After decades of being looked down on as harmful drugs, psychedelics are now increasingly recognized for their extraordinary medicinal and therapeutic properties.
Research has shown that psychedelic substances could treat serious mental health disorders like anxiety1, addiction2, depression3, PTSD, and OCD4,5; in 2018 and 2019, the FDA recognized psilocybin as a “breakthrough therapy;”6 and psychedelic stocks are now reaching the stock markets. Psychedelics research centers have opened up at respected institutions, impacting both public opinion and legal attitudes towards psychedelics.
A UK survey into the use of psychedelics reported that 55% of the population supports legalizing and opening up access to psychedelics7, while a US study concludes 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.”8 A recent study in Ireland reported that 72% of people supported research into psychedelics and 55% would take them if recommended by their doctor9.
Canada is moving towards full acceptance of psychedelics for medical purposes10, and a number of cities in the US including Denver, CO; Oakland and Santa Cruz, CA; and Washington, D.C.; have decriminalized psilocybin. Oregon is the first state to legalize psilocybin for medical use, and psychedelics reform is advancing in a number of other states and cities11, while Ann Arbor declared September to be Psychedelics Awareness Month and will host an Entheo Festival to celebrate sacred plants and fungi12.
The change in attitudes is partly due to COVID-19, which removed much of the stigma surrounding mental health disorders while increasing the number of people with depression, anxiety, and addiction disorders. But it’s also the result of frustration with the lack of effective treatments for mental health. According to First Trip Health’s State of Mind survey, 81% of Americans have at least one symptom of depression, and a significant number are self-treating with alcohol, prescription medications, and addictive opioids.13
All of this is having a corresponding impact on the burgeoning psychedelics market. Worth just over $2 billion in 2020, it’s predicted to grow at a Compound Annual Growth Rate (CAGR) of 16.3% to $6.9 billion by 202714. So far, three psychedelics companies (MindMed, Compass Pathways, and Atai Life Sciences15) are trading on the NASDAQ16, and Cybin just launched on the NYSE17. JR Rahn, CEO and co-founder of MindMed, points out happily “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.”18
R&D into new formulations, dosages, and delivery methods is progressing apace; psychedelics companies are forging new partnerships to expand the production and distribution of medical-grade truffles and psychedelics; and treatment centers are expanding across the US, with 2 new “wellness clinics” opening in New York City in the just last couple of months, and another planned for September19.
With this kind of action, plus the appeal of investing in drugs that were still illegal two decades ago, it’s not surprising that investors are increasingly enthusiastic about investigating psychedelic stocks. Here are some of the best psychedelic stocks to pay attention to in 2021.
1. Defiance Next Gen Altered Experience ETF (PSY)
Defiance offers PSY, an ETF that tracks the BITA Medical Psychedelics, Cannabis, and Ketamine Index, a rules-based index which in turn follows the performance of companies listed in North American Exchanges with a minimum of 50% of their income deriving from developing, manufacturing, or trading in medical cannabis, psychedelics, and ketamine.
As an ETF, PSY offers investors the opportunity to spread their investments across numerous promising psychedelics stocks with a single investment, rather than placing all their eggs in one basket and hoping to hit the best psychedelic stocks. PSY has $6.8 million in net assets, 20 holdings, and an expense ratio of 0.75%. As of August 22, PSY is trading at $19.29. See here for a full list of its holdings.
2. MindMed (MMED)
MindMed is a New York-based psychedelic stock with international multi-disciplinary partnerships, working on developing best in class mental healthcare using psychedelic-based substances.
It’s running clinical trials into LSD, ayahuasca, ibogaine, and MDMA, with a view to producing psychedelics that can be prescribed by doctors and taken at home20, while also training psychiatrists in next-generation psychedelic treatments, and offering an integrated digital platform for the delivery of psychedelic-based medications and digital therapeutics.
As of August 22, MindMed is trading at $2.59, with a market cap of CAD $1.22 billion.
