Special Report: Investing in Psychedelics

On November 3, 2020, Oregon became the first state to allow the use of therapeutic psilocybin.

If that sounds familiar, it’s the psychoactive ingredient in hallucinogenic mushrooms. 

The use of psilocybin being incorporated into medical practices isn’t something we’re a stranger to now. 

It was already five years ago that Johns Hopkins first reported the relief of anxiety and depression in people under controlled doses of psilocybin. 

The topic is still somewhat taboo, understandably. Testing the psychological effects of psychedelics is still in its early stages. 

Some claim that “magic mushrooms” have been used since as early as 9000 B.C. 

In the ’50s, a mycologist named R. Gordon Wasson traveled to Mexico and participated in a ritual using mushrooms. He published his experience in Life magazine in 1957 titled “Seeking the Magic Mushroom.”

Then Timothy Leary read the article and took it upon himself to start experimenting with them at Harvard University. 

Before we knew it, psychedelics were heavily associated with “hippie culture” and psilocybin was banned in 1970. The only exception of legal use was for medical experiments. 

Still, after bills passing and more mainstream acceptance, the topic of unconventional medicine such as psychedelics is still considered taboo. 

That being said, from what we’ve seen, it’s pretty promising. 

The psychedelic market is projected to grow to $10.7 billion by 2027. 

Compared to the pharmaceutical market, it’s tiny. But take into consideration that last year, the global psychedelic drug market was worth around $3.8 billion. 

That means that every year, the market will grow at a consistent rate of 12.36%. 

But that’s just the start. 

If other states push for the legalization of psychedelic use — medical or recreational — the market could grow significantly faster. 

And so will its worth. 

State Studies

Keep in mind that other states are going to most likely follow Oregon in terms of decriminalizing psychedelic use.

California is trying to take it up a notch by filing a petition to become the first state in the nation to legalize psilocybin mushrooms for universal use. 

If passed, “the personal, medical, therapeutic, religious, spiritual, and dietary use of psilocybin mushrooms” would be legalized. 

There’s no doubt the psychedelic drug market will expand if the most populated state in the nation actually goes through with it. 

We’re also waiting on multiple reports from states using psychedelics in medical studies.

Connecticut signed a bill in June 2021 that permitted psilocybin research. A working group was created through this bill, with a report on the results due to present to the state’s general assembly at the beginning of 2022.

New York is in the works of developing a “Psychedelic Research Institute” with their findings due by December 2021.

Even Texas allowed a bill that authorized the study of psilocybin. Texas governor Greg Abbott allowed the bill to be passed without his signature. Previous findings showed the positive effect psilocybin had on veterans with PTSD, convincing Abbott to take testing seriously. 

The path that psychedelics are on is too similar to the one cannabis was on not too long ago. And its expanding use is something too large to ignore.

Medical Marvels

Psilocybin is said to be about 100 times less potent than LSD. This is what researchers believe assists in treating certain mental disorders. 

When it was incorporated in treating depression, it was given a “breakthrough therapy” designation by the FDA in 2019. 

Similar to New York, The University of Wisconsin-Madison is starting a center to expand research on psychedelic drugs such as psilocybin and MDMA. 

Psychedelic research started at UW in 2014. It has come a long way. Currently there are four clinical trials underway to prepare for submission to the FDA. 

The trials involve MDMA in treating PTSD and psilocybin to treat depression and addiction to opioids. 

“Psychoactive agents are the new frontier for potential new therapies and medications,” said UW pharmacy professor and Center Director Paul Hutson, who believes the FDA approval of psilocybin and MDMA will come within five years. 

A randomized, double-blind trial from Johns Hopkins held in 2016 reported that a single dose of psilocybin improved quality of life and decreased depression and anxiety in people with life-threatening cancer diagnoses by a substantial amount. 

Our northern neighbors are also applying psilocybin to treating cancer patients. 

The first Canadian to legally undergo psilocybin-assisted therapy was Thomas Hartle in August 2020. 

After being diagnosed with stage four colon cancer, Hartle was granted a federal exemption to process the prospect of death in an easier way. 

Hartle reported going through chemotherapy treatments easier and that he coped with his own morality.

Since then, Canada has granted an exemption to 45 other patients. The majority had a terminal illness like Hartle but there was also one patient with severe depression and another with ALS. 

Thomas Hartle was granted a one-year prescription but he claims that he didn't need any psilocybin treatments after November. 

