This year, the psychedelics sector is expected to continue attracting investors' interest.
The Best Psychedelic Stocks to Invest in 2022 is covered in the following guide.
Since the outbreak, more attention has been paid to mental health and the limitations of our present standards of care, among other things. This has resulted in the emergence of a new alternative drug business that makes use of psychedelic chemicals to generate profits.
What is psychedelic?
It is a class of hallucinogenic medications that induce altered states of consciousness by binding to serotonin receptors in the brain, which regulate sensory perception and cognition-related brain circuits. Mescaline, LSD, psilocybin, and DMT are the most frequently used psychedelics.
Psychedelics are frequently likened to cannabis, as both are commonly used recreationally. And, given marijuana's enormous success, there is comparable anticipation for psychedelics. Marijuana, on the other hand, is a far more mature market. It is already legal in a number of states, and several of the businesses are lucrative.
On the other hand, psychedelics remain banned in the majority of the world, including the United States. And, despite all the studies, actual items from businesses may take time to reach the market, if they do at all.
The utilization of psychedelic drugs is not novel. Indeed, psychedelics have their origins in ancient cultures that revered the super or magical mushrooms from which they are produced. In the 1950s and 1960s, a number of individuals experimented with them for recreational purposes and to treat alcoholism and other diseases, primarily in informal settings.
And while the more formal trials were numerous (almost 40,000 people participated), they did not meet the same criteria as the FDA's current approval process. Furthermore, their involvement with the counterculture resulted in their censure and shame.
A psychedelic stock is a company's stock that is engaged in the business of producing or distributing psychedelics.
Psilocybin (mushrooms), lysergic acid diethylamide (LSD), and mescaline are all popular psychedelics.
With over 30 million psychedelic users in the United States, this sector is thriving.
As a result, including psychedelic stocks in an investor's portfolio early on has the potential to provide significant gains.
Kevin O'Leary's audio interview below delves deeper into investing in the psychedelics market and covers all you need to know to get started.
It is critical to understand the risks and characteristics of individual stocks before investing in psychedelic stocks.
Individual psychedelic stock investing is not one of the top stocks of the world's greatest investors. Indeed, the best investors are now extinct:
The following are some of the primary risks associated with investing in certain psychedelic stocks:
Individual stocks with a high degree of volatility
Regulations by the government
Inadequate liquidity
Businesses that are unproven
While there are significant risks, investors can still profit from psychedelic stocks through share appreciation.
The same is true for 5G penny stocks and other promising businesses that file for initial public offerings (IPOs).
The latest market of psychedelic stocks
The use of psychedelics such as psilocybin, LSD, ketamine, and others is becoming increasingly widespread, especially as the first steps toward legalization are being taken in a number of states across the United States. As a result, the psychedelics market is expected to expand at a 12.4 percent annual rate until 2027, reaching $10.75 billion. However, as you may recall from the meteoric rise of publicly-traded cannabis stocks, the psychedelic stocks sector is fraught with risk for investors as it navigates regulatory hurdles, stigma, and cultural concerns.
Psychedelic stocks provide incredible value propositions.
Institutional investors have been queuing up to invest in these privately held businesses and startups. In just 2020 and 2021, this brand-new industry raised over $2 billion.
It is not a matter of a lack of opportunities. As Psychedelic Stock Watch frequently reports, over 2 billion individuals worldwide suffer from treatable mental diseases.
Psychedelic medications (and therapies based on psychedelics) are not only the "best chance" for these two billion people, and they are our one ray of hope.
For 50 years, the majority of these psychedelic drugs have been highly criminalized (for no reason), thus halting medical study. In other words, the healthcare industry has had half a century to find effective treatments for mental health illnesses without resorting to psychedelic medications.
The healthcare sector has been a dismal failure. That is why we are currently experiencing a Mental Health Crisis, with over two billion individuals in need of therapy. Conventional therapy is incapable of controlling, never alone curing, certain mental health issues.
In contrast to conventional therapy, psychedelic-based therapies are effective.
Psychedelics' Potential Therapeutic Applications
Psychedelics, like cannabis and marijuana, can be utilized for medical and therapeutic purposes, most notably in the treatment of certain psychological and neurological disorders.
However, much research must be conducted before solid rules on how to consume psychedelics, and the impacts of chemical refinement of psychedelic substances can be developed.
Psychoactive psychedelics are predicted to revolutionize PTSD, depression, anxiety, and addiction treatments.
Ironically, much study was conducted on these medications between the 1950s and 1970s, but the stigma connected with their use, combined with other reasons, effectively eliminated any possibility of them entering mainstream medicine.
However, marijuana legalization has paved the way for the legalization of psychedelics as well. Oregon pioneered the legalization of psychedelics in the United States.
The term "psychedelic renaissance" has been used to describe the "rebirth" of psychedelics. Although not particularly original (unfortunately), it is nonetheless apt.
The Advantages And Disadvantages Of Psychedelic Stocks
The advantages of investing in some of the top psychedelic stocks begin with their relative value. The majority of these are possibly penny stocks, which means that you can acquire a sizable number of shares even with a tiny investment. And you wait for the legalization of psychedelics.