3. Compass Pathways (CMPS)
As the first psychedelic medicine stock to list on the NASDAQ, Compass has been attracting attention for a long time. Its aim is to develop new treatments for mental health disorders, with a focus on psilocybin. The company secured 8 patents for its formulation and delivery method of psilocybin for mental health patients, and is running a number of clinical trials.
Its Q2 2021 financial results reported a net loss of $30.2 million over the past 6 months, with cash reserves totalling $316.3 million, compared with $190.3 million as of 31 December 202021.
It’s currently trading at $30.66 as of August 22, down 16.55% in the past month, with a market cap of $1.28 billion.
4. Atai Life Sciences (ATAI)
Atai Life Sciences is a biopharmaceutical company that aims to incubate development of treatments for people with mental health disorders. It owns a number of psychedelics holdings, including Compass Pathways, and its Q2 2021 earnings results reported the launch of a new subsidiary called Revixia, as well as 11 therapeutic programs, and new clinical partnerships.
2021 saw Atai become the 3rd psychedelics stock to float on NASDAQ22, raising $258 million in their IPO23. Although stock prices have dropped since then, analysts have faith in the company’s long-term strength24. Atai is trading at $14.84 as of August 22, with a market cap of $2.2 billion.
Cybin recently became the first psychedelics company to trade on the NYSE25, after Atai, MindMed, and Compass all traded on the NASDAQ. In the past few months, Cybin raised over CAD$120 million, bringing its cash reserves to CAD$55.1 million, according to its recent financial earnings report.26
The company has filed 14 patent applications27, and developed more psychedelic compounds than other psychedelic medicine stocks, with a number of clinical trials underway or approved. It is also engaged in scaling up its European operations and research activities. Cybin is trading at $1.90 as of August 22, with a market cap of CAD$383.95 million.
Numinus is working at building an integrated psychedelic health infrastructure in Canada. It produces psychedelic substances; is developing treatment programs and protocols; trains therapists in psychedelic medications; and runs clinics across Canada. The company is one of the few psychedelic stocks already generating income, and it reported a cash runway of CAD$63.2 million as of May 31, one of the biggest cash reserves among psychedelic stocks28.
Numinus’ stock price rose 192% in the six months leading up to April 2021, and although it fell in the last few months, it’s still recommended by many analysts29. As of August 22, Numinus is trading at CAD$0.88, down 10.2% in the past month
1 “Safety and efficacy of lysergic acid diethylamide-assisted psychotherapy for anxiety associated with life-threatening diseases,” Gasser et al (2014) J Nerv Ment Dis 202: 513–520.
2 “Psilocybin-assisted treatment for alcohol dependence: a proof-of-concept study,” Bogenschutz et al (2015). J Psychopharmacol 29: 289–299.
3 “Antidepressant effects of a single dose of ayahuasca in patients with recurrent depression: a preliminary report,“ Osorio et al (2015) Rev Bras Psiquiatr 37: 13–20; “Antidepressant effects of a single dose of ayahuasca in patients with recurrent depression: a SPECT study,” Sanches et al (2016) J Clin Psychopharmacol 36: 77–81..
4 “Safety, tolerability, and efficacy of psilocybin in 9 patients with obsessive-compulsive disorder,” Moreno et al (2006) J Clin Psychiatry 67: 1735–1740.
6 “FDA Calls Psychedelic Psilocybin a ‘Breakthrough Therapy’ for Severe Depression,” Yasemin Saplakoglu, November 25, 2019. https://www.livescience.com/psilocybin-depression-breakthrough-therapy.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/
9 “Psychedelic perceptions: mental health service user attitudes to psilocybin therapy” June 15, 2021 https://link.springer.com/article/10.1007/s11845-021-02668-2
10 “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
11 “Market For Psychedelic Drugs Expected to Reach $6.9 Billion By 2027” April 14, 2021 https://www.prnewswire.com/news-releases/market-for-psychedelic-drugs-expected-to-reach-6-9-billion-by-2027–301268400.html
“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/
“California Bill To Legalize Possession Of Psychedelics Clears Another Hurdle But Faces Key Challenge Next Week” August 18, 2021
12 “Ann Arbor declares September Psychedelics Awareness Month — and we’re tripping” August 19, 2021 https://www.metrotimes.com/news-hits/archives/2021/08/19/ann-arbor-declares-september-psychedelics-awareness-month-and-were-tripping
13 “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
14 “Market For Psychedelic Drugs Expected to Reach $6.9 Billion By 2027” April 14, 2021 https://www.prnewswire.com/news-releases/market-for-psychedelic-drugs-expected-to-reach-6-9-billion-by-2027–301268400.html
15 These three companies are holdings in the Defiance PSY ETF. As of September 1, 2021, MindMed stock comprises 4.96% of PSY’s Net Assets, Compass comprises 6.06% and Atai comprises 5.86%.
