Psychedelic biotech startup Psylo raises $1.1m to treat mental health issues with the key ingredient in magic mushrooms

Psylo, a preclinical biotech firm, has raised $1.1 million as part of an ambitious plan to treat mental illness with naturally occurring psychedelic drugs.

The Sydney-based startup, part of Startmate‘s current W21 cohort, has been backed in a round led led by Chris Hitchen’s global micro-VC fund Possible Ventures. The venture’s prominent angel investors also include Airtree’s Daniel Petre. 

Psylo is presenting at Startmate’s Demo Day on October 7 and has begun work modifying naturally occurring psychedelics to discover new medicines. 

CEO Joshua Ismin said psychedelic-assisted therapy using psilocybin, the active molecule in ‘magic mushrooms’, is increasingly being evaluated as a potential treatment for severe mental illness. 

“By applying nimble start-up principles and tapping into cloud-based biotech infrastructure we have built a virtual drug company on the bleeding edge of psychedelic research — while in lockdown,” he said.

Ongoing research suggests psilocybin is significantly more effective in treating major depression that existing options, and the startup is seizing its opportunity at a time where the pharmaceutical industryls investment in clinical research programs for mental illness has fallen by 70% in the last decade. 

“We’re at the precipice of an entirely new class of psychedelic-inspired therapeutics,” Ismin said. 

The exploration of psychedelic treatments is a growing area of interest for a number of startup ventures, underpinned by a 2019 US FDA designation of psilocybin as a ‘breakthrough therapy’.

In March 2021 the Australian federal government launched a $15 million fund for psychedelic clinical trials, and in July 2021, the Psychae Institute, a $40 million psychedelic research centre, opened in Melbourne. 

Psylo is looking to initially develop a shorter-acting version of psilocybin, which normally takes effect for 6-8 hours in duration.

The startup’s Chief Scientific Officer, Samuel Banister, formerly team leader in medicinal chemistry at the Brain and Mind Centre at the University of Sydney, said there’s potential to discover other applications for the drug.

“A medicine that has a similar clinical profile to psilocybin, but which reduces a treatment session to 1-3 hours, could drastically expand therapeutic application,” he said. 

Investor Christopher Hitchen says the world desperately needs a new generation of mental health medicines. 

“We’re confident that new approaches will yield more effective alternatives, so we’re proud to be backing the Psylo team on their breakthrough mission,” he said.

Daniel Petre is similarly upbeat about the potential of psychedelics. 

“Australia has a nascent early-stage biotech scene, but we have tremendous academic talent and a hospitable R&D framework,” he said.

“Psylo is a great example of an Aussie startup applying an innovative approach to solve an intractable problem. I can’t wait to see where they take it.”