11th Feb 2022
For the nascent psychedelics sector, 2021 was the year that established the foundations for a future that may hold impressive payoffs. It remains to be seen if those payoffs will materialize in 2022, or if they’ll take a little longer to appear, but signs appear positive for a potentially strong growth market.
2021 saw increased clamor for psychedelics-based treatments
Consumers were already seeking effective mental health treatments, but COVID-19 swiftly removed the stigma from mental health conditions at the same time as fueling their rise. First Trip Health’s State of Mind survey reported that 81% of Americans have at least one symptom of depression, and in the absence of alternatives, many are self-medicating with alcohol, prescription medications, or addictive opioids1.
Psychedelics can offer a credible, effective, and safe treatment for depression, anxiety disorders, PTSD, and also for chronic pain2, which now affects millions more Americans who developed long covid3. As Clara Burtenshaw and Sean McLintock, founders of Neo Kuma Ventures, put it, “COVID-19 has proved to be a real tailwind for the psychedelics industry. An increased focus on mental health has created a much larger addressable market.4“
Public acceptance of psychedelics rose together with the need for its mental health treatments. DataBridge market research reports that “growing acceptance of psychedelic drugs for treating depression across the U.S. is one of the prominent factors for an upsurge demand of psychedelic drugs.”5 In the US, 37% of people say they’re in favor of psychedelic-assisted therapies6; 55% of the population of the UK supports opening up access to psychedelics7; and 55% of people in Ireland would take them if recommended by their doctor8.
The legislative environment is set fair
Driven by the twin engines of public opinion and consumer need, 2021 also saw legislative changes towards psychedelics. Seattle9 and 3 cities in Massachusetts10 decriminalized psilocybin this year, and Senate Bill 631 could decriminalize some psychedelics on a federal level11.
Full acceptance of psychedelics for medical purposes is approaching in Canada12. In September 2021, the National Institute on Drug Abuse (NIDA) became the first US government body to approve funding for a study into the use of psychedelics for therapeutic purposes13, and a White House press release expressed strong support for advancing psychedelics-based therapies14. The ground is being prepared for more possible approvals and decriminalizations in 2022.
Investment in psychedelics broadened out
2021 brought a number of other signs which all point towards the continued strength of the market. Investment rose and is still rising, predicted to top $2 billion in 202115.
Although most investment is coming from private sources, there’s an expectation that more traditional biopharma investors will join them in the near future16.
LEK Consulting’s analysts conclude that “We see no evidence that the surge in investment in psychedelics witnessed this year will slow down. If anything, the rate is likely to continue to increase especially as lead candidates across several larger companies edge their way towards launch. This will further propel an industry that will likely offer hope to many patients in desperate need of alternative, effective therapies.17“
So far, most investment has focused on R&D for biopharmaeutical formulations and psychedelics derivatives, but 2021 saw companies broaden their concern to cover the entire value chain18. Some notable developments include Compass Pathways’ plans for 3,800 psychedelic treatment centers19; Field Trip Health’s decision to expand to 75 ketamine-assisted therapy centers by 202420; and Numinus’ move to increase its network of community clinics in Canada21.
At the other end of the chain, Red Light Holland partnered with medical cannabis company Creso Pharma to increase the supply of high-quality medical cannabis and psychedelics for use in treatments22, and Mindcure launched its iSTRYM digital therapeutics platform23.
Taken as a whole, these steps and others like them indicate the potential long-term viability of the market. When infrastructure for the entire value chain is in place, from R&D capabilities to a dependable supply chain to accessible distribution points, it raises confidence that psychedelics-based treatments will deliver on their potential.
Clinical trials are showing promise
Many clinical trials were continued, kicked off, or completed in 2021, with results that confirm the potential of psychedelic-based treatments. The year began with more psychedelics-related trials than ever before24, and the number has only grown since then25.
