Psychedelic Capital Podcast

S1 E2 Transcript

Ross O'Brien 0:17

Welcome to another episode of the Psychedelic Capital Podcast, where we go beyond the headlines in the emerging world of psychedelics venture capital. Join us for in depth interviews with leading investors, entrepreneurs, researchers, and policymakers who are pioneering a new future in healthcare. I'm your host, Ross O'Brien, founder of venture capital firm Bonneventure Equity, author and lifelong entrepreneur, and I see entrepreneurship everywhere. As an early investor in this new frontier of life sciences, it's my goal in these conversations to bring you direct access to the thought leaders and pioneers at this defining moment. We are in the midst of a mental health crisis, an addiction crisis. Pain is an epidemic. And for the first time we now have the legal pathways to develop psychedelic science and bring a new paradigm of medicine to the patients who need it most. As we imagine this new future, I'm inspired every day by the visionaries that we get to work with and have the privilege of introducing them to you today. I'm honored to speak with a unique visionary and one who I also get to call a partner, greg McKee. Greg is the founder and CEO of Journey Life Sciences and a managing partner at Bonneture Equity, a lifelong biotech and drug development executive. So Greg, welcome to the Psychedelics Capital podcast.

Greg McKee 1:33

Thank you, Ross, great to be here. Good to see you again.

Ross O'Brien 1:36

Good to see you as always, and a lot so as one of our goals here is to expand our thinking without substances. So kick off the conversations, we lean into the oblique strategies. And so for those of you who don't know, oblique strategies are a set of cards developed by Brian Eno and Peter Schmidt. And they were used in the studio, they're producers to inspire creativity and to move past writer's block. So we hope you enjoy the thinking about them in the entrepreneur context and in this space of psychedelics. And so the card, Greg, here we go with a truly unscripted conversation. And the oblique strategy for today is would anybody want it?

Greg McKee 2:24

Would anybody want it? Man, a lot of different stuff comes up, right? Build it. And they will come, of course, like comes forward right away. Would anybody want it? Well, yes, I think that they would. I mean, I think that's the greatest part about being an entrepreneur is that you get to make stuff out of pixie dust, right? Like we get to take ideas, we get to take things that have never been created and pull these ideas out of our mind and put them on paper, put them in slide decks, put them in podcasts, and then most importantly, begin to execute on them. And yeah, the entire time you're thinking about, holy shit, is anybody going to want this stuff? And I guess the two drug development. Yeah, clearly if we can come up with solutions to health problems, that's going to work. When it comes to psychedelics in particular, right? Like the projects that we're working on that I'm sure we're going to get into today. It's even more obvious that people want it because there's been 50 years of history in the development of these chemistries. So it's like, it's clear people are already using these chemistries. They're already doing research in academic institutions on these chemistries, and there's already some clinical, even clinical trials that are being run. So, yeah, it's pretty clear in this particular instance, people are not only going to want to want it, but they already do, and they already are working to gain access.

Ross O'Brien 3:52

And it feels to me as well, Greg, like this is the first step towards the people. Will people need it? Right. Which is, is this real medicine? Right. And is there real efficacy? And when I think about what anybody wanted in the entrepreneurial context, we see so many times entrepreneurs have ideas that seem compelling without testing the market demand for it.

Greg McKee 4:15

Right.

Ross O'Brien 4:15

So it's not just, would you want it, but is there a universe of people out there that would want it? And so in the context of psychedelics, it seems like there's conversations around dozens and dozens of therapeutic indications where the research and the science is starting to explore if these are compounds that will work. So maybe we should step back for a minute and get to there. It'd be helpful to hear a little bit more about your background, Greg, and how you found your way to the psychedelic space.

