As this exciting new drug market continues to attract capital, investors are starting to ask about ways to invest in psychedelics.
The heightened opportunity recently attached to psychedelic drugs has left curious market participants wondering how to invest in psychedelics.
Promising research associated with psychedelic medicine shows the potential for these products to treat mental health issues and even addiction to opioids. In fact, according to a recent report from Data Bridge Market Research, the psychedelics market could reach a US$8 billion value by 2029.
The capital markets have opened the doors to this sector as a new wave of public companies pursues effective medicines and products to offer growth in this developing arena.
Here the Investing News Network (INN) provides investors with a closer look at ways to invest in psychedelics, what to look for when starting in the space and the early trends seen so far in this nascent industry.
Ways to invest in psychedelics: Early stage opportunities in Canada
As with the fast growth of the cannabis industry over the last half decade or so, the Canadian capital markets have welcomed the opportunity attached to psychedelics.
The Canadian space has already seen a significant number of public listings related to the market for psychedelics stocks, as well as existing public businesses trying to get a piece of the pie.
The Canadian Securities Exchange (CSE) has long established itself as a hotbed for up-and-coming companies in growth-stage areas. It has been no different with psychedelics, and it didn't take long before the exchange was offering a collection of stocks for investors to examine.
During an online video conversation, Richard Carleton, CEO of the CSE, said he’s held discussions with both companies and investors that are keenly interested in investment opportunities in the space.
The exchange executive stressed that investors need to keep an eye on the disclosures offered by companies operating businesses that may not be universally legal.
This is something that the CSE got experience doing during the cannabis boom — the exchange began asking marijuana companies to fill out detailed forms indicating the risks associated with their businesses.
Carleton compared the two industries, saying that while cannabis has raised millions of dollars in Canada to launch “the most exciting new consumer packaged goods industry in generations,” the psychedelics space is akin to pharmaceuticals and is taking a much more established medical approach to its business model.
A 2022 outlook report from business law firm McMillan shows that in 2021, 34 psychedelics companies were listed on the CSE, TSXV or the NEO Exchange in Canada, compared to just 16 in 2020.
In the first 11 months of 2021, psychedelics firms raised C$289 million on the CSE alone. McMillan expects to see further growth in this market in the years ahead.
Within the NEO, which in mid-2022 was acquired by Cboe Global Markets (BATS:CBOE), the opportunity attached to psychedelics investing has been recognized as critical for the future of the Canadian exchange.
“The psychedelics space shows incredible promise and NEO is ready and willing to help bring that potential to fruition,” Jos Schmitt, president and CEO of the NEO, wrote in a letter attached to the exchange’s public report on psychedelic investments.
Ways to invest in psychedelics: The broader investment landscape
The psychedelics investment industry is still in its early stages, but a crop of companies are already trading with healthy volumes. As mentioned, some brand-new companies are coming out of the private stage and into the capital markets, but existing firms are also diversifying because of the promise they see in the market.
A few of the rising stars in the Canadian psychedelics space include Mind Medicine (MindMed) (NEO:MMED,NASDAQ:MNMD), Field Trip Psychedelics (TSX:FTRP,NASDAQ:FTRP), Cybin (NEO:CYBN,NYSE:CYBN) and Numinus Wellness (TSXV:NUMI,OTCQX:NUMIF).
The majority have put forward business models based on the psychedelic research of novel medicines, which like established pharmaceutical products will require heavy inspections and reviews.
The message of a pharmaceutical-like industry was echoed by MindMed, the first psychedelics entity to make a major debut on the NEO. The company is focused on developing treatments for depression, anxiety, ADHD and addiction that harness the medical benefits of LSD and the psychedelic drug ibogaine.
JR Rahn, co-founder director and co-CEO of the firm, previously told INN his company is squarely focused on the medical aspect of the psychedelic drug industry.
“We don’t see a future in recreational psychedelics,” the MindMed executive said. “The only future that we see is psychedelic medicines being passed through the (US Food and Drug Administration).”
In Q1 2022, mental health company Numinus Wellness completed the first MDMA administration for its PTSD trial, which is sponsored by the Multidisciplinary Association for Psychedelic Studies (MAPS).
"We are proud of our clinical and research teams who have been and continue to be instrumental in driving MDMA-assisted therapy for PTSD research forward in Canada," said CEO and Founder Payton Nyquvest. "We will continue to work with MAPS, Health Canada and the industry to help make MDMA-assisted therapy a reality."
For its part, Cybin is moving forward with clinical trials for CYB003, a psilocybin-based candidate for the treatment of major depressive disorder and alcohol use disorder. In mid-2022, the firm received approval to begin its first in-human Phase 1/2a clinical trial evaluating CYB003 after submitting regulatory applications in the Q2 period.
The connection to the pharmaceutical space was also reinforced with the launch of the first psychedelics exchange-traded fund — while it includes mostly psychedelics-focused companies, it also has some exposure to big-name pharma stocks doing research on psychedelics.
The wellness and improvement trend in the space is widespread too, with many psychedelic drug investment stories relating to modern clinics offering novel treatments for people struggling with mental health issues. In design, these clinics offer a fresh method of treatment for patients.
Ways to invest in psychedelics: Investor takeaway
The lofty expectations for the psychedelics industry relate to the potential for these drugs to become go-to treatments for mental health issues such as anxiety and depression, and perhaps even addiction.
Cultural acceptance of psychedelic medicine and treatments is shifting, partially due to growing investor interest in the space. While this change has brought excitement from the public markets, there's still a long path ahead for companies working in the sector — and the investors backing them.
This is an updated version of an article first published by the Investing News Network in 2020.
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Securities Disclosure: I, Melissa Pistilli, 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.
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