Investing in Psychedelics

Investing in Psychedelics

How to Invest in Psychedelics

Probably not an investment theme you ever thought you'd be able to invest in and certainly not your granddad's idea of a good investment like investing in bonds might be, psychedelics have now started to gain traction. And not just in the investment industry either. What was long thought to be terrible for an individual, and certainly demonized by law enforcement is taking the world on a trip. Psychedelics are in the middle of a powerful renaissance.

From the 1950s to the 1970s, promising medical research occurred in the field of psychedelics, only for LSD (lysergic acid diethylamide) and similar drugs to be banned by the federal government through the Controlled Substances Act in 1970, similar to how cannabis was treated for many years.

Signed into law by Richard Nixon, the Act classified LSD, MDMA, psilocybin, peyote, mescaline and other psychedelics as Schedule 1 drugs, meaning that the government deemed them to have “no currently accepted medical use and a high potential for abuse” (1).

For almost 30 years, very little progress occurred in the neuropharmacological applications of psychedelics. Then, in 2000, a group of researchers at Johns Hopkins University gained regulatory approval to resume research into psychedelics (2). Since then, it’s been full speed ahead. This is especially exciting news for the mental health world and possible psychedelic therapy, such as psychedelic treatment for depression.

In August 2017, “the FDA granted ‘breakthrough therapy’ status to study MDMA as a potential treatment for post-traumatic stress disorder" (3). The breakthrough therapy designation means that the FDA “will expedite the review of the drug and potential approval” (4).

MDMA-assisted psychotherapy is currently in Phase 3 trials— the final phase before FDA approval. In March 2019, Spravato, an esketamine-based (derived from ketamine) drug produced by the Janssen Pharmaceutical Companies of Johnson & Johnson was approved by the U.S. Food and Drug Administration (FDA) for treatment-resistant depression (5).

These treatments have enormous potential for medical use, so it’s no surprise that there are many psychedelic startups working on innovative treatments for mental health disorders.

In September 2020, COMPASS Pathways, a London-based biotech company, became the first psychedelic medicine company to go public on a major US exchange. They previously received FDA breakthrough therapy designation for their work with psilocybin (a psychedelic compound found in mushrooms) therapy in treatment-resistant depression.

With there now being medical application for these compounds, the future for this industry is just beginning to take shape, making now a great time to think about how to invest in psychedelics. But what are they? Many don't quite know, but here, we will try to peel back some of the mystery surrounding these, now medicinal, drugs.

What are Psychedelics?

Psychedelics are "powerful psychoactive substances that alter perception and mood and affect numerous cognitive processes” (6). They include, but are not limited to, lysergic acid diethylamide (LSD), psilocybin (commonly known as magic mushrooms), DMT, ayahuasca, mescaline, peyote, MDMA (also referred to as ecstasy), and ketamine.

Psychedelics cause hallucinations and other sensory disturbances. They work by “stimulating, suppressing, or modulating the activity of the various neurotransmitters in the brain” (7). While they stay in the body for a relatively short period of time, they can have long-lasting psychological effects.

Psychedelics came into popular use in the 1960s and 1970s but were eventually made illegal through the Controlled Substances Act, limiting researchers’ access to study them for medical use. It wasn’t until the 2000s that the FDA and the DEA began to approve psychedelic research again.

Since then, psychedelics have made their way one by one to labs where they are proving their ability to treat mental health issues including depression, suicidal thoughts, PTSD and anxiety.

According to Amanda Feilding of the Beckley Foundation, which investigates psychoactive substances and advocates for global drug policy changes, “the combination of advancing neuroscientific knowledge, modern brain-imaging technology and psychedelics provides a unique microscope to the mind, allowing us to map changes in consciousness to changes in neuronal and physiological activity. This opens up a new universe in which we can explore novel pathways to treat many of our most intractable illnesses, and to expand our understanding of consciousness itself” (8).

More and more, the clinical community, regulators, and investors alike are open to psychedelic treatments. This is especially true following legalization of medical cannabis, which formally recognized the drug’s therapeutic benefit.

Despite their progress, psychedelics are still languishing on the list of Schedule I drugs. A schedule change remains a hurdle for all research firms hoping to bring psychedelics to the mainstream.

