TCF Presents | Cody Shandraw

TCF Presents: Cody Shandraw

The Conscious Fund (TCF) Presents is a conversation series on Clubhouse which aims to educate and expand the dialogue around psychedelic medicine, venture capital, and the big ideas that look to shape our future with a focus around mental health & addiction. Follow us on Twitter, stay up to date for our latest events and join the conversation, if you’re a founder looking for capital, investor looking to invest, or anyone in between!

In this Clubhouse interview Richard Skaife & Michael Hoyos, Founding Partners of The Conscious Fund, sat down with Cody Shandraw, Director for Ambria Capital to discuss the psychedelic industry at large.

Your background before you got into psychedelics was in the cannabis industry so I’m curious.. What have been the polar differences that you’ve seen between the two sectors?

Cannabis had a built in user base in the US of 80 million people. So the push for the recreational use side has been tremendous, especially from 2015 to today. I think the most headway that is going to be made in the psychedelic industry is going to be on the therapeutic and the medicinal side. Everything has its place in society and especially when you’re talking about naturally occurring entheogens. As long as you’re in the right environment with the right people, I think it’s going to have its use.

What originally got you interested in the psychedelic space?

I have very close family members and friends who suffer from addiction and depression. I’d had a close friend participate in an ibogaine and ayahuasca treatment down south, and I was able to see their behavior change in a very short period of time after knowing them my entire life.

Looking back at the sector, it’s really only a year old…

What changes have you noticed in terms of companies within this last year?

You’re starting to see leaps and bounds when it comes to the formulations of existing compounds, and also the development of new analogues and compounds themselves. Also, the integration with some existing clinics; it seems like a lot of existing clinics are now rapidly looking for ways to develop psilocybin, LSD, and DMT to their patients. It’s been interesting to see the unique types of delivery systems — You’re talking about somebody with Alzheimers in their later stages in life and a pill may not be the best thing for them. So kind of seeing how rapid the evolution of getting some of these new drugs and existing drugs to a completely new age group it’s been incredibly interesting. As the industry starts to move forward, we’re going to see an increase for the potential applications, especially on the stroke side; there’s talk about administering DMT immediately once an ambulance arrives for stroke victims.

Can you talk through what you see happening in terms of state & county level vs. the federal pathway certain companies are following? Is the psychedelic space going to follow a pathway similar to cannabis?

This is why I stress the differentiation between cannabis and psychedelics, when cannabis started to make the medicinal push you started to see pushback by lawmakers, I guess that was before the tax revenue that was being generated, and everybody kind of started to jump on board. Most people are very familiar with Oregon and what they did, but there are talks in very large states. Texas just had a press release that they’re interested in exploring medicinal uses. You and I talked about this earlier this week, once there is actual data that shows this is specifically treating this condition, I think it’s going to be a real driver for the FDA.

In what countries do you think we’re going to see the biggest shift and see the most inertia?

I was very bullish on the US, being a US citizen. I was hoping after the Right to Try Act in 2018 — If there’s a terminally ill patient that wants to explore different options and treatments for a better quality of life towards the end of their life. With psilocybin being granted “breakthrough therapy” status, hopefully there is legalization here, especially on the therapeutic and medicinal front, hoping most nations should follow quickly. We’re obviously seeing some exciting things with DMT and ketamine out of the UK. And Canada has just been so progressive, I honestly don’t know if this industry would be possible without the support from the Canadian government. So if I had to say one, I’d say the US and that the Right to Try Act starts opening up different pathways.

Michael: What’s your view on what’s happening in your country?