With positive outcomes coming from bordering countries, many doors could open to the U.S. as well. 

The Perfect Scenario 

It wasn’t a unanimous vote in Oregon when psilocybin therapy got the green light — 55.8% of votes went to the new practice. 

Now, the Oregon Health Authority has two years to develop the program and regulations along with it. 

If findings continue to report compelling results, psychedelics could be the new cannabis for business.

If investors stay as bullish as they are about the industry, the earnings initially projected could soar a lot higher. 

That’s a good amount of ifs and not whens, but it seems like the psychedelic industry may be inching closer to its “perfect scenario” a lot quicker than expected. 

There are already multiple companies within the industry that are performing well. 

Compass Pathways (NASDAQ: CMPS) is a mental healthcare company that is currently developing a synthetic, purified psilocybin variant. Named COMP 360, the variant will be used to treat severe depression. 

The five independent studies have shown the rapid alleviation of depressive symptoms on behalf of the drug. Compass is to release the results of Phase 2 of these studies by the end of 2021. 

There are currently 22 centers in 10 countries where Compass is holding these studies. There are 14 in Europe and 8 in the U.S. If trials are deemed successful, the COMP 360 variant could secure 5–11 years of market exclusivity on the U.S. and EU markets. 

This means that there won’t be any generic drug competition for COMP 360. 

Compass is seen as a frontrunner in psychedelic therapeutics. If it snags market exclusivity, it could tackle a multi-billion dollar industry: the antidepressant market.

The market is on track to be worth $17 billion by 2026. 

As of August 2021, the stock price is $32.68. 

Cybin (NYSE: CYBN) is a biotech company that also focuses on psychedelic therapeutics. 

Two HUGE things Cybin has in store for the near future are possible game-changers within the industry.

The first is partnering with neurotechnology company Kernel at the beginning of 2021. 

Cybin is agreeing with Kernel to leverage “Kernel Flow” technology, a full-head coverage device that pulses light through the skull and into the bloodstream to measure how much oxygen the blood is carrying at any given time. 

This gives Cybin the ability to track in real-time where psychedelics work in the brain. From there, experts can design future therapeutics based on their readings from Flow.

The second was beginning its listing to the New York Stock Exchange in August 2021. 

Though five psychedelics companies debuted on the NASDAQ since the beginning of 2021, Cybin is the first in its sector to enter the NYSE. 

CEO Doug Drysdale believes the exchange is eager to welcome (and list) drug development and technology.

Cybin’s claim to fame is CYB001, the psilocybin film that is placed under the tongue. This delivers the psilocybin quicker into the bloodstream as opposed to taking capsules and the consumer having to digest the drug and wait to feel the effects.

The product, if greenlit, will give Cybin a competitive edge against other psilocybin options. As of now, the most popular method of consuming psilocybin is orally via capsule in a clinical setting. 

CYB001 is made to target major depressive disorder. CYB003 and CYB004 are variants of the drug but aim at alcohol use disorder and anxiety.

To date, Cybin has raised over $95 million and has a market cap of $477 million. 

Now We Wait

Psychedelics could be considered the future of psychotherapy. 

Nonprofits are popping up left and right. Though there are many embracing psychedelics as the norm, there are still many out there with opposing stances. 

The debate on legalization is still ongoing — remember, there was only a 5% difference in the polls when Oregon legalized psilocybin therapy.

Thankfully, the industry is ready to embrace investors with open arms.

As mentioned earlier, five psychedelic companies debuted on the NASDAQ this year. That’s just the beginning. 

Psychedelic companies are easily accessible on any trading platform. All it takes is a simple search for a company like Compass Pathways or Cybin, and you’ll see them. 

And more.

Now, things are definitely going in a decent direction for the psychedelics industry. But it is a little tricky to pinpoint when the time is right for it. 

Multiple companies are debuting — have you heard about them? Our experts at the Outsider Club have. They’ll help you weed out the dos and don’ts of the psychedelic industry. 

You don’t want to miss out on gains of an industry as promising as psychedelics.

Stay groovy. We’ll be in touch. 

Outsider Club Research Team

P.S. — If you’d like to dive even deeper down the rabbit hole of psychedelic stocks, Outsider Club editor Jimmy Mengel has zeroed in on a few other companies that he has shared with his readers at The Crow’s Nest

You can find out more about how to access The Crow’s Nest’s psychedelic stocks and other companies in the portfolio right here.


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