MAPS’ phase III study testing the impact of MDMA for people with severe PTSD found that after treatment, 67% of the MDMA group no longer met the diagnostic criteria for PTSD, compared with just 32% of the placebo group.26
Psychedelics-related patents grew too, with scientists predicting that the FDA will approve MDMA for the treatment of PTSD by 2023, and psilocybin for depression by 202527.
As usual, there’s a range of different predictions for the psychedelics market in the next few years, but they share a positive trend. DataBridge predicts that the US market for psychedelics will grow at a CAGR of 11.5% between 2021 and 2026, reaching $6.4 billion by 202828, while Research and Markets forecasts the global market to rise at 14.5% CAGR from $3.2 billion in 2021 to $6.3 billion in 202629. It’s clear that analysts expect the market to grow dramatically, even if they disagree about the precise size of that growth.
2021 saw 4 more companies join Compass Pathways on the NASDAQ, including MindMed and ATAI Life Sciences, and Cybin begin trading on NYSE American30. As JR Rahn, CEO of MindMed, pointed out, “Three is a trend. This is not just a one-off thing anymore—this is going to stay and there are clearly large problems we’re solving and investors are willing to allocate capital.31“
Against such a positive backdrop, it’s surprising that psychedelics stock prices remained relatively flat during the year, although individual companies saw spikes when big announcements were made.
Many analysts are convinced that psychedelics companies are underpriced, and predict long term gains, whether they’ll arrive in 2022 or a little further down the line. “Whether the market prices in this potential now or later, it’s coming,” writes Jeff Nielson, adding “The two billion people with treatable (but untreated) mental health disorders represent not years but decades of robust growth potential.32“
Cannabis is keeping up
The medical cannabis ETF and psychedelics sectors are linked closely in many people’s minds, with many of the same players backing companies in the two markets. Indeed, psychedelics are much seen as the “younger sibling” of medical marijuana, benefiting from the work that the latter has done in softening public opinion.
So it’s not surprising that cannabis companies and weed ETFs are benefiting from the same trends driving psychedelics. The cannabis sector too has seen significant maturation, with an infrastructure emerging of a reliable supply chain for high quality weed, standardized dosing, and accessible distribution points. Grand View Research predicts the medical cannabis market will grow to $74 billion by 202733.
2021 left psychedelics stocks poised for takeoff
Overall, while the stock prices for psychedelics stocks might not have risen significantly this year, 2021 saw the framework of a successful market advance markedly, auguring well for future returns.
Investments grew across the value chain, clinical trials reported positive results, and demand for and acceptance of psychedelics-based treatments rose, encouraging more investors to turn to a psychedelics ETF or choose their own favorite psychedelics stock.
While it’s not yet clear whether 2022 will be the year that psychedelics stocks explode, analysts agree that the moment may notbe long in coming.