16 “New Psychedelic Drug Stock Jumps In Debut After Upsized IPO Prices At High End” June 18, 2021 https://www.investors.com/news/atai-ipo-new-psychedelic-drug-stock-atai-life-sciences/
17 “Cybin Becomes First Psychedelics Company On The NYSE: CEO Explains Everything You Need To Know” August 5, 2021 https://finance.yahoo.com/news/cybin-becomes-first-psychedelics-company-185151400.html
18 “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
21 “COMPASS Pathways plc announces financial results and business highlights for the second quarter 2021” August 11, 2021 https://www.globenewswire.com/news-release/2021/08/11/2278629/0/en/COMPASS-Pathways-plc-announces-financial-results-and-business-highlights-for-the-second-quarter-2021.html
22 “New Psychedelic Drug Stock Jumps In Debut After Upsized IPO Prices At High End” June 18, 2021 https://www.investors.com/news/atai-ipo-new-psychedelic-drug-stock-atai-life-sciences/
23 “atai Life Sciences Reports Second Quarter 2021 Financial Results and Business Update” August 16, 2021 https://finance.yahoo.com/news/atai-life-sciences-reports-second-110000373.html
24 “Why I’m Psyched About Atai Life Sciences, Even With a Broken Chart” August 4, 2021 https://realmoney.thestreet.com/investing/stocks/why-i-m-psyched-about-atai-life-sciences-even-with-a-broken-chart-15732375
25 “Cybin Receives Final Approval to Commence Trading on the NYSE American on or About August 5” July 28, 2021 https://www.businesswire.com/news/home/20210728006105/en/Cybin-Receives-Final-Approval-to-Commence-Trading-on-the-NYSE-American-on-or-About-August-5
26 “Cybin Inc. Announces 2021 First Quarter Financial Results and Business Highlights” August 13, 2021 https://www.businesswire.com/news/home/20210813005436/en/Cybin-Inc.-Announces-2021-First-Quarter-Financial-Results-and-Business-Highlights
27 “Cybin Files 14th Patent Application Further Strengthening its IP Portfolio and Receives a Favorable Patent Claim Opinion” August 17, 2021 https://www.businesswire.com/news/home/20210817005263/en/Cybin-Files-14th-Patent-Application-Further-Strengthening-its-IP-Portfolio-and-Receives-a-Favorable-Patent-Claim-Opinion
28 “Numinus Wellness Closes Q3 2021 With $63.2 Million Cash Position, Lab and Trial Advances, and Strategic Expansion into Psychedelic Neurology” July 29, 2021 https://www.newswire.ca/news-releases/numinus-wellness-closes-q3-2021-with-63-2-million-cash-position-lab-and-trial-advances-and-strategic-expansion-into-psychedelic-neurology-845511452.html
29 “3 of the Top Psychedelic Stocks That Will Blow Your Mind” April 20, 2021 https://www.nasdaq.com/articles/3-of-the-top-psychedelic-stocks-that-will-blow-your-mind-2021-04-20
“Numinus Wellness May Be the Best Penny Stock to Buy Today” March 26, 2021 https://investorplace.com/hypergrowthinvesting/2021/03/numinus-wellness-may-be-the-best-penny-stock-to-buy-today/
“More Psychedelic Companies Are Going Public” February 2, 2021 https://money.usnews.com/investing/stock-market-news/articles/more-psychedelic-companies-are-going-public
“Four Top Psychedelic Stock Picks for 2021” January 4, 2021