Over the past decade, and amid the COVID-19 pandemic, cases of mental illness have seen an unprecedented rise. More and more people continue to be diagnosed with depression and anxiety and traditional medicine is proving to be ill-equipped to provide a lasting solution. The demand for more effective treatment alternatives has increased interest in psychedelics and, in response, investors are turning toward Psychedelics Startups. The interest in these companies is fueled by the opportunity psychedelics provide as a viable market and the dire need for treatment. By the end of October 2021, investments in this budding industry hit $595 million from 45 deals. Psychedelic stocks seem to be all the range, with everyone wanting a piece of the cake. Are you considering investing in psychedelics startups? Here are five companies you should watch.
5. Numinus Wellness
Numinus Wellness has been operational since 1964. The company has a Numinus Biosciences unit that develops psychedelic drugs and provides services such as marijuana testing. It also runs several centers where trained therapists help patients with substance use and mental health issues. In 2022, the company is planning to initiate a phase 1 study examining NBIO-01, a naturally-derived psilocybin extract. It will also be starting a clinical trial for MDMA therapy as a remedy for PTSD. The Multidisciplinary Association for Psychedelic Studies (MAPS) will be funding this study.
4. Mind Medicine
Also called MindMed, Mind Medicine was established in May 2019. In March 2020, it became the first psychedelic company to conduct an IPO on the NEO Exchange in Canada. Its leading program is called Project Lucy and is examining LSD therapy for anxiety treatment in a phase 2a clinical study. The company has also entered a collaboration with University Hospital Basel to research the use of psychedelic drugs like LSD. Other candidates in MindMed’s pipeline include LSD microdosing as a remedy for adult attention deficit hyperactivity disorder (ADHD) and an ibogaine-based non-hallucinogenic drug called 18-MC for opioid withdrawal treatment.
3. Seelos Therapeutics
Seelos Therapeutics was established in 2016 and, in January 2019, merged with a publicly traded company called Apricus Biosciences. The resulting business was made up mostly of Seelos’ business and adopted the Seelos name. Overall, the company has four programs in its pipeline and all of them are in clinical testing. They include SLS-002, SLS-005, and SLS-006. SLS-006 is a partial dopamine agonist that the company is developing for Parkinson’s disease. It is currently in a phase 2/3 clinical study. At the same time, Seelos has SLS-002 in a phase 2 study for acute suicidal ideation in people with major depressive disorder. SLS-002 is an intranasal ketamine drug. Another candidate from Seelos is an intravenous sugar with two glucose molecules, or SLS-005, which the company is testing for amyotrophic lateral sclerosis (ALS) treatment in phase 2b/3. The same therapy is in phase 2 testing for Sanfilippo syndrome treatment. Sanfilippo syndrome is a rare genetic disorder that affects the nervous system.
2. Atai Life Sciences
Atai Life Sciences is currently ranked as the largest biotech stock with a focus on psychedelic drugs. This is to be expected considering the significant and prominent backing the startup has received from big names, including Peter Thiel, the billionaire. While it was founded in 2018, Atai Life Sciences went public in June 2021 and is itself a major investor in other Psychedelics Startups. The company has nine programs in the pipeline and four of these are already in clinical testing. RL-007, its top candidate, is being examined in a phase 2 study as a possible schizophrenia treatment. Additionally, the Perception Neuroscience unit at Atai has collaborated with Otsuka, the Japanese drugmaker, to develop R-ketamine as a treatment for depression. Atai Life Sciences is also a major shareholder in Compass Pathways.
1. Compass Pathways
Compass Pathways was established in 2015 when Ekaterina Malievskaia and George Goldsmith started The Compass Trust Limited. The Compass Trust Limited is a non-profit organization started to fund research and development for psilocybin therapy for people with anxiety about death. A year after establishment, it became a for-profit company called Compass Pathways. Compass Pathways listed its shares on the Nasdaq stock exchange in September 2020. Its phase 2 study, which examined the effect of COMP360 in treatment-resistant depression, was the largest psilocybin therapy clinical trial in history. Currently, the company is planning to enter the late-stage testing of this therapy in 2022. While COMP360 is Compass Pathways’ only pipeline candidate, the therapy can be used for other diseases. The company has phase 2 studies in place evaluating the impacts of the therapy on major depressive disorder and post-traumatic stress disorder (PTSD). The latter is being done at The Institute of Psychiatry, Psychology & Neuroscience (IoPPN).
Possible Risks and Rewards
While these five startups do show promise, none of them has approved psychedelic therapies on the market yet. This means that investors risk losing their investments if a therapy they are backing fails to pass clinical testing and get regulatory approval. There is also the risk of a therapy failing to achieve commercial success even after it passes testing and gets approved. Another possible area of worry is the fact that none of these psychedelic startups have reached market profitability yet. Investors might need to use stock offerings to produce more capital, which would dilute the value of the current shares. That said, there are many reasons investors should be optimistic about the viability of using psychedelic substances to treat psychological or neurological disorders. It is still fairly early to say, but either of these rising startups could achieve significant commercial success over the next several years.
Considered a countercultural fad in the 1960s, psychedelics have now broken into mainstream medicine and promise to be a viable industry within the next few years. Psychedelics Startups are healthcare companies that focus on treating mental illnesses using hallucinogens. The concept is still fairly new so most of these startups have low market capitalizations. Nonetheless, they seem to be growing rapidly. Several are already developing psychedelic drugs that could qualify for regulatory approval. At this rate, investors are likely to receive healthy returns on their investments sooner than later.