How to Invest in Psychedelics: Risks and Opportunities of Psychedelics Investments, Psychedelic Stocks to Buy
Psychedelic pharma companies are in their early stages. However, some of them have already shown significant results in treating depression, addiction, ADHD, post-traumatic stress disorder, and other mental health problems. More and more investors focus on psychedelics investment.
In this article, we will try to cover the basics of how to invest in psychedelics. You will learn the pluses and minuses and the psychedelic stocks you can buy.
Understanding the Psychedelic Sector
The world has a significant need for better mental health treatment. This is the main reason why investors are paying increasing attention to the psychedelic sector. Annually, the world economy spends almost $1 trillion studying and treating mental illnesses. That is why investors are expecting significant returns in the near future.
Why Psychedelic Stocks Are Becoming So Popular
According to the research, post-COVID conditions include worsening mental health problems. Pharma corporations are planning large investments in psychedelic medical therapies to cope with this. Governments also want to defend their populations' mental well-being.
Major Challenges and Ailments that Psychedelics Are Looking to Help With
A lot of people are suffering from mental health difficulties. However, these problems are generally treated with psychiatric drugs. They have a lot of side effects and are not 100% effective.
Psilocybin is the main element in magic mushrooms. Its legalization in Oregon in November 2020 and Fast Track Designation from the FDA has created a whole new industry — psychedelic-assisted therapy. There is a growing body of evidence that this type of therapy is much more effective than traditional treatments for:
- treatment-resistant depression,
- post-traumatic stress disorder (PTSD),
- adult ADHD,
- substance abuse disorder, and all sorts of other mental issues.
Risks and Opportunities in the Psychedelic Sector
The companies that study chemical entities and produce psychedelic medicines share two fundamental risks that everyone needs to be aware of:
- the rate at which they burn cash;
- the uncertainty around the clinical efficacy of these projects.
Most of these companies function like biotech companies. They hinge on clinical trial success to validate their product, valuation, and FDA approval. The entire value prospect of these billion-dollar companies fully depends on trials. They can either fail or show significant results.
How do these companies raise cash when they have no cash flow? They don’t have products to trade; that is why such companies aren’t self-sustaining. The only way they can get money is to raise funds and continue to undertake further studies.
That is far from uncommon in a lot of biotech and medical fields. It means that if you are going to invest in psychedelics companies, choose long-term psychedelics investments. Thus you will give them time to finalize their studies and produce new medicine.
The psychedelic industry is going to be one of the biggest investing opportunities over the next decade. It is going to change the way we look at treating mental health. For example, the newest experiment in the field of psychedelics is microdosing. It can help to uplift moods, improve focus, and reduce anxiety.
Psychedelics present a fascinating opportunity because they are only in their first innings. There is so much more to come as these companies release clinical trials. You can buy stocks in promising companies. However, it is not easy to determine which company will skyrocket. Therefore, it is better to find a fund that invests in the stocks you are interested in. Negev Capital is such a fund.
Invest in Funds: Negev Capital
Negev Capital is an up-and-coming fund in the psychedelic space. They usually invest from $500K to $2M into one company. This fund focuses on the psychedelic companies that develop novel drugs based on psychedelic compounds. Most of their allocation goes to early-stage companies.
Here are some of the most promising psychedelic stocks. All of them are chasing different aspects of the market. Their focus is split. It depends on aspects of treatment through psychedelics:
Atai Life Sciences (ATAI)
This is a psychedelic drug research company. Their studies are focused on treating mental health issues like PTSD, anxiety, depressive episodes, and addiction in a new way. It also owns 20% of Compass Pathways. The company has the highest number of drug development programs. It explores the properties of drugs such as ketamine, MDMA derivatives, and kratom.
For example, the company studies PCN-101 (R-ketamine) and RL-007. These investigational drugs are in the Phase 2a trial. The first substance has the potential to treat treatment-resistant depression, and the second one is believed to treat schizophrenia.
Compass Pathways (CMPS)
The company is mainly focusing on one specific psychedelic drug called COMP360. It targets treatment-resistant depression. This synthetic psilocybin is in Phase 2b trials. The company has recently released the results of a major clinical trial. They were pretty positive.
Compass Pathways is waiting for the FDA approval of its drug. If successful, the company will be granted a 7-8 year patent.
Awakn Life Sciences (AWKNF)
This UK-based company is studying the properties of 3,4-methylenedioxymethamphetamine (MDMA), its derivatives, and ketamine. Some of their compounds are in Phase 2a and Phase 2b. Awakn has established several treatment centers in Europe.
The company's studies are based on innovative approaches to treating various addictions. In particular, they want to treat alcohol use disorder, and behavioral and gambling addictions. It can already provide ketamine-assisted therapies to treat mental disorders.
Small Pharma Inc. (DMT)
This company is also based in the UK. It studies both psychedelics and non-psychedelics to create mental health medications. The drug pipeline includes related compounds of N,N-Dimethyltryptamine (DTM). Studying of SPL026, an injectable DMT formulation, is already in Phase 2a. This drug can be used in treating major depressive disorder.
Bright Minds (DRUG)
This is a biotech company from Vancouver, Canada operating in the psychedelic industry. It is looking to improve on first-generation psychedelic compounds and provide specific personalized drugs to target the serotonin system.
Bright Minds are creating a pipeline of 5-HT, or serotonin, medicines. Their lead candidates, for example, BMB-101, feature next-generation characteristics reducing unwanted side effects and maximizing therapeutic attributes.
Mindset Pharma (MSET)
This psychedelic drug company is also situated in Canada. Its specialists are working on researching and creating new psychedelic compounds for the treatment of neurological and psychiatric disorders.
Mindset Pharma’s pipeline includes next-generation psychedelic drugs. Their main compound, MSP-1014, has the potential for the treatment of anxiety and resistant depression. Now the company is developing the new psychedelic drugs MSP-4019 and MSP-4020.
The Bottom Line
When it comes to investing in psychedelics, there are no holds barred from a moral standpoint. Companies like these are developing things that will help humanity progress and deal with mental health problems in a much better way. This will promote a whole new sector that will most likely provide hope to many individuals who are in dire need of alternative, effective medicines. That is why there are no signs that rapid psychedelics investment growth will slow down in the near future.