This is definitely a confusing sentence, especially for a non English speaker. You can reword the sentence and add something in front (e.g. "The researchers").

This is definitely a confusing sentence, especially for a non English speaker. You can reword the sentence and add something in front (e.g. "The researchers"). "The researchers are using psilocybin assisted group therapy for demoralization in long term AIDS survivors." AIDS surviors have "demoralization in them". The psilocybin assisted group therapy is being used for that demoralization.