Marc Davis
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It has the potential to be the next frontier in the psychedelics renaissance, and it represents an unprecedented opportunity to innovate a notable advancement in mental health therapy.

In anecdotal studies, mescaline has shown promise in treating depression, anxiety, PTSD, and addiction – conditions that cost the global economy billions of dollars each day. It therefore has the potential to carve out a significant share of the US $70 billion global mental health market, according to Bloomberg.

However, the life sciences companies spearheading the resurgence in psychedelics have not yet given mescaline the attention it deserves. They have poured their resources into psilocybin cultivation and research, while generally overlooking mescaline – arguably the world’s oldest psychedelic.

That situation is now set to change. XPhyto Therapeutics Corp. (CSE: XPHY) (FSE: 4XT) (OTCQB: XPHYF), a pioneering bioscience company based in Vancouver, Canada, has added the production of pharmaceutical-grade mescaline to its psychedelic medicine programs. 

The company plans to develop industrial scale pharmaceutical-grade production processes for the wholesale market and for incorporation into the company’s thin film drug delivery platforms. XPhyto says that mescaline has been “anecdotally recognized as a relatively safe psychedelic drug” and has displayed “particular promise for the treatment of addiction and depression”.

“We see a significant market opportunity in the production of pharmaceutical mescaline and the standardization of dosage formulations with precise, predictable and efficient drug delivery for clinical study and therapeutic use,” says Chief Executive Officer, Hugh Rogers.

Mescaline is derived from a cactus plant called peyote that is common in Mexico

Why Investors are Embracing Psychedelic Stocks

This makes XPhyto a leading contender in the race to bring the next potential blockbuster psychedelic drug to market.

The small-cap markets have been flooded with intriguing psychedelics stocks over the past couple of years. This sector gained significant momentum in 2020.

For example, Mind Medicine Inc. saw its share price increase 864% last year. The share price of Numinus Wellness increased 555% in 2020, while Red Light Holland’s stock increased 300%. Investors in several other psychedelics stocks saw their money double or triple last year, and it appears to be an exciting potential growth area.

As previously mentioned, the global mental health treatment market is worth an estimated US $70 billion a year.

Depression is perhaps the most urgent concern for healthcare professionals and economic leaders alike. A recent WHO-led study estimated that depression and anxiety disorders cost the global economy US $1 trillion each year in lost productivity. More than 16 million people in the United States and 264 million people worldwide suffer from depression, according to the WHO.

Allied Market Research expects the antidepressant drugs market to reach $16 billion by 2023. However, between 10% and 30% of patients fail to respond to antidepressants, so the need for a new weapon to combat this crippling condition is clear as numbers continue to rise. 

Mescaline Research: Strength Through Diversification

The addition of cannabis as an alternative treatment to antidepressants does not appear to have been as effective as anticipated. In fact, the traditional antidepressant market has continued to grow since medical cannabis became widely legalized over the past several years.

It is arguable that psychedelics have far greater potential to disrupt the antidepressant market than cannabis. The FDA considers psychedelics to be a breakthrough therapy for treating severe depression, causing the leading companies in this nascent sector to enjoy soaring stock market valuations as interest in its potential grows. 

It is interesting to see XPhyto pushing boundaries by looking past the “shroom boom” and exploring the potential of mescaline. In Europe, the Company is already involved in the development of a proprietary biotechnology process for the industrial manufacture of pharmaceutical-grade psilocybin, , but it has decided to cast its net wider in a bid to be a major player in the psychedelic market.

How Mescaline is a Mood-Modifying Breakthrough

The real money in psychedelics will be made from FDA approved drugs that can treat depression, addiction and other mental health conditions. A landmark moment came in March 2019, when the FDA approved esketamine. Pharma giant Johnson & Johnson now sells the ketamine derivative as a nasal spray used to treat depression.

Advocates of psychedelics hope that will pave the way for a number of other substances to break into the mainstream. Market intelligence firm Data Bridge Market Research forecasts the psychedelic pharmaceuticals market could grow to almost US $7 billion by 2027, and mescaline could play a key role in its development.

