The Escalating Mental Health Crisis: A Disturbing Reality



Ailsa Craig
Portfolio Manager
Marek Poszepczynski
Portfolio Manager

As we reflect on Mental Health Day, which took place earlier this month, it is imperative to address the growing challenges posed by the mental health crisis, which has become an increasingly concerning reality in recent years. Data from the Centers of Disease Control (CDC) paints a stark picture of the current state of mental health in the US.[1]

The CDC reports a staggering 33% surge in depression rates since 2019, afflicting over 22 million adults. Simultaneously, anxiety disorders have experienced a parallel increase, with more than 40 million Americans grappling with various forms of anxiety.

The crisis extends to young people, with the CDC reporting that 1 in 3 adolescents has endured prolonged feelings of sadness and hopelessness. This alarming statistic underscores the urgent need for early intervention and robust support systems.

The US is not alone in experiencing this unprecedented rise in mental health conditions. According to the Office of National Statistics, 10% of UK adults showed moderate to severe symptoms of depression prior to the pandemic, whereas the latest data from October 2022 shows a notable increase to 16%. Among young people (16-29 years old) in the UK, the proportion with moderate to severe depressive symptoms is 35% in young females and over 20% in young males.[2]

The COVID-19 pandemic has unquestionably exacerbated these issues, with isolation, economic instability, and the fear of illness compounding the stressors on individuals and families. Additionally, substance abuse disorders have surged, contributing to the mounting crisis.

As a result, the strain on healthcare systems due to the mental health crisis is significant, and the calls for comprehensive, accessible mental health services are growing ever louder. One of the tools psychiatrists have in their toolbox is medication. However, existing therapies have their limitations and side effects, making this area of the market a clear unmet medical need.

Treatment-Resistant Depression

In the quest to alleviate the burden of depression and related mental health disorders, a range of antidepressant medications is available. However, each comes with its own set of considerations.

Selective Serotonin Reuptake Inhibitors (SSRIs), also referred to as “happy pills” like Prozac and Zoloft, are the most commonly prescribed antidepressants. They work by increasing serotonin levels in the brain. While effective for many, they may have side effects such as weight gain and sexual dysfunction. Moreover, these drugs can take many weeks to show an effect on symptoms.

Serotonin-Norepinephrine Reuptake Inhibitors (SNRIs) such as Cymbalta and Effexor target both serotonin and norepinephrine. They tend to be more effective for severe depression but also take time to take effect and can lead to side effects, including elevated blood pressure.

Choosing the right antidepressant can be challenging, as individual responses vary. Sadly, for many patients suffering from depression, these treatment options either prove ineffective or lose their efficacy over time. In such cases, the condition is classified as “treatment-resistant depression” (TRD).

Many companies are striving to tackle this by exploring innovative treatments. These include new approaches such as Psilocybin and Ketamine-based therapies. Both have demonstrated remarkable potential in providing rapid and transformative relief for some TRD patients. However, challenges related to the method of administering these treatments may impact their widespread uptake.

For instance, Johnson and Johnson’s Spravato is an intranasal esketamine approved in 2019 for TRD. However, the drug requires doctor supervision over at least two hours post-treatment, and due to these logistical hurdles, uptake has been underwhelming.

Compass Pathways has faced similar challenges despite reporting remarkable efficacy in a 233 patient earlier stage trial of its psilocybin therapy COMP360. One dose of the treatment achieved remission in 30% of patients within just three weeks. Notably, this rapid and sustained response lasted for up to twelve weeks. Despite the promising outcomes, the drug faces logistical challenges due to the need for the patient to remain in a controlled environment for six to eight hours after administration, coupled with the requirement for ongoing psychological support. Data from the current phase 3 trials are expected to read out next year.

Bipolar Disorder

Bipolar disorder is also on the rise in the US, affecting an estimated 2.8% of adults annually, as per the National Institute of Mental Health. Similar rates are observed in other countries, with 2% of the UK population also screening positive for the disorder.[3] This condition, characterised by extreme mood swings between mania and depression, poses significant challenges.

Managing bipolar disorder involves a multifaceted approach, combining psychotherapy and medication. Mood stabilisers like lithium, antipsychotic medications, and antidepressants are commonly prescribed to manage symptoms. Psychotherapy, particularly cognitive-behavioural therapy (CBT), aids in coping strategies and stress management.

Meanwhile, exciting developments are underway in the field of bipolar disorder treatment. In 2021, the FDA approved Intra-Cellular Therapies’ lumateperone (Caplyta) for the treatment of depressive episodes associated with bipolar I and II disorders in adults, either as a standalone therapy or an add-on treatment to lithium or valproate. The drug stands out as the only FDA-approved treatment for patients with bipolar I and II, offering the advantage of avoiding side effects commonly associated with other treatments, such as weight gain and movement disturbances.


Schizophrenia's prevalence is on the ascent, affecting approximately 1% of the population in the US and 0.7% in the UK.[4] As this complex mental illness becomes more prevalent, ongoing research and development in treatment options are imperative.

Managing schizophrenia entails a comprehensive approach. Commonly prescribed antipsychotic medications target symptoms such as hallucinations and delusions, while psychosocial interventions, including therapy and support services, help individuals cope and function effectively. However, it is worth noting that these medications often lead to weight gain or movement disorders, which directly impact patient compliance. Poor compliance can have a significant impact on quality of life for both patients and their caregivers.

However, cutting-edge research from companies aims to address these issues. For instance, Karuna's investigational drug, KarXT, aims to provide relief from psychosis without the typical side effects through a new mechanism of action that controls acetylcholine release into the brain.

Cerevel is taking a similar approach, using a similar novel mechanism of action to address the symptoms of schizophrenia while minimising the undesirable side effects. The company is roughly two years behind Karuna in the development process.

After a long period of few revolutionary new treatments in the field of mental health, the industry is now responding to the increasing need for effective treatments for these conditions, which place a substantial burden on patients and their families. This presents opportunities for investors in the form of promising new therapies for a growing population of patients. By remaining informed about the complexities of mental health issues and the latest innovations in treatment, we can navigate this dynamic and evolving landscape while contributing to the solution by improving access to equity finance for the companies undertaking these trials.





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Ailsa Craig
Portfolio Manager
Marek Poszepczynski
Portfolio Manager


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