Greg McKee 4:45

Yeah, so I've been very interested in entrepreneurship from the early years of my career. I did start my career in finance working in Tokyo. I managed $550,000,000 in the public equity markets. And at that particular time, I frankly didn't want to choose a specific industry. I was just very curious about how do economies grow and how do you invest capital effectively? And I had an opportunity to work in Tokyo and I took that and I ran with it. And a one year internship ended up being seven years for me. But as I spent more time there and sort of got my feet wet and had an opportunity to look around a number of different industries, a couple of things happened for me. One of them was that I really wanted to get my hands dirty and get much more involved in companies than just from looking at them from the perspective of a financial balance sheet or a PNL or cash flow statement. I was really curious about operationally how these companies worked and what was going on with the technology, what kind of regulatory pathways were required for companies to commercialize their technologies and commercialize their product. So I really wanted to kind of, like, peel back the onion and really take a deep dive in entrepreneurship and companies in particular. Right. And I remember when I was on the trading floor one day thinking to myself, man, it's all about not necessarily these bigger companies, but it's all about these earlier stage entrepreneurial companies where you put the right combination of people, capital and technology together. And if you get that in the right configuration, magic happens on every level. Every level. You get products that can be taken to market, that are groundbreaking, that have huge impact, you can make phenomenal returns for investors and you're building and leaving an incredible legacy for our time here. So all those things really align for me. So I used business school at Wharton as my segue into industry and when I was leaving Wharton, I really had a couple of I was also at a pretty seminal moment where I had an opportunity to either work in tech in Silicon Valley, which was really compelling. I'm not from California, but I wanted to get to California and that was really compelling because it gave me a straight opportunity to go work in Silicon Valley and was very tempted to do that. But at that time, in the mid ninety s, I felt that the life science industry was going to be highly relevant during my career and there was also a lot of influence from my family background. My father is a physician, his brother, my uncle was an anesthesiologist at Cedars of Sinai in Los Angeles, and my aunt taught nursing at UCLA. So there's been a long history of individuals in my family in medicine. And so I used to make rounds with my dad at the hospital in the small community where I grew up. And I've always had kind of exposure to the healthcare space. So I decided to stay on the east coast and go to Boston and work for a company called Genzyme. And that just ended up being the start to a really incredible period of time in the drug development world. For the most part. I did spend a little bit of time in diagnostics and also in the Gen X division there, but quickly moved into the therapeutics realm. I helped commercialize our Genzine's lead compound in Japan and China and all other countries in Southeast Asia. And so I was kind of pushed very far forward in terms of looking at drug development from a commercial perspective and that was incredibly helpful and my skills matched that really well at that particular time. But I also was really curious about how does drug development work and how do you pick good chemistries and the rest? And that ended up being a segue into the gene therapy space where I spent a considerable period of time as well as then about a decade in immunotherapy where I was able to see every single aspect of a publicly traded company where I started as VP of Business Development and then worked my way into the Chief Financial Officer role and then the CEO role, where I was CEO for about six to ten years. And that just gave me a complete 360 degree view of every single aspect of not only drug development for the chemistries and biologics that we are working on, but also all the different levers and areas of complexity of an early stage company.

Ross O'Brien 9:04

Yeah. So Greg, before we keep going on the background, I think I'd be interested to understand now from that point in your career and some of those earlier stages in gene therapy and things like that, what similarities are you seeing and what differences are you seeing to where we are today?

Greg McKee 9:22

Yeah, for sure. Right. So this is really interesting kind of teachings. If we jump forward to sort of looking at psychedelics and other naturally derived chemistries cannabinoids, right. Things that we're investing at Bbe and things like that, we're developing a journey, life sciences. One of the similarities. I mean, obviously, you're dealing with the FDA, you're dealing with manufacturing, you're dealing with relatively novel chemistries, you're dealing with clinical studies. You're dealing with, actually, the added layer of the drug enforcement agency, although I dealt with that at Inventa, where we had a schedule two drug fentanyl that we were developing in a novel formulation. You also have that, you've got novel formulations, you got intellectual property and all that. But one of the biggest differences, and certainly there's many, right? So obviously the therapeutic areas are unique, obviously the chemistries are unique. But I would say the biggest difference for me that's the most impactful is the fact that there's so much history, right? Meaning that there's so much academic work and there's also, frankly, quite a bit of recreational use of cannabinoids and also psychedelics, which gives you this platform of data to kind of look into and to use as a backdrop in terms of what we're doing now. Never in gene therapy or immunotherapy were we at a point where we had 50 years of research behind us. I mean, even today that's hardly the case. And so when we were working in those areas, we didn't really have a whole lot of information around the safety and efficacy of those compounds. Whereas with psychedelics and cannabinoids, we know they're safe and well tolerated, and we know that they were, which is just a really incredible, frankly unfair advantage in some regard and very unique in the drug development world.

