Britain’s burgeoning psychedelic healthcare ecosystem includes leading research institutions, drug developers and clinical operations, with ancillary organisations providing essential financial and regulatory support.
Hill Dickinson, with offices in the UK and across the world, provides legal advice to companies contributing to the future of psychedelic medicine in Europe. This includes protecting intellectual property, navigating various regulatory processes and raising capital through public listing and private investment rounds.
The law firm has worked with several NHS bodies and over 100 healthcare clients, guiding Psych Capital through its public listing on the AQSE market – making it the first psychedelic healthcare company to complete a public listing in London.
Psychedelic healthcare companies have raised over US$2bn, and the firm’s Legal Director Jack Delaney specialises in supporting businesses through IPOs, mergers and acquisitions. PSYCH spoke with Delaney on increased interest in psychedelic healthcare following the sold-out PSYCH Symposium.
‘Many of us at some stage will be affected by mental health issues, and psychedelic medicines may prove effective where current treatments yield unsatisfactory results,’ commented Delaney.
‘UN conventions and legal frameworks have stigmatised psychedelic research since the 1960s, which is why we are only now beginning to understand the therapeutic potential of compounds such as MDMA, psilocybin and LSD.
‘With over 50 clinical trials in progress and many later-stage studies yielding encouraging results, there is cautious optimism that psychedelic medicines may be effective in the treatment of a variety of health conditions. This potential has ignited interest from the investment community, which wants to support the development of these drugs from an early stage.’
Public companies are listed in North America, under the regulation of the U.S. Securities and Exchange Commission (SEC) – a federal government agency. The UK’s equivalent, the Financial Conduct Authority (FCA), operates independently of the government. PSYCH asked Delaney if this made a difference for companies in psychedelic healthcare.
‘At present, no company in psychedelic healthcare has undertaken a direct listing on the FCA’s Main Market. In stark contrast, North America’s markets such as the NEO, Toronto Stock Exchange and Nasdaq have enabled a number of growing businesses to conclude a listing.’
‘As North America has successfully established a regulatory environment hospitable to psychedelic medicines, we expect to see an increase in companies listing in North America alongside those potentially seeking to dual list in the United Kingdom.
‘The London Stock Exchange remains one of the most revered exchanges worldwide. It has a hub of institutions able to support companies in their listing and provides investor protection through high standards of corporate governance.
‘The FCA has been slow off the mark to approve the listing of companies from emerging sectors like medical psychedelics. The FCA is concerned first and foremost with investor risks, considering business activities deal with compounds that remain Class A drugs. However, last year Lord Hill led a review of the UK listing regime, following a request from former Chancellor Rishi Sunak.
‘The primary aim is to ensure that the London Stock Exchange’s Main Market remains competitive with global exchanges, which is particularly pressing given the impact of COVID and rising inflation. We suspect that over the coming years the Main Market will become more dynamic and, consequently, better able to assist companies within new sectors.’
With companies looking to attract capital through public listings, PSYCH was keen to learn about the motivations behind the sector’s wave of IPOs, and whether going public was always the best option.
‘Investors who have supported companies through initial fundraising rounds will be keen to secure an event which provides shareholders with greater liquidity,’ stated Delaney. Furthermore, companies in psychedelic healthcare are likely to require significant capital investment to reach the later stages of drug development.
‘A public listing provides businesses with a greater public presence, so they are better able to communicate with a wider audience of investors. Companies can also sell shares to finance acquisitions and investments that achieve their aims quicker.
‘Listing might not necessarily be the best option for a company, given the stage of its development or the objectives that it is pursuing. Remaining private may enable a company to operate in a more dynamic way without giving up significant equity, if it has strong support from its existing shareholder base.
‘It is important before taking a significant step towards undertaking a public listing to weigh up the various options, and to take advice from advisers who are able to support the company.’
In the face of the market downturn, Delaney remained tentatively optimistic regarding continued activity and investment in the sector.
‘It has been a troubling time for capital markets, as inflation and growing interest rates cause investors to be more cautious,’ he said.
‘Despite this, we still expect psychedelic healthcare companies will look to public markets to build both capital and profile. I believe the growing body of research that demonstrates the value of psychedelic medicines will continue to support investor confidence and the sector’s success in the long term.’
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