Andy Gordon

How Startups Are Joining the Battle Against Addiction

Many Americans prepared for their July 4th festivities last week. But for thousands of Americans, celebrating was the furthest thing from their minds. Instead, it would be another weekend of coping with opioid addiction.  

As COVID-19 finally shows signs of winding down, America’s other pandemic — the opioid crisis — continues to play out in hospitals, rehab centers and courts. In fact, the pandemic made the opioid crisis worse. There were more than 81,000 drug overdose deaths in the U.S. from May 2019 to May 2020 — the highest number of overdose deaths ever recorded in a 12-month period, according to the CDC.

Last week, Johnson & Johnson settled on a $230 million payment with New York State for its contribution to the opioid epidemic. It also agreed to stop distributing its opioid drugs anywhere in the U.S. But progress on the judicial front does little to help those who are already suffering from addiction. 

Startups to the Rescue

The good news is that startups are stepping into the breach with a wide range of solutions that include therapy, community support and telehealth. A Crunchbase survey found that venture-backed companies focused on addiction treatments and service offerings have raised more than $1 billion in funding over the past few years.

Crunchbase identified 21 startups in the addiction space that have raised money in the past couple of years. And most conducted raises in the seed or early stages, with a focus on telehealth solutions that are more accessible and less expensive than traditional treatments. 

Some of these companies offer treatments for multiple categories of addiction. Others focus on one area, such as opioids. Groups Recover Together and Bicycle Health are two telehealth-focused providers of medication-assisted treatment for opioid addiction. 

But my favorite is Phoenix PharmaLabs, a startup developing an entirely new kind of opioid drug. (I introduced Phoenix PharmaLabs to First Stage Investor subscribers back in January 2019. If you’re not already a member of First Stage Investor and you’d like to learn about exciting startups like this on a regular basis, click here to sign up.) 

Phoenix PharmaLabs’ opioid drugs are non-addictive. They only partially stimulate the brain’s Mu receptor (the type of nerves that opioids target to reduce pain). Aggressive stimulation of the Mu receptor causes euphoria and leads to addiction. Partial stimulation avoids those side effects.

Pre-clinical tests show Phoenix PharmaLabs’ opioids don’t cause euphoria, withdrawal or dependence. And its drugs are up to 100 times more powerful than morphine in dulling pain. 

The tests show that Phoenix PharmaLabs’ opioids work on animals, but it will take another three-to-four years to test on humans. But the company’s early progress is excellent. The drug has passed multiple safety and efficacy tests with flying colors. And the considerable amount of opioid testing data on animals and humans shows opioids have similar effects on both. 

The technology is very promising and could represent a huge breakthrough in treating both pain and opioid addiction.

Reason for Hope

Phoenix PharmaLabs’ drug is just one of many promising technologies now being applied to the addiction space. Another up-and-coming technology is psychedelics-based treatments. Berlin-based Atai Life Sciences is researching psychedelics-based treatments for opioid addiction, among other ailments. It went public in mid-June, securing a market capitalization around $2.3 billion. 

New York-based MindMed is another psychedelic biotech company developing therapies to address addiction. It recently began trading on the Nasdaq at a valuation around $800 million.

This is what startups do — address our most stubborn and damaging problems with new ideas and innovative technology. They don’t always work. But when they do, both the country and the investors who back these companies benefit. 

Addiction remains a widespread problem in America. The battle is far from won. But the fact that more and more startups are attacking the problem gives us hope — and reason beyond hope — to believe the tide is turning in our favor.