Investing In Psychedelics: Why Is It In Such High Demand These Days?
Is investing in psychedelics the next wave in the alternative medicine business? With the cannabis investment boom still ongoing, speculators are keen to catch the next wave of drug legalization. That wave is already taking shape as research institutions and private companies work to make psychedelic therapies available.
Once relegated to the black market, psychedelics now hold promise as clinical treatments for a wide range of ailments. Drugs such as magic mushrooms, LSD, and MDMA have shown great promise in addressing serious mental health issues.
The low toxicity and negligible side effects of many of these treatments have added to the appeal. Public approval of psychedelic research is high, and legislation has paved the way for further studies. This could lead to an accelerated path to market.
Changes In Legal Status
Since 1970, psilocybin and LSD have been Schedule I drugs in the United States. Other psychedelic substances, such as MDMA, are also of the Schedule I variety. These drugs remain Schedule I at the federal level, but a number of local initiatives have moved the needle toward legality.
Perhaps, most notably, in 2020 Oregon voted to decriminalize possession of psilocybin mushrooms and to legalize their therapeutic use. Washington, D.C., also voted to decriminalize them that year along with other psychedelic plants. California and New Jersey appear to be on the verge of doing the same. Cities including Denver, Oakland, and Santa Cruz have instituted local decriminalization measures as well.
More substantive policy shifts on the federal level could be on the horizon. Ketamine has already seen major inroads for off-label use. In 2019, Johnson & Johnson’s esketamine nasal spray Spravato got approval as a medication for treatment-resistant depression.
A Legal Shift Is Already Happening
Health Canada, the Canadian agency responsible for oversight of healthcare policy, granted exemptions to four terminally ill patients in 2020. These people were then given psilocybin mushrooms as part of end-of-life care. Further, 16 healthcare professionals were also given exemptions, allowing them to consume psilocybin mushrooms. The agency reasoned that experimentation might allow these clinicians to devise ways for the drug to be used therapeutically.
Canada saw its first legal import of psilocybin mushrooms in 2020. It came from Mydecine, which plans on selling its product to other licensed institutions. The company will also use them in their own PTSD treatment trials. One Canadian business owner is already selling microdoses of psilocybin, despite its illegal status. He has yet to see any legal consequences, which could be a sign that a shift in perception is occurring.
A handful of countries already allow legal possession of psychedelics, and the precedents set there will likely influence policy elsewhere. For example, the Netherlands allows legal possession of the mycelium (or “truffle”) of the psilocybin mushroom. The country plans on using this component in a therapeutic context.
Successful Trials And Regulatory Approval
Yes, broader legal status of psychedelics remains in flux. However, a number of institutions and private companies have gained government approval for research into their beneficial application. This should only add more intrigue about investing in psychedelics.
In 2017, the U.S. FDA granted breakthrough status to an MDMA therapy protocol for PTSD developed by the Multidisciplinary Association for Psychedelic Studies. The next year, status to a program aiming at addressing treatment-resistant depression using psilocybin began development from Compass Pathways. And, in 2019, a program using psilocybin to treat major depressive disorder got approval. These trials are in later stages, meaning they’re likely to produce available drugs in the next several years.
The legitimacy of these trials has been bolstered by the opening of major psychedelic research centers at noted institutions. Both Johns Hopkins University in the U.S. and Imperial College London in the U.K. opened psychedelic research centers in 2019.
The Mental Health Problem
Nearly an eighth of the world’s population will face some sort of mental health challenge in their lifetimes. According to WHO, 264 million people around the globe suffer from depression alone. And a substantial fraction of that population does not respond to conventional treatment approaches.
If existing trials successfully demonstrate the efficacy of psychedelic modes of treatment, investing in psychedelics could become a major untapped market. It’s something many in the investment sector are keeping a close eye on.
The Appetite For Investing In Psychedelics
Starting in early 2020, a number of companies began offering public options in Canada due to looser regulations. Psychedelics that are Schedule I in the U.S. are Schedule III in Canada. Some 25 psychedelics companies now trade on the Canadian Stock Exchange, and others trade on smaller exchanges.
In September 2020, Compass Pathways became the first psychedelics company to be listed on a major U.S. exchange (NASDAQ). The company is backed by Paypal founder Peter Thiel. Its highly successful IPO paved the way for further offerings.
Though the psychedelics boom bears some similarities to the cannabis explosion of the past decade, observers point to notable differences. Since psychedelic drugs are Schedule I in the U.S., the development process is much slower. Institutions wishing to work with the psychedelic drugs must deal with extensive licensing procedures. This substantially extends the development period and creates additional costs.
So Is Investing In Psychedelics Right Now A Smart Move?
Even if the initial trials are successful, the path to FDA acceptance is also long and far from a certainty. Furthermore, a patent isn’t available for specific psychedelic drugs. This creates a very competitive market for derivatives, novel molecules, or proprietary formulations. This only makes the outlook for investing in psychedelics blurrier.
It is also worth noting that, unlike existing psychiatric drugs, some psychedelics treatment requires minimal doses to be effective. This leaves questions about sustainable production of these drugs long-term. Companies such as MindMed are thus pursuing diverse options based on an array of psychedelics.
While investing in psychedelics currently appeals to those with a high risk appetite, growth could reach $6.85 billion by 2027. Eventually, it could be worth over $100 billion. Even a small investment now in the right company could pay major dividends in the next several decades.
Interested in Psychedelic Therapy? Here are a few clinics across the country:
Kalypso Wellness Centers – North Houston, Texas
Portland Ketamine Clinic – Portland, Oregon
Cornell Pain Clinic – Beaverton, Oregon
Pittsburgh Ketamine – Monroeville, Pennsylvania
Serenity Mental Health – Ogden Riverdale, Utah
Institute for Integrative Therapies – Mendota Heights, Minnesota
MY Self Wellness – Bonita Springs, Florida