Noetic Launches Second Fund to Invest in Emergent Psychedelic Medicine Sector

Noetic launched their second fund with the goal of raising at least $200 million to invest in psychedelic startups.

The “Noetic Funds,” founded by the team at Grey House Partners GP Inc., has announced the launch of Noetic Fund II LP (“Fund II”), a venture capital fund that is seeking to raise a minimum of $200mm to invest in early-stage psychedelic and Central Nervous System focused companies addressing global ailments such as mental health conditions, substance use disorders and distinct inflammatory-related ailments. The team will build on its investment thesis validated in Noetic Psychedelic Fund LP (“Fund I”), which has provided exceptional returns to date.

Noetic was founded by veteran investors who have the professional experience, background, and deep network required to navigate the emergent psychedelic sector at a time of immense growth. The team at Noetic combines passion, purpose and pedigree to support the development of innovative and sustainable products and services that utilize technological innovation and the cutting edge research in psychedelic medicines to help define a healthy future for people and our planet.

This announcement comes amid a surge of interest in psychedelic medicine, with world-leading institutions such as Johns Hopkins and Imperial College London being joined by Mount Sinai, NYU Langone, Sheppard Pratt, and UC Berkeley; all of which have founded centres dedicated to the study of psychedelics. Regulators are increasingly attentive to mounting efficacy data, with Health Canada granting Section 56 exemptions allowing access to psilocybin-assisted therapy for a number of cohorts, and the FDA awarding both psilocybin- and MDMA-assisted psychotherapy Breakthrough Therapy Designations.

“There is a clinical trial nearing Phase III completion, a dozen or so in Phase II, and a whole host of Phase I trials and preclinical work from leading institutions across the globe. These trials continue to show profound efficacy rates coupled with impressive safety profiles. Given the escalating magnitude of the mental health crisis, the need to address this epidemic has never been as accentuated. We strongly believe that the growth potential within this industry is of staggering proportions and we are extremely well-positioned to back the right parties and play a supporting role,” said Sa’ad Shah, a Managing Partner of Noetic.

At the time of Fund I’s inception in February 2020, there were no public companies operating in the psychedelic space. Since then a host of companies have emerged, with COMPASS Pathways becoming the first billion-dollar psychedelics company shortly after its listing on the NASDAQ. However, the current level of investment is not commensurate with that required to steward lead candidates through the clinical trials process, and to develop the sector in a sustainable manner.

“The renaissance in psychedelic-based medicines and their related therapeutic technologies is only just beginning, and given the nascency of the industry, most opportunities remain under-researched and under-capitalized in the private domain. This offers fertile ground for the Noetic Fund II LP to take a strategic position with the industry’s early leaders in drug discovery and development and realize industry-leading returns over time,” said Warren Wright, a Managing Partner of Noetic.

Noetic is committed to nurturing companies with a long-term focus-such as those committed to drug development-who operate in accordance with established regulatory pathways. Fund II will invest in a diverse range of companies, from those focused on the discovery and development of new chemical entities through to wearable devices, digital diagnostics and adjunct technologies.

Fund I, which closed to new investors in December 2020, made approximately 20 investments in companies such as COMPASS Pathways, MindMed, Apollo Neuroscience, Eleusis, Beckley Psytech, Tactogen, Gilgamesh and Bexson Biomedical to name a few. Five companies in Fund I’s portfolio have since gone public.

Noetic is led by Michael Franks, Sa’ad Shah and Warren Wright, who have significant experience as venture capitalists, hedge fund managers, and operators. This capital markets acumen is coupled with a vast network within the psychedelic medicine and wellbeing sectors, which provides access to significant deal flow.

A team of in-house research associates and venture partners provide the deep domain expertise required to appraise investment opportunities in this nascent sector. The team possesses expertise in fields such as biotech, drug discovery, pharmacology, neuroscience, intellectual property and regulatory pathways, learned through study and research at renowned institutions such as University of Oxford, the Max Planck Institute, LSE, Harvard, Princeton, Columbia and Yale. This will allow the Fund to assess opportunities efficiently yet robustly, in their endeavour to build a similarly orthogonal portfolio as in Fund I.