Psychedelics such as LSD and psilocybin (colloquially known as "magic mushrooms") have long been known to have therapeutic effects in alleviating depression and mood disorders. However, their legality quickly became a political issue in the 1960s, as such drugs became increasingly associated with "hippie culture," especially anti-war demonstrations and student riots. As a result, U.S. lawmakers outlawed most psychedelics under the Controlled Substances Act, classifying them in the same group as heroin.
Fast-forward half a century, and the political pressure to suppress hippie culture has largely disappeared -- making researchers, patients, and investors alike far more interested in the medical benefits of psychedelics. Some would even argue that the efficacy of psychedelics is generally better than that of modern antidepressants in alleviating mental illnesses. Here are three maverick companies that are making innovations in this field.
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1. Compass Pathways
Compass Pathways (NASDAQ: CMPS) is developing a synthetic, purified psilocybin variant called COMP360 to treat severe depression. So far, there have been five independent studies on psilocybin for this indication. All of them show that the drug can rapidly alleviate depressive symptoms, with a high degree of statistical significance. By the end of the year, the company will release the results of this phase 2 study.
Compass Pathways is pretty far ahead of the game regarding research and development compared to its peers. If approved, COMP360 could receive between five and 11 years of market exclusivity in the U.S. and EU.
The company currently has a market cap of $1.4 billion. Over the past year, the stock is down about 10%. But it did have a broad trading range of $30 to $60 per share. This is a great psychedelic stock for investors as it is the frontfrunner in proving that psychedelics have ample therapeutics benefits. It will be able to leverage its intellectual property protection and exclusively tackle the multi-billion dollar antidepressant market with psychedelics for some time if its clinical trials succeed.
2. Mind Medicine
Also known as MindMed (NASDAQ: MNMD), this company is known for developing LSD for various indications -- the most advanced of which is pending the start of phase 2, for treating anxiety. The study compares the effects of 20 micrograms of LSD compared to placebo, and will commence in Q4 2021. MindMed designed the trial with LSD neutralizers on hand, which will abort patients' hallucinogenic effects in less than 30 minutes in case of adverse events.
Aside from that, the company is also partnering with the University Hospital of Basel to develop LSD therapies for indications such as cluster headaches, and has other psychedelics in multiple early stage clinical trials. Since its inception, the company has raised $204 million from investors. MindMed is also backed by Bruce Linton, the former co-founder of Canopy Growth. It now has a market cap of $1.2 billion. The healthcare stock is up 960% over the past year. Investors could consider Mind Medicine over the others, as it currently has the most diversified pipeline involving psychedelics, with a wide exposure to a variety of indications.
3. Cybin
Cybin's (OTC: CLXP.F) flagship drug candidate is psilocybin delivered via a sublingual film; it's under investigation to treat depression. The phase 2 placebo-controlled study will start sometime this year and will last 12 months.
Cybin is doing much more than simply developing psychedelic drugs. Right now, it's partnering with neurotechnology company Kernel to quantify psychedelic experiences in real time. The data here is worth a lot, as it would provide valuable insight on how new molecules could target neurological disorders.
Since its founding, the company has secured more than 88 million Canadian dollars from investors. It currently has a market cap of $308 million (U.S.). The stock is up 217% from its listing last November. If its momentum continues, now could be a great time to buy in.
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Zhiyuan Sun has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends COMPASS Pathways. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