Research into mescaline’s psychotherapeutic potential is understandably limited right now, but several studies suggest it could successfully treat mental health conditions. It is thought to increase blood flow and activity in the prefrontal cortex. Low activity in this area is linked to depression and anxiety, leading scientists to hypothesize that microdosing mescaline could alleviate those conditions.

Researchers at the University of Alabama found that mescaline could curb suicidal thoughts. Another study found it reduces agoraphobia, which could be a growing concern as the world emerges from Covid-19 lockdowns. Elsewhere, a researcher at Harvard University found that mescaline use leads to reduced rates of alcoholism and drug abuse among Native Americans.

Mescaline is found in the San Pedro cactus as well as several other species found in the Andes, Mexico and the southwestern United States. Archaeological evidence shows that its use goes back at least 5,000 years. It was legal in the United States until 1970, when President Nixon launched a psychedelics crackdown, but it is now making a comeback among bold scientists.

Yet very few companies have recognized its commercial potential, giving XPhyto the opportunity to secure first-mover advantage, assuming that mescaline wins FDA approval and is rescheduled by the DEA.

Mainstreaming Mescaline as Medicine

Mescaline remains a Schedule I drug in the United States, but it is legal in certain religious ceremonies registered by the Native American Church. There is also a substantial black market for mescaline, so it might make sense for the government to legalize, regulate and tax it.

The societal cost of depression and anxiety is growing increasingly difficult to ignore, and there is a clear motivation for governments to consider innovative solutions like mescaline.

Researchers at prestigious universities like Johns Hopkins University, Imperial College London and King’s College London have provided the psychedelics sector with a much-needed injection of credibility.

Mescaline may no longer be viewed as a counter-culture movement. This is the sharp end of the race to combat mental health conditions, led by hard-nosed scientists and pioneering psychotherapists.

Politicians are also growing increasingly open towards psychedelics. Just last month, Senator Scott Wiener (D-San Francisco) introduced Senate Bill 519, which seeks to legalize mescaline along with ketamine, psilocybin, LSD and DMT in California.

Health Canada has given doctors and therapists permission to use psilocybin as they develop therapies, suggesting a paradigm shift in governments’ attitudes towards psychedelics, and the trend is highly likely to accelerate in the months ahead.

PTSD causes at least two dozen suicides among veterans in the US every day

XPhyto describes itself as a “bioscience accelerator”. It operates a range of R&D projects in both Canada and Germany. The company has expertise in using sublingual and transdermal therapeutics to deliver extremely precise doses, which could prove invaluable for microdosing mescaline and other psychedelics.

Professor Raimar Löbenberg is overseeing XPhyto’s focus on turning promising psychedelics into therapeutic, pharmaceutical drugs. He is the founder of the Drug Development and Innovation Centre at the University of Alberta and the former president of the Canadian Society for Pharmaceutical Sciences.

Dr. Löbenberg has the necessary Health Canada licenses to conduct this research, making him one of the few scientists in North America to enjoy such status.

“XPhyto intends to first produce psychedelic active pharmaceutical ingredients, which can then be incorporated into our novel sublingual and transdermal delivery systems,” he says. “This is our competitive advantage, from production of API to drug formulation to clinical validation,” he says.

The company has only around 62 million shares outstanding, and this tight structure often acts as a powerful catalyst to driving share price increases in response to a buoyant news flow. All told, XPhyto looks poised to become a rising star within the Psychedelics Renaissance, and 2021 could prove to be the year that sets XPhyto on the path towards higher share price multiples.

ABOUT THE AUTHOR: Marc Davis has a deep background in the capital markets spanning 30 years, having mostly worked as an analyst and stock market commentator. He is also a longstanding financial journalist. Over the years, his articles have appeared in dozens of digital publications worldwide. They include USA Today, CBS Money Watch, The Times (UK), Investors’ Business Daily, the Financial Post, Reuters, National Post, Google News, Barron’s, China Daily, Huffington Post, AOL, City A.M. (London), Bloomberg, (Germany) and the Independent (UK). He has also appeared in business interviews on the BBC, CBC, and SKY TV. An enthusiastic shareholder of XPhyto Therapeutics, his opinions are therefore biased and should not be relied upon for making investment decisions.

UK-based business writer Martin Green also contributed to this article.

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