Psychedelic Capital Podcast

 S1 E4 Transcript

Ross O'Brien         00:15

And with that, welcome to another episode of Psychedelics Capital and I'm pleased to introduce everyone to the founder of Sensorium Therapeutics. Mr. Dick Simon. Dick, welcome.

Dick Simon 00:27

Thanks. It's great to be here.

Ross O'Brien         00:29

Well, it's exciting to have you. You guys are doing really out there in a pioneering role in this emerging world of psychedelics and life sciences. We've been really excited to track the company and wildly impressed with all your progress. But I'd love to hear a little bit more, maybe the founding story and why don't we start there, a little bit of the background and what attracted you to psychedelics and how did you get things started at Sensorium?

Dick Simon 00:53

Great. So I first started learning about psychedelics about eight years ago. Up till that point I knew nothing and I was in the group more like certainly not for political reasons, but just for personal reasons. Your brain on drugs, I don't need to mess with this. But I started learning a story of a very close friend whose son otherwise probably wouldn't be with us today due to mental health issues. And they had tried absolutely everything, nothing was working. And out of desperation they tried psychedelics. And lo and behold, this unfortunate kid who was suffering horribly and the prognosis was somewhere between terminal and just horrible, became better. So that inspired me to learn a lot more. We've been involved with mental health issues in my family and I was acutely aware of the fact that we just need better tools. So that led to several years of spending very full time doing what I could to help advance research and destigmatization of psychedelics. This is before Michael Pollan's book and before it was certainly not totally mainstream now, but when it was far more marginal. So I would speak before different business groups, other audiences, helping essentially everyone in the space who was looking for a platform or a way of further amplifying their message, worked with maps, worked with CIS, worked with a host of different groups. One of the programs or projects that I undertook was helping Massachusetts General Hospital to create a center for the Neuroscience of Psychedelics. This was early on again and the idea being let's figure out how and why they're working and what may make them work better. So to do serious research using Harvard and Massachusetts General Hospital. In addition that there was a certain irony returning to Harvard decades after Timothy Leary's activities essentially started what ultimately became Prohibition. Inadvertently, certainly, but essentially so at the center for the Neuroscience of Psychedelics, one of the scientists had an idea. He said, psychedelics are great or certainly hold huge promise. Neuroplasticity that they induce seems to be an important driving force and everyone is focusing on a dozen or so psychedelics. They hold promise, they're positive. But what if we looked adjacent to that at the thousands of plants and fungi that have a long history of human use, that exhibit or reported to have positive benefits for what we now call mental health and other central nervous system diseases, but do not necessarily create a psychedelic effect. So we call them psychoactive plants and fungi that have some effect on the brain. And from ethnobotanic literature or the work of scientists studying human plant interaction, it's reported to have positive effects on anxiety, on depression, on movement disorders, on cognitive decline, on a host of different things. It's challenging in that that literature is not well curated. You've got some brilliant scientists, but we've now created the largest database, the most comprehensive database of plants and fungi that have been documented, that have been used in an ethnobotanic literature for a host of different indications.

Ross O'Brien         04:11

So this is really interesting dick because clearly you've spent a lot of time in the research arena understanding the science, the promise of psychedelics, the history and legacy of it. What was the turning point to approach this from an entrepreneurial perspective?

Dick Simon 04:27

I'm a serial entrepreneur for decades in a host of different industries. What I found really appealing and what convinced me to co found and now CEO sensorium was the potential for massive impact at scale. Both because you have resources as a for profit entity, you're able to access the capital markets in ways that you can't do on a nonprofit basis. And also the possibility of creating new novel pharmaceuticals to help people who are otherwise suffering, who may not be able to be helped by psychedelics, are not being helped by current medicines or they're being helped, but there are significant side effects or liabilities or from a psychedelic standpoint psychedelics are essentially a complex looked at in a medical context are a complex medical procedure. You need time before, you need time during integration, time afterwards depends on the protocol, but it may be multiple sessions. So you're at a comprehensive procedure. That data looks like it holds huge promise or in many situations hold huge promise, but it's complicated, it needs therapists and it's expensive. So for hopefully soon people who are suffering acutely will have third party payers reimbursing but it will be a very long time before third party payers are going to generally reimburse extensive psychedelic therapies for those who are not well, but are not so acutely disabled that everything else has failed. And that's an order of magnitude or more greater number of people suffering that we're hoping to be able to help.

