The IPOs and RTOs are now coming fast-and-furious in the psychedelics space.
After a quiet summer, Compass Pathways (US:CMPS) got the ball rolling with its much-anticipated IPO on September 18th, becoming the first psychedelics unicorn. As Psychedelic Stock Watch predicted at the time, it’s been a “game-changer” for the industry.
Compass joined a small group of other pure plays in the psychedelic drug industry that include: MindMed Inc (CAN:MMED / US:MMEDF), Numinus Wellness (CAN:NUMI / US:LKYSF), Champignon Brands (CAN:SHRM / US:SHRMF), and Mydecine Innovations Group (CAN:MYCO / US:MYCOF).
Shortly after that, two other psychedelics companies commenced public trading.
Mind Cure Health (CAN:MCUR / US:MCURF) started trading right after CMPS. Priced at CAD$0.20, it became an immediate success for investors and currently sits at CAD$0.63.
A couple of weeks later came Field Trip Health (CAN:FTRP / US:FTRPF). Field Trip has traded much flatter than MCUR, but it was priced a lot higher. It commenced trading as the #3 psychedelic stock by market cap (currently CAD$116 million), behind only Compass and MindMed.
Not only has CMPS doubled in price for investors since commencing trading, it has sparked a broader rally among psychedelic stocks. Investors looking for some general information on these companies can refer to a previous Psychedelic Stock Watch article:
Now three more psychedelic stocks are being added to the menu for investors.
Pure Extracts Technologies commenced public trading last week. Cybin Corp and Entheon Biomedical are both due to commence public trading this week.
Pure Extracts Technologies (CAN:PULL / US:BGKYF)
As its name implies, Pure Extracts is an extraction specialist. It started its business (and developed its expertise) in the cannabis industry, where there is an enormous need for extraction from plant biomass. Cannabis extraction has been one of the few niches in the industry (so far) where companies have been able to turn a profit.
Now Pure Extracts has gone public via RTO (on Canada’s CSE) as it looks to expand its operations into the psychedelic drug industry. Currently trading at CAD$0.57, the company sits with a market cap of ~CAD$40 million, with just over 70 million shares issued/outstanding.
Pure Extracts uses Vitalis Machines for plant extraction, which it describes as “the most technologically advanced on the market”. Its extraction operations are currently being ramped up in a three-stage development plan.
Pure Extracts’ obvious initial target in the psychedelic drug industry would be psilocybin extraction, the active ingredient in “magic mushrooms”. Psilocybin is one of the most heavily-researched psychedelic drugs and (arguably) the furthest advanced in the clinical trials process – outside of ketamine, which is already legal.
However, Pure Extracts could also pursue ibogaine extraction (from the iboga plant), or perhaps even ayahuasca – which is formulated from two plants (Banisteriopsis caapi and Pyschotria viridis).
Investors will be closely watching extraction margins when Pure Extracts moves into psychedelics extraction. Unlike cannabis, which already has relatively robust legal markets, psychedelics extraction (at this stage) would be almost entirely for research purposes. This greatly limits near-term commercial potential.
Also affecting the success potential of Pure Extracts in psychedelic-based extraction is a scientific debate in the medical community.
One camp of researchers assert that there is a (yet unidentified) “entourage effect” with psilocybe mushrooms, and thus whole plant extracts will provide the best medicine for therapeutic use.
Another camp believes that synthesized psilocybin is the road to the future, as (efficiently) synthesizing psilocybin would greatly simplify supply chain issues. If the latter opinion prevails, then long-term commercial opportunities for psilocybin extraction could be very limited.
Cybin Corp (CAN:CYBN)
Next to go public and expected to being trading on or about November 10th on Canada’s NEO Exchange is Cybin Corp.
Cybin’s general corporate mission is pursuing psychedelic drug development to address the fast-growing Mental Health Crisis. Its initial focus will be to launch a psilocybin-based drug to treat depression.
This is very similar to the business model of Compass Pathways itself, which already has a psilocybin-based therapy in Phase 2 of the clinical trials process. Additionally, CMPS is benefiting from FDA fast-tracking of this treatment as a Breakthrough Therapy.
However, as Psychedelic Stock Watch has pointed out previously, this is a very large treatment market – with an urgent need for new (psychedelics-based) therapies to cope with this Crisis.
Over 300 million people around the world were exhibiting symptoms of depression before the COVID-19 pandemic struck. Virus fears and lockdown stresses have caused depression numbers to spiral higher.
Cybin is already well-funded to execute on its business model. The company has raised ~$55 million from its two previous financing rounds. This includes CAD$45 million in a recently completed financing.
Cybin plans on focusing on chemically synthesized compounds in its psychedelics-based research.
CEO Doug Drysdale is a pharmaceutical industry veteran. His biggest success was as the founding CEO of Alvogen Group, generating over $450 million in revenue and raising $465 million in capital.
Entheon Biomedical (CAN:ENBI)
Last-but-not-least among the new psychedelic stocks is Entheon Biomedical.
Entheon expects to commence trading on the CSE on November 12th. It provides investors with a unique investment option among public companies.
Yes, Entheon’s business model is also focused on psychedelic drug development. But Entheon is targeting DMT (N-dimethyltryptamine) in its drug R&D.
Why should this be of interest to psychedelics investors? Two reasons.
- Entheon is the only public company focusing on DMT-based psychedelics research. At this point, it has a relatively clear playing field.
- DMT has a rapid onset of (hallucinogenic) effects and a much shorter duration than other psychedelics. This makes DMT potentially much more efficient as a psychedelics-based medicine.
A third reason why investors may take a particular interest in Entheon is that its DMT research is aimed at addiction treatment.
Over 1 billion people around the world grapple with substance dependency issues, ranging from nicotine addiction to opioid addiction. Addiction treatment is a $35 billion dollar revolving-door industry in the U.S. alone.
This is largely because (as with depression), mainstream medicine currently does an abysmal job of treating addiction. It is also an incredibly costly health disorder. Substance abuse costs the U.S. economy $740 billion per year, rising rapidly.
There is both a huge economic and healthcare need for better addiction therapies.
Overall, the psychedelic drug industry is generating increasing amounts of (favorable) attention from the mainstream media. It is attracting both large quantities of capital and large numbers of high-profile investors.
After a couple of quiet weeks, psychedelic drug stocks have once again been outperforming the broader markets.
As investor appetite for psychedelic stocks continues to grow, the menu of companies from which they can choose is about to grow much longer.
DISCLOSURE: The writer holds shares in MindMed Inc, Numinus Wellness, and Mind Cure Health. Mind Cure Health is a client of Psychedelic Stock Watch.