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Business Insider - Neo Kuma

clara@neokuma.co (Clara Burtenshaw) — Sat, 30 Jan 2021 10:26:30 GMT

The lawyer who started the UK's first dedicated psychedelics venture fund lays out how she placed her initial bets

by Dr. Catherine Schuster-Bruce

Neo Kuma Ventures is a new venture fund in London that's just for investing in psychedelics.
Psychedelics are mind-altering substances, like the psilocybin found in magic mushrooms.
Early research suggests that psychedelics could be used to treat health conditions, like mental illnesses resistant to conventional treatments.
The mental health market is set to cost the world $16 trillion by 2030 according to a Lancet Commission expert report .
Psychedelics is an emerging industry worldwide, separate to cannabis. Canada, the US and Europe are frontrunners.
Neo Kuma's 35-year-old co-founder shared her strategy for an emerging and risky field.

Clara Burtenshaw had a personal interest in psychedelics that's now become her job. The 35-year-old lawyer has just started a venture fund in the UK, devoted to investing in psychedelics.

Psychedelics are mind-altering substances that have been used by Silicon Valley celebrities like Tim Ferris to enhance performance and creativity. They've also shown promise in treating medical conditions like mental illness resistant to conventional treatments.

It's a fast-growing industry, mostly trying to tap into the mental health market, set to cost the global economy $16 trillion by 2030 because mental health illnesses are on the rise in every country worldwide, according to The Lancet Commission, an expert report published in 2018 . Included in the figure is the direct cost of mental health treatments and care, as well as indirect costs such as reduced productivity, co-lead author Vikram Patel told Reuters.

Burtenshaw's fund is called Neo Kuma Ventures, and it only plans to invest in companies that use psychedelics for health purposes. It's an open-ended fund, meaning there's no cap to the amount it can invest. Burtenshaw said the fund plans to invest more than £10 million ($13.5 million) in seed to Series C deals in early 2021.

"The momentum that has been gathering in this area over the past four or five years in the US and here in the UK has been hard to ignore"

Burtenshaw told Business Insider. She said she's excited to tackle the growing mental health crisis.

"It feels amazing to be contributing towards the development of something that could be a new industry, beneficial to the UK in business terms, but also moving the standard of healthcare forward"

There are other funds that include psychedelics companies in their portfolios. For instance, Leafy Tunnel is a UK venture firm investing in seed and Series A rounds in Europe-based psychedelic companies, as well as in cannabis.

US funds tend to be private backers or bigger investments firms that have made a huge investment in one company. The top three global venture deals in psychedelics in 2020, according to PitchBook, were ATAI Life Sciences , COMPASS Pathways and Mindmed , which raised $125 million, $73.9 million and $24.2 million respectively.

Neo Kuma is borne out of Burtenshaw's frustration with trying to find quality psychedelic companies to invest in during years of personal research. She co-founded Neo Kuma in 2019 with Sean McLintock , a 30-year old entrepreneur with a CBD drinks company , who she was introduced to by her husband, also a healthcare investor.

Nick David is their partner, and responsible for investor relations. David has consulted companies in the tech , wellness and cannabis sectors. Their chairman also has experience investing in the cannabis industry.

An overlap between the cannabis and psychedelics industries is that both involve substances that are illegal in many countries worldwide, and there are regulatory processes to navigate.

"[We] each bring a different skillset to the table that is complimentary in order to be able to research and do the due-diligence to find the most exciting companies in this space," said Burtenshaw.

David Nutt, the Edmond J. Safra Professor of Neuropsychopharmacology and director of the Neuropsychopharmacology Unit in the Division of Brain Sciences at Imperial College London, told Business Insider that more money should lead to more clinical trials, which could accelerate getting psychedelics on the market sooner.

Nutt is currently writing up the first trial that puts a psychedelic drug psilocybin — the substance found in magic mushrooms — head to head against a standard antidepressant. He's also setting up trials looking at the role of psilocybin in treating anorexia, obsessive compulsive disorder — commonly referred to as OCD — and chronic pain syndromes. He said that trials are planned to investigate psilocybin for addiction in the future.