Ross O'Brien         06:05

So these are safe and well tolerated. The early data is very promising. There's a lot of research, the anecdotal experiences that people are having are profoundly positive such that there's this great wave of momentum and we're breaking down the stigmas there seems to be and I'm going to keep coming back, sort of back to this from the entrepreneurial standpoint. Starting companies is really hard, right? And so we're investors, we're investors in your company and we're excited, really thrilled to be a part of the story. But I've spent a decade building my fund and another decade before that struggling in the startup arena as an operator. There's a leap it takes to go from hey, this can have massive impact to actually doing the hard work of building a company. Can you talk a little bit about just the inception and how you pulled your team together and in particular you talked about accessing the capital markets and being able to do things in the space. There seems to be a few camps developing in Psychedelics where there's a real pushback on the for profit world versus the not for profit world and there seems to be some divergence there. What are you seeing? How did you straddle that successfully when you started Sensorium?

Dick Simon 07:24

So in starting Sensorium initially or pre starting Sensorium I was not looking to find a company to create, I was looking to have impact in the mental health space and I came to the very clear conclusion that the probability of successfully doing that is much greater in the commercial or for profit arena. It just takes tremendous amounts of capital. You're seeing it even among say the leading nonprofit in the space in Maps's case where there have been ongoing rounds and we've been personal supporters of Maps Rick but it just takes a lot of money. So the decision on for profit or not for profit to me was fairly straightforward. The goal was have impact and then the question was how to go about best increasing the probability of creating and having that impact and creating a for profit company. I've explained to various investors that the real motivation here is impact. The way that we assume that will be able to be created is by creating a good sized company and then the derivative of that is investors should make a bunch of money but it's being driven impact building and then financial returns. It's driven by how do you have impact, what ultimately can create phenomenal financial returns but that's not what started it.

Ross O'Brien         08:49

Sure and without using all the buzzwords of impact investing or double bottom lines. I mean if you have that perspective from the outset everything you do at the formation stage will inform the future structure of the company. So to have that as your founding ethos I think is somewhat unique in that you've been able to kind of straddle both of those worlds. As I said earlier. Now looking at, and this is one of the things that we find exciting about this space is there's a lot of times we're finding research programs underway and potential therapeutic applications that don't have companies already aligned with them. So when you identified this space and it was time to start Sensorium, talk a little bit about recruiting the team, you've got a wildly impressive team. These are the kinds of startups that require a lot of PhDs around and a lot of like they're not standing up a dispensary or something like that. So, pretty big undertaking. What were the early days like and how did you think about building your team?

Dick Simon 09:48

Well, there are three science co founders in sensorium with me, and that's where the incredible PhD professorships at Harvard and the like, running large departments and large labs there, that's where it started. So recruiting brilliant talent that came with the foundation of the company. What we have subsequently done is built in addition to that. And around that, an incredible R and D team with our chief scientific officer, who's got decades of experience in large pharma and in earlier stage companies, an incredible team of directors and people in our labs and computational biology space, again, with very significant experience. But it started with brilliant founders, excluding the three scientific founders.

Ross O'Brien         10:38

I think it's all right to put you in with that, cohort we certainly are very abreast with the team collectively. When you think about where the company is today, and I can speak and we've talked about this, how we had been following the company for a little while and candidly you way outperformed the timing and the momentum that we thought would be there, it just happened so much faster, which was exciting for us as investors. Right. There's a lot that's been accomplished in a short period of time and not everything are tailwinds in this market.

Dick Simon 11:11

Right.

Ross O'Brien         11:11

It's very complicated. But we certainly see people coming from traditional pharma backgrounds that are getting very excited about the space because of the potential in the early indication, the early data. So one of the decisions that you made early on was incorporating artificial intelligence into your platform. Talk a little bit about what that is first.