1 “More than 80% of Americans report one or more symptoms of depression, and many have turned to substances to cope with negative emotions during COVID-19 Pandemic, according to Field Trip Health’s First Annual “State of Mind” Survey” May 18, 2021 https://www.globenewswire.com/news-release/2021/05/18/2231476/0/en/More-than-80-of-Americans-report-one-or-more-symptoms-of-depression-and-many-have-turned-to-substances-to-cope-with-negative-emotions-during-COVID-19-Pandemic-according-to-Field-Tr.html
2 “MindMed Announces Project Angie, Targeting the Treatment of Pain with Psychedelics” May 5, 2021 https://www.prnewswire.com/news-releases/mindmed-announces-project-angie-targeting-the-treatment-of-pain-with-psychedelics-301284096.html
3 “A pandemic that endures for COVID long-haulers” April 13, 2021 https://news.harvard.edu/gazette/story/2021/04/harvard-medical-school-expert-explains-long-covid/
4 “The Investment Surge in Psychedelics for Treatment of Mental Health Conditions” October 15, 2021 https://www.lek.com/insights/ei/investment-surge-psychedelics-treatment-mental-health-conditions
5 “North America Psychedelic Drugs Market – Industry Trends and Forecast to 2028” March 2021 https://www.databridgemarketresearch.com/reports/north-america-psychedelic-drugs-market
6 “More than 80% of Americans report one or more symptoms of depression, and many have turned to substances to cope with negative emotions during COVID-19 Pandemic, according to Field Trip Health’s First Annual “State of Mind” Survey” May 18, 2021 https://www.globenewswire.com/news-release/2021/05/18/2231476/0/en/More-than-80-of-Americans-report-one-or-more-symptoms-of-depression-and-many-have-turned-to-substances-to-cope-with-negative-emotions-during-COVID-19-Pandemic-according-to-Field-Tr.html
7 “TDR’s Top 5 Psychedelic Developments For The Week Of June 14” June 19, 2021 https://thedalesreport.com/psychedelics/tdrs-top-5-psychedelic-developments-for-the-week-of-june-14/
8 “Psychedelic perceptions: mental health service user attitudes to psilocybin therapy” June 15, 2021 https://link.springer.com/article/10.1007/s11845-021-02668-2
9 “Seattle Becomes Largest U.S. City To Decriminalize Psychedelics” October 4, 2021 https://www.marijuanamoment.net/seattle-becomes-largest-u-s-city-to-decriminalize-psychedelics/
10 “A Third Massachusetts City Decriminalized Psychedelics” April 23, 2021 https://www.benzinga.com/markets/cannabis/21/04/20585751/a-third-massachusetts-city-decriminalized-psychedelics
11 “Dem introduces bill decriminalizing psychedelics, hopes to reverse some ‘War on Drugs’ impacts” September 14, 2021 https://www.metrotimes.com/news-hits/archives/2021/09/14/dem-introduces-bill-decriminalizing-psychedelics-hopes-to-reverse-some-war-on-drugs-impacts
12 “In Canada, psychedelics re-emerge in treatment of depression” April 16, 2021 https://medicalxpress.com/news/2021-04-canada-psychedelics-re-emerge-treatment-depression.html
13 Tweet, Matthew W. Johnson, September 20, 2021 https://twitter.com/drug_researcher/status/1440001296266838019?s=21
14 “Biden-Harris Administration Provides Recommendations to Congress on Reducing Illicit Fentanyl-Related Substances” September 2, 2021 https://www.whitehouse.gov/ondcp/briefing-room/2021/09/02/biden-harris-administration-provides-recommendations-to-congress-on-reducing-illicit-fentanyl-related-substances/
15 “The Investment Surge in Psychedelics for Treatment of Mental Health Conditions” October 15, 2021 https://www.lek.com/insights/ei/investment-surge-psychedelics-treatment-mental-health-conditions
16 “The Investment Surge in Psychedelics for Treatment of Mental Health Conditions” October 15, 2021 https://www.lek.com/insights/ei/investment-surge-psychedelics-treatment-mental-health-conditions
17 “The Investment Surge in Psychedelics for Treatment of Mental Health Conditions” October 15, 2021 https://www.lek.com/insights/ei/investment-surge-psychedelics-treatment-mental-health-conditions
