Psychedelics Trends 2021: Investors Tested by Stock Losses

Psychedelics trends 2021: Medical progress leads the way for opportunities

Andrew Charrette, director of regulatory affairs and psychedelic advisor with KGK Science, told INN he was encouraged by the business plans put forth by companies in the space throughout 2021.

In particular, he highlighted the research launched this year. “From my perspective, 2021 was a big year for a lot of the companies coming in and declaring their intent to conduct research,” he said.

Aside from drug development, Charrette said he saw significant progress from psychedelics companies that are focused on other aspects of the market, including those working on establishing networks of clinics.

In a video conversation with INN, James Halifax, host of the popular YouTube channel the Psychedelic Investor, reminded investors this market is not for the faint of heart, and a long-term outlook is essential to get started.

He identified a few “bullish signs” present throughout 2021 that encourage him about the growth of the space.

Halifax is primarily optimistic about the headway made by psychedelics companies when it comes to research and progress on scientific studies. In particular, he pointed to leaders like Cybin (NEO:CYBN,NYSEAMERICAN:CYBN), Atai Life Sciences (NASDAQ:ATAI) and Mind Medicine (MindMed) (NASDAQ:MNMD,NEO:MMED).

“Anybody who is even thinking about investing in the psychedelic sector needs to be aware that this is a long-term investment. You need to have a five-plus-year-long time horizon here,” Halifax said.

Watch the full interview with Halifax above.

The psychedelics space hasn't shied away from modeling itself on the pharmaceutical market, where a long-term outlook is also necessary due to intricate and costly drug-development programs.

During a panel at the Lift Expo, Stephen Murphy, co-founder and CEO of Prohibition Partners, said he still expects to see pharmaceutical companies of grand stature explore the psychedelics market through merger and acquisition strategies. From his perspective, it will be some of these big companies that ultimately end up taking the most promising drugs today through the approval process.

In terms of regulatory progress, Michael Kydd, founder of the Kydder Group, a regulatory communications firm, told INN that 2021 was a significant year for regulatory discussions with medical rule-maker Health Canada.

“We expected more discussion and interest at the political level, and we got it,” Kydd said. This pursuit is designed to build on Canada's recently proposed amendments for end-of-life treatment. Kydd said a new meeting is meant to take place in January with leading psychedelics businesses and Canadian regulators.

The industry saw other kinds of significant advancements by way of joining the corporate conference world.

While the COVID-19 pandemic continues to change the way business events have been held, 2021 provided some relief as a few were organized to discuss the progress of the psychedelics market.

Microdose put on its first in-person event after months of establishing its online conference talks. Called Wonderland, it was one of the first exclusively psychedelics business events. Later on, psychedelics got another boost in visibility thanks to its addition to the lineup at the latest Lift Expo, typically a cannabis-centric event.

Psychedelics trends 2021: Stock market losses highlight long road ahead

As 2021 began, the psychedelics market had already seen a boost in confidence thanks to the launch of the first exchange-traded fund (ETF) exclusively dedicated to psychedelics names. The Horizons Psychedelic Stock Index ETF (NEO:PSYK) made its debut on January 26.

However, the fund faced difficulties in its first year, and wrapped up 2021 down from its initial launch point.

Steve Hawkins, president and CEO of Horizons ETFs Management (Canada), said 2021 brought a downturn for psychedelics stocks compared to a “fantastic” 2020 period.

As of December 24, the ETF was down 48.11 percent year-to-date, sitting at C$4.75. Hawkins wasn’t surprised by these results, having previously told INN that all investors should expect volatility within the psychedelics market.

Larry Zeifman, a partner at mid-sized accounting firm Zeifmans, told INN that from his perspective, the most challenging aspect for the market in 2021 was the finance all around.

Another difficulty for psychedelics has been the high expectations surrounding the market — the promise of revolutionary new medicines has left investors hoping for a trip to the moon via stocks.

However, as one executive told INN, the industry's potential can bring an extra level of pressure. “Unfortunately, drug development takes a long time, and although Cybin has grown from five to 55 employees in the past year, I sometimes feel that we just can’t grow fast enough to meet those, perhaps unrealistic, expectations,” CEO Doug Drysdale said. He did express optimism at seeing so many new publicly traded companies join the market in 2021.

And despite the losses seen among stocks, there were significant maturing steps for psychedelics throughout 2021, including a few names in the space graduating to US exchanges.

Atai joined the public race with a stock launch in June, and MindMed and Field Trip Health (NASDAQ:FTRP,TSX:FTRP) jumped to the NASDAQ. Also this year, Cybin moved to the NYSE small-cap market.

Halifax told INN that reviewing the psychedelics market by stock performance alone would leave people thinking that the industry is in peril, but the widespread losses don't tell the whole story.

“If you’re just zooming out and taking a look at the stock price, not taking in any more information, you would come along or come away with the perspective that, ‘Oh golly, it’s been an absolutely horrible year or six months for psychedelic stocks,” he explained in conversation with INN.

Psychedelics trends 2021: Investor takeaway

The path to a thriving psychedelics market won’t arrive without a few hits along the way. As investors begin to grasp the scope of the industry, they may come to better appreciate the patience required.

In 2021, psychedelics stocks faced serious hardships, but the market's long-term prospects are what experts point to when doubts arise. There are many unknowns ahead, but the anticipation for when psychedelics could take a new kind of leap is ever present.