XPhyto: Innovating a Therapeutic Psychedelic Drug Pipeline

June 1st , 2021

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Marc Davis

It’s been dubbed the Age of Anxiety. Yet it’s quickly becoming far worse than that.  

With the arrival of globalism, the new millennium has already become synonymous with the threat of deadly pandemics. And the onslaught of the worst of them so far, COVID-19, has set everyone’s nerves on edge – at the very least. 

At worst, tens of millions of Americans and Europeans have been shown in recent government surveys to be suffering from chronic anxiety, depression, and even despair.  

Yet, throughout history, humanity has always risen to the challenge when we are faced with an existential crisis. Which is why mainstream modern medicine, as well as Wall Street, are betting that psychedelic drugs are about to revolutionize the global US $70 billion mental health care market. 

What makes this new class of medical drugs so disruptive is their ability to modulate brain plasticity by essentially re-wiring those neurons in the human brain that are malfunctioning. This breakthrough has shown considerable promise in the treatment of other massive health care market segments, such as treating chronic pain, opioid dependence, and even addictions to alcohol and cigarettes.

This extraordinary development in the treatment of mental health disorders is also an opportunity for a small vanguard of enterprising, nimble-footed biotech innovators to synthesize novel new psychedelic drugs. And on an expedited timeline, thanks to the US government. (More on this in a moment.)

Among the leading contenders in the race to pioneer new blockbuster psychiatric drugs is Vancouver-headquartered XPhyto Therapeutics Corp. (CSE: XPHY) (FSE: 4XT), (US OTC: XPHYF) which is a small opportunity-driven life sciences accelerator that operates a range of R&D projects in both Canada and Germany.

Fortunately, XPhyto’s recent foray into the psychedelics space is proving to be a smart move that clearly plays to the company’s core competencies. Especially as its proven operational strengths in Germany in developing novel plant-based drug formulations. 

Hence, this company is able to hit the ground running with its entry into the frontier scientific realm of psychedelic pharmacology. XPhyto’s near-term focus entails the formulation of psychedelic compounds – such as psilocybinderived from “magic mushrooms” and mescaline derived from peyote and other cactus species – into mood-improving and therapeutic pharmaceutical drugs. In particular, its expertise in using sublingual and transdermal therapeutics to deliver precise dosing of very dose-specific drugs, like fentanyl, will prove invaluable in this opportunity-driven undertaking.


Leading the Way with German Pharmaceutical Expertise 


XPhyto’s psychedelic research is led by Professor Raimar Löbenberg. Although he developed his professional expertise in Germany, he is now one of the few medical scientists working in North America who has the necessary government-level clearance to develop experimental pharmaceutical psychedelic drugs in a leading university laboratory. His Health Canada licences for research and analytical testing allow him to work with LSD, psilocybin,MDMA, and other psychotropic molecules.

Professor Löbenberg explains, "Our initial focus is to develop standardized drug formulations with precise, predictable and efficient delivery of their active pharmaceutical ingredients for clinical study and therapeutic use. We see a lot of potential therapeutic value in psychedelic compounds for their ability to positively influence neural networks through growth and reorganization." 

As a founder and director of the Drug Development and Innovation Centre at the University of Alberta and the former president of the Canadian Society for Pharmaceutical Sciences, Professor Löbenberg is a hard-nosed scientist with many years of expertise in pharmacology. 

In addition to Dr. Löbenberg’s laboratory, team and drug development expertise, one of the company’s German subsidiaries – Vektor Pharma TF GmbH – has globally recognized drug delivery technology and manufacturing capabilities. In particular, Vektor specializes in the use of proprietary oral/transmucosal strips to optimize the uptake of orally administered drugs.  

It is well worth noting that most drugs that are delivered via this method are shown to have especially high bioavailability. They also provide a faster onset and more predictable level of efficacy because the drug does not need to be metabolized via the liver. Keep in mind that dosage-control will be vital to the judicious administration of such powerfully potent drugs as psychedelics, Professor Löbenberg adds.


He adds, “XPhyto intends to first produce psychedelic active pharmaceutical ingredients, which can then be incorporated into our novel sublingual and transdermal delivery systems. This is our competitive advantage, from production of API to drug formulation to clinical validation.”

In this regard, XPhyto is doing pre-clinical laboratory work with a focus on the following psychotropic compounds: psilocybin, mescaline, LSD, MDMA and DMT.

All of these mind-expanding compounds are known to modulate neurotransmitters such as serotonin and dopamine, which regulate cognition, perception and mood. This makes them well suited to treating a variety of mental conditions, which also include post traumatic stress disorder (PTSD), according to several early-stage clinical trials. 

Why Society So Desperately Needs Psychedelics

There have been few meaningful advances in the development of psychiatric drugs since the late 1980s. This was when selective serotonin reuptake inhibitors (SSRIs) – the health care industry’s go-to antidepressant of choice – were first commercialized.

Yet antidepressants fail to help up to 30% of those prescribed. And they can be highly addictive among people who do find them therapeutic. So, according to many mental health experts, the arrival of a new paradigm in breakthrough psychiatric drugs is long overdue. 

Nonetheless, annual sales of antidepressant drugs keep surging higher every year. They currently total more than US $14 billion, according to a study by Allied Market Research. Other estimates range as high as US $50 billion worldwide. 

