The word “noetic” is from the Greek word “noēsis” meaning inner wisdom, direct knowing, or subjective understanding. Noetic science, then, refers to a multidisciplinary field that brings objective scientific tools and techniques together with subjective understanding to study the full range of human experience. It is science applied to the real world, with direct impacts on the lives of everyday people.
That’s what Noetic Fund, a venture capital fund dedicated to investing in emerging wellness and alternative pharmaceuticals, is working on and why it is named as it is. Its mission is “to nurture the scientific advancement of mental, emotional, psychological and physical health by investing in alternative therapies, modalities, and sciences that are committed to optimizing our human experience.”
To learn more about what the fund is building and where it sees the future going in the psychedelic space, we sat down with Noetic’s three managing partners: Michael Franks, Sa’ad Shah and Naseem Saloojee.
Psychedelic Invest: You just launched last year. How are things progressing?
Michael Franks: We started the fund in February 2020 and we’re trying to build an orthogonal portfolio with a lot of asymmetry. Fund I will continue for the next seven years (it’s an eight-year structure), recycling gains from the first few years into new portfolio companies. We closed Fund I to new investors in December 2020, and are now launching Fund II. This will be a $200+ million dollar fund focusing on psychedelic compounds, technologies and software related to mental health applications in the psychedelic sector.
We are taking a sort of merchant bank approach, in the sense that we are looking to join boards every time we make an investment and we’re looking to create term sheets and guide due diligence for other investors as well. We want to be part of the whole ecosystem, and as part of that we host monthly Zoom sessions, which we’re calling “sessions of intellectual discovery,” where we bring on notable personalities from the sector to help educate the global community on various aspects of the psychedelic ecosystem. We invite not only our community of LPs, but also global citizens to participate in those calls to foster discussion and education on what’s happening in the sector.
PI: Do you think that plant-based medicine is going to disrupt what Big Pharma has been doing and supplant some long-accepted therapies?
Sa’ad Shah: Absolutely. What’s happened with big pharma is that they’re primarily driven by their sales and marketing teams. So, when the sales teams go out and meet with clinics and doctors they’re the ones dictating exactly what it is that they want to sell. As a result, they’re used to a certain base with the particular pharmaceuticals that both they and patients are familiar with. As long as what they’re selling doesn’t deviate from that base then they’re happy with it.
That’s a big reason why big pharma hasn’t had much innovation when it comes to SSRIs since the time of Prozac. They just haven’t done well with it. A lot of the big companies have actually shifted their attention away from mental health and onto oncology. They’re not paying attention to this area because there hasn’t been much innovation. On top of that, a lot of these drugs are so old that they are now going generic, so there’s not much of an incentive for them to be in mental health from a financial standpoint.
Still, they know that this is an area that needs new development. They just don’t want to do it themselves. They’re very happy for other innovators to work on new pathways while they sit back and wait and see how it develops. Then they can come in and either scoop up these technologies or partner with these new companies and bring them into their ecosystems.
PI: Is there no getting around that establishment involvement?
SS: Our view is that you do need big pharma to play a role here, because they are already set up with the distribution platform to get this medicine out broadly, effectively and efficiently to wherever it is needed. What they’re doing is they’re waiting and watching exactly what’s going on. We know — by way of a lot of our underlying portfolio companies — that they’ve been circling the wagons, asking for updates and keeping abreast of how things are developing. That’s how the industry operates. So, they will be playing a role. Maybe not right now, but more so going forward.
PI: Why is community and education such an important part of developing this market?
Naseem Saloojee: We’ve been suffering under prohibition in this industry for the last 50 odd years. And that prohibition came not as a result of any sort of issue with neurotoxicity or any sort of issue with addictiveness, but from the time that the Nixon administration began waging its war on drugs. Psychedelics were heaped in there with cocaine and heroin as bad actors in a sense. And that stigma is still there despite the incredible therapeutic potential of these medicines.
It’s on us in the community to educate the global populace around the potential here and build a movement of folks that understand the data and understand the science and are committed to unlocking the therapeutic potential of these compounds to help with mental health. It’s a grassroots effort because that’s what it takes.
PI: There is certainly a lot of momentum in the industry right now, but is there anything that is holding things back?
MF: A few things. I think there are some bad actors in the sector that are looking to raise money on not a lot of science and aren’t true to the potential of the medicines. The other thing is, people haven’t had the opportunity to read through the data rooms of many of these true psychedelic compound companies, so they don’t fully understand the efficacy rates combined with low toxicity and high safety profiles. There are still a lot of people that just say “no,” instead of taking the time to understand the benefits of psychedelic medicines to help cure global ailments. What’s holding us back is the opportunity to help educate the global population on the benefits, and that will happen through clinical trials; but it’s still got a long way to go.
PI: Is there any technology that you’re seeing out there right now that’s particularly interesting or promising?
NS: One thing is a new delivery mechanism that several folks are working on that is subcutaneous, or through a patch, so that the medicine can be self-administered in the patient’s own home.
Another area that’s incredibly exciting is the work that’s being done with new chemical entities (NCEs). We’ve got portfolio companies that are working on empathogens, and others that are working at the forefront of molecules that haven’t really been studied all that much yet. Right now the focus, as far as the public is concerned, is really all about psilocybin and MDMA. Those are the two molecules that have been given breakthrough designation by the FDA. But there is so much more. There’s LSD, there’s DMT, there’s 5-MeO-DMT, there’s mescaline and more. There are also parties that are working on producing these molecules (bio)synthetically through the use of yeast and bacteria, extracting the compounds and then refining them.
What I find particularly exciting is that several of our portfolio companies are using some very sophisticated AI infrastructure to piece together various molecules and see what compound or formulation is most effective for a given scenario. That requires a lot of mixing and matching, but AI really makes that process more efficient and does it at scale.
SS: I’ll also add that there are things happening in terms of wearables as well that are very, very complimentary to psychedelic therapy. One is the Apollo Neuro which is a wearable device that’s been created by a neuroscientist out of the University of Pittsburgh. It sends sound waves through the skin that are barely perceptible but bring the wearer into a parasympathetic mode. It has multiple modalities – it can help you focus, it can help you sleep, it can help you meditate, it can help you socialize, etc.
What many people forget is that none of these things that we’re talking about are a silver bullet. It isn’t the Holy Grail. Psychedelics are simply the most effective catalyst that we know for people to get on track and feel better. Once you have your therapy session, you still have a lot of work to do afterwards in reintegrating and processing what you’ve gone through in the session. Wearables and things like that can help.
NS: The problem that’s not being solved right now is mental health, and it is just getting worse because there’s nothing out there to effectively treat these problems. There’s a fight going on between the DEA and the FDA – the DEA still has psychedelics on the schedule I list and the FDA is just saying, look at the science. The science is saying that these compounds are incredibly efficacious. There’s very low toxicity. It goes against everything that the DEA uses to classify something as schedule I. Is it harmful? No. Is it toxic? No.
So that debate is still on. And it’s one of the reasons why we’re in this industry because it’s clearly mispriced. But as investors clue in on how high the efficacy rates here are, and how big the problem is that we’re trying to solve, you’ll see a lot more investors flock to the space.