Ross O'Brien 11:11

So, Greg, let's talk a little bit about coming from the drug development world and leading drug development companies. How do you find your way into this emerging psychedelic space? I mean, even just a few years ago, this was a little bit on the fringe.

Greg McKee 11:26

Yeah. So for me, the experience in gene therapy and experience in immunotherapy was very telling, in that I really appreciate, I really have a long strong interest in getting involved in these novel therapeutic classes. Right. And after we sold inventor and went through a couple of different transactions there and after I spent a period of time running a startup accelerator here in Southern California, I had as would be a really unique experience with a set of individuals, a group of Navy Seals where we were actually working on another startup together, which was in a completely different area around healthcare, but not in the psychedelic space. And I started to learn about their personal experiences with PTSD and also their personal experiences with the use of a psychedelic chemistry called Dmt. And I was just blown away by how they spoke about the life altering changes of these chemistries and how much that shifted their consciousness and their ability to frankly cope with a lot of the past experiences they had while being Seals. And the second thing I thought to myself was like, wow, what in the heck are these chemistries? Right? I had never had exposure to them, to Psilocybin, MDMA, Dmt, LSD, others. I mean, of course I knew of them, but I didn't have a lot of direct exposure or experience. So those two things kind of came together for me as a quick realization that one, whatever these chemistries were, they just had profound impact on people that actually had real life use cases, right? And then the second thing was that there was this significant history that I discovered very quickly 50 plus years of research in this field. And so that to me just spoke to the idea that we were on the cusp of a new wave of a new therapeutic class of drugs called psychedelics and that I wanted to get involved in this. I just felt it was going to be so impactful, it was going to potentially and I think it will potentially impact so many different types of patients. And so many patients. As you mentioned before, we're in the middle of this mental health crisis for one. Plus there's a number of there's so many other therapeutic areas that potentially could benefit from cannabinoids and psychedelic drugs. So all that to me came together pretty quickly as essentially a vision that we're on the cusp of this massive new wave of new drugs that will come to market and have big impact on a lot of different types of patients.

Ross O'Brien 14:03

So one of the things that you mentioned, Greg, which I think is really interesting, is decades of research. I think a lot of people assume that this is very new and at the very early stage, which, granted, there is a lot of grant money starting to only now be unlocked for this. But when you see people flocking to this space, seasoned, traditional researchers, PhDs founders, et cetera, and start to, as you said earlier, peel back the onion, where is this history of research leading us today?

Greg McKee 14:36

So the work done starting with Albert Hoffman right in LSD that he created at Sandos, all the way up through like big push of research. Of course in the well, it got cut off in the 70s, but there was some early research there. But there's actually been a couple of different waves. One particularly fairly large wave in the 90s. But where it's leading is a number of different areas, right? A number of different places. One, we've got, as you said, there's more academic research. There's grants now becoming available, larger dollars in a broader set of different types of grants. You're seeing the numbers of publications increase dramatically, which is a good indication there's more academics working in this space. We're also seeing now what I would sort of characterize as being first generation chemistries moving into clinical studies. So you've got a few companies already that are in late stage, phase two or even phase three. So we potentially will see the first FDA approval of a therapeutic use of a psychedelic later this year or early next year by Maps, which is going to be a great watershed event with their MDMA drug. You've also got a couple of other companies now in phase three, which is really good, but where this is also leading is to so many different areas. There's actually, I think, more questions now kind of coming forward than there are answers. So there's work in terms of defining clinics and figuring out that the clinic model, which will be slightly different than a typical hospital or clinic setting. So there'll be very unique environments where people are treated, which is that's emerging. There's work on the very specific type of psychotherapy that will be typically coupled at least with these first generation chemistries. There's a lot of work being done on the manufacturing front to identify manufacturing platforms that are the most effective across at least three different areas that we know now, right? Naturally derived extracts, traditional chemical synthesized chemistries, and now even biosynthesized chemistries. So those three platforms are emerging, and there's a lot of work there to really identify the right processes and characterization of the manufacturing techniques that are used that will clear traditional pharma FDA guidelines. And then there's also a whole body of work now emerging around the push into other therapeutic errors outside of traditional mental illnesses. So there's work on Parkinson's, work in chronic pain like we're pursuing at Journey Life Sciences. There's work in certain eating disorders, work in use disorders. So there's a lot of other therapeutic areas, a lot of different patient populations that potentially could benefit that the industry is beginning to move towards. And then on top of all that, there's work in a handful of companies to look at second generation chemistries that potentially could have a different safety profile, potentially not require psychotherapy, and could model a little bit more of a traditional pharmaceutical type of product. Potentially, we'll see all this research and all the history has been incredibly helpful, and that's pushing into a number of different areas as essentially this whole ecosystem is being created.

