Filament Health targets substance use disorders with natural psychedelics

Filament Health Corp (OTCQB:FLHLF)‘s diversified business model makes it one of the only psychedelics companies to be already generating revenue.  

The Vancouver, British Columbia-based clinical-stage drug development company is focused first and foremost on developing drug candidates made from natural psychedelics for substance use disorders with significant unmet medical need.  

However, it is already generating revenue by licensing its drug candidates to other biotechnology companies for their research programs in other mental health indications, which contributed $400,000 in revenue from licensing milestone payments for the company in 2022.  

“We can’t attack every indication on our own, so it makes sense to partner up on these indications where we are not going to have a near-term focus,” Filament Health co-founder and CEO Ben Lightburn told Proactive.  

Filament Health receives milestone payments from its licence partners as they progress their research, typically a specific fee for carrying out a Phase 2 or Phase 3 trial, when they apply for marketing authorization, regulatory approval and so on.  

Most importantly, as highlighted by Lightburn, Filament Health will be paid a royalty on its partners’ future commercial sales.  

“It takes hundreds of millions of dollars to develop a drug for a given indication. If we licence our drug to a third party, they incur that cost, but we still get a share of the revenue for their approved drug,” he said.  

The company has been able to command a relatively high royalty rate on the strength of its intellectual property (IP) portfolio, Lightburn noted.  

To date, Filament Health has announced commercial licensing agreements for its natural psilocybin drug candidate with Psyence Group for palliative care and NeoLumina Bioscience for eating disorders.  

It has also entered into many non-commercial agreements, including with Cybin Inc. (NYSE-A:CYBN, NEO:CYBN) for depression; EntheoTech Bioscience for opioid tapering, chronic pain and depression; and a contract development and manufacturing agreement for MDMA capsules with PharmAla Biotech (CSE:MDMA). 

Additionally, Filament Health provides its drugs on a low or no-cost basis to qualified academic researchers at esteemed institutions, including the University of Toronto, Brugmann University Hospital, the University of California Los Angeles, and the University of Washington.  

Psilocybin for substance use disorder research 

Filament Health’s in-house research is focused on substance use disorders, such as stimulant use disorder and opioid use disorder.  

Lightburn told Proactive that Filament Health had chosen these indications because the company was drawn to the large unmet need due to the lack of treatments for these indications.  

He said that the company was building on exciting early research about the effectiveness of psychedelics in treating other addiction-related disorders alcohol use disorder and smoking cessation, in addition to anecdotal reports from drug users who self-medicated with psychedelics to help with an addiction to stimulants or opiates.  

Filament Health, in partnership with the University of California San Francisco (UCSF) Translational Psychedelic Research Program (TrPR) is currently carrying out a Phase 1 trial administering the company’s botanical psilocybin drug candidate.  

Interim safety results released in May showed the drug candidates to be well-tolerated.  

A Phase 2 trial for methamphetamine use disorder, also in partnership with UCSF TrPR, was approved by the Food and Drug Administration in March 2023.  

A leader in naturally derived psychedelics

Filament Health works with natural psychedelics derived from mushrooms and other plant-based sources rather than synthetic forms.  

“While there is nothing inherently wrong with synthetic psilocybin and other substances, we know that there would be a number of advantages to doing things naturally, especially if we were the first to do things naturally,” Lightburn told Proactive.  

He highlighted the potential entourage effect of psychoactive compounds that may occur in plants that does not exist with synthetics, the differing impurity profile, lower manufacturing costs, and consumer preference for natural products as among the advantages of natural psychedelics.  

“We knew if we were the first ones to develop pharmaceutical-grade naturally derived psychedelics, we would likely have the opportunity to claim a lot of valuable IP,” he said.  

“The drugs that we manufacture do contain all the secondary metabolites from the raw psychedelics species, so that’s one thing that makes it very unique.”  

Lightburn said that Filament Health has acquired more than 20 patents covering various methods of manufacturing, extraction, purification, standardization, and the compositions of matter for different human-deliverable forms. It also has 47 patents pending worldwide.  

He noted that patents for manufacturing methods for psychedelics, including extraction, purification, and standardization, were significant because there were only a finite number of ways to do this with natural psychedelics as opposed to synthetic forms and methods, where this is unlimited.  

The company started out with psilocybin-containing magic mushrooms grown under Good Manufacturing Practice (GMP) conditions but is now also working with other substances such as mescaline and ibogaine which have shown academic and anecdotal promise in treating mental health conditions.  

Filament Health only works with psychedelic compounds that can be sourced sustainably and equitably, Lightburn noted.  

In May, the company received the first-ever Nagoya Protocol-compliant shipment of iboga from Gabon to its Vancouver research and development facility to be analyzed and transformed into alkaloid iboga extract.  

The Nagoya Protocol is an international agreement that governs the sustainable and equitable use of physical and cultural resources.  

Additionally, the company sources its mescaline from the San Pedro cactus, which is widely available for purchase throughout the Americas, unlike another mescaline-producing cactus peyote which is endangered due to overharvesting.  

“We’re just scratching the surface,” Lightburn said of the company’s research efforts, noting that there are dozens of natural psychedelic species out there that are under-researched.  

Supporting special access schemes 

Also setting Filament Health aside from its psychedelic peers is the fact that it has chosen to supply its drug candidates to early access schemes that provide these yet-to-be-approved substances to patients.  

The company is the primary supplier of Canada’s Special Access Program (SAP), which in 2022 was amended to allow health practitioners to request access to psilocybin and MDMA for patients with a serious or life-threatening condition for whom approved therapies have been ineffective.  

Filament Health provides its psilocybin drug candidate to SAP patients at no cost and it has been authorized to do so more than 130 times.  

“It’s interesting and gratifying because it gives us insights into how these drugs work in patients in the real world, outside of a clinical trial. That’s an experience that very, very few companies get,” Lightburn said.  

The company is poised to be a leading supplier of a similar program in Australia approved this year by the nation’s health regulator the Therapeutic Goods Administration called the Authorized Prescriber Scheme.  

“We are in the process of having our products imported into Australia for eventual distribution under the Authorized Prescriber Scheme there,” Lightburn said.  

The company has also been in discussions with the United States Food and Drug Administration regarding being a supplier of its Expanded Access program.  

Nasdaq uplisting on the horizon  

Filament Health is targeting uplisting to the Nasdaq later in 2023 through a proposed business combination with US-listed special purpose acquisition company Jupiter Acquisition.  

The business combination values Filament Health at US$176 million in equity value or US$0.85 per share of the company, with a pro forma enterprise valuation of US$210 million.  

Lightburn said market interest in the psychedelics sector appeared to be returning after investor pullback following a pandemic-induced spike in 2020.  

He pointed to successful fundraising rounds and increased mergers and acquisitions (M&A) activity in the space, such as Cybin’s takeover of Small Pharma and Otsuka Pharmaceutical’s acquisition of Mindset Pharma Inc (CSE:MSET, OTCQB:MSSTF), in addition to Filament Health’s own combination with Jupiter Acquisition.  

He described Big Pharma’s interest in psychedelics as a “validating moment” for the sector.  

“We are experiencing the early signs of a bit of a rebound, and if that’s the case it could be a very exciting time to get into the industry and try to pick some winners,” Lightburn concluded.