Morgan Stanley’s Counterpoint Global team, a collective of investors and researchers, has turned its focus to the potential of psychedelics. This group, operating under Morgan Stanley Investment Management, is dedicated to identifying disruptive and emerging fields for long-term investments. Comprising 30 investors and over half a dozen subject matter experts, the team concentrates on themes such as disruptive change, consilience, and sustainability. In a recent four-page viewpoint piece, the team delved into the history and potential future of psychedelic research.
The authors highlighted the resurgence of interest in this field, noting that a “second wave of psychedelic research is underway.” This renewed interest, backed by promising academic studies, has given credibility to the use of psychedelics as medicine.
The team believes that psychedelic therapy could revolutionize the treatment of not only mental illness but also a range of other conditions. They suggest that several psychedelic compounds stand a good chance of receiving FDA approval. The potential applications extend beyond PTSD and depression to include ADHD, addiction, anxiety, and chronic pain. The authors underscore the disruptive potential of psychedelics, pointing out that no truly innovative psychiatric drug treatments have been introduced since Prozac in the 1980s.
Unlike SSRIs, which merely alleviate or mask symptoms of depression and require chronic use, psychedelic-assisted therapy could fundamentally alter a patient’s outlook in just a few sessions. The team also sees potential for psychedelic therapies to be used when SSRIs fail, given that SSRIs only help about 25% of patients who take them. They even suggest that psychedelics could treat any disease where the formation of new neural pathways might enhance function. However, the path to widespread adoption of psychedelic therapies is not without obstacles.
The first hurdle is obtaining FDA approval, followed by the challenges of building infrastructure and clinician support. The authors also identify decriminalization efforts as a potential issue, as they could infringe on the medical market. Another challenge is overcoming the negative perception of psychedelics, fueled by years of adverse press and their classification as Schedule 1 drugs. However, the authors note that the narrative is changing, with increasing interest in and openness to psychedelics as medicine, driven by changing media narratives and growing evidence of their benefits. On the commercial side, the authors highlight the difficulty of differentiating between treatments and the challenges of patenting these drugs.
They also note that reimbursement will be crucial for ensuring the scalability of this disruptive treatment model. Despite a few minor issues and broad generalizations, the analysis provides a comprehensive overview of the potential of psychedelics. The report from Morgan Stanley’s disruption forecasting team is decidedly optimistic, perhaps even overly so, about the future of psychedelic therapies.
