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Witnessing the creation of an entirely new industry from scratch is a rare and historic event, which offers tremendous opportunities for investors and entrepreneurs.
If 2020 was the year that psychedelic companies were put on the map, 2021 was the year they began to expand their territory and enter the realms of big business and traditional capital.
With scientific evidence for the therapeutic potential of psychedelics becoming increasingly difficult to ignore, this year, many companies developing psychedelic drugs into viable medical treatments have received institutional support from major US stock exchanges and traditional investment banks.
While the industry’s overall performance turned poor in the second half of the year, 2021 was definitely a win for the psychedelics industry, which regularly builds on a solid foundation for the development of a breakthrough. paradigm in the treatment of mental health.
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Psychedelic Companies Hit Major U.S. Stock Exchanges
In 2021, the psychedelics industry landed on Wall Street, giving it exposure to millions of retail investors around the world.
The public rush in 2020 that launched dozens of psychedelic companies on venture capital exchanges in Canada and the US OTC market became impossible to ignore when several of these companies began listing. in major US exchanges like NASDAQ and NYSE.
In October, the number of psychedelic companies listed in the United States reached 50. Nine of these are currently listed on the NASDAQ and the NYSE, including:
- Atai Life Sciences
- Compass paths
- MindMed
- Field Trip Health, Inc.
- Seelos Therapeutics
- Enveric Biosciences
- Pasithea Therapeutics Corp.
- GH Research
- Cybin corp
The first psychedelic ETFs are born
The growing attention to the psychedelic space resulted in the launch of the first exchange traded funds focused on psychedelics.
The Horizons Psychedelic Stock Index ETF (NEO: PSYK) became the first ETF to focus solely on the psychedelics industry, debuting on the NEO Toronto Stock Exchange in late January.
Horizons was followed by Defiance ETF, which launched the Defiance Next Gen Altered Experience ETF in May, becoming the first psychedelic ETF to go public in the United States.
These two ETFs are passive, which means that they each track a specific index that is restructured periodically.
In September, AdvisorShares launched the country’s first actively managed ETF covering the psychedelics sector: the AdvisorShares Psychedelics ETF.
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Private funding has almost doubled
While many psychedelic start-ups have chosen to go public as a strategy for raising growth capital, others have relied on private placements, which reached a record number in 2021.
According to a November report from CB Insights, equity funding in the space reached $ 595 million at the end of October, in 45 different deals. At this rate, the company is forecasting 55 global deals this year, possibly exceeding $ 724 million by the end of the year. This figure would double the 2020 added sum of $ 358 million.
CB Insights notes that almost half of deals (48%) were in drug research and development, a vertical industry with the highest barrier to entry in the industry, but also promises significant to medium returns. term.
This new availability of capital has given way to hundreds of new start-ups that have sprouted up around psychedelics. It is estimated that there are at least 10 times more private start-ups in the space than there are listed companies.
Investment banks embark on the mush rush
Yet another mark of the passage of psychedelics into the big leagues of finance, several investment banks and financial services companies have launched coverage of companies in the sector.
RBC Capital Markets, Cantor Fitzgerald, Credit Suisse, Citigroup, Aegis Capital, Berenberg, Canaccord Genuity, Cowen & Co, Roth Capital and Maxim Group now provide analysis on top psychedelic companies, with very promising ratings often in categories Buy or Outperform.
The financial tailwinds the psychedelics industry has received this year are a reflection of events unfolding on a much larger scale, supported by a growing ecosystem of regulatory victories, advancements in private and academic research and a change in public acceptance.
On the regulatory front, several new jurisdictions decriminalized psychedelics this year, including Detroit, Seattle, four suburbs of Boston and several cities in Massachusetts and California.
Progress in the legalization of psychedelics at the state level has also reached unprecedented levels with a number of states including Texas, California, Florida, Colorado, New York, Michigan, Massachusetts, Pennsylvania , Vermont, Iowa, Missouri, Connecticut and Maine, introducing or passing bills intended to expand therapeutic access to psychedelics.
Scientific progress towards a better understanding of psychedelic molecules and their interactions with the human body and mind has also increased significantly in 2021. Several universities and research institutes have undertaken new programs dedicated to the study of psychedelics, including ‘New York University, UC Berkeley Center, UT Austin. , Icahn School of Medicine at Mount Sinai and University of Wisconsin-Madison.
Academic research on psychedelics has also been encouraged to develop through partnerships between for-profit companies and academic institutions seeking to fund their research, such as the Mydecine Innovations (NEO: MYCO) research agreement with the University. Johns Hopkins and Atai’s partnership with Massachusetts General Hospital at Harvard.
Finally, the media have played an important role in disseminating the therapeutic potential of psychedelic treatments. Psychedelics have been featured in cover stories published in the New York Times, LA Times and Washington Post and have become the central theme of several television shows and documentaries, including “Nine Perfect Strangers,” a mini-series featuring starring Nicole Kidman, who debuted on Hulu in August.
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