4 Psychedelics Stocks To Buy Now

Psychedelics are following in the footsteps of the cannabis industry and growing towards legalization. These previously demonized substances are now being researched as miracle drugs, and many companies in the sector are going public.

With the cannabis industry so volatile, psychedelics stocks are a new frontier adventurous investors on the hunt for new highs.

Oregon is the first U.S. state to legalize psilocybin in November 2020, and it’s starting to gain traction across North America. This is the active psychoactive ingredient in hallucinogenic mushrooms, and it’s now one of many hallucinogens being studied for potential medicinal benefits.

Many are undergoing clinical trials in a variety of jurisdictions, and that’s fueling a potential $10.75 billion psychedelics market by 2027. Even in countries like Canada, where psychedelics are illegal, medical research is being allowed by the government.

That creates a high-risk investment with a potentially high reward. Here are four of the top psychedelics stocks to buy now.

Mind Medicine Has A Shark Supporting It

Mind Medicine (MindMed) Inc (NASDAQ:MNMD) is a Toronto, Canada-based biotechnology company co-founded in May 2019 by former Uber executive J.R. Rahn and Stephen Hurst. Initially focused on opioid withdrawal with a non-hallucinogenic molecule called 18-MC that synthesizes Ibogaine, the company transitioned into a second clinical trial for LSD microdosing to treat anxiety.

Both therapies are in phase 2 clinical trials. The company is researching the efficacy of LSD on pain treatment. It’s also expanding research on DMT and MDMA. 

In its mid-year 2021 earnings call, the company discussed encouraging news coming from countries like Canada, Switzerland, and more supporting psychedelics research and development. Still, this pipeline of treatments comes with an expensive price tag. 

The company recorded a net loss of $12.8 million in the first half of 2021, and its market capitalization has been rocky since surpassing $1 billion. Share prices will remain rocky like any clinical-stage biotech company until it has an approved product on the market. And the efficacy of micro-dosing LSD versus the placebo has been questioned, so it could be a long road.

Although this is the most popular psychedelics stock pick because of its association to Kevin O’Leary, it may not be the best for investors at this stage and price. It’s burning through cash, and others could beat it to the finish line.

Compass Pathways Targeting Growing Market

Compass Pathways PLC (NASDAQ:CMPS) is a pharmaceutical company headquartered in the United Kingdom and focused on psilocibin therapy.

Chairman and CEO George Goldsmith believes the substance is a pivotal medicine for mental health, and he highlights the company’s intellectual property and active discussions with regulators as potential key growth indicators.

COMP360 is a psilocybin therapy in late-stage clinical trials to treat major depressive disorder (MDD). It was designated as a Breakthrough Therapy by the U.S. Food and Drug Administration (FDA) and grew its staff to over 60 employees. 

Like MindMed, however, the company’s success hinges on its ability to move past clinical stage and be awarded an approved drug on the market. It lost $60.33 million in 2020 while raising $165.37 million in its public offering. But its cash burn rate of over $4.2 million per month at the start of 2021 means it has a long enough runway ahead.

Don’t expect a dividend, but this company could see big growth if its treatment is proven successful. An estimated 9.7 percent of Americans under 18 suffer from depression, and the Centers for Disease Control estimates 41.5 percent of adults experienced symptoms of anxiety or depression in the first pandemic holiday season.

This leads to an estimated $18.9 billion market by 2026 with a lot of potential for COMP360 to breakthrough and earn the company a steady revenue stream.

Numinus Wellness Aims to Treat PTSD

Numinus Wellness Inc (OTCMKTS:LKYSF) is a Vancouver-based company that made history as the first public company to receive a psylocibin license in Canada. It now holds licenses to import, export, distribute, extract, and cultivate, DMT and MDMA too, along with other psychedelics.

In the decade it has been in business, this psychedelic pioneer partnered with MAPS Public Benefit Corp to conduct trials of MDMA in people suffering from post-traumatic stress disorder.

And it has a diversified portfolio that also includes third-party cannabis testing, alongside both natural and synthetic versions of psychoactive drugs. This means it has an open revenue stream that generated over USD $200k in revenue in the first half of 2021. 

The company raised its cash reserves to over $50 million USD, and that trickle of income is enough to keep long-time investors happy with this penny stock in American markets too, where it has a market capitalization of over USD $150 million.

Much like the other companies discussed, Numinus could potentially blow up to a market capitalization of $10 billion or perhaps even larger if it gains market approval for its pipeline of psychedelics-based treatments. The U.S. Department of Veterans Affairs estimates about eight percent of the adult population suffers from PTSD.

This market is expected to reach a $10.7 billion market by 2026, especially as more widespread understand of PTSD is reached.

Cybin: Can Psychedelics Treat Mental Illness?

Cybin Inc (OTCMKTS:CLXPF) is a Toronto, Canada-based pharmaceutical company founded in 2019 to research the effects of psychedelics on mental illness. Its leading drug candidate, CYB001, is a synthetic psilocybin compound being studied for treatment of depression.

Its pipeline also includes preclinical research on the compound’s efficacy in alcohol addition and other psychiatric disorders that aren’t relieved by traditional medications. And it has two investigational therapies using deuterated tryptamines as an active ingredient.

The company is still bleeding cash, with a $4.6 million-per-month cash burn rate. Cybin held over $64 million in cash during its most recent earnings report. Its market capitalization of $500 million may be a bargain for investors if the company passes through clinical trials.

Still, it’s worth reminding readers that all of these companies are best classified as risky until efficacy is proven. Many of the compounds they’re working with are still largely illegal, and that poses enormous risk to investors.

But if they work, the sky is the limit for the profit potential.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.