedelic Medicine, means psilocybin can be safely administered under close medical supervision.
Click here to learn how psilocybin breakthroughs could spark fresh investments.
Companies Developing Psilocybin-based Therapies
Given the vast benefits of psilocybin, several companies are involved in commercializing this drug. This includes Cybin (CYBN -5.63%), a $182.68 mln market cap company whose shares are up 14.5% YTD and is developing a proprietary deuterated psilocybin analog program (CYB003) to treat MDD.
The $526.5 mln market cap Mind Medicine (MNMD +5.46%) is another one that has found psilocybin to be safe to administer together with an antidepressant, and the perceptual effects of a 100 mcg LSD dose to be equivalent to a dose of 20 mg psilocybin.
Now, let’s take a deeper dive into a couple of prominent names actively involved in the development of related treatments.
1. Atai Life Sciences (ATAI -1.69%)
The Germany-based clinical-stage biopharmaceutical company is engaged in developing treatments that focus on various mental health disorders. This past summer, atai Life Sciences shared an update on the next phase of ELE-101 (IV Psilocin) for MDD.
ELE-101 is a synthetic psilocin formation that offers the therapeutic advantages of psilocybin in a controllable, more consistent, and shorter treatment. With ELE-101, the company aims to enhance convenience and therapeutic outcomes for patients with depression while reducing the burden on healthcare systems.
Atai Life Sciences N.V. (ATAI -1.69%)
With a market cap of $297 million, the company stocks are currently trading at $1.83, up over 33% YTD. It has an EPS (TTM) of -0.80 and a P/E (TTM) of -2.22.
When it comes to company financials, Atai Life Sciences reported $101 million in cash, cash equivalents, restricted cash, and short-term securities at the end of Sept. 30, 2024. During the third quarter of 2024, its R&D expenses were $12.4 million, G&A expenses of $10.3 million, and a net loss of $26.3 million.
“Our team is focused on executing these trials with the utmost scientific rigor and is driven by our goal of being the leader in developing new psychedelic treatment options to mental health patients in need of innovative, safe and effective solutions.”
– Co-founder and co-CEO Dr. Srinivas Rao
2. Compass Pathways (CMPS -3.58%)
This one is studying investigational psilocybin treatment for PTSD and anorexia nervosa. The company’s randomized controlled phase 2b study of psilocybin treatment in treatment-resistant depression was actually the largest-ever clinical trial of psilocybin treatment. The trial, which included 233 patients, analyzed the efficacy and safety of its COMP360 in three doses — 25mg, 10mg, and 1mg.
The largest Phase 2 trial to date on psilocybin suggested a 25-mg dose of it with psychotherapy before and after the dosing for a rapid and sustained antidepressant effect for up to 12 weeks.
COMPASS Pathways plc (CMPS -3.58%)
With a market cap of $304.47 million, the company stocks are currently trading at $4.55, up over 9.8% YTD. It has an EPS (TTM) of -2.19 and a P/E (TTM) of -2.03. At the end of 3Q24, Compass Pathways reported a cash position of $207 million. During the quarter, the company had a strategic reorganization in order to focus all its efforts on the COMP360 program, which resulted in a 30% reduction in its workforce.
Conclusion
So, magic mushrooms are getting more and more popular, not just for recreational purposes but also for medicinal use. However, psilocybin’s use to treat depression, anxiety, addiction, and other psychological disorders remains in the research stage. The illegal status of psilocybin and the need for larger clinical trials evaluating the therapeutic efficacy and safety of the drug are the prominent reasons currently limiting its wider use.
However, as studies have been showing, psilocybin offers a promising treatment for a range of mental health conditions. The remarkable potential of psilocybin calls for a need to better understand gender-specific responses and safety concerns so that it can be made accessible for millions of people grappling with mental health issues and redefine the therapeutic landscape for the better!
Click here for a list of top health and wellness stocks for a growing industry.