Dick Simon 11:32

What we're doing is we call it Psych graph and it's an ML based engine that does a number of things for us. One is actually taking a look at all the literature that's out there. People had been using something called natural language processing, but now there are other more powerful tools that essentially you're able to go through massive amounts of information, massive amounts of literature, and piece together what is often poorly curated and disparate sources of information. So, in our case, a plant may have multiple spellings depending on who the researcher was and where they may have been. Indications aren't called major depressive disorder, or treatment resistant depression or social anxiety disorder, maybe Sad, and it helps people who are Sad and the ethnobotanists doing the work are not mental health professionals or CNS experts. So there's all this putting it together. We use artificial intelligence or machine learning to process through all this. Now gone through a couple of hundred thousand articles that have been written, articles, papers, et cetera, to distill down to, all right, here are compounds, here are plants, and then here are the natural products within them that we ought to be looking at. That starts a process. Then we gather samples or extracts of these in order to be able to do work in our lab, in a wet lab, essentially, where we're working with human neurons. Human neurons created from stem cells that originally started as skin cells. So these induced pluripotent stem cells are able to create human neurons. So you start with human experience. You're calling them anecdotal, but stories often over hundreds of years or thousands of years, people are continuing to take this. You then are working with human neurons and creating massive amounts of data. This data then has to be distilled down in a way that we can logically begin to think about what might be an appropriate lead to be following. And that's where machine learning, you can train on data sets and tremendously accelerates the whole process. Basically what we're doing is we've come up with a way of doing drug discovery faster because you're starting with non clinical trials, but trials, people who figured out they're not going to die from it. So you probably have good safety. And when you see it across cultures in particular, there's something going on there, we then reverse engineer that and figure out how to make it better. So when you go through all of that and then very much reliant on computational biology and AI to help distill all this information, your probability of success is much, much greater. Starting with what works changes everything and then doing tremendous amount of science on it that you couldn't have even done five years ago in some situations, and.

Ross O'Brien         14:27

Having the mission to have the greatest impact possible. At the inception of the company, I'm sure largely informed, trying some of these new pioneering methods where you didn't have an incumbent system that you had to adapt, you could start fresh and hit the ground running. It was very impressive to us. The timeline that it took you to identify your first candidate versus what is traditional was profoundly shorter. And if I'm recalling correctly, this is for anxiety, right?

Dick Simon 14:57

Correct.

Ross O'Brien         14:58

Interesting. So let's talk a little bit about the regulatory environment, the recreational space advocacy we talk a lot about. We're investing in both cannabinoids and psychedelics. And more generally, as you're talking about naturally occurring chemistries molecules, bacteria, fungus, et cetera, that can have a transformative impact in healthcare. We don't think health care will ever be the same in a good way as a symptom of all this disruption from the regulatory standpoint that's giving us access to these materials. However, we always struggle with the recreational, selling chocolate bars in the Circle K with mushrooms in them for an intoxication effect versus delivering actual health care and actual benefits. So how do you see things emerging? Is there a coming? FDA hasn't approved anything yet. We think it'll probably be this year. We think things are going that way. How do you see this evolving in the regulatory environment and from a necessity in terms of how we're going to deliver benefit to patients several pieces of.

Dick Simon 16:08

An answer to that. One is just a clarification. We're not actually working with psychedelics. So some of these questions that you're raising I'm happy to speak about, but they're not necessarily directly related to what we're doing today in sensoria. Secondly, we're starting with nature. We use the expression inspired by nature and the history. And then we are creating new novel molecules that are somehow or another making these substances more valuable for people to take in a pill a day model or whatever. It might be delivered in a contemporary context. I mean, something that is useful if you chew on the bark all day is great, but most people won't show up in their office chewing bark all day. So with those as caveats, we're pursuing a traditional regulatory pathway, if you will. It's a new chemical entity, newly synthesized. We will be going through the three phases that the FDA has. First one being phase one, for safety, second, where you're getting your signals of efficacy. And third, where you're doing a larger scale trial to determine how it is actually doing against current standard of care. So from that way we don't face any additional regulatory hurdles. We also are able to avoid the hurdles of just dealing with scheduled substances, which is not impossible, but add some complexity. Just going to answer your question about at a circle K. I don't know how all that plays out is my honest answer. And psychedelics are very different from cannabis, but we'll see how things do sort out on that front. Certainly at this point the only states that are fully legalizing are doing it in a controlled context and we'll see.

Ross O'Brien         17:51

Where things evolve and very focused on the medicinal applications and therapies around that.

Dick Simon 17:58

Yeah, therapeutic not necessarily what we would call medical. I mean, they don't require in Oregon at least a medical professional, but certified.

