This is really painful to observe in someone you care about. As long as you feel safe doing so it is appropriate and possibly helpful to express disagreement (you dont see spaceships, etc.). Sometimes disability contributes to mental illness, and vice versa. I reconnected with an old friend who was diagnosed borderline and getting intensive care, socially isolated. And my just calling and emailing him made an impact. Hes now in school getting a degree and working part time. All that is just to say whatever social contact you can offer your friend that keeps you both grounded may make a positive difference for him. But if G-d forbid he continues to retreat in delusions, your engagement is admirable. Hope things can improve for him.