Despite some downbeat reports, a buzz still surrounds the business landscape for psychedelic therapies and medicinal products. More and more Americans are seeking out psychedelic solutions courtesy of ambitious science laboratories and even straight from Mother Nature.
According to market research site Fact.MR, the psychedelic drug market is expected to reach a valuation of $603.1 million in 2024. Growing at a 7% compound annual growth rate, the market could hit $1.18 billion by the end of 2034.
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That may sound like a drop in the bucket compared with the eye-popping projections for artificial intelligence, quantum computing and some other industries now. But despite their unique products treating a range of diseases such as depression and schizophrenia, some of the leading publicly traded psychedelic stocks are going for bargain-basement prices.
Several leading industry stocks are already trading higher as of June 12, likely boosted by the May inflation report that showed consumer prices cooling more than expected.
Interest in psychedelic stocks peaked after the U.S. Food and Drug Administration issued its first-ever draft guidance in June 2023 aimed at the design of clinical trials for psychedelic drugs. “By publishing this draft guidance, the FDA hopes to outline the challenges inherent in designing psychedelic drug development programs and provide information on how to address these challenges,” said Tiffany Farchione, director of the Division of Psychiatry in the FDA’s Center for Drug Evaluation and Research. “The goal is to help researchers design studies that will yield interpretable results that will be capable of supporting future drug applications.”
On June 4, however, an FDA advisory panel voted 2-to-9 against recommending the use of MDMA (also known as ecstasy) in therapeutic treatment for post-traumatic stress disorder (PTSD), sending industry stocks tumbling. The official FDA decision against Lykos Therapeutics’ MDMA drug is expected in August, but the agency’s initial call negatively impacted many psychedelic drug stocks.
Investors who imagine an eventual expansion of the psychedelic sector can add these industry names to their list. As you can see from these stocks’ performance year to date, however, this is still a speculative industry with plenty of risk and volatility, so proceed with caution:
| Psychedelic stock | YTD performance as of June 11 |
| Atai Life Sciences NV (ticker: ATAI) | -0.7% |
| GH Research PLC (GHRS) | +107.1% |
| Compass Pathways PLC (CMPS) | -25.1% |
| Incannex Healthcare Inc. (IXHL) | -27.4% |
| Mind Medicine Inc. (MNMD) | +105.7% |
| Seelos Therapeutics Inc. (SEEL) | -90.8% |
| Cybin Inc. (CYBN) | -26.8% |
Atai Life Sciences NV (ATAI)
Based in Berlin, this clinical-stage biopharmaceutical company specializes in the treatment of mental health disorders. The stock was hit hard by the FDA advisory committee’s recent disapproval of MDMA for PTSD. ATAI shares fell 14% in the immediate aftermath of the FDA decision, but they recovered 8% within 24 hours.
Analysts aren’t overly concerned. H.C. Wainwright’s Patrick Trucchio held his “buy” rating on ATAI stock and issued a $15 price target. The share price closed at $1.32 on June 11. Trucchio’s call comes after Atai Life Sciences reported robust results from its phase 2b trial of BPL-003, a novel short-duration psychedelic therapy for treatment-resistant depression. Peak annual revenues from the drug should hit $3 billion, the company has reported.
GH Research PLC (GHRS)
GH Research’s shares have soared 107.1% on a year-to-date basis to $12 as of June 11, and the consensus analyst price target for the stock stands at $33.50 per share, according to ratings site TipRanks. The company has noted that its cash and financial assets on hand would be enough to cover operating expenses and capital expenditures into 2026.
That momentum pairs well with a “buy” call from Canaccord, with a target price of $31 per share, issued after Dublin-based GH Research reported a top-notch phase 2b trial for mebufotenin (5-MeO-DMT) inhalant GH001. The phase 2b trial is scheduled to end successfully in the second half of 2024.
The company specializes in depression treatments with its proprietary 5-MeO-DMT therapies, and it cleared a negative FDA call last October on GH001’s phase 1 trial after the agency reported “insufficient information.”
Compass Pathways PLC (CMPS)
This London-based company specializing in mental health care services is also reeling from the FDA committee’s June vote on MDMA. CMPS shares have been dropping in the past few days, but their price surged about 7% in intraday trading on June 12.
Investors and analysts maintain high hopes for the company’s mood disorder drug treatments. In a May analyst note from Ritu Baral at TD Cowen, the firm reissued a “buy” rating on CMPS with a price target of $23 (shares closed at $6.39 on June 11). The analyst is upbeat on Compass’s COMP360 therapy, which relies heavily on psilocybin, the active ingredient in psychedelic mushrooms. The therapy, which targets serious conditions such as depression, anorexia and PTSD, is in the late trial stage, with key results expected in late 2024 and mid-2025 from a pair of stage 3 trials.
