Dustin Robinson, Founder of psychedelic VC firm Iter Investments, recently sat down with InvestorPlace to discuss the emerging sector of psychedelic medicine. Here are some key takeaways:
When asked about the possible breadth of clinical psychedelics, Robinson had this to say:
The FDA responds to data. People respond to stories
Large institutions like the FDA and major insurance carriers have to see the data with their own eyes before they go about adopting psychedelic medicines. Robinson believes that there’s going to be a need to educate both the public and the major institutions before they warm up to clinical psychedelics
“I believe — once all those stories are told and once the public comes around, once the insurance carriers come around as well — I think we’re going to prove that these compounds are absolutely transformational. “
How would you compare the rollout of the cannabis industry to psychedelics?
“Really, the main distinction is that cannabis, when all the dust is settled, is mainly driven by its recreational and adult use. Yes, we’ve kind of had a medical market. But that was really just a pretext to get recreational adult use. And you see that in the states. As soon as they pass medical, the next thing they’re looking to pass is recreational adult use… That’s really where we’re moving on the cannabis side — really just full access, people should have the right to access these plants.”
“In contrast, on the psychedelic side, it’s really mainly driven by science and the pharmaceutical approach. I believe that when all the dust settles in the psychedelic side… a very large part of the market is mainly going to be pharmaceutical and biotech. There will be a relatively small size market for, you know — I guess you’d call it spiritual or entheogenic use that will probably go through states and cities, decriminalizing and legalizing.”
What’s your advice to investors looking at the space?
“I think, really, from an investor’s perspective, you’ve got to figure out where along that value chain you have conviction. Certainly our fund has — we have a very specific thesis in number one, which parts of those value chains we want to invest in. And we have a very specific thesis within that value chain portion: what kind of model. For example, on the clinical side, we have a very specific type of clinical model that we’re looking for when we look to invest in some of these different clinics. So you [have] to decide that.”
Robinson also commented on where to find value in the clinical psychedelic space, here’s his take:
“Right now, drug development is where you’re seeing the biggest value creation… The highest market caps of companies are drug development. Compass Pathways (NASDAQ:CMPS) [has] Phase 2 clinical trials for psilocybin for treatment-resistant depression. Mind Medicine (NASDAQ:MNMD) — they’ve got various clinical trials going on. ATAI [Life Sciences] (NASDAQ:ATAI) — various different clinical trials going on… And there’s tremendous value creation.”
It seems like the attention in the psychedelic space is moving away from the clinical models, and more towards drug development. According to Robinson, “people are starting to understand the financials around that and some of the regulatory and operational challenges that go along with opening up some of these clinics.”
Lastly, when asked about the skeptics, Robinson didn’t hesitate to voice his opinion. Here’s what he had to say:
“It’s easy for me to talk to the skeptics because I was actually one of those skeptics probably 24 months ago. I had actually never taken a psychedelic compound, 36 years old. I didn’t take in anything until about 24 months ago when some of the doctors I was working with in the cannabis space started coming to me and telling me and sending me research. And you know, I tell [the skeptics] go read the research, right? Because… look I’m an attorney, I’m a CPA, I’m a man of data and science. I’m not big on anecdotal stuff. You tell me a story, I don’t [really] react. Some people react great to stories, I’m really not a story guy. I like to read data and science.”
Ultimately, it should be up to the investor to do their own research and come to conclusions on their own. He finishes by saying:
“So go out there, do your research, legally try these compounds potentially. You can also try these compounds at retreats in other countries legally. And I feel quite confident that if you do those two things — you spend the time learning the research and you legally experience these compounds yourself — I believe very strongly that your entire perspective on these compounds will change. As did mine.”