Psychedelics Market Update: H1 2024 in Review

How are psychedelics stocks performing?

Following a period of highly anticipated clinical trials and FDA decisions that dominated the first half of 2024, it's crucial to examine the financial performance of leading psychedelics companies as the industry continues to evolve and garner attention.

As clinical trials can span several years, the progress and financial health of companies are essential indicators of potential growth areas and future prospects in the sector.

Atai Life Sciences, which is in the early stages of testing five new psychedelics-based treatments, released its Q4 and full-year 2023 financial results on March 28, reporting US$40.2 million in net losses for the full year, a significant decrease from the US$152.4 million net loss from the same period a year prior.

On May 15, the company's Q1 results were disclosed, revealing a continued reduction in losses; Atai Life Sciences reported US$26.7 million in net losses compared to US$33.1 million during the same period a year before.

Compass Pathways’ Q4 2023 financial results were released on February 29. They show that its spending on research and development (R&D) increased by 25.4 percent in 2023 compared to 2022, which may have contributed to higher net losses for both the quarter and full year.

However, the company has announced multiple research collaboration agreements in 2024 in anticipation of future FDA approval of its COMP360 psilocybin treatment, including with Greenbrook TMS, Hackensack Meridian Health, Journey Clinical and Mindful Health Solutions. In its Q1 financial report, released on May 8, the company said it anticipates Phase 3 results for two clinical trials of its psilocybin formulation, COMP360, by Q4 2024 and mid-2025, respectively.

Cybin’s has reached notable milestones in 2024. On January 23, the company was granted FDA clearance to initiate a Phase 2a study of CYB004, a deuterated DMT molecule for treating GAD. In February, the company’s Q3 2023 quarterly earnings report included several optimistic updates on the various stages of its other trials.

Cybin has been actively pursuing intellectual property protection for its drug discovery platform, and its Q4 2024 report mentions four additional patents in jurisdictions in the US, Canada and China for CYB003 and CYB004.

MindMed has also made significant progress this year in terms of clinical programs and financial positioning. Its 2023 financial report includes multiple planned milestones, such as presenting 12-week Phase 2b data for its GAD treatment, MM120, and initiating a Phase 3 program in the second half of 2024.

Additionally, MindMed proposed an underwritten offering of common shares and a concurrent private placement, a higher cash balance in Q1 compared to Q4 2023 and decided to consolidate trading of its common shares on the NEO Exchange and Nasdaq, resulting in a voluntary delisting from Cboe Canada on April 1. MindMed's inclusion in the Russell 2000 and Russell 3000 Indexes on June 28 suggests its prominence in the US market could grow in Q3.

Finally, Numinus’ results for its first fiscal quarter of 2024 show an 18.8 percent increase in gross profits and a 3 percent decline in revenue compared to the previous quarter, a reduced cash burn rate of under US$1 million per month from October 2023 and over 700 new learners enrolled in its training programs.

The company was also approved to conduct a clinical trial by Health Canada that will assess the viability of a group model in MDMA-assisted psychotherapy on May 30.

On June 20, the company announced its intention to change its name to "Numinus Intelligence" after acquiring MedBright AI, a company that uses artificial intelligence to help medical professionals improve healthcare access and patient outcomes and reduce costs.

The acquisition involves merging MedBright's AI-powered clinical solutions with Numinus' data to optimize clinical operations and take advantage of reimbursable services.

What's ahead for the psychedelics sector?

The future of psychedelics and mental health treatment is evolving, and shareholders of companies pursuing psychedelics-based treatments will continue to advocate for their potential to play a considerable role in the future of mental health.

However, continued legislative action is necessary for psychedelics to become a more integrated part of mental health treatment, and to allow broader access and research. Currently, there are legislative developments happening in a few states.

In November, Massachusetts residents will have the opportunity to vote on a measure that would legalize the use of psychedelics in the state. The announcement was made by state officials after Massachusetts for Mental Health Options submitted 14,000 signatures to the office of Commonwealth Secretary William F. Galvin, who finalized the ballot questions on July 25.

In California, Senator Scott Wiener (D-CA) and State Assemblymember Marie Waldron (R-CA) introduced bipartisan legislation in February after Democratic Governor Gavin Newsom vetoed legislation that would have decriminalized psychedelic mushrooms last year. The new law would allow patients to consume psilocybin, dimethyltryptamine (DMT), MDMA and mescaline under the supervision of a licensed therapist.

The bill was approved by the Senate Business, Professions and Economic Development Committee on April 16, and by the Senate Public Safety Committee on April 23. However, on May 16, the Senate Appropriations Committee voted to hold the bill without taking further action, putting its future in question.

In New York, Assembly Bill 0375 was introduced on May 21. The bill is sponsored by Assemblymember Amy Paulin (D-NY), and is supported by New Yorkers for Mental Health Alternatives. It proposes the legal growth, cultivation and regulated adult use of psilocybin for certain health conditions. The bill has been referred to the Assembly Health Committee.

In Utah, SB 0266, a bipartisan bill sponsored by Senator Kirk Cullimore (D-UT) and Assemblymember Jim Dunnigan (R-UT) outlines a pilot program for hospitals to administer psilocybin and MDMA as an alternative treatment option for adults 18 and older. The bill became a law on March 21, although without Republican Governor Spencer Cox’s signature.

The financial health and progress of leading psychedelics companies indicate potential growth areas and future prospects in the sector.