RA Capital on the Psychedelics Companies That Get Mainstream Investor Interest

• RA Capital is one of the few mainstream biotech VCs wading into the psychedelics space.
• The VC firm has invested in three psychedelics startups since 2021.
• It’s looking for companies with short acting drugs that can be given without extensive supervision. 

The number of companies touting the benefits of psychedelics for healthcare is rapidly growing, but not all biotech investors are on board yet.

Boston, Massachusetts-based RA Capital has been an outlier among established biotech VCs; while its counterparts have largely hesitated to invest in the dozens of companies racing to develop psychedelic drugs to treat illnesses like depression and PTSD, RA has seemingly embraced the opportunity by investing in several companies focused on psychedelic treatments.

But RA isn’t funding just any psychedelics company. According to Andrew Levin, partner and managing director at RA, biotech VCs are mainly interested in companies that are developing fast-acting and short-lasting drugs that don’t require intense and lengthy supervision from expensive practitioners. 

“It really comes down to access in our view,” Levin told Insider. “Being able to administer these drugs in a safe setting within the existing infrastructure is critical.” 

Last year RA Capital made two investments into the psychedelics space 

In 2021, RA made its first investments into the psychedelics space by funding two startups: GH Research and Delix Therapeutics.  Dublin, Ireland-based GH Research is one of the only psychedelics companies to have garnered a flurry of interest from mainstream healthcare investors including RA Capital, RTW Investments, and BVF Partners.

Its lead compound, a synthetic version of 5-MeO-DMT, the psychoactive compound found in the Sonoran Desert toad and some plants, offers something most other psychedelic companies currently do not: a treatment that would take 30 minutes to two hours for a full treatment. The drug is being tested as a treatment for treatment-resistant depression (TRD), or depression that doesn’t improve with other treatments.

Boston-based Delix isn’t developing short-acting psychedelic treatments, but it is focused on psychedelic-based medicines that don’t have hallucinogenic effects. This would help eliminate the need intense supervision from licensed practitioners. 

Meanwhile, the earliest entrants into the psychedelics space like Atai and Compass Pathways have largely focused on developing synthetic versions of existing psychedelic compounds including psilocybin and ibogaine, which for the most part have necessitated an intense and long experience that must be supervised by a trained professional like a therapist.

Dr. Stephen Ross, an associate director at the New York University Langone Health’s Center for Psychedelic Medicine, previously told Insider that he estimated we could need tens of thousands of trained professionals when psychedelic medications come to market, which could create a bottleneck for patients. 

But Levin said that companies like GH Research and Delix answer the looming question investors have in mind of how a treatment can be both effective and scalable.

Lusaris, a new company incubated by RA Capital, is already getting attention from biotech VCs 

Earlier this month, RA announced another entry into the psychedelics space when it launched a new startup called Lusaris, which is also developing a version of 5-MeO-DMT. Lusaris’ treatment is designed to be taken sublingually — placed under the tongue — for treatment-resistant depression. It, like GH’s treatment, is expected to be fast-acting and short-lasting to treat TRD. 

Levin, who is also interim CEO of Lusaris, told Insider the drug’s effects are expected to last between 15 and 20 minutes.

“The goal here really is to simplify the administration with an easy to use sublingual tablet and keep the duration of effects short so that ultimately it’s shorter in clinic time and can be more widely used by patients and physicians,” Lusaris’ cofounder and chief operating officer Neil Buckley told Insider.

At its launch, the company announced a $60 million series A round financed by major healthcare investors in addition to RA including Venrock Healthcare Capital Partners, Deep Track Capital, and Boxer Capital.

The company is still in early stages. It plans to soon start an early stage study and release data mid-next year, followed by a mid-stage trial in 2023.