Ross O'Brien         18:08

We think we have everything we need to bring legal drugs into the market today and that's called the FDA. What's exciting about this is just finding new baseline materials to start with and when some of these receptors are considered now in these experiments that we're seeing kind of across the board, the patient outcomes can be really profound. And I commend you and the team and we're excited to be a part of the story because we've got to continue to push the boundaries in order to find solutions where our incumbent system isn't able to support the things that we need to do to make our communities healthier.

Dick Simon 18:45

Thank you. On that. I would point out you use the term receptors and a lot of the work that is done in drug development, certainly in drug development related to neuropsychiatry or mental health issues tends to be receptor focused. In other words, if we get something that hits the in the case of psychedelics, it's often the five H T, two A receptor that will do something we're not sure what, but it'll do something. So it's a focus on how do you get something through the blood brain barrier so that it gets into the brain in sufficient quantities to evoke the effect. All of which is very helpful. We're really receptor and mechanism of action agnostic. We're starting with the phenotypical or the effect that you want. A person who's severely depressed is not depressed, a person who is anxious and unable to function is not. Or someone cognitive decline is no longer declining and then figuring out how and why it's working. But it's a very, very different approach than the traditional approach of let's get something to hit that receptor. It seems to work in mice, there are rodent models that are used, but the human psyche is very different. So they're better than nothing. But clearly they're not good enough or we would have a lot better drugs out there.

Ross O'Brien         20:01

Well, there's a lot of people that stand to benefit. And what's also really impressive is the cohort of investors. If people are listening to this in May of 2023, they'll be living through the real crucible of a very challenging capital market. Dick, you've been very successful in raising capital and with institutional investors participating in the company, it seems that time and time again we get into these cycles from a macroeconomic standpoint and this becomes fertile ground for entrepreneurship. Any advice out there for folks who are raising capital or in the capital markets that work for you when it's been a very, very difficult market?

Dick Simon 20:42

Sure. It is definitely a challenging market. When we were doing our Series A last year, it was a very challenging market. That said, we focused on how do we build the best company that we can as we're out there raising money so that we had and certainly have even stronger today. A very, very compelling story. Here's the incredible team we've assembled. Here's why somebody should be doing this and here's why we are particularly well suited to be doing it. So yeah, to the entrepreneurs I would share that don't get discouraged. Markets go in waves or in cycles. And yes, it is a more challenging time. That doesn't mean that no money will be raised. It means that investor standards are much higher and more selective and somewhat more cautious. And for companies that are able to deliver a really compelling story and progress toward achieving goals, there is capital out there more limited, but there is capital out there.

Ross O'Brien         21:43

Having been on all sides of that equation, it's at several points in my career from starting companies in my apartment in Manhattan to now writing checks with a venture. Fund capital is always scarce, right? So I always kind of scratch my head at these markets like, oh, investors are being more and more cautious. It all comes down to an articulation of risk. And each company has its own risk profile. And the investors that get comfortable with their risk adjusted returns and tolerance of that risk are the ones who tend to be successful in any market. So, interesting times. Not without its challenges, but dick I'm certainly excited to see where Sensorium goes from here. It's a pleasure to be a small part of the team. But final question then. When you look forward into your crystal ball over the next three to five years, what are some of the things that you're excited about in the future for Sensorium and the mission that you're on?

Dick Simon 22:38

So we're actually working very hard to implement what that crystal ball is going to show. Two major areas. One is that the platform that we are developing will be that much more developed and have produced a large number of leads and then development candidates and then drugs that are going through in the three to five year time frame, going through regulatory approval. We're expecting to a number of those through partnerships so that we have a much broader portfolio which derisks the company and again amplifies the potential impact. So I would say the parts are platform regularly producing new candidates, initially again focused on mental health. But what we're doing is pretty straightforward to expand the scope from, say, mental health to movement disorders to cognitive decline and even potentially beyond CNS space because it's a methodology and a data set and then you adapt some of the tools within it. So I see us having a huge impact, a number of drugs going through the regulatory process in that time frame and a platform that's regularly partnering out and creating phenomenal new medications to help millions of people. That's what gets me going every morning.

Ross O'Brien         24:00

It's exciting. Dick and look, I really enjoy our conversations. Thank you. I learned something every time we speak and just really enjoy your ability to articulate a very complex arena in really straightforward way that hopefully gets everybody else as excited as we are. So appreciate you spending the time with us today and thank you for the conversation.

Dick Simon 24:21

Thank you very much. Been a pleasure.