Exploring the Psychedelics Landscape: Looking Ahead to Funding in 2024 (L.E.K. Consulting)

Summary

• The psychedelics sector attracted almost $500 million in investments in 2023, showing resilience relative to 2020 and 2022 levels.p.1
• Between 2020 and 2022, record investments into the psychedelics sector exceeded a total of $2.5 billion.p.2
• Compass Pathways completed a $285 million private placement led by TCGX and Aisling Capital to extend its cash runway into late 2025.p.2
• Otsuka completed a $59 million acquisition of Mindset, marking the largest inorganic pharma deal in psychedelics research to date.p.3
• Lykos Therapeutics raised $100 million following positive Phase 3 trial results and an NDA submission to the US FDA for MDMA-assisted therapy.p.4
• Investment activity in January 2024 reached $162 million, exceeding the total January investments of the four preceding years combined.p.4

Key insights

1. Psychedelics funding in 2023 totaled $509m, remaining stable compared to $555m in 2022 despite broader biotech market headwinds.p.1
2. Drug development accounted for the vast majority of investment in 2023, representing 92% of all capital allocated in the sector.p.1
3. Private rounds exceeding $50 million were predominantly driven by crossover funds and venture capital firms.p.2
4. Otsuka became the first pharmaceutical company to acquire a psychedelics research programme inorganically via its $59 million acquisition of Mindset.p.3
5. Academic research received non-profit funding including a $16 million Harvard endowment and $10 million appropriated by the US Congress.p.3
6. Venture funding shifted toward later-stage clinical development, resulting in fewer and smaller early-stage Series A rounds in 2023.p.3
7. Atai Life Sciences expanded its footprint by making a $50 million strategic investment in UK-based Beckley Psytech.p.4
8. January 2024 capital deployment reached $162 million, signaling strong momentum and potential acceleration in 2024 dealmaking.p.4