18 “The Investment Surge in Psychedelics for Treatment of Mental Health Conditions” October 15, 2021 https://www.lek.com/insights/ei/investment-surge-psychedelics-treatment-mental-health-conditions
19 “A psychedelic drug boom in mental health treatment comes closer to reality” May 10, 2021 https://www.cnbc.com/2021/05/10/psychedelic-drug-boom-in-mental-health-treatment-nears-reality-.html
20 “In Canada, psychedelics re-emerge in treatment of depression” April 16, 2021 https://medicalxpress.com/news/2021-04-canada-psychedelics-re-emerge-treatment-depression.html
21 “Psychedelics Treatment Concept Numinus Wellness Inc. Aims for Aggressive Location Expansion Across Canada” March 30, 2021 https://retail-insider.com/retail-insider/2021/03/psychedelics-treatment-concept-numinus-wellness-inc-aims-for-aggressive-location-expansion-across-canada/
22 “Creso Pharma and Red Light Holland Merge” June 17, 2021 https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02385462-6A1037153?access_token=83ff96335c2d45a094df02a206a39ff4
23 “MINDCURE Positioned For Strong Run In 2022 – CEO Q&A” November 8, 2021 https://psychedelicstockwatch.com/psychedelic-stock-news/mindcure-positioned-for-strong-run-in-2022-ceo-q-a
24 “How ecstasy and psilocybin are shaking up psychiatry” January 27 2021 https://www.nature.com/articles/d41586-021-00187-9
25 “MindMed Announces the Approval of Mescaline Study” May 20, 2021 https://www.prnewswire.com/news-releases/mindmed-announces-the-approval-of-mescaline-study-301295710.html “Cybin Granted IRB Approval for Phase II Clinical Trials of its Sublingual Psilocybin Formulation for the Treatment of Major Depressive Disorder” May 18, 2021 https://www.businesswire.com/news/home/20210518005402/en/ “Cybin Announces Completion of its 51st Pre-Clinical Psychedelic Molecule Study” June 22, 2021 https://www.businesswire.com/news/home/20210622005438/en/ “COMPASS Pathways announces positive topline results from groundbreaking phase IIb trial of investigational COMP360 psilocybin therapy for treatment-resistant depression” November 9, 2021 https://ir.compasspathways.com/news-releases/news-release-details/compass-pathways-announces-positive-topline-results “TDR’s Top 5 Psychedelic Developments For The Week Of November 15” November 20, 2021 https://thedalesreport.com/psychedelics/tdrs-top-5-psychedelic-developments-for-the-week-of-november-15/
26 “A psychedelic drug may help treat PTSD. But questions remain on how best to use—and regulate—it” May 19, 2021 https://www.sciencemag.org/news/2021/05/psychedelic-drug-may-help-treat-ptsd-questions-remain-how-best-use-and-regulate-it
27 “Turn On, Tune In, Feel Better: The Rise of Psychedelic Therapy in Texas” May 14, 2021 https://www.texasmonthly.com/news-politics/psychedelic-therapy-texas/
28 “North America Psychedelic Drugs Market – Industry Trends and Forecast to 2028” https://www.databridgemarketresearch.com/reports/north-america-psychedelic-drugs-market
29 “Psychedelic Drugs Market – Global Industry Analysis (2018 – 2020) – Growth Trends and Market Forecast (2021 – 2026)” August 2021 https://www.researchandmarkets.com/reports/5440730/psychedelic-drugs-market-global-industry?utm_source=GNOM&utm_medium=PressRelease&utm_code=vb3htr&utm_campaign=1598039+-+The+Psychedelic+Drugs+Market+-+Global+Industry+Analysis+(2018-2020)%2c+Growth+Trends%2c+and+Market+Forecast+(2021-2026)&utm_exec=joca220prd
30 “A List of Psychedelic Stocks and Where They’re Traded” July 30, 2021 https://microdose.buzz/news/a-list-of-psychedelic-stocks-and-where-theyre-traded/
31 “Psychedelics Company MindMed Trips In Nasdaq Debut” April 27, 2021 https://www.forbes.com/sites/willyakowicz/2021/04/27/psychedelics-company-mindmed-trips-in-nasdaq-debut/?sh=4b2d0eff1ac2
32 “Compass Pathways 2.0: A New Rally In Psychedelic Stocks?” November 2, 2021 https://psychedelicstockwatch.com/psychedelic-stock-news/compass-pathways-2-0-a-new-rally-in-psychedelic-stocks
33 Grand View Research. “Legal Marijuana Market Size Worth $73.6 Billion By 2027. Accessed Nov. 12, 2020.