Psychedelic Stocks: Which Have The Greatest Potential?
This article identifies:
- the 9 psychedelic substances undergoing extensive research for the treatment of mental health conditions,
- those with the most therapeutic and commercial potential, and
- the 12 companies that are most involved in such research
to help you decide which offer the best investment opportunities.
Data Bridge Market Research forecasts that the global psychedelics market will grow from $2.077B in 2019 to $6.859B by 2027 which represents a 3.3 times increase in just 7 years. Below are the 9 psychedelic substances undergoing extensive research, those with the most therapeutic and commercial potential and the 12 companies that are most involved in such research.
1. Ketamine
Ketamine, used primarily as an anesthetic in veterinary clinics, is the only psychedelic drug that is broadly legal today. Unfortunately, it has had the reputation of being used as a date rape or sexual assault drug (and referred to in those circles as Special K, Cat Valium or Kit Kat) as it can be slipped unnoticed into a drink causing the consumer to experience a loss of muscle function combined with only a dream-like awareness of what’s happening and not to being able to remember what happened the next day although they may have flashbacks of the event several weeks later.
The above being said, ketamine is now being used to treat chronic pain, alcohol withdrawal management, and depression despite its addictive properties, toxicity and unpleasant hallucinogenic properties.
The public companies currently involved in ketamine-based clinical-stage research are Field Trip Health (FTRPF), Seelos (SEEL), Numinus (LKYSF), Awakn Life (AWKNF), ATAI (ATAI) and Novamind Inc. (NVMDF). Only Field Trip (+77% YTD*) and Seelos (+37% YTD) are up YTD. Novamind is down the most at -32% YTD and Numinus is down the least at -11% YTD. ATAI and Awakn are new listings down -20% and -24%, respectively since the end of June, 2021.
*YTD is the period from the close of the markets on December 31st, 2020 to the close of the markets on August 6th, 2021.
2. Psilocybin
Psilocybin, the primary psychoactive ingredients in “magic mushrooms”, is the most widely-researched psychedelic substance today due to its minimal toxicity, non-addictive nature and powerful medicinal effect of generating new neural pathways that allow different regions within the brain to communicate in new and more effective ways.
Psilocybin will likely become the first psychedelic drug to be de-scheduled by a major government and legalized for medicinal use. A recent poll in Canada shows that nearly 80% of the population favor legalizing psilocybin for medicinal use and, to that end, Health Canada has already been granting special exemptions to allow patients with critical healthcare needs to be treated with psilocybin-based therapies. In the U.S., however, while psilocybin enjoys rapidly increasing grassroots support at the local and even state level, psychedelics research remains blocked at the federal level. Legal use and commercialization of psilocybin may advance much faster in the EU and UK via their “real-world evidence” pathway to drug approval that advances drugs that are proven safe substances, a category into which psilocybin fits.
The public companies involved in psilocybin research are Compass Pathways (CMPS), Cybin Inc. (CLXPF), Mind Medicine (MNMD) and Mydecine (MYCOF). Cybin is +101% YTD and Mydecine by +11% YTD while Mind Medicine had no change in price YTD. Compass is down -29% YTD.
3. MDMA
MDMA, more commonly known by its street drug name, "Ecstasy", has a strong safety profile, produces feelings of emotional warmth, an increase in self-awareness and in empathy which make it a natural fit in those severely traumatized individuals with PTSD.
The public companies involved in MDMA research are GH Research (GHRS), Numinus (LKYSF), Mind Medicine (MNMD) and ATAI (ATAI). Mind Medicine has had no change in price YTD, Numinus is -11% YTD and, as mention in #1, ATAI and Awakn are new listings and are down -20% and -24%, respectively since the end of June, 2021.
4. Ibogaine
Ibogaine, a natural psychedelic drug derived from the iboga shrub, is much more toxic than psychedelics like psilocybin, MDMA and LSD, presenting some cardiac risks as well as other side effects such as seizures, paralysis and difficulty breathing although Ibogaine presents minimal health risks in a controlled medical setting. Despite these risks, however, research has shown that Ibogaine exhibits unique properties in neutralizing addictive cravings.
According to Psychedelic Stock Watch (from which site some material was accessed for this article) addiction/substance abuse therapy provides the most long-term commercialization potential for psychedelic drugs given the more than 1 billion nicotine addicts, 107 million alcoholics and 71 million drug use abusers worldwide and the +7.6 million deaths per year directly attributable to such substance abuse/addiction. (In comparison, depression and PTSD lead to approximately 800,000 suicide deaths per year, a shockingly high number, but dwarfed by the death toll from substance abuse.)
The public company most heavily involved in Ibogaine research is ATAI (ATAI). Mind Medicine (MNMD) is also doing research on an Ibogaine derivative, 18-MC. Mind Medicine's stock price is unchanged YTD while ATAI's stock price is -20% since it began trading in June, 2021.
5. DMT
Dimethyltryptamine (DMT), an extremely potent psychedelic compound, is the synthetic version of ayahuasca. Because of its potency, DMT research is still at an early stage but it offers important commercialization advantages in that it produces a rapid onset and a brief trip compared to experiential therapies using other psychedelic drugs that require expensive, multi-hour, supervised sessions by trained medical professionals. A DMT “trip” and therapy session can be over in under an hour making such a treatment much cheaper than other psychedelic drugs, raising the prospect for greater patient affordability and greater resultant appeal to health insurers.