Ross O'Brien 17:49

So you've mentioned first generation, second generation, maybe. For those listening, can you just define sort of what that means in the context of pharmaceuticals?

Greg McKee 18:01

Sure. So first generation chemistries, I would characterize as being chemistries that are already well understood. Meaning we know the chemical composition. There's a high focus on essentially creating a novel formulation or potentially the novel route of administration. Most of the time we think about an orally viable tablet or capsule, which is the case of most psychedelics right now. But there's the possibility to have better bioavailability by looking at an IV, potentially inhaled, potentially nasal, potentially a lozenge, a type of delivery. So there's exploration around taking chemistries that are already known, but look at different formulations and different routes of delivery, but essentially they're chemistries that we've known about for decades.

Ross O'Brien 18:49

And how does that impact intellectual property? And so if there's founders out there that are listening to this, how should they be thinking about what we know about the IP landscape today in this context of first, next generation?

Greg McKee 19:02

Yeah, it's a really great topic, right? Because on the one hand, the good news is there's a lot of data around these chemistries, as we were talking about a moment ago. On the other hand, the IP landscape is a little bit unique. Composition of matter patents are not available for these naturally derived chemistries, and that counts for scheduled drugs as well as non scheduled drugs.

Ross O'Brien 19:22

You just define a composition of matter. I don't want to get too technical.

Greg McKee 19:28

Yeah. So composition of matter is a patent around the actual chemistry of the actual molecule. So you own that specific molecule. But because these chemistries have been around for so long, and because they're considered fairly obvious, it's not possible to get composition of matter patents. But you can create intellectual property around a whole lot of other areas, including manufacturing process patents, including around formulation, including around use patents in novel therapeutic indications, and around novel routes of administration as well. So there's at least three, possibly four different large categories of intellectual property that can be created. And there's many examples in the pharma space where compounds that have already been known and that have come off patent have been reformulated, or they've been repurposed into new therapeutic applications. So that's a fairly tried and true path. So that's sort of the way the intellectual property resides, and that's what that looks like in first generation.

Ross O'Brien 20:28

So as it relates to psychedelics, can anybody own psilocybin?

Greg McKee 20:37

No. It's pretty widely understood right now that nobody can own the composition of psilocybin per se, but there's certainly a lot of naturally occurring because it's naturally occurring, and it's been around so long that it's fairly obvious that there is a therapeutic benefit of using that or will be soon. So the use of it can be patented. But the actual composition itself, because the chemistry has been around for 50 plus years, is is not something you can create new IP around because it wouldn't pass,

Greg McKee 21:15

it fails the obviousness test. It's too well understood to be considered novel.

Ross O'Brien 21:25

And so that's the landscape of first generation chemistry is in psilocybin. So let's continue talking about this next generation and let's take this into like now we know the landscape a little bit better. There's a ton of opportunity there. And you've talked about some potential watershed moments coming in front of us. How does this play out? And what I'm really interested in, what I think people will be really interested to hear, Greg, is again layering in that traditional decades of traditional drug development experience, right? Like, there's certain pathways that are going to be applicable to this, then there's certain new ones that need to be pioneered.