Burtenshaw said that the local talent is one advantage of the fund's UK location.

More than maximizing profits

The challenge of investing in a nascent industry is working out whether a company could be a breakthrough, if well-funded and supported.

Amanda Feilding, a pioneer in psychedelic research, has initiated and collaborated on many of the research studies that have demonstrated the potential of psychedelic medicines — mainly through her work with The Beckley Foundation , a UK-based think-tank and UN-accredited non-governmental organization that Feilding set up in 1998. For example, she was involved in the very early research published in The Lancet that investigated using psilocybin to help people with treatment-resistant depression.

Feilding told Business Insider that it is absolutely essential that investors in this space care about more than just maximizing profits, and take seriously the responsibility to identify and support ethical and evidence-based businesses, whose leadership teams have high integrity.

Investing Strategy

Burtenshaw laid out for Business Insider the three things Neo Kuma looks for when investing in companies.

1. The team

The team has to come from a pharmaceutical background, or someone on the team has to have experience taking a new drug through the three stages of clinical trials, and to an exit.

2. The Problem

There has to be a problem that the company is trying to solve — a therapeutic indication — like treating a mental health condition.

3. The Science

Neo Kuma has to be excited about the science, and the product that could evolve from it.

Where Neo Kuma has already invested

Burtenshaw and McLintock have already made some initial investments, putting money into ATAI Life Sciences, Bright Minds and Beckley Psytech.

ATAI Life Sciences is a German biotech company developing psychedelic and non-psychedelic treatments for mental health conditions. It closed a $125 million Series C funding round in November 2020, and is expected to IPO next year. Neo Kuma has invested around £500,000 ($680,000) across multiple funding rounds, according to Burtenshaw.

ATAI is an investor in COMPASS , a UK-based company that's conducting psilocybin trials and listed on the Nasdaq in September 2020.

Bright Minds is a Canadian biotech company that aims to create new psychedelics to treat mental health conditions by modifying natural psychedelics to optimize the drug's effects. Burtenshaw is also hopeful about Bright Mind's work to use psychedelics to treat conditions like cluster headaches, which are seriously debilitating headaches that affect roughly 2 people in every 1,000 .

"This could become a widely taken drug, and when it comes to an exit it would be a sensible investment for a large pharmaceutical company, because they aren't innovating or investing in the research these days,"

said Burtenshaw.

Beckley Psytech is a psychedelic medicines company co-founded by Feilding. It raised a £3 million ($4 million) Series A in June , and is using the cash to research the use of synthetic 5-MeO-DMT — a psychedelic agent with a uniquely short duration of action — in the treatment of neuropsychiatric diseases. Natural DMT is found in Ayahuasca.

Despite Burtenshaw's optimism, in many parts of the world, most psychedelics are not legal unless a company or researcher is in possession of a controlled drugs license granted by the national regulator. In the UK, psilocybin is classed by the UK Home Office as "Schedule 1", meaning it's deemed to have no medical value .

This means Burtenshaw expects it could be three to five years before Neo Kuma see the results on their investments coming through. Burtenshaw is confident, however, that there will be a "domino effect", with Denmark reviewing its legislation, and the US Food and Drug Administration fast-tracking COMPASS's psilocybin-based treatment for depression in 2018.

For now, the fund's focus is to grow its offering.

"The next step for us is how do we meet the founders? How do we understand the industry better? And how do we get into the heart science?"

said Burtenshaw.

Bioworld - Have a good trip

clara@neokuma.co (Clara Burtenshaw) — Sat, 30 Jan 2021 09:42:02 GMT

Psychedelic drug developers all set for take-off

by Cormac Sheridan

DUBLIN – A re-evaluation of psychedelic drugs as potential therapies for major depressive disorder (MDD), anxiety, post-traumatic stress disorder (PTSD) and other neuropsychiatric conditions has been underway for some time, but this broad effort gained further momentum during 2020, as commercial firms started to raise money at the level needed to enable the field to start moving from small-scale academic studies to the kind of industry-scale trials that will be needed to convince regulators, patients and physicians that these molecules could become viable treatment options.

