Psychedelics Sector Shifting Gears, Broad Market Forces at Play

Approvals imminent, expert says

When asked about when psychedelic medicines may be approved and how these milestones may impact stock prices, Trucchio said he still sees approvals being a year or even two away.

“The leaders in the space are all researching and in discovery states,” he said.

Trucchio explained that patience from investors is needed, noting that entrepreneurs and companies working with established compounds and substances generally have access to longstanding academic research.

But in psychedelics legal restrictions have limited the amount of information available to public companies.

The process of getting a drug approved is built on the back of a tremendous amount of medical research. Periodic updates from drug companies are key to the stability of any study, and often play a role in affecting the value of companies and their share prices.

“There was a large amount of enthusiasm placed around some of the data readouts that we were going to see, or some of the updates we were going to get in Q4 of last year,” Trucchio said.

He added that even though, in his opinion, the data that came out was compelling and positive, the market didn’t react in the way that experts expected.

The most prominent update, according to the financial expert, was news on the Phase 2B trial of COMP360 from Compass Pathways (NASDAQ:CMPS). “There was a very high amount of enthusiasm going into that readout, and I think that there’s been some kind of resetting of expectations,” he said.

Trucchio added that he is encouraged by the results expected to be delivered throughout 2022 by several publicly traded psychedelic players.

Investor takeaway

The psychedelics rush appears to maturing, and now that the initial hype is over, experts are reminding investors to be ready for a long road to approvals and any actual market operations.

One thing is for certain — there is no more doubt about this industry being only a momentary trend. In the talk, Trucchio was bullish in expressing that all the data recently seen in the market show psychedelic medicines have truly arrived, and “they are here to stay.”