Greg McKee 22:03

Right.

Ross O'Brien 22:03

So let's start with where we are and where it's going.

Greg McKee 22:07

Right. I think from my standpoint, there's so much work that's ahead of us already in first generation compounds. And that will take we have a huge head start, which is terrific, and it'll be a shorter time frame to get those to market. But first approvals and figuring out the clinics and the psychotherapy and novel indications, all that is an enormous body of work, which is fantastic. And then shifting to second generation mysteries. I think that there is this belief that and there's already a fairly well honed business model in the pharmaceutical space that we deliver medical grade medicine in a capsule in a 30 day prescription typically type of format where you go to the pharmacist or that prescription is filled, you take that home. You then take a daily dose of whatever your particular medication is that your physician has prescribed. And that's sort of that right. So there's not a novel clinic you have to go to necessarily. You don't need psychotherapy. So you typically would need a whole lot of other things with that 30 day prescription of a typical drug. So like your cholesterol medication or certain diabetic medications, what have you, although obviously that's a different route administration. But typically, if you've got a daily dose of Ssri or something like that, you wouldn't have any other types of requirements around that. So I think there's a strong desire in the pharma space to potentially model that and come up with and reshape and create new chemistries that wouldn't necessarily patients in the psychedelic state wouldn't necessarily require. Psychotherapy may potentially have a better safety profile. There's some concern that hitting the five H, two TB receptor, it's understood through other chemistries that potentially over periods of time can cause valvular cardiovascular toxicities.

Ross O'Brien 24:01

And that's what is known as micro dosing, then.

Greg McKee 24:04

Or that, yes, it could be micro dosing. Right. Where you're taking small amounts of psilocybin, for example, or other chemistries over a long period of time. It also could be macro dosing after a number of different cycles and a number of different experiences. It's not known yet exactly how many sure how long of exposure, what dose of exposure. Those data points aren't yet understood. But there is a general belief Fenfen was one of these drugs. There's other chemistries that have hit that same receptor that have known in small numbers by the way, but have known to cause cardiovascular side effects. There's been a group of companies and also, I think, researchers and an opportunity potentially to create these second generation compounds that one would potentially eliminate utilizing the five H. Two TB receptor would potentially have a better side effect. Profile potentially could be used in microdosing. As you mentioned may not require psychotherapy, may not require patients to get into the psychedelic state and it also importantly from an IP perspective tying that piece allow for novel composition of matter. Patents to be issued, which is considered kind of the traditional way that pharma likes to create a moat around their business, is through owning the actual molecule. So all that's really compelling. But on the other hand, you're kind of starting from scratch. You don't really know. And we know that in drug development though, that there's a lot of failures and that when you start essentially designing new chemistries, you've got to put it through a lot of in vivo in vitro at preclinical work before you even get to humans. And often the preclinical and other laboratory experiments don't necessarily correlate highly to clinical utility. So in other words, they're not really predictive in terms of whether or not these chemistries work. So we just don't know. So yes, someone's whiteboarded a fantastic desirable label, product label that pharma is going to love. But there's a big question in my mind in terms of whether or not those chemistries are going to work. And I don't think anybody like nobody can say. There's a lot of speculation, there's a lot of dialogue around certain platforms that may quickly identify the right types of chemistries. There's some belief that early experimentation and early preclinical models are correlated, but we don't know yet until we kind of run those their paces. So that's kind of the trade off. The good news is that you potentially can create composition matter and you'll come up with a product that's more akin to a traditional pharmaceutical drug that pharma companies will be more comfortable with. On the other hand, you're kind of walking into the big unknown, the deep unknown in terms of whether or not these chemistries are going to work. Whereas in first generation compounds, because so many people have used them in their labs. There's been so many publications and so much more research as you mentioned a moment ago, and recreational use and some clinical trial use. We know they're safe and well tolerated and they work, which is just an incredible tailwind to have at your back.

