Psychedelics Outlook: A New Industry Emerges
Bryan Mc Govern – June 30, 2020
The idea of investing in psychedelics has captured the attention of the market, but what’s next for this exciting new segment?
Heading into the second half of the year, industry experts and advocates are considering the current psychedelics outlook as the market continues to grow.
With interest in investment opportunities related to psychedelic therapy on the rise, the Investing News Network (INN) spoke with a collection of insiders and experts about what investors should be paying attention to, and about the larger trends for this up-and-coming industry.
Overall, market watchers agree that the psychedelic medicine sector is growing, and a variety of companies are set to enter this early stage public space. Many of them have the goal of addressing the doubts and concerns of investors while pursuing potentially critical clinical trials.
In addition, since psychedelics companies are battling stigma and establishing that the therapies they use are legitimate, there will be changing legal landscapes that investors will have to pay attention to.
Below INN offers investors a look at the potential roadmap ahead for psychedelics investment from experts in the space. Read on to learn more.
Psychedelics outlook: Investor maturation process
Because of this increased attention, one industry expert told INN that there will be dubious players making a run in the market as a way to capitalize on the excitement surrounding the space.
“I think that there’s a lot of optics-based acquisitions that are happening right now,” said Marik Hazan, co-founder of Tabula Rasa Ventures. Tabula Rasa Ventures is a new venture investment firm focused on the expansive psychedelics opportunity.
According to Hazan, a lot of these purchases are coming from cannabis players looking to pivot into psychedelics. The executive said the justification comes from an attempt to satisfy an investor base with the promise of expert know-how on psychedelics. “When the reality typically is they know very little.”
The advent of psychedelics will likely test investors looking to gain exposure and ride the psychedelics train. But Hazan added that as it stands, a lot of investors still need to do proper due diligence and become more familiar with the segment before jumping in.
“Most investors don’t even really have a true understanding of the differences in policy or legislation.”
Psychedelics outlook: Projections on the psychedelics play
Interest in psychedelics-based medicine has opened the door for some experts to speculate about the potential this industry holds as a relative of the multibillion-dollar pharmaceutical market.
The connection between the two industries was explained by Maruf Raza, national director of public companies at MNP, an accounting and business advisory firm. During an online talk about the investment potential attached to the psychedelic market, he said he believes the development of psychedelic medicines will be dominated by synthetically manufactured components.
“Because it’s synthetics that’s something that Big Pharma is going to understand,” Raza said during the web-based discussion. The business executive pointed to the advanced state of modern psychedelic research as a big boost for the industry moving forward.
Ronan Levy, co-founder and executive chairman of Field Trip Psychedelics, told INN that at the moment the psychedelics industry is following a similar path to the pharmaceuticals space in terms of its approach to drug development models.
“The general direction of the industry is taking a more traditional approach to drug development, which is doing clinical trials … ultimately getting US Food and Drug Administration approval to market and sell the drug, just like any other pharmaceutical product on the market right now,” Levy said.
As the industry gains momentum, public exchange executives have confirmed that there is an increasing pipeline of firms looking to go public and raise capital for psychedelic businesses.
During an online forum held in June, Richard Carleton, CEO of the Canadian Securities Exchange, said there were 10 firms on his exchange associated with the psychedelics industry, and at least six additional companies were pursuing listings at that point in time.
Hazan warned investors about the dangers of public listings launched with the aim of looking for quick returns, compared to companies that have been around longer and have vocalized their psychedelics intentions from the beginning.
The investment executive said the rush of listings represents a full trend for the segment, with companies attempting to “capitalize on the boost that they’ll get from just being one of the few psychedelic stocks on the market.”
Psychedelics outlook: Research and studies lead the way
Psychedelic treatments have been tied to various mental health ailments, such as depression, post-traumatic stress disorder (PTSD) and anxiety.
The study of these hallucinogenic drug compounds has been pushed forward by corporate firms like COMPASS Pathways, as well as by psychedelic drug research groups like the Multidisciplinary Association for Psychedelic Studies (MAPS) Canada.
During an online presentation on the benefits of psychedelics as a medical treatment, Field Trip Psychedelics’ lead psychologist, Dr. Joseph De Leo, and the company’s medical director, Dr. Michael Verbora, broke down some of the current mental health treatment associations for the hallucinogen compounds found in magic mushrooms:
- Ketamine: Depression, suicidality, PTSD, end-of-life anxiety and depression, alcohol dependence and cocaine addiction.
- Psilocybin: Depression, obsessive-compulsive disorder, end-of-life anxiety and depression, alcohol dependence, cocaine addiction, eating disorders and smoking cessation.
- MDMA: PTSD and social anxiety in autism.
Levy told INN that the success or failure of most drug development paths lies in the construction of studies, meaning answering questions like, “Who are the people being treated with the candidate?” or “What is the specific disease or condition being treated?”
He cautioned that since the industry has by and large pursued a drug development model similar to the path pharmaceuticals take, investors need to be aware of the long timelines attached to these studies.
A market report sponsored by the NEO Exchange warns that despite the potential attached to these studies and to eventual drug candidates, research timelines are an expensive endeavor, and these projects will need support by way of funds and a boost in confidence from eventual legalizing paths.
“Until leading nations such as the United States, United Kingdom and Canada reseachedule psychedelic drugs so that investment and research funding (including federal grants) are more widely available, a dearth of research will hamper the potential of this emerging market,” the report states.
Psychedelics outlook: Investor takeaway
Thanks to the growth factor attached to psychedelic mushrooms at the moment, investors have embraced the potential of this new sector. Now comes the more complicated part as the number of companies available begins to increase and the market plays expand in variation and scope.
In addition to learning about psychedelic substances — such as LSD, psilocybin or ayahuasca — investors will need to read up on the effects of psychedelic experiences and the roadmap ahead for any kind of legalization with these psychedelic use compounds.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: 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.