In November 2020, Oregon made history by becoming the first U.S. state to legalize psilocybin, the active ingredient in so-called magic mushrooms. Much like cannabis, psychedelics are becoming more mainstream, and investors are sizing up what could be a major long-term growth opportunity, especially as companies develop therapeutic uses for the compounds. Market research firm Research and Markets estimates that the worldwide legal psychedelic drugs market will grow to $10.75 billion by 2027, up from $4.75 billion in 2020. Unfortunately, cannabis stock investors know the nascent business has faced many regulatory hurdles and experienced multiple boom-and-bust cycles, so psychedelic investors must have a high-risk tolerance. Here are seven top psychedelics stocks to watch.
Mind Medicine Inc. (ticker: MNMD)
Mind Medicine is a biotechnology company that is running clinical trials on multiple drug candidates. Two of its trials are focused on LSD, and the third is focused on the psychedelic drug ibogaine, a naturally occurring substance found in a West African shrub. Mind Medicine’s Project Lucy LSD trial to treat anxiety is in phase 2b testing, while its LSD microdosing and opioid withdrawal projects both recently entered phase 2 testing. The company is also participating in collaborations to investigate cluster headache treatment and LSD-assisted therapy. Depression, attention deficit (hyperactivity) disorder and addiction are massive markets and provide tremendous long-term potential.
Compass Pathways PLC (CMPS)
Compass Pathways is testing the synthetic psilocybin therapy COMP360 for treatment-resistant depression and post-traumatic stress disorder, or PTSD. Trial patients take COMP360 in a controlled environment, and a therapist talks them through the experience. Similar phase 3 trials by the University of California—San Francisco using MDMA, or ecstasy, to treat PTSD recently yielded positive results. Compass Pathways completed its initial public offering in September 2020, selling shares at $17 per share. Since its debut, the volatile stock has traded as high as $60 but has since dropped back below $25. Investors should expect further trial data to trigger more volatility in CMPS stock.