Ross O'Brien 27:18

Right? And I think that's why I mentioned micro dosing, for example. There's a lot of buzzwords that people are grabbing onto and it's exciting because everything you just said, people are having very positive experiences consuming these in their natural format. But there's a chasm between occurring in nature and being an FDA approved therapeutic drug. And this is, I think, where we really try to go, right? This certainly isn't about the recreational opportunity for us as investors, but how do these coexist? How do you see that sort of playing out? Because that's a little bit unique compared to some other, certainly other things that are available to pharma biotech. And then when we look at traditional drug developments, I mean, there's very clear pathways there to bring these to market. What do those look like?

Greg McKee 28:07

Right, yeah, there's a lot to dive into there. Right, so just first of all, on the microdosing front, I think it's really important to keep in mind that even though we've got this incredible tailwind and a lot of history around these chemistries, there's still a lot of unanswered questions. Right. And the micro dosing question is a great one to look at. And just as we sort of saw in the pandemic, when there seemed to be a little bit of moments where there seemed to be changing policy, well, that's because this is just science and the science was evolving, therefore the policy needed to sort of change. So in a similar way, microdosing is a really interesting kind of little case study within the broad psychedelic space, because when you talk to individuals who are micro dosing, they'll swear by it as having an effect. But when you at least up until this point, or until recently talk to academics about it, they would essentially set it aside as being something that's completely unproven and not even worthy of testing. That's now changed, though. There's a bit of a push in the academic world now to look at micro dosing and run properly controlled studies to ask the question of whether or not micro dosing works, which I think is great. And that's just the way science, we get to a certain point and we answer certain questions and then the next questions emerge and we need to run the experiments to figure out if they work. So the micro dosing thing is going to be interesting in terms of the drug development process, right? So as you said, that is a pretty arduous process. All in air quotes that we're doing in some regard is taking these known chemistries and running them through kind of traditional drug development processes, right? So mostly what we're doing is we're setting up proper, at least in the first generation chemistries. I'll just sort of jump into that. We're running properly controlled studies with material that has been manufactured under cGMP manufacturing processes. So that means it's chemistry that's consistent. We know it's in that chemistry. We know that it follows FDA guidelines and is cleared as the language, but cleared by the FDA to enter clinical trials. So that typically means you've had to meet a certain threshold to demonstrate that one. There's actually a rationale for why you're going to put that chemistry in a patient, meaning that there's at least an idea and a notion that. The patient will benefit from that. And then most importantly, there's a body of evidence that gets submitted to the FDA to show that it's safe and you won't do harm, which of course is the first principle in drug development. So we're going to run these experiments and we are running these experiments as an industry right now in larger numbers of patients in a controlled setting with material that's well characterized and that's the first time this has ever happened. So those processes are in place. The FDA is involved and is clearing these studies to go into human trials. The Drug Enforcement Agency is also because you've got to be licensed as a clinical trial you've got to be licensed as an academic and frankly, as a clinical trial site to handle these scheduled substances and all the other support mechanisms, contract research groups, regulatory consultants, PhD, scientists. As you were describing earlier at the top of the podcast that are evaluating clinical trial design. All those elements are coming to bear, which is great. And that should give everybody a lot of confidence that when these data points are released and there's now data now that's slowly being becoming public, the public can be assured that there's proof that there's safety and there's evidence of real activity. So all that bodes really well. And I think most importantly then that will bring in other resources or other capital resources and also I expect will begin to draw in the traditional pharmaceutical companies and biotech companies to license and commercialize these. Because the other thing that will happen is once there's approvals, then there will likely be reimbursement of these drugs. And so we can then utilize the healthcare system that's in front of us. So the hospital clinic channels that are here and then being developed, the reimbursement and insurance resources that are around, as well as then creating a whole body of psychotherapists and practitioners that have a new tool in their toolkit. So our ability to impact large groups of patients is going to increase dramatically I think, with utilizing the tools that are available to us and also the kind of more traditional drug development pathway. So the other element of your question was then, well how will that coincide with what's happening in the state of Oregon, what's happening in the state of Colorado? What potentially health Canada will do around decriminalizing the use of cannabinoids cannabis and psychedelics. And obviously we saw that in cannabis early on. With the legalization of cannabis, we're seeing that now in Oregon, potentially Colorado, potentially California. I predict that at some point soon canada will also potentially decriminalize the use of whole mushrooms for medicinal purposes. I think that these will coexist, but I also think there's a very, very big difference between both those strategies. On the one hand, the medicinal use of psychedelics will potentially provide access for certain patient populations a little bit earlier, a little bit faster than going through traditional drug development steps. On the other hand, I'm I'm pretty concerned about the consistency of the substance that people will be ingesting. I'm pretty concerned about the environment that people will be in. Patients are in a pretty vulnerable state when they're on a psychedelic journey for a pretty extended period of time. These journeys are anywhere between four to 8 hours. Psilocybin is an eight hour journey, Dmt is a much shorter journey and there's new, slightly different formulations that may create shorter journeys. But those times that you're in the hallucinogenic or psychedelic state, you're quite vulnerable. So having patients properly monitored, having patients properly guided, I think is a really important principle on top of the fact that it's been documented that the durability of the clinical effect is also somewhat tied to the use of proper psychotherapy techniques, integrate those experiences as people enter their normal life. So I think there's a lot of unanswered questions, as we were saying before, in terms of durability, in terms of what the dose should be, in terms of the frequency of those experiences. And we need to know what is the right sort of cadence, what is the right dose and what is the right way to deliver this? So my view is that utilizing a traditional drug development process is going to answer all those questions and we're going to be able to harness all the resources that we need and that are available to us to have maximum impact. Not to say that I'm opposed to recreational use, I just think that that is probably not the best way for us to deliver health care and it certainly wouldn't happen with other chemistries, right?