The public companies most heavily involved in DMT research are Small Pharma (DMTTF), GH Research (GHRS), Mind Medicine (MNMD) and ATAI (ATAI). Algernon (AGNPF) is researching DMT’s non-psychedelic potential to help promote healing and recovery in the brain from a stroke and so, technically speaking is not a psychedelic stock and, as such, is not included in this articles list of such companies. Mind Medicine and ATAI prices changes YTD are as mentioned previously. Small Pharma's stock price is unchanged since it began trading last May and GH Research is -3% since it began trading last June
5. LSD
LSD, known by its street drug name “acid”, is non-toxic and non-addictive and, along with psilocybin, is the most-researched psychedelic drug and, as such, its medicinal applications are generally more advanced than with other psychedelics.
The above being said, however, while both psilocybin and MDMA have received Breakthrough Therapy Designation from the FDA, this has not yet been extended to LSD-based research making the path to legalization for LSD more uncertain than psilocybin in Canada and MDMA in the U.S.. Leading the way in LSD-based psychedelics research is MindMed Inc. (MNMD). Its stock price is unchanged YTD..
7. Psilocybin Truffles
Truffles and mushrooms are part of the same fungus but produce different effects. Truffles grow underground as a vegetative colony known as mycelium and are generally smaller and wet while mushrooms are the fleshy, spore-bearing fruiting body of a fungus, and typically grow above ground.
Currently only one company, Red Light Holland (TRIP), produces, grows and sells “magic” truffles through existing smart shops operators and e-commerce platforms in the Netherlands where wet psilocybin-containing truffles are legal.
Last year Red Light Holland acquired Mera Life Sciences that has a lab in St. Vincent and the Grenadines and holds several psychedelic licenses in the Caribbean. Red Light then created a scientific research and development division called “Scarlette Lillie Science and Innovation” and, in September, Scarlette Lillie secured a relationship with Jinfiniti Precision Medicine that will help it to investigate the therapeutic possibilities of psilocybin and truffles for the treatment of age-related and psychiatric disorders.
Just recently Canada approved 17 healthcare professionals to possess and use the psychedelic active ingredient psilocybin to conduct professional training in psilocybin therapy. The focus is mainly for patients dealing with end-of-life distress, but marks the first step towards legal medicinal psychedelics use in Canada.
In February, 2021, Red Light made its first import and sale of psilocybin truffles to Brazil advancing the legal and medically approved market for psilocybin in Brazil. Red Light Holland's stock is down -16% YTD.
8. Mescaline
Mescaline is a naturally occurring psychoactive alkaloid with hallucinogenic properties derived from the San Pedro cactus, the Peruvian/Bolivian torch, the Peyote cactus (found predominantly in Mexico and the southwestern deserts of the U.S.) and two other varieties of peyote cacti and was first isolated in 1896 from the peyote plant back in 1896. Interestingly, mescaline was legal in the United States until 1970, when then-President Richard Nixon launched a crackdown on psychedelics.
Mescaline can be synthetically manufactured, and its extracted compound, similar in structure to adrenaline and noradrenaline, is being considered for its health benefits as a potential psychotherapeutic treatment in conditions such as substance abuse and depression and, as such, has the potential to carve out a significant share of the $70bn global mental health market.
The primary company researching the possible benefits of mescaline is XPhyto Therapeutics Corp. (XPHYF) which operates a range of research and development projects in both Canada and Germany and has expertise in using sublingual and transdermal therapeutics to deliver extremely precise doses, which could prove invaluable for micro-dosing mescaline and other psychedelics. XPhyto's stock price is unchanged YTD.
9. 5-MeO-DMT
5-MeO-DMT, which stands for 5-MethOxy-N,N-DiMeThyltryptamine but is better known by its nick name, The Toad, is derived from dried venom secreted by the Sonoran Desert (Bufo Alvarius) toad, also known as the Colorado River toad (Incilius alvarius) which is found in the lower Colorado River and the Gila River catchment areas, in southeastern California, New Mexico, Mexico and much of southern Arizona living in both desert and semi-arid areas throughout its range. The Toad produces hallucinogenic, boundless experiences within one second of inhalation that can last from 7 to 90 minutes (average of 20 minutes) that create a sustained enhancement of satisfaction with life, and the easing of anxiety, depression and post-traumatic stress disorder (PTSD). It binds to serotonin receptors (neurotransmitters in your body that can affect a variety of different functions, ranging from your bowel movements to your sleep to your mood) and since activating serotonin receptors may affect your mood, some researchers have been exploring whether 5-MeO-DMT may help with depression and anxiety.
GH Research PLC (GHRS) is currently the only a clinical-stage bio-pharmaceutical company dedicated to developing 5-MeO-DMT therapies and is concentrating on finding a better treatment for patients with Treatment-Resistant Depression, or TRD. GH Research began trading in June and is down -3% since being listed.
Conclusion
Roughly 2 billion people, worldwide, suffer from some form of a treatable mental health disorder; addiction/substance abuse therapy could easily prove to be the biggest investment driver of psychedelic stocks over the long term, supported by the high degree of insurance coverage for addiction therapy in the U.S..
To give the reader the complete picture of the psychedelic drug stocks universe below is a list of the other 22 public clinical-stage psychedelic companies trading publicly in addition to the 12 much larger capitalized companies mentioned above: Aion Therapeutic, Better Plant Sciences, Bright Minds Biosciences, Ehave Inc., Entheon Biomedical, Filament Health, HAVN Life Sciences, Hollister Biosciences, Lobe Sciences, M2BIO, Mind Cure Health, Mindset Pharma, Neonmind Biosciences, New Wave Holdings, Nova Mentis, PharmaTher, PsyBio Therapeutics, Revive Therapeutics, Roadman Investments, Silo Wellness, Tryp Therapeutics and XPhyto Therapeutics.
Conclusion
It is very early in the psychedelic drug industry’s evolution, so it is difficult to weed out the eventual winners in advance so it might be a good idea to own a variety of the psychedelic drug companies highlighted above to have all your basis covered.
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Good one