Investors are opening their minds and wallets to the possibilities of psychedelic-assisted therapies.

Three biopharmaceutical companies aiming to make psychedelic drugs to treat mental health disorders have gone public in recent months: Peter Thiel-backed Atai Life Sciences IPO’d in June and now has a market cap of $2.6 billion; MindMed went public in April and now has a market cap of more than $1 billion; and Compass Pathways IPO’d in November, with a current market cap of nearly $1.5 billion.

Together the three companies have more than nine psychedelic therapy drugs in their pipelines. And that’s not to mention the work being done by many more private biotech and telemedicine companies like Y Combinator-backed Gilgamesh Pharmaceuticals, as well as start-ups like Mindbloom, which is already treating patients with ketamine-assisted psychotherapy. (Ketamine is not a psychedelic but is considered a dissociative anesthetic that can lead to a distortion of sights, colors, sounds, self and environment).

All this means that tripping on mind-altering drugs like MDMA could become a regular part of therapy to treat conditions from depression to post-traumatic stress disorder, addiction, chronic pain and obsessive-compulsive disorder in the next two to five years.

Here’s what that could look like and what the research says.

How psychedelics work for therapy
Psychedelic drugs are substances that alter perception and mood and affect a number of cognitive processes. The classic psychedelics include MDMA aka “ecstasy” or “molly,” LSD, psilocybin or “mushrooms,” ayahuasca and ibogaine.

Used in conjunction with therapists, research has shown that psychedelics can help treat historically difficult-to-treat conditions by essentially “reshaping” the way “parts of the brain talk to each other,” says Jennifer Mitchell, a neuroscientist and professor in the departments of neurology, psychiatry and behavioral sciences at the University of California San Francisco.

Researchers provide therapeutic support in the treatment room at one of the study sites for MAPS-sponsored clinical trials of MDMA-assisted therapy for PTSD.Courtesy of MAPS.
“Psychedelics allow for processing in a way that enables subjects to let go of things that had previously plagued them,” she says.

As Mitchell explains it, when people are young, their brains go through critical periods of learning and development that then become closed off as they age. Researchers believe that psychedelics “open those closed critical periods for just a tiny window of time,” she says.

“When that critical period is open again, you want to make the most of it, and make that potential change as positive as possible,” she says.

With psilocybin, for instance, it is believed the drug boosts connectivity in the brain and increases “neuroplastic states,” which are the brain’s ability to reorganize and adapt, says Dr. Stephen Ross, associate professor of psychiatry at the NYU Grossman School of Medicine, who has been conducting clinical trials on psilocybin-assisted therapy for the past 16 years.

A recent Yale University study conducted on mice, for instance, found that a single dose of psilocybin led to an immediate increase in connections between neurons that lasted for a month afterwards.

When on psychedelics, “parts of the brain that don’t normally speak to each other start to communicate with each other, and it appears to reset brain patterns in some way,” he says.