Ross O'Brien 35:13

And I like to take Bob's chocolates that he makes from the mushrooms he grows in his closet and go on a hike. But what I'm not doing is trying to work through childhood trauma in that state. And I think you bring up a really great point that there's just a lot more to understand. But look, that's the role of innovation, right? To do the research, to ask hard questions and get the facts and get the data. So yes, there's a lot of enthusiasm and certainly feels like the train has left the station, that psychedelics are here to stay as a part of our communities. The question is now how do we build real medicine around this and what are the protocols and standards of care? One of the questions that I get asked a lot, and I know you do as well, is the assumption that this is a threat in some respect to the incumbent pharmaceutical industries and why doesn't big Pharma air quotes just squash this? Yeah, you were just at the JPMorgan conference, right? So it'd be interesting to hear what has the industry looking at?

Greg McKee 36:14

Yeah, I think that the incumbents are going to be threatened. I mean, that is the nature of innovation, right? The obvious markets to go after are ones that have already been created, right, as compared to creating something new, just come at the same market with a better offering. That's innovation 101 and Entrepreneurship 101. So yeah, the incumbents are going to feel threatened. But on the other hand, if you take at the incumbents so you look at say, for example, traditional mental health and you look at Ssri, they don't work. And if you look at a lot of other therapeutic areas, like there's just nothing. So fibromyalgia, for example, right in the broad chronic pain space that we're looking at, Journey, there's three drugs that are currently approved in that arena. And in talking to some of the researchers that were there in the early days and just understanding those chemistries, one, they're not very effective. And two, patients drop off compliance on those chemistries very quickly. So first year, 90% of patients drop therapy. So there really isn't much of an incumbency there. There are some drugs approved and they're decent revenue streams, but they're going to get disrupted because they're not very good. And I think there's really nothing that pharma can do or anybody can do to frankly stop that. Like you said, that the trains left the station and there's so much critical mass already that's so much inertia on these programs, I don't believe it's possible for Farmer to stop it. On the other hand, like as you said, I was at the JPMorgan conference in January, which is always a really interesting time in a Bellwether event to kind of take the temperature of pharma and see where they're at. Right now, pharma is not really very close to this new class of compounds. Oatska Pharmaceuticals has probably leaned in the most of anybody, but I think the other big pharma companies will begin to take a look at this as the industry gets a little bit farther down the path. They're going to be here, they typically are, but they're going to wait for more data. They're going to wait for some of the initial approvals and they're going to wait for some of the answers to emerge around what's the right delivery modality and what is the FDA? Is the FDA actually approving these? And are these chemistries being reimbursed at levels that make business sense and so forth? So there's a lot of uninsured questions that I think pharma is going to wait, which they typically do, right. They pay up for a highly derisked story, which is a great place for entrepreneurs to be, right? Like pharma is. They're not price insensitive, but they tend to pay a premium and be willing to pay a significant premium for derisked stories with lots of answers, whereas so that that's the opportunity for all of us as entrepreneurs and investors. And the state of play, I would say, from being in San Francisco back in January around Psychedelics, is that we are a collectively, the entrepreneurs in this space are a fairly tight knit small group that's forging a path with these chemistries that right now is for the most part being under recognized by Pharma. But that's okay, that's the way this always is. It was this way in gene therapy, it was this way for sure in immunotherapy, at least in my experience, and I think Pharma will just wait. But they're around and many of us are having conversations with companies now and their curiosity is emerging, which is great. And I think over time, as we see more data and we see approvals and reimbursements come through, pharma is going to get involved. So it's a very exciting time, as you said, and we just have to just continue down the path that we know is the right one and ultimately.