Because many of the companies operate in both Canada and the United States, even if psychedelics are nowhere near becoming authorized on a federal level in Canada, several U.S. states have already begun the process.
A healthy demand environment and a few cross-border transactions can propel many of these stocks significantly higher, and you may see profits comparable to marijuana stocks during their heyday.
However, as demonstrated by the trend of the stocks used as cautionary examples, it does not take long for the euphoria to subside and your investment to become worthless. Therefore, exercise extreme caution when it comes to holding psychedelic stock increases for an extended period of time.
The major weakness of psychedelic stocks is their lack of predictability. We have no idea when it will become legal or how long you will have to wait to see favorable changes in your psychedelic assets. Even if medical use is authorized, what regulations would apply?
These substances, which not only dull the senses or induce euphoria but also alter perception, are likely to be more strictly regulated than marijuana and its derivatives. Additionally, it may obstruct or postpone recreational use's legalization.
The second significant flaw is the negative precedent set by marijuana stocks. Investors may begin selling at the first sign of a fall in order to maximize their prospective gains.
This could result in a snowball effect, driving stocks lower than they should be. For investors unfamiliar with volatile asset types, comprehending market dynamics may be challenging.
1. MentalMed (NASDAQ: MNMD, NEO: MMED, DE: MMQ)
MindMed has long been the darling of retail investors in psychedelics. It was the first serious psychedelic stock to go public in May 2020 and was able to leverage that first-mover advantage to raise a sizable amount of capital. Though it lags behind atai and Compass in terms of cash on hand, it's $145.9 million at the end of Q3 is nothing to scoff at.
What genuinely differentiates MindMed as an investment possibility is the scope of its trials and substances under development.
To begin, MindMed is the only business that has advanced LSD to Phase 2 clinical studies. They just completed a Phase 2a trial using their version of the drug, MM-120, to treat Generalized Anxiety Disorder, and aim to initiate a Phase 2b trial shortly. Additionally, they have a Phase 2 LSD experiment treating cluster headaches, one addressing depression, and a Phase 2a trial treating adult ADHD with LSD microdoses. Additionally, they have other Phase 2a LSD trials scheduled for the first part of 2022, including pain treatment.
Additionally, MindMed possesses the most advanced next-generation psychedelic, 18-MC, which has entered Phase 2a testing. 18-MC is a non-hallucinogenic ibogaine derivative that MindMed plans to use to treat Opioid Use Disorder.
Additionally, MindMed is developing new forms of MDMA, psilocybin, and DMT and a novel method of delivering psychedelics directly to the brain via the blood-brain barrier.
2. Numinus Wellness (TSEV: NUMI)
Numinus (TSEV: NUMI) is a mental health integrator that is attempting to build a healthy ecosystem on three fronts.
Numinus Bioscience is a Health Canada-licensed laboratory conducting research on psychedelic substances, producing intellectual property, and providing revenue-generating analytics services.
Numinus R&D is developing psychedelic-assisted therapeutic protocols for integration into mainstream healthcare. Medical leaders lead the Company with extensive experience in global research and policy reform.
Finally, Numinus Health provides centralized training facilities, and other operational resources are held at Numinus.
Numinus is the first public company in Canada to be granted a license to manufacture and extract psilocybin from mushrooms and the first to successfully harvest psilocybin mushrooms under this license.
Numinus also holds a dealer license from Health Canada, which authorizes it to import, export, possess, test, and distribute MDMA, psilocybin, psilocin, DMT, mescaline, LSD, and ketamine. Health Canada licenses Numinus to do cannabis testing, which enables them to generate cash by providing third-party analytics and testing services.
By the end of 2021, the Company intends to expand its lab by 7,500 square feet and invest several million dollars. Additionally, Numinus bought Mindspace, which brought the organization over 40 practitioners, 1,400 clients, psychotherapy, psychoeducation, and group mindfulness programming.
Numinus has made it plain that it will continue to acquire clinics as long as they are profitable and growing.
The Company currently has $63.2 million in cash on hand to fund its growth goal. In March 2021, it raised $40 million in a fundraising round. At the time of writing, the stock is trading at $1.07.
3. Compass Pathways (NASDAQ: CMPS)
Compass Pathways (NASDAQ: CMPS) is situated in the United Kingdom and is developing a proprietary, synthetic psilocybin formulation called COMP360 for the treatment of treatment-resistant depression. Compass Pathways' primary selling point is its patent, and it holds a patent for "methods of treating medication-resistant depression with a psilocybin formulation." Compass Pathways is now conducting clinical trials with a synthetic version of psilocybin as a treatment for treatment-resistant depression. The majority of other companies are evaluating an organic version of the psychedelic chemical found in magic mushrooms.