In fundraising terms, Compass Pathways plc has led the way, with an $80 million series B round in April, followed by an upsized IPO on Nasdaq in September, which pulled in another $146.6 million. The company is now valued at about $2 billion and is on course to report data from a phase IIb trial of psilocybin in treatment-resistant depression in late 2021.

Several smaller scale transactions closed during the fourth quarter. New York-based Mindmed Inc. recently raised CA$80 million (US$62 million) in a bought-deal offering led by Canaccord Genuity Corp., to fund a phase IIb trial of lysergic acid diethylamide (LSD) in anxiety, a phase IIa trial in opioid addiction of 18-methoxycoronaridine (18-MC), a synthetic, non-hallucinogenic ibogaine derivative, and a microdosing study of LSD in adults with attention deficit hyperactivity disorder (ADHD).

In December, Oxford, U.K.-based Beckley Psytech Ltd. raised £14 million (US$18.6 million) to move 5-methoxy-N,N-dimethyltryptamine (5MeO-DMT), a psychedelic molecule with a limited duration of action, into a phase I trial in an as-yet-undisclosed neuropsychiatric indication. (Dublin-based GH Research Ltd. recently completed a phase I trial of the same molecule in healthy volunteers and has initiated recruitment in a phase I/II trial in treatment-resistant depression.)

Shlomi Raz , CEO and chairman, Eleusis

Also in December, London-based Eleusis Ltd. acquired Kalypso Wellness Centers ina stock-based transaction, while also unveiling plans to move two programs, ELE-Ket+ and ELE-Psilo+, into phase I/II trials as adjunctive therapies for major depressive disorder by late 2021. Kalypso, which runs a chain of ketamine infusion centers throughout Texas, will aid its clinical development efforts, Eleusis chairman, CEO and founder Shlomi Raz told BioWorld, given its experience in developing delivery protocols and dosing regimens.

The company, founded by a group of four physicians with board certifications in anesthesiology and pain management, provides low-dose ketamine infusion therapy off-label to patients with conditions such as chronic pain, migraine, depression, anxiety, fibromyalgia, bipolar disorder, PTSD, inflammatory pain, cancer pain and neuropathic pain. ELE-KET+, one of the two lead programs at Eleusis, comprises ketamine along with a benzodiazepine antiemetic and possibly other drugs, in order to minimize any potential tolerability problems or side effects during the drug experience. ELE-Psilo+ is not finalized but it involves a similar approach.

“They’re combination drug products,” Raz said. Eleusis is also exploring the potential of psychedelics as anti-inflammatory and neuroprotective agents, which would not elicit perceptual effects. The company is also investigating the potential use of LSD microdosing in Alzheimer’s.

Also in the fourth quarter, London-based Neo Kuma Ventures set out its stall as the U.K.’s first venture capital fund exclusively focused on psychedelic health care. It is still in active fundraising mode, but its portfolio includes Berlin-based Atai Life Sciences AG, Vancouver-based Bright Minds Biosciences Inc. and Beckley Psytech.

“We see a lot of parallels with cannabis in terms of market activity,” Neo Kuma co-founder Clara Burtenshaw told BioWorld. And, as with the cannabis field, the space is not short of fast-buck merchants. “Then you have people developing quality IP in the area and adding value,” she said. “The types of companies we’re really interested in are the companies who are really innovative.”

At the same time, the immediate scope for innovation appears to be more limited than it is in many other areas of drug and therapeutics development. The available chemistry is already broadly defined – most of it comes from natural sources and has a history of human use in therapeutic and cultural settings that dates back thousands of years. (See Selected psychedelic drugs in clinical development for neuropsychiatric disorders, below.)

