From trippy outsider fad to mainstream medical phenomenon, psychedelics are having a moment. Cannabis has also been having a moment in the sun, and is now fueling a massive industry that is still growing.
Hallucinogens, including psilocybin and LSD, are promising treatments for intractable illnesses such as PTSD and depression. Multiple psychedelic pharmaceutical companies are already developing a range of drugs based on hallucinogenic compounds, and some are already on the road to regulatory approval.
Several of these companies are getting plenty of attention from investors, and whatever you want to call them, these psychedelic stocks are hot. Of course, psychedelic stocks are really just a more narrow form of healthcare stock focused on the therapeutic use of hallucinogens. But since the area is still in its infancy, many of these companies still have relatively low market capitalizations.
In this post we’ll cover:
- What psychedelics are and what we mean by psychedelic drugs
- What the psychedelic market looks like
- What the best psychedelic companies to watch are
Read on to really get into this market!
What Are Psychedelics?
Psychedelics are a type of hallucinogenic compound. By increasing connectivity between different regions of the brain and reducing activity in the default mode network of the brain, psychedelics significantly alter the state of consciousness of the person who takes them.
The psychiatrist Humphrey Osmond was the first person known to create the term “psychedelic.” He created the phrase from the Greek words “psyche” or mind and “delos” or manifest. His point was that these compounds can assist the user in revealing the potential of their own minds.
The more modern or preferred term is “entheogen,” which means “god within.” This refers to the general human spiritual, religious, and mystical experiences that typically arise from psychedelic use.
Research indicates psychedelics have potential for treating alcoholism, cluster headaches, depression, obsessive-compulsive disorder (OCD), post-traumatic stress disorder (PTSD), and other issues. And unlike medications such as antidepressants that must be taken daily, psychedelics are usually just taken once.
At higher doses, psychedelics can produce synesthesia. This is the stimulation of multiple senses at once, such as “smelling colors.” Users of psychedelics may also experience extra time and space dimensions.
Occasionally, a user might experience a negative psychedelic experience or a “bad trip,” including feelings of dread or even injuries if they place themselves in danger.
Psychedelic drugs include:
- LSD (Lysergic acid diethylamide). An alkaloid derivative found mainly in rye fungus, LSD is an antagonist to both serotonin and dopamine receptors in the brain.
- Psilocybin. Over 200 species of fungi produce enough psilocybin to manifest mystical experiences. Many of them were used by the native Mazatec people of Oaxaca, Mexico.
- Mescaline. This natural psychedelic compound found in various species of cacti such as Peyote is known for producing colors and patterns.
- DMT. Known popularly as ayahuasca, this is an indole alkaloid found in a number of plant species and consumed by various South American tribes; recreational users in the US buy a vaporized or inhaled version of DMT that produces an experience of a separate reality that includes different entities and hyperbolic geometry.
- (2,5-dimethoxy-4-bromophenethylamine). This compound was synthesized from mescaline in 1974 by Alexander Shulgin.
The Psychedelic Market
According to a recent market research report, the worldwide market for psychedelic drugs is expected to grow from 2022 to 2029. Data Bridge Market Research predicts that during this period the market will grow with a CAGR of 13.3%. If this holds true, the psychedelic market should reach a value of USD 6,401.95 million by 2029 up from its 2021 value of USD 2,386.72 million.
Here is a list of psychedelic companies to watch in 2023:
- ATAI Life Sciences
- Albert Labs
- COMPASS
- Mind Medicine, Inc.
- Numinus
- Entheon
- Cybin Corp.
- Seelos
- GH
- Incannex
- HAVN
- Field Trip
- NeuroRx, Inc.
- GABA Therapeutics, Inc.
- Horizon ETF
- Defiance ETF
- Advisor ETF
Top Psychedelic Companies
ATAI Life Sciences. Berlin-based ATAI is a biotech company that backs both psychedelic and conventional therapies and made news when it received backing from billionaire investor Peter Thiel. The company has several drugs in Phase 2 trials and is the home of Empath Bio.
Albert Labs. Vancouver-based Albert Labs is a research and drug-development company focused on innovative mental health medications. The team is developing a psilocybin-based medication for cancer-related distress.
Compass Pathways. (NASDAQ:CMPS) is developing COMP360, a psilocybin-based therapy for treatment-resistant depression (TRD). This well-funded company is expecting to move toward clinical trials soon.
Mind Medicine. This biotechnology company is running clinical trials on multiple drug candidates, including DMT, LSD, ibogaine, and mescaline derivative 19-MC. The FDA allowed phase 2b testing of Mind Medicine’s investigational drug, MM-120, a version of LSD pharmacologically optimized for treating generalized anxiety disorder.
Numinus. Canada’s first publicly traded company authorized to conduct research on psilocybin extraction, Numinus’s stated goal is to help treat trauma, mental illness, and addiction.
Entheon Biomedical. This company aims the causes of addiction with DMT. Founder and CEO Timothy Ko lost his brother to substance abuse and has personally used psychedelics.
Cybin. This Canadian pharmaceutical company is developing psychedelic medicines to treat mental illnesses such as anxiety, depression, and addiction. They are testing psilocybin’s ability to treat mental distress in frontline healthcare workers in the clinical-stage EMBARK trial.
Seelos Therapeutics. This biopharmaceutical company is home to four clinical-stage pipeline programs. Seelos is testing ketamine-based therapies to treat patients with major depressive disorder and acute suicidal ideation and behavior.
GH Research. This company is testing and developing proprietary 5-MeO-DMT, or O-methyl-bufotenin, a close relative of dimethyltryptamine, commonly known as DMT. It is testing this compound in therapies for treating bipolar II disorder, treatment-resistant depression (TRD), and postpartum depression.
Incannex Healthcare. Australian drugmaker Incannex is researching the use of psilocybin-assisted psychotherapy to treat GAD.
HAVN Life Sciences. (OTC: HAVLF) This Canadian biotechnology company focuses on psychedelic medicine, mushroom offerings, and LSD-linked drugs that may treat cluster headaches.
Field Trip Health Ltd. (OTC: FTRPF). Field Trip conducts research and operates ketamine-assisted psychotherapy clinics in Canada, the US, and internationally.
Psychedelics ETFs
A psychedelics ETF or exchange traded fund allows investors to spread their risk among multiple psychedelics companies. This way they can still keep investing in this specialty area, and offset potential losses with potential gains. Each of these psychedelics ETFs takes a slightly different approach:
- Horizon’s Psychedelic Stock Index ETF (PSYK): PSYK is managed and closely tied to the North American Psychedelics Index.
- Defiance Next Gen Altered Experience ETF (PSY): PSY is passively managed and includes psychedelics and cannabis.
- AdvisorShares Psychedelics ETF (PSIL): This is the lone actively managed psychedelics ETF.
The Bottom Line
Recently, researchers realized that common medications such as SSRIs may not be working the way we thought they were—and this realization along with ongoing dissatisfaction and record levels of mental health problems are causing people to look for alternatives. This in turn is fueling a renaissance for the psychedelic medicine market. These are just a few of the many companies to watch right now, and many more are coming.
