Words by Isabel O’Brien
In a sector where innovation typically favours high-investment, low-risk mechanisms, a renewed interest in psychedelics might seem like an unlikely twist. But after decades of regulatory exile, compounds like MDMA, psilocybin and LSD are re-emerging as pipeline assets. And their potential isn’t going unnoticed.
According to Clarivate’s ‘Biopharma deal making in 2024 and 2025’ report, the psychedelics space saw a noticeable uptick in commercial activity throughout 2024. Companies like MIRA Pharmaceuticals, PharmAla Biotech and Optimi Health signed multiple supply and development agreements to advance psychedelic treatments across a range of indications, ranging from major depressive disorder to PTSD and chronic pain.
MIRA, for example, announced five deals last year centred around its novel oral ketamine analogue with applications in treatment-resistant depression and neuropathic pain. PharmAla Biotech, which describes itself as the only supplier of clinical-grade MDMA in North America, secured seven supply agreements with research institutions including Yale, Johns Hopkins Medicine and Mt. Sinai Hospital. Optimi Health, meanwhile, inked contracts to supply GMP-grade psilocybin to clinical trial sponsors in Canada and Israel.
The growing interest is grounded in science, rather than quackery or speculation. A wave of small, controlled studies has shown that psychedelic-assisted therapy can produce sustained improvements in symptoms of depression, anxiety and PTSD – sometimes after just one or two sessions. However, the FDA’s advisory committee recently voted against approval for Lykos Therapeutics’ MDMA-assisted PTSD treatment, citing concerns over trial conduct and functional unblinding. Nevertheless, a complete response letter followed that gave a path forward: another Phase 3 trial and potential independent data review.
The opportunity appears vast – if psychedelic-assisted solutions like this can get off the ground. In 2023, analysts at Data Bridge Market Research projected the global psychedelics market will exceed $10bn by 2029, with some bullish forecasts, particularly those including broader mental health and wellness applications, stretching into the hundreds of billions. For investors, the upside lies in the unmet need. Depression is a leading cause of disability worldwide, and existing treatments often fail or take over a month to work.
Still, regulatory frameworks remain a key obstacle. In the US, psychedelics like MDMA and psilocybin remain Schedule I substances – legally defined as having “no accepted medical use”. Australia, by contrast, began allowing psychiatrists to prescribe MDMA for PTSD and psilocybin for treatment-resistant depression in 2023. In Europe, the Horizon-funded PsyPal project is investigating psilocybin’s role in palliative care-related anxiety and depression.
For all the excitement, many in the industry remain cautious – and perhaps rightly so. Whether these therapies live up to their billion-dollar potential in mental health and beyond may depend less on the molecules themselves, and more on the industry’s ability to deliver them safely, ethically and at scale.
