Norms and regulations in society can change in the span of a few generations. We’ve lived through this with the rise of the cannabis industry. A few decades ago, most people were against its use for recreational and medicinal purposes. Today, medical marijuana has nearly unanimous approval, while a majority are in favor of its legalization for recreational use…
We may be now going through the same process with psychedelic drugs such as LSD, psilocybin, and MDMA. There has been promising research and evidence that these substances can help with mental illnesses and anxiety in a much more effective way than traditional treatments with fewer side effects. Further, psychedelics have the power to help at a much more root-cause level than merely treat symptoms.
Research and clinical trials are being conducted using these substances, while state legislatures in more liberal enclaves are considering its legalization for medicinal purposes. Last year, Oregon became the first state to legalize its use for medical use. Investors are also starting to pay attention as there is significant commercial potential. 3 stocks that are working on developing treatments from psychedelics are ATAI Life Sciences N.V (ATAI – Get Rating), Compass Pathways Plc (CMPS – Get Rating), and Mind Medicine Holdings (MNMD – Get Rating).
ATAI Life Sciences N.V (ATAI)
ATAI is the latest psychedelic company to go public. It was able to raise $225 million at a $2.3 billion valuation, although shares are down by about 15% since opening. It has a variety of psychedelic-derived treatments that are in the clinical or research stage. The company has several impressive, high-profile investors with a track record of success like Peter Thiel, Mike Novogratz, and Apeiron Investment Group.
Currently, ATAI has 10 potential treatments in its pipeline, each in various stages of development. However, ATAI’s ambitions go beyond just developing treatments. The company sees itself as a drug development platform to acquire, incubate and develop psychedelics and other drugs that can be used to treat depression, anxiety, addiction, and other mental health conditions. Currently, it’s partnered with 14 companies on various joint ventures.
This makes ATAI a way for investors to get exposure to a wide swathe of the industry as it’s more of a holding company rather than a drug development company. This structure has appeal to investors as its IPO was oversubscribed by 12 times. Further, private investors are getting increasingly excited about the space which bodes well for public companies. So far this year, VCs have invested $329 million in psychedelic startups, which is close to the $345 million that was raised in 2020. In 2018 and 2019, less than $100 million was raised each year.
Compass Pathways Plc (CMPS)
CMPS was founded in 2020 in London but has expanded to the US. The company is currently focused on using psilocybin to treat depression. Currently, this treatment is in PhaseIIb trials. Its earlier trials showed better outcomes for its treatments compared to a placebo.
The company was also granted two new…
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