Sources: ClinicalTrials.gov; Pubmed; NIH; Company websites

“They’re well understood,” Cosmo Feilding Mellen, CEO of Oxford-based Beckley Psytech, told BioWorld. “There is a huge body of anecdotal and observational data about their effects.” Even the more recently developed synthetic molecules undergoing clinical studies are decades old. Some companies are employing medicinal chemistry or combination approaches to optimize certain parameters – or to de-emphasize others – but most are still converging on business models that vary little from one another, at this point in the field’s development at least.

An additional set of less-well-known psychedelic substances also has therapeutic potential, Feilding Mellen said. “They are very under-researched from a scientific and clinical development perspective,” he said. A third generation of molecules will comprise novel chemistry discovered through drug screening approaches. Beckley Psytech has close links with the not-for-profit Beckley Foundation, which was among the pioneers in putting the therapeutic use of psychedelics on a scientific footing. It plans to work across all three areas. “We’re not the only people doing it of course,” Feilding Mellen said.

Cosmo Feilding Mellen , CEO, Beckley Psytech

Changing regulations

As currently envisaged, psychedelics are adjunctive therapies, which will be administered as part of a wider intervention that will also include psychotherapy or some other form of psychological support. Typically, patients will receive at least one preparatory session before undergoing a drug-induced experience, during which at least one if not two trained therapists will be present. Follow-up “integration”sessions are also included, to review the experience and deal with the issues that emerged during the experience. “That’s very resource-intensive and expensive,” Feilding Mellen said. For that reason, Beckley’s lead program is based on 5MeO-DMT, which induces a far shorter psychedelic experience than many other molecules. “The duration of action of 5-MeO-DMT is under an hour,” he said. That may help to reduce some of the cost, at least. The basic therapeutic approach is still expensive and, at present, is not reimbursed. Getting buy-in from payers represents a significant challenge for the entire field. “How do you avoid these therapies becoming niche therapies?” asks Raz.

Psychedelics are still, in most places, controlled substances. In the U.S. many are regulated under Schedule I of the Drug Enforcement Administration’s scheme. The approvals of New Brunswick, N.J.-based Johnson & Johnson's Spravato (esketamine) for treatment-resistant depression and of Cambridge, U.K.-based GW Pharmaceuticals plc’s Epidiolex (cannabidiol) for treating seizures associated with rare forms of epilepsy have been an important enablers for the field. Both helped to remove the regulatory and cultural stigma from using mind-altering drugs or their derivatives in clinical settings.

The not-for-profit Multidisciplinary Association for Psychedelic Studies (Maps) may be next in line for an approval. It has already completed one phase III trial of 3,4-methylenedioxy-N-methylamphetamine (MDMA or ecstasy) for treating PTSD, and a second phase III study is currently recruiting. Data are expected in late 2021, and the

program has received breakthrough therapy designation from the FDA. Compass Pathways also has breakthrough therapy designation from the FDA for its treatment- resistant depression program; so, too, has Usona Institute, a not-for-profit medical research organization based in Madison, Wis., for its psilocybin program in major depressive disorder.

In parallel with those developments, the legal prohibitions surrounding the use of at least some of these substances are also starting to be relaxed. In November, Oregon became the first U.S. state to decide to set up a licensing regime regulating the use of psilocybin products and services. The Oregon Health Authority will start

issuing the first licenses from Jan. 2, 2023, after a two-year development period during which it will develop specifications and guidelines for the development of therapeutic services that will incorporate the use of psilocybin. Denver, Oakland and Washington were the first cities to decriminalize psilocybin, but many more are

expected to follow. The line between recreational use and therapeutic use is likely to become blurred, therefore, but clinical data will differentiate the therapeutics firms from the growers and suppliers. “Clearly there’s hype right now,” Feilding Mellen said. “Where we take comfort is drug development is a highly regulated field,” he added. “By necessity, the companies that do it properly will succeed and those who do not do it properly won’t.” Psychedelic drugs are not inherently addictive in the way that opioids are, but the human costs of the opioid crisis are a stark reminder of the absolute necessity for ethical behaviour on the part of all participants in this emerging market. No company wants to be labeled the Purdue Pharma of the psychedelic drug era.