Ross O'Brien 39:54

These pathways are in place so that these treatments can get into the hands of the patients that need it the most, right? So I think sometimes we lose sight around, oh, Pharma is here squash this and not paying attention or advocacy mandates to make this just accessible and legal. But at the end of the day, there's people that could really benefit from these new drug developments and taking that risk now and investing in that is ultimately with the objective of getting these things into the patient populations that need for sure.

Greg McKee 40:26

You make a really great point that there's this assumption that just because psychedelic, for example, or cannabis was decriminalized or legalized right, that all of a sudden there was going to be a big impact. I would say that we saw that movie already, cannabis has been decriminalized. And I would say the impact of the utility of that chemistry is not there at all to what it's highly underutilized. So it doesn't work just because Oregon decriminalizes psychedelic. I don't think we're going to see the impact yet because I think until you harness the constructs that we have in place right now, whether you like them or not, by the way, and look, that's another conversation for another day of how to disrupt healthcare delivery. But that's what we have to work with now and I think that's the best tool to get the most impact.

Ross O'Brien 41:19

And we've seen this before, Greg. I mean, it's hard to disrupt a system if you don't understand how it works, right? So it's not to say that disruption isn't part of the plan, but at the end of the day, I think we lose sight of as I said a moment ago, and use all of the tools at our disposal, including aligning with large, powerful forces, in order to get these treatments into the patients that need it the most. I think this has been terrific, Greg, and always great talking to you. So let's conclude, I think this is a great segue, talking about the patients and talking about the vision. If you could fast forward five years, ten years out, what is the biggest impact that you see for yourself, for Journey, for companies we're working with and psychedelics as a whole.

Greg McKee 42:06

No, I think that in a relatively short period of time of three to five years, we're going to see the first approvals for MDMA, first approvals for Psilocybin. I think that journey that we're going to bust open, the notion that psychedelics can be used as a treatment modality for chronic pain, which I think is going to be just a huge breakthrough, I think that we're going to sort through a lot of questions of reimbursement and clinics. I think those companies will make progress around demonstrating what needs to be done there. And I also think that we will attract a lot of traditional life science and biotech venture capital, as well as very likely in that time frame, pull in a number of pharma companies. And once we do that, this is all going to begin to go mainstream. So the upside is enormous and I think that in three to five years we're going to see massive shifts in terms of people's thought processes around using these chemistries to help patients in great need.

Ross O'Brien 43:05

That's fantastic, Greg, and a great place to adjourn what I think will be part one of hopefully multiple conversations. There's a lot to digest there and think about. Certainly an exciting time, certainly worth the hard work to develop these further because the implications could be so profound for our societies. So Greg, thank you very much for joining me today on Psychedelics Capital.

Greg McKee 43:30

Great to be here, Ross, and look forward to our next conversation.