A startup that wants to use psychedelics to treat addiction just raised $6.2 million from the host of Shark Tank and the architect behind the world’s biggest cannabis grower

Turning a promising compound into an FDA-approved prescription drug is hard work. Add in side-effects that can include questioning the nature of your reality, and it gets even harder.

A new company called MindMed just raised $6.2 million to try to make psychedelics without their characteristic hallucinogenic qualities, so that the compounds can be used in medicines for diseases like addiction. Those qualities can include powerful sensations like feeling outside of one's own body.

Investors in the latest round include Shark Tank host Kevin O'Leary, Bruce Linton, the former CEO of the world's biggest cannabis grower, Canopy Growth, and James Bailey, a partner at private equity firm Bail Capital and early investor in psychedelics company Compass Pathways. Linton also joined MindMed's board of directors.

Founded earlier this year, MindMed aims to capitalize on the recent wave of interest in psychedelics to create versions of the drugs without hallucinogenic effects — that is, medicines that don't induce the classic psychedelic experience also known as a "trip."

MindMed aims to get FDA approval for a treatment inspired by the West African drug ibogaine

The company's cofounder and director, JR Rahn, spoke to Business Insider exclusively about its latest fundraise and the company's ambitions, along with Kevin O'Leary, the "Shark Tank" host.

Based in the US and Canada, MindMed's team of 11 is scattered across Toronto, New York, and San Francisco. The company's first goal is getting approval from the US Food and Drug Administration for a drug candidate inspired by the psychedelic West African drug ibogaine.

Some research suggests that ibogaine could help treat opioid addiction in people who've struggled to see results with other therapies. But the drug has also been linked with serious, potentially life-threatening side-effects.

MindMed's compound, called 18-MC, was developed to remove ibogaine's hallucinogenic properties while maintaining its medicinal ones, Rahn said.

'This is going to be a renaissance for psychedelics or an apocalypse'

A full psychedelic experience can take anywhere from 4 to 12 hours.

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Rahn believes the psychedelics industry is at a make-or-break crossroads.

Either the recent resurgence of interest in drugs like psilocybin and MDMA could fuel new therapies for hard-to-treat conditions such as depression and addiction, or it could lead to disaster as people in the industry tire of working out a sustainable business strategy for the drugs, which are widely illegal and tough to administer.

"This is going to be a renaissance for psychedelics or an apocalypse," Rahn said.

A full psychedelic experience can take anywhere from 4 to 12 hours. During a trip, people can experience troubling hallucinations, visions, and out-of-body experiences. If and when these drugs are approved as medicines, patients will most likely need to visit special clinics to receive them.

Read more: Investors just launched the first VC dedicated exclusively to psychedelics, which they call the 'next wave' after the cannabis boom

Rahn's hope with 18-MC is that it can help treat addiction without the inconvenience and expense tied to traditional psychedelics. Earlier this month, MindMed acquired the drug development program for 18-MC from now-shuttered drug company Savant HWP, Biospace reported. Savant's leadership team and scientists also joined MindMed, Rahn said.

The idea of prescription-based, non-hallucinogenic drugs are appealing to Rahn for another reason, too. He believes they would bring in revenue that could free them up to work on potential addiction therapies involving more intensive hallucinogenic drugs, such as psilocybin or LSD.

"I think you need to have both in your pipeline to actually deploy these medicines," Rahn said.

O'Leary agreed. He said a key reason he chose to invest in MindMed is because they are exclusively focused on creating FDA-approved medicines. O'Leary added that he turned down several opportunities to invest in cannabis companies who were pursuing recreational use, for example.

MindMed is currently preparing to test 18-MC in a second clinical trial, according to Rahn and MindMed's chief medical officer, Scott Freeman. An early-stage trial of the drug's safety, which included 14 people and took place in Brazil, was completed in 2014, Scientific American reported. Rahn and Freeman said they had not yet published the results because they contain some of the company's intellectual property.

Trip treatment without the trip?

Some clinicians see tripping as vital to the psychedelic healing process. Rahn and his team do not.

In recent years, scientists have studied the potential benefits of a full, trip-inducing dose of psychedelics on mental illnesses that range from anxiety to depression and addiction. They have come to promising, but early, conclusions using psilocybin, the main psychoactive component of magic mushrooms, to treat severe anxiety and depression, as well as using MDMA or ecstasy to treat veterans with PTSD.

In March, the FDA approved a treatment for severe depression that's based on the semi-psychedelic drug ketamine. Patients have to take the treatment, called Spravato, in a clinic, because of the potential for side effects like the"out of body" sensation known as dissociation.

The idea of taking a full dose of a drug like LSD — not to mention a 12-hour treatment window dotted with colorful hallucinations — may be intimidating to some people, Rahn said. And he believes MindMed could help people without making them trip.

"If it's not a trip-based therapy, I'm ok with that," Rahn said. "We can't be purists about how we use these substances."

Ibogaine has some big drawbacks

Still, ibogaine is not discussed in today's psychedelic circles with quite as much fervor as compounds like psilocybin or ecstasy, despite its long history as a healing tool among members of the Bwiti religion in West Africa.

Ibogaine has been involved in more than 30 deaths, according to the Multidisciplinary Association for Psychedelic Studies (MAPS), and its side-effects include an increased risk of heart attacks and seizures.

Nevertheless, some recent studies of the drug have been promising. In 2017, in comments it submitted to President Barack Obama's Commission on Combating Drug Addiction and the Opioid Crisis, MAPS asked the Commission to recommend further federal funding for research and development of ibogaine as a clinical treatment for opioid abuse.

Rahn said MindMed aims to start its second clinical trial on 18-MC late next year. He added that the company is hiring more research scientists and plans to open an office in Europe.

"We're focused on creating something that people can access and afford," Rahn said.

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