In total, anxiety disorders and/or persistent depression affect up to 25% of the population in Europe, and a similar percentage of people in the USA. That’s 250 million people combined. The majority of them merely experience chronic anxiety. Yet they are commonly treated with anti-depressants due to a scarcity of effective medicine to treat people with frayed nerves. 

As to whether psychedelics represent a prospectively better alternative, the public perception has always been that any therapeutic value they may have is outweighed by the dangers that they supposedly pose. This comes in the wake of anecdotal stories of hippies “frying their brains” with large amounts of psychedelic drugs that were consumed for recreational purposes in the 60s. 

However, 21stcentury observational studies conducted by healthcare professionals in controlled environments have consistently shown that participants have reported few or no negative side effects. Studies also show that psychedelics have low potential for abuse or dependence. 

According to drug-harm experts, the psilocybinin magic mushrooms, mescaline in certain cactus, as well as the synthesized compounds in LSD and MDMA, rank among the least harmful drugs when factoring-in damage to health, drug dependency, economic harm, and the societal cost of crime.

Then there is a whole array of other anti-psychotic medications that might one day be replaced by psychedelics. As previously mentioned, the mental health market is worth an estimated $70 billion a year globally, according to Bloomberg. Psychedelics stand to earn a sizeable share of this enormous market.

Wall Street Bankrolls the Mainstreaming of Psychedelic Medicine 

Inlate 2018, the FDA gave “breakthrough therapy” status to a psilocybin treatment that is being innovated by London-based Compass Pathways for debilitating, treatment-resistant depression – which affects an estimated 100 million-plus people worldwide. 

This special designation affords Compass Pathways – the high-flying flagbearer among publicly-traded psychedelic companies – an expedited regulatory route to market. 

Now a small vanguard of psychedelic drug start-ups and other life sciences companies are vying to pursue an accelerated regulatory timeline to market –assuming that they are each able to develop psychedelic drugs that demonstrate evidence-based efficacy. 


At least three dozen of them are venture capital-backed start-ups that have also achieved public listings in Canada and the US. In particular, most are focussed on innovating the next generation of blockbuster drugs to more effectively treat psychiatric illness and other mental health issues, especially chronic depression. 

Accordingly, Compass Pathways has become a hot commodity. And it has seen its market capitalization soar over one billion US dollars, making it the industry’s first unicorn company. This follows its listing on NASDAQ in September of last year –a stunning achievement that shows that Wall Street views this fast-emerging new industry as a multi-billion-dollar opportunity. Its backers include billionaire investor and PayPal co-founder, Peter Thiel.

Truth be told, it is largely thanks to the FDA’s remarkable move to encourage psychedelic drug R&D that Wall Street is abuzz with high expectations. Several hundred million dollars have been raised in the last two years alone to float new start-ups in this hot new niche in the biotech sector.  

Leading the pack among North America’s start-ups is MindMed Inc. It has already conducted Phase One clinical trials for using LSD to treat anxiety disorders. XPhyto Therapeutics is not far behind thanks to its expertise in innovating novel drug formulations. The company envisions its own clinical trials getting underway later this year. 

Disrupting Mood Drugs: A New Multi-Billion Dollar Market   

The market intelligence firm, Data Bridge Market Research, forecasts the psychedelic pharmaceuticals market could grow to almost US $7 billion by 2027 from almost a standing start. Meanwhile, a prominent Canadian investment bank, Canaccord Genuity, estimates that this nascent industry could eventually be worth US $100 billon.

Not surprisingly, Big Pharma is already beginning to get serious about this new frontier of medical science. After all, the industry has made massive profits from the sale of SSRIs while also becoming increasingly sensitive to the dangerous drawbacks of these controversial drugs. 

Hence, an opportunity to help launch a new generation of more effective, yet less problematic mental health drugs must seem very appealing. Which is why Big Pharma will be keenly watching the progress of these biotech innovators in psychedelic medicine with a view to acquiring the best of the bunch for big-dollar sums. 

In summary, psychedelic drugs have at last shrugged off the stigma of the hedonistic 1960s and are finally coming of age as a highly disruptive form of medical therapy. Besides a diversity of mental health ailments already mentioned, psychedelics are proving in observational trials to be especially effective at treating drug and alcohol addictions, too. 

Additionally, they are even being developed to treat chronic pain and to help cigarette smokers quit for good. All of this means that up to two billion people may eventually benefit from access to these non-addictive, non-toxic new drugs.  

Accordingly, industry frontrunners like Compass Pathways, MindMed and XPhyto Therapeutics enjoy an early-mover advantage that promises to make them rising stars within this science-driven psychedelic renaissance. 

ABOUT THE AUTHOR: Marc Davis has a deep background in the capital markets spanning 30 years, having mostly worked as an analyst and stock market commentator. He is also a longstanding financial journalist. Over the years, his articles have appeared in dozens of digital publications worldwide. They include USA Today, CBS Money Watch, The Times (UK), Investors’ Business Daily, the Financial Post, Reuters, National Post, Google News, Barron’s, China Daily, Huffington Post, AOL, City A.M. (London), Bloomberg, WallStreetOnline.de (Germany) and the Independent (UK). He has also appeared in business interviews on the BBC, CBC, and SKY TV. An enthusiastic shareholder of XPhyto Therapeutics, his opinions are therefore biased and should not be relied upon for making investment decisions.