Psychedelic stocks are on fire again. Compass Pathways (US:CMPS) kicked off the party with its long-anticipated IPO on September 18th.
Backed by heavyweights like PayPal’s Peter Thiel and Wall Street hedge fund manager Mike Novogratz, CMPS is the early industry darling in the psychedelics space.
Not without cause.
Its psilocybin-based therapy for treatment-resistant depression is in Phase 2 of clinical trials. Compass has received Breakthrough Therapy Designation for this research from the Food and Drug Administration (FDA).
With the world in the midst of a Mental Health Crisis, this is (arguably) the best-positioned psychedelic drug research initiative – with a multi-billion treatment market on the horizon.
Compass raised $80 million in its Series B financing alone while still private. It closed on $127.5 million for its IPO financing. CMPS’s market cap has reached as high as $1.5 billion in its first weeks of trading.
However, like a bunch of party-crashers, several Canadian-listed junior psychedelics companies have moved in and are starting to steal the spotlight.
Psychedelic stocks take off
Compass Pathways itself exploded out of the starting blocks.
Initially priced at $17 per share, CMPS has traded as high as $47.30. It reached a billion-dollar market cap – and unicorn status – by the time it completed its IPO financing. Heavy trading volume.
In turn, this drew an enormous amount of mainstream attention toward the psychedelic drug industry and psychedelic stocks. Bloomberg, Reuters, MSN, MarketWatch, and numerous other business news sites have all been covering the Compass IPO.
But Compass has tailed off in recent trading sessions, slipping all the way back to $34.61.
Meanwhile, several other psychedelics companies have capitalized on the increased attention on psychedelic stocks by going on big runs – on much heavier-than-normal trading volume.
Grabbing most of the attention has been the other early industry leader in the psychedelics space: MindMed Inc (CAN:MMED / US:MMEDF / GER:MMQ).
MindMed: the heir apparent?
Compass Pathways can boast the best-positioned (individual) psychedelic drug research program in the industry. But MindMed has the deepest portfolio of psychedelic drug research that is already at the clinical trials stage.
Via its research partnership with the University of Basel (Switzerland) and its Leichti Lab, MindMed now has three drug initiatives into Phase 2 of the clinical trials process. Several other initiatives are in Phase 1 trials.
Psychedelic Stock Watch has reviewed MindMed’s R&D platform in a recent feature article.
After closing at CAD$0.44 on September 17th, MindMed has taken off with the Compass Pathways IPO. It climbed to as high as CAD$1.34, tripling in three weeks.
Unlike Compass, MindMed has been holding onto its gains.
The stock took a hit on Friday. But that was on news that MindMed had just closed a $25 million bought deal financing – at CAD$1.05 per unit. After dropping to as low as CAD$0.99, MMED rallied all the way back to CAD $1.18.
Not a surprise to see the share price slip on announcement of the financing. It’s unlikely to stay there long.
Along with its advanced psychedelics research program, expectations of a near-term up-listing to the NASDAQ have been driving heavy trading volume.
And MindMed has its own big-name backers.
Bruce Linton, the cannabis industry icon and former CEO of Canopy Growth Corp is a Director in MindMed. Kevin O’Leary, a high-profile Canadian investor and media celebrity is a major shareholder in MMED.
MindMed is the biggest name among public companies in this sector (after Compass Pathways). But it’s not leading the way in terms of generating investor profits.
That honor belongs to Mind Cure Health (CAN:MCUR / US:MCURF).
The hottest psychedelic IPO stock
Ask the question: name the hottest psychedelic IPO stock, and 99 out of 100 investors would say “Compass Pathways”.
In fact, psychedelics junior Mind Cure Health has recorded the biggest gain among all psychedelic stocks since the Compass Pathways IPO.
Mind Cure made its own debut one trading day later than Compass, on September 21st.
MCUR raced from CAD$0.20 to CAD$0.70 in just its first week of trading. It has traded as high as CAD$0.80 and closed last week at CAD$0.76, nearly quadrupling in value for early investors.
Smaller and leaner than either Compass or MindMed, Mind Cure has devised a business model designed to allow it to quickly scale up.
Initially targeting the $23 billion nootropics market for functional mushrooms, Mind Cure already has its Health Canada Natural Product Numbers to start retailing its Moonbeam product line of organic mushrooms.
But the Company is also busy laying the foundation for its own psychedelic drug R&D program. In just the last two weeks, Mind Cure has named three highly regarded experts in psychedelic drugs and psychedelic medicine as Advisors: Dr. Dan Engle, Hamilton Morris, and Dr. Jason Wallach.
With the right team and the right business strategy, Mind Cure sees itself continuing to move up the rankings among psychedelic stocks.
Mydecine and Numinus also breaking out?
Even more recently, two other psychedelics juniors have been making some noise, with large jumps in share price driven by heavier trading volumes.
Numinus Wellness (CAN:NUMI / US:LYKSF) is a vertically integrated Vancouver-based psychedelic drug company. It is seeking to combine clinics operations with psychedelic drug R&D and even psilocybin cultivation.
Numinus is one of the only companies licensed (by Health Canada) for psilocybin research in Canada. The stock jumped this week on news that Numinus is now commencing psilocybin cultivation.
NUMI hit its highest price (CAD$0.35) since early July last week and is on the cusp of joining MindMed and Mind Cure as one of the new performance leaders among psychedelic stocks.
Also seeking to elbow its way into that group is Denver-based Mydecine Innovations Group (CAN:MYCO / US:MYCOF). Mydecine has been very active in advancing its own psychedelics operations.
While other psychedelics stocks had already started slipping lower in late spring, MYCO was one of the only rising plays.
It soared as CAD$1.15 in early June. But with the weak sentiment in the sector over summer, the stock tailed off badly, drifting back down to CAD$0.20.
After closing at CAD$0.23 on October 6th, MYCO has exploded.
By week end, the stock had run all the way up to CAD$0.375, with MYCO also recording new highs in trading volume. Powering recent gains was Mydecine’s news that it has filed a provisional patent for a psilocybin-based treatment for PTSD.
The newest public company in this space, Field Trip Health (CAN:FTRP) began trading (via RTO) on October 6th. The share price has bounced around between CAD$2.50 and CAD$3 in its first few trading sessions as the market seeks to price the company.
With a unique, ketamine-based business strategy, Field Trip may also join this psychedelics rally in the near future.
An industry starts to mature
Even a month ago, investing opportunities in the psychedelic drug industry were looking pretty lean, at least among the public companies. Anemic trading volumes had led to depressed stock prices across the board.
All that has quickly changed.
While industry leader Compass Pathways has lost its momentum – at least for the moment – four other psychedelic stocks now appear to be in full rally mode.
The sector is still in its infancy. But psychedelic drug stocks offer investors enormous growth potential with an increasingly robust list of investing candidates.
DISCLOSURE: The writer holds shares in MindMed Inc, Numinus Wellness, and Mind Cure Health. Mind Cure Health is a client of Psychedelic Stock Watch.