Experts of the financial market react to one of the biggest new listings for the psychedelics investment market.
A new listing announcement is set to completely change the landscape for psychedelic investments.
Last Wednesday (September 2) a document filing revealed COMPASS Pathways submitted paperwork for an initial public offering (IPO) to publicly list on the NASDAQ.
At an online event, a group of investors agreed the eventual COMPASS Pathways public offering will take the entire psychedelics industry into the next stage.
The researchers of Compass Pathways have been investigating the medical benefits of psilocybin and particularly its treatment of depression.
This company has been on the radar of psychedelic insiders thanks to the notorious backing of billionaire venture capitalist Peter Thiel. While the listing announcement wasn’t unexpected, it still represents a significant stepping stone for the market, according to financial figures such as the head of Stifel Canada.
Harris Fricker, president of Stifel Canada, said this listing could represent an inflection point for the market and sets up the NASDAQ as the optimal home for these listings. “It’s the highest-profile listing to-date,” he said.
The event was hosted by Microdose Psychedelic Insights, a division of The Conscious Fund, which is trying to change the views on psychedelic investments.
Fricker said while there are high profile investors involved with the psychedelics space, it is not an institutional market yet.
“The COMPASS filing and subsequent IPO will be very validating of the market,” he added.
Bill Stern, managing partner at Venture Group Capital, said this announcement could begin to tip the scales in favor of the US capital markets since, so far, psychedelics listings have primarily appeared in Canadian exchanges.
“This is a game-changer for the industry,” said Stern. “Unfortunately, a lot of public companies when they have come to market have been trading on the smaller exchanges with very little exposure. This is going to change the game and is going to change the industry dramatically.”
Stern and fellow panelist entrepreneur and investor Lindsey Hoover agreed COMPASS Pathways’ listing may help in increasing the interest big pharmaceuticals could have in making acquisitions looking for psychedelic exposure.
As the Canadian representative in the online forum, Fricker said there have been interesting companies going public in Canada but the new listing solidifies the life science aspect of the psychedelics play and reinforces the NASDAQ as the home of that investment.
“The viable companies that are listed, I think, will benefit quite nicely from what’s going to happen in the NASDAQ… I think it will further validate the space here in Canada if you got an attractive, well-managed company,” Fricker said.
In late 2018 the company obtained a critical US Food and Drug Administration (FDA) breakthrough therapy designation for its psilocybin therapy investigation with treatment-resistant depression.
This year the company has been angling for its listing since, in April, it raised US$80 million in a Series B investment round.
“It brings in much-needed capital because already the (psychedelics) space is extremely capital intensive,” Stephen Murphy, co-founder and managing director for drug research firm Prohibition Partners, told the Investing News Network (INN).
Murphy said the business of psychedelics will continue to face stigma as it expands and begins adding more investors. And COMPASS Pathways seems to agree with him as it prepares for the pushback its business may face in the spotlight.
According to a report from FierceBiotech, the psychedelic drug maker issued the following warning in its IPO filing:
“Therapies containing controlled substances may generate public controversy. Political and social pressures and adverse publicity could lead to delays in approval of, and increased expenses for, COMP360… adverse publicity from psilocybin misuse may adversely affect the commercial success or market penetration achievable by our investigational COMP360 psilocybin therapy.”
However, Murphy told INN, the medical benefit and potential treatment for conditions like depression or PTSD –another potential checkpoint for psychedelic medicines– will help quickly remove the stigma associated with these substances.
The listing announcement by COMPASS Pathways is shining a light on psychedelics investments and making it clear to the world these companies are here to stay.
It’s clear the visibility and interest for psychedelics investments will only pick up from here on out.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.