Even though Compass Pathways is a development-stage firm with a single medicine, we believe the stock will soar if COMP360 is successful in treating depression. If Compass Pathways receives clearance for COMP360, it should be able to protect and commercialize the medicine since the Company is entitled to up to 7.5 years of intellectual property protection in the United States and up to 11 years in the European Union for COMP360. The Company was backed by investors, including PayPal co-founder Peter Thiel and Apeiron Investment Group founder Christian Angermayer. Compass Pathways reported a $41.5 million loss in the first nine months of the year, compared to a $12 million loss last year's same period. Compass ended the third quarter with $196.5 million in cash, which is sufficient to keep the company solvent until 2023. Suppose the sight of red writing makes you nauseous. In that case, a visit to Compass Pathways' website and the Company's world-class Board of Directors and Scientific Advisory Board may allay your anxieties.
4. Field Trip Health Ltd. (FTRP)
Field Trip Health is another firm that is conducting research on a synthetic psilocybin molecule known as FT-104. Field Trip believes FT-104 is comparable to psilocybin in terms of potency but has a shorter duration of psychoactivity, making it potentially more suitable for use in treating patients. Last year, Field Trip Health inaugurated its Field Trip Natural Products Limited Psychedelic Fungi Research and Development Laboratory in Mona, Jamaica. The new facility is the first legal research facility dedicated solely to psilocybin and other plant-based psychedelics in the world. Field Trip was given a Nasdaq listing in July 2021 and began trading in the United States under the symbol FTRP.
5. Seelos Therapeutics
Seelos Therapeutics, launched in 2016, merged with publicly traded Apricus Biosciences in January 2019. The new corporation, which was mostly comprised of Seelos' business, assumed Seelos' name and changed its Nasdaq ticker symbol from "APRI" to "SEEL."
Four programs are now undergoing clinical trials in the Company's pipeline. SLS-002 is an intranasal ketamine formulation now undergoing phase 2 evaluation for the treatment of acute suicidal ideation and behavior in individuals with major depressive disorder. SLS-005 (intravenous trehalose, a sugar-containing two glucose molecules) is being evaluated in phase 2b/3 trials for the treatment of amyotrophic lateral sclerosis (ALS) and in phase 2 trials for the treatment of the rare genetic illness Sanfilippo syndrome. Additionally, Seelos is evaluating the partial dopamine agonist SLS-006 in a phase 2/3 clinical trial for Parkinson's disease.
6. Atai Life Sciences N.V. (NASDAQ: ATAI)
Atai Life Sciences N.V. (NASDAQ: ATAI) is a biopharmaceutical business headquartered in Germany focused on developing psychedelic medications. It comes in the second position on our list of the ten best psychedelic stocks to buy right now. The Company's shares have returned more than 6.9 percent to investors during the last week. Peter Thiel, a famed investor, supports the startup. It went public last month with a market capitalization of $2.3 billion.
On July 13, renowned investment advisors such as Citi, Credit Suisse, Canaccord Genuity, and Cantor Fitzgerald commenced coverage of Atai Life Sciences N.V. (NASDAQ: ATAI) with a Buy or Overweight recommendation.
At the end of the first quarter of 2021, three hedge funds in Insider Monkey's database held holdings in Atai Life Sciences N.V. (NASDAQ: ATAI), totaling $782,000, up from one in the previous quarter totaling $118,000.
7. Cybin Incorporated (NYSE: CYBN, NEO: CYBN)
The Novel Analog of Cybin Exhibits Numerous Advantages Over Oral Psilocybin
Cybin has less cash on hand than the companies mentioned thus far, with $63.6 million at the end of Q3. However, what excites Cybin is their work on next-generation psychedelics. CYB-003 and CYB-004 are Cybin's two main next-generation psychedelics, while they are currently developing others.
Cybin says that CYB-003 is a modified form of psilocybin that, based on preclinical animal research, resolves a number of the issues associated with the use of conventional psilocybin in a therapeutic setting. It has a shorter duration of action, the effects begin more rapidly after ingestion, and the effect is less variable between individuals. These three modifications to the molecule would make CYB-003 a more effective medicinal version of psilocybin.
CYB-004 is a metabolite of DMT. The primary difference, or at least the primary difference reported, is that CYB-004 will have a longer duration of action than conventional DMT. While the duration of action of psilocybin is frequently considered too long for therapeutic use, the converse is true with DMT. With the primary effect lasting approximately ten minutes, one could argue that a lengthier experience would provide more therapeutic benefit.
It is critical to remember that these two chemicals are still in their infancy. Though encouraging animal tests have been conducted, additional human trials must be conducted before we can definitively state that CYB-003 and CYB-004 are more effective than standard psilocybin and DMT. Phase 1 safety trials for CYB-003 and CYB-004 are anticipated to commence in 2022. Cybin intends to use CYB-003 to treat Major Depressive Disorder and Alcohol Use Disorder and CYB-004 to treat Anxiety Disorders.
Summary
Even if multiple enterprises pursue psychedelic drugs, not all will succeed. It's critical to keep in mind that psychedelic stocks are long shots, and there's a considerable chance you'll have to wait years to see your investment pay off. This group of stocks is susceptible to changing market and industry conditions, so thoroughly investigate your picks before making a purchasing decision.
Real-time News