I think this is actually one of the very few issues that regardless of where you fall on the political spectrum, it seems to be one of the few things that both sides actually agree on. On one side you have democrats who would naturally expect to be open to progressive approaches to treatment. But then what many people may not realize, on the other side of the aisle, there’s a lot of support as well. When you look at some of the work being done right now, in particular with MDMA to treat PTSD, that trial being run MAPS. One of biggest constituencies that theyre addressing are war veterans that are coming back from palces like afghanistan and iraq and are dealing with huge levels of PTSD and epidemic levels of suicide. Given the historic treatment protocols have been less than stellar in terms of helping these people heal from those traumas, so regardless of how you feel the current work being done with MDMA speaks for itself and is an order of magnitude improvement. This is something congressmen of some of the reddest parts of the country are getting behind because its helping their constituents and it’s hard to argue. So I’d have to imagine that over the next few years we’ll hopefully be gain even more positive momentum here in the States.

What does the next 12 months look like for you?

It’s going to be broken down in 4 verticals. Number 1 is about the clinics and their support running the clinical trials. Number 2 will be the analogs and what existing compounds can do regarding treatments. Number 3 is going to be tying down new delivery systems for different categories of people and users. Number 4 will be on the production side — I’ve talked to several CEOs that are having to pay for their product but also having to pay to have it stored because they don’t have the proper license to do so. So I think the industry is going to be broken up into those 4 verticals and I think you’re going to see hundreds of companies being developed out of there. And just like any industry over the next 12 to 36 months you’ll probably see 100 companies pop up and by the fourth, fifth, sixth year, you’re going to see a massive consolidation effort, especially as the valuations start to rise and these companies are raising very large amounts of money, it’s going to make sense for some of the smaller operators to join a large network to have the cash available to them to start running what they’d like to and have the war chest needed to do so.

Talking valuations, we’ve seen a step up in terms of starting price. Where would you say the median is at the moment? What are you commonly seeing?

Most of the time series B/C you’re seeing is in the $10–20 million range, then it seems like post IPO/RTO you’re seeing between $40–200. Then you’re seeing the obvious upper tier guys move to the billion dollar market cap.

Where do you think some of these companies will end up? Are we potentially creating the next AstraZeneca or the next Pfizer? Do you see a time where those groups will kind of get their head around it and participate in some shape of fashion?

100% you’re going to see participation. And you never know, I mean there could be some exciting things on the horizon over the next 24 months, where some purchases by some of these larger pharmaceutical companies for specific delivery systems, or even analogs themselves. I mean look at Spravato — just understand, where there is a multi-billion dollar opportunity, you better believe the suits will always infiltrate the roots. And this is something I think about all the time, I just hope that the scientific interest doesn’t get corrupted for financial gain.

During the last 12 months how many founders have you actually got to meet in a face to face environment?

I’ve been lucky to sit down with Dan from Wesana in Palm Beach, Florida, Evan the Ceo of Hive Bio in Boca Raton and again in Delray Beach Florida, Ben Kaplan the CEO of EHave in Miami and Patrick the CEO from Microdose. But I’d have to tell you I’ve had more video conferences in the last nine months than I’ve had in eight years. So it’s been kind of nice seeing people in their home environment, being relaxed and the kids running around in the background. It’s definitely been an interesting shift and dynamic as far as doing business.

Question from audience:

How do you think the regulatory side of things affects companies pursuing psychedelics?

Richard: I think Health Canada is showing an incredibly progressive approach in terms of regulating companies and allowing us to do valuable research. There’s been fantastic support from the health minister in Canada, with patients given access to psilocybin therapy when at first it was around palliative care. So I think it’s been fantastic from Health Canada. The FDA in the US to their credit, have given breakthrough therapy status to a number of psychedelic medicines and that’s been taken as a very positive signal to investors. Of course giving breakthrough therapy status doesn’t mean you’re going to easily get a medicine into the market, but It shows that we are working with a regulator who has a good understanding of the medicines that you’re actually looking at trying to develop and bring in to the market.

Cody: Everything that he said I agree with. One of the appeals for an investor is that you’re the first person to the party. When you start to see some of the work that’s being done in the world right now, especially that breakthrough therapy status like Richard was saying, it’s going to rapidly advance across the country in the US at least. And Canada being as progressive as they are, obviously has been leading the way; as long as the data continues to support what is being shown currently, I think it’s going to move very quickly as well and the access to capital is going to increase as the data comes out.

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