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The Collapse of Field Trip Health

“Welcome to the era of psychedelic stocks,” declared Forbes

It was October 2020. A startup called Field Trip Health had just gone public on the Canadian Securities Exchange. The birth of a psychedelics industry was upon us, some said.

These molecules “stand poised to fundamentally revolutionize how we consider mental, emotional and behavioral health,” said Ronan Levy, the co-founder and president of Field Trip.

He may well be right. 

But Field Trip Health, a high-profile upscale chain of ketamine clinics that burned through nearly CA$100 million in investor money before collapsing in March, won’t be leading the way. 

Instead, Field Trip’s story is a cautionary tale. Developing the potential of FDA-approved psychedelic medicines will require time, vast sums of patient capital and the support of regulators, government payors and private insurers so that psychedelic-assisted therapies can be fit into the existing health-care system in the U.S.

So, at least, say insiders at Field Trip, as well those who followed the company’s travails. By most accounts, the company’s leaders were well intentioned, but they tried to grow too quickly and then found themselves overextended as losses mounted. 

“Maybe ketamine therapy is not going to be a big business,” says Elizabeth Wolfson, who was Field Trip’s vice president of clinical services. “Maybe it’s going to be community clinics.”

Dr. Michael Verbora, the medical director at Field Trip, says: “I think we provided really, really good quality care and service. I don’t think we made any money doing it.”

“Maybe we were doing too much too fast,” he added. 

Accomplishment And Dissolution 

In March, Toronto-based Field Trip closed five clinics, laid off most of its staff and sought protection from creditors under Canada’s Companies’ Creditors Arrangement Act, an alternative to bankruptcy that allows a company to operate while seeking to pay its debts, often by selling off assets.

Since then, Field Trip has agreed to sell its clinics in New York, Washington, D.C., and San Carlos, CA., to a company called Stella for $751,770 and to sell clinics in Toronto and Vancouver for $627,900 to the Canadian Centre for Psychedelic Healing, which is based in Thunder Bay, Ontario. Both buyers currently offer ketamine treatments. In May, Field Trip sold its research and cultivation laboratory in Jamaica, which had been growing psilocybin mushrooms, for $350,00 to Jamaican businessman William Mahfood. 

The proceeds will be distributed to creditors, who will get just pennies on the dollar. Field Trip faced “claims or potential claims” of more than $59 million as of Jan. 31, according to an affidavit from Keith Merker, a former Field Trip director who has led the company through the dissolution process. “Field trip is insolvent and in urgent need of relief,” he said in an affidavit to the court.

It’s quite the comedown for a company that once said it expected to own and operate 75 clinics around the world by 2024 and planned to offer MDMA and psilocybin therapy to patients if and when those drugs become legal under federal law.

Neither Levy nor Merker responded to emails requesting comment. Nor did executives at Stella. Ian Ruberry, an executive with the Canadian Centre for Psychedelic Healing, which has acquired the Field Trip brand, said the new owners will expand operations at clinics in Toronto and Vancouver, treat new and existing patients and retain some Field Trip staff. 

Ketamine, once known as the party drug “special k,” has been an FDA-approved anesthetic for decades. The FDA approved a form of ketamine, branded as Spravato, as a treatment for depression in 2019. Physicians now prescribe ketamine for a variety of mental health disorders. Ketamine is not a classic psychedelic, like psilocybin or LSD, but it’s an alternative substance for emerging “psychedelic-assisted therapies” that is legal and widely available.

Former staff at Field Trip praise the company’s work. They say ketamine-assisted therapy provided to patients, some of whom had exhausted all other options, brought relief to many. 

Vicki Reed, who was Field Trip’s chief growth officer, said: “We had very good testimonials from people who went through our program — many, many stories of their positive experiences.”

Andrea Stranges, a marketer at Field Trip, wrote on LinkedIn: ”Working to connect people to life changing mental health treatment has brought me an immeasurable amount of fulfillment.”

In a January podcast, Ronan Levy said that an average Field Trip client “sees their depression and anxiety scores go from severe to mild and those benefits last up to six months….As far as I’m aware, there’s no mental health treatment that comes close offering those kind of results in just four or six sessions.”

Errors and Market Timing

So what went wrong? Plenty. Treatments were costly. Competition was fierce. Getting insurance companies to reimburse patients proved difficult. The Covid pandemic certainly didn’t help, and the company may have taken on more than it could handle–offering free treatments to laid-off workers, producing a podcast, offering yoga, massage therapy and dietary counseling advice at one clinic and trying to sell therapy without any drug treatment at another. 

Field Trip also operated a drug-development division that was spun off into a public company called Reunion Neurosciences that is now at risk of being delisted by the NASDAQ exchange. On June 1, Reunion said it had agreed to be acquired by a Boston-based investment fund called  MPM Bioimpact for $13.1 million. Investors in Reunion will be paid $1.52 a share if the deal goes through; the stock had been priced at 70 cents a share just before the deal was announced but shares had traded for as much as $4 each last year. 

Field Trip may have been ahead of its time, some say. “We might have been five or 10 years too early,” Verbora said.

On Twitter, venture capital investor Greg Kubin of PsyMed Ventures wrote: “The ketamine therapy market is still new. Patients, clinicians, and insurance co’s are still getting educated. There’s demand, but not enough to justify a fully scaled company yet.”

As head of marketing, Vicki Reed found that many potential clients knew nothing at all about ketamine and how it works. “If I have to spend my marketing money on educating, we’re in trouble,” she said. “We didn’t have the time or money to be educators for the industry.”

The biggest deterrent to clients was cost, insiders say. Prices for a series of six in-person ketamine sessions, along with preparation and integration, range from $5,250 to $7,250, depending on the levels of support. 

“In every community there was a ketamine infusion clinic up the street that costs less,” Wolfson says.

The availability of at-home ketamine also undercut Field Trip’s business. Mindbloom offers six at-home ketamine sessions, with support and integration, for $195 per session. Other telehealth startups were even cheaper. Field Trip experimented with at-home programs as well, but they never took off. 

Because most insurance companies won’t pay for ketamine-assisted therapy, Field Trip had little choice but to appeal to well-heeled clients who could pay out of pocket. The company invested in art and design, zero-gravity chairs and noise-canceling headphones, saying that its “spa-like retreats are intentionally designed to evoke feelings of comfort, reducing any stress or anxiety.”

“They built the most beautiful spa-like clinics. That, in itself, is restorative. You walk in there and just breathe. Setting is an important part of the protocol,” says Wolfson. 

But not enough people came through the door. Field Trip went public at a time of peak enthusiasm for psychedelic stocks – a decision Ronan Levy now says he regrets – but as funds ran short, raising additional capital proved difficult.

Other ketamine providers struggled, too. Ketamine Wellness Center abruptly shut down more than a dozen clinics in the U.S. in March. The business has since been sold to a company that provides hormone therapy to men and women. Revitalist Lifestyle and Wellness, which operates 10 clinics, last month failed to make an interest payment on its debt.

The challenges encountered by Field Trip may prefigure the difficulties that other companies could face as they try to commercialize psychedelic medicines. Clinical trials for treatments using psilocybin and MDMA are time-consuming and expensive. Companies who are early in the market could also run out of money. Patients and insurance companies are still learning about these therapies. 

Still, former Field Trip workers say they hope to continue to work with ketamine and psychedelic medicines. As Reed reflects, “This is just a bump in a road that is many years long.”

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