Maxim Group analyst Michael Okunewitch also recently issued a “buy” rating on Compass stock, with a one-year price target of $22 per share.
Incannex Healthcare Inc. (IXHL)
In early May, this Australian biosciences company specializing in cannabinoid and psychedelic treatments issued a “thumbs up” on its recent pre-investigation engagement with the FDA over the company’s CannQuit-O product that treats opioid use disorders.
CannQuit is a chewable, CBD-based off-patent prescription opioid fighter that has proven successful outside the U.S. and should lead to successful later-stage clinical trials in combating opioid use disorders, according to Incannex. In the meantime, the company’s share price is down 27.4% year to date, but the stock has surged over the past month on its FDA news.
Incannex is also shifting into the patient dosage stage with its IHL-42X sleep apnea drug in the U.S. Testing will soon start on obstructive sleep apnea patients who traditionally rely on continuous positive airway pressure (CPAP) devices for treatment.
Incannex also received the go-ahead from Australian regulators to proceed with phase 2 trials on its rheumatoid arthritis drug treatment, which could set the stage for the company’s second pipeline drug in the next several years.
Mind Medicine Inc. (MNMD)
This New York-based company specializes in the development of novel product candidates to treat depression, anxiety, addiction and other disorders. The FDA “red light” call on Lykos and MDMA in early June also put a damper on Mind Medicine’s investigational new drug application for MM-120, a pharmacologically optimized form of LSD to treat generalized anxiety disorder. The FDA panel vote triggered a 13% decline in the company’s share price from June 3 to June 11.
Mind Medicine isn’t likely to pay a big price for the Lykos call specifically, as the FDA did acknowledge the therapeutic potential for MDMA and psychedelics, Jeffries’ Andrew Tsai said in a recent research note. That outlook provided some downside protection for companies like Mind Medicine, Atai and Compass, which all are working on psychedelic drug therapies.
Brian Abrahams, an analyst at RBC Capital, reiterated a “buy” rating on MNMD shares on June 5, keeping his target price of $22. The stock was trading at $7.53 as of June 11, well above its $2.70 share price last October.
Seelos Therapeutics Inc. (SEEL)
Seelos suffered some bad news in March, after a phase 2/3 trial for its IV-delivered sugar therapy SLS-005 for amyotrophic lateral sclerosis didn’t meet expectations. That news came on top of a September 2023 miss on its phase 2 trial of its SLS-002 intranasal racemic ketamine treatment for suicidal ideation and severe depression. The trial failed to include enough patients; full trial reviews must have 220 test patients, and Seelos only included 147.
The twin trial reports caused SEEL stock to drop more than 90% in 2024, and Seelos is looking to rebound by cutting about one-third of its workforce. The New York company also announced a securities purchase agreement with institutional investors in May, which is expected to bring in $1.1 million in gross proceeds. Seelos also gained about $2.4 million from its staffing cuts.
Though shaken by the trial outlook, SEEL still has support from consensus analysts who peg the company’s share price at $4 (compared to a closing price of $1.02 per share on June 11). One of them is BTIG analyst Thomas Shrader, who maintained his “buy” rating on SEEL earlier this year.
An investment in SEEL could offer some much-needed sector diversity for psychedelic stock investors, as Seelos is involved with testing protocols for a wide array of diseases, including Huntington’s disease, ALS and Alzheimer’s disease.
Cybin Inc. (CYBN)
This Toronto-based clinical-stage biopharma firm is down 26.8% year to date, but it still has plenty of intrigue for investors. Cybin is currently developing CYB003, which it describes as a proprietary deuterated psilocybin analog for the treatment of major depressive disorder. CYB003 is already in the clinical trial stage and has acquired an FDA Breakthrough Therapy designation. A phase 3 study on the drug is scheduled for the second half of 2024.
Cybin is also developing CYB004, a proprietary deuterated DMT molecule for generalized anxiety disorder. It reports that the phase 2 results of its CYB004 anxiety treatment drug study are set for release toward the end of this year.
If the final phase of Cybin’s CYB003 clinical trial passes muster, expect some robust activity on the stock. A TipRanks consensus analyst price target is $3.50 per share, compared with a minuscule June 11 closing share price of 30 cents. Plus, the company already has over 30 patents granted and more than 160 patents pending.
Cybin also received a big boost from New York Mets owner Steve Cohen, whose hedge fund snapped up nearly 19 million CYBN shares last fall. As of Dec. 31, the hedge fund has a 7.4% stake in the company. The purchase by the high-profile billionaire also offers some much-needed validity to the psychedelics sector at a time when it could use a shot in the arm.
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7 Best Psychedelic Stocks in 2024 originally appeared on usnews.com
Update 06/12/24: This story was previously published at an earlier date and has been updated with new information.