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Why Invest in Psychedelics?

For something to be misunderstood, it first has to be understood, at least a little bit. However, because the Untied States cracked down on these compounds, there wasn't much research done on them for them to be misunderstood. The public just thought they just turned your brain to mush because, after all, that's what we were all told.

Years went by where hardly any resources were spent on what, if any, benefits these drugs could carry. Now, that is all beginning to change with new research coming out that these medicines can actually be used to treat severe mental health issues. A development that couldn't have come at a better time for those who suffer from these issues.

The growing momentum and usage for these psychedelics for depression and anxiety treatment is happening in parallel to an escalating mental health crisis which is not just secluded to the United States, but stretches the globe. Approximately 280 million people are suffering from depression worldwide (9).

In late June 2020, after the arrival of the coronavirus disease 2019 (COVID-19) and resulting global pandemic, 40% of US adults reported struggling with mental health or substance abuse, according to the Center for Disease Control (10). In another recent study that assessed 402 adult COVID-19 survivors, 55% presented a clinical score for at least one mental disorder, including anxiety (42%), insomnia (40%), depression (31%), PTSD (28%), and OCD (20%) (11).

Depression is a serious condition that “can dramatically affect a person’s ability to function and live a rewarding life,” according to the World Health Organization. Depression is linked to suicide, which is the cause of death for nearly 800,000 people every year. It’s the second leading cause of death in 15-29-year-olds (12).

While depression and mental health issues are growing, they are hard to treat effectively, especially when individuals have a growing distrust of the drugs that are commonly used to treat such issues. Psychedelics are offering the world new hope as a more natural way to treat such illness.

Psychedelics for depression and anxiety is finally getting its day in the sun as more and more research pours in, directed at getting to the heart of just how psychedelics can help remedy the situation for these individuals.

The excitement for the psychedelics market reflects that enthusiasm. According to InsightAce Analytic, the psychedelic therapeutics market was worth “3.61 billion in 2021, and it is expected to reach US$ 8.31 billion by 2028, with a CAGR of 13.2% during the forecast period of 2022-2028” (13). The market for psychedelics has the potential to improve lives and generate investment returns.

How Can Magnifi Help You Invest in Psychedelics?

The psychedelics industry is still in its infancy and only a few publicly traded companies are currently operating in this space. However, for the top psychedelic stocks that are out on the market, let Magnifi help you find and buy them. Check out of few of your options below:

• Psychedelic Stocks
• Psychedelics and Healthcare
• ETFs that Hold Compass Pathways

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FAQs:

What are some top psychedelic stocks?

With an industry that is still growing such as this, psychedelic stocks can be a bit more difficult to find. However, thanks to your AI investing assistant, you can easily find psychedelic stocks that fit your investment strategy and goals.

Is psychedelic stocks a booming industry?

With the advent of psychedelic therapy, the industry has just been created. Before psychedelic therapy became a medical treatment, psychedelics were outlawed. Now, they're making a big break into the medical and healthcare fields.

What is the future of psychedelic stocks?

The future looks bright for psychedelic stocks. With the breakthrough treatments going on in terms of psychedelic therapy, these stocks are set to rise in value if the treatments are proven to be effective. Now that these compounds can be studied further, we can only imagine where this path will lead.

Why is psychedelic industry booming?

As stated above, the psychedelic industry is booming due to the recent developments in the area of psychedelic therapy. These compounds are being used to treat a wide variety of mental illness, such as depression and PTSD.

Are psychedelic stocks a good investment?

Psychedelic stocks are part of a relatively new industry, so it is difficult to determine whether or not they are a good investment for someone. You must do your own research into this budding industry to make that decision for yourself. However, if these compounds show promise in the healthcare field, then this investment theme could prove to be very valuable in the future.

References:

1. “Drug Scheduling” United States Drug Enforcement Agency, https://www.dea.gov/drug-information/drug-scheduling
2. “About,” Center for Psychedelic & Consciousness Research, https://hopkinspsychedelic.org/
3. Welch, Ashley, “FDA designates MDMA as "breakthrough therapy" for PTSD,” CBS News, 31 August 2017, https://www.cbsnews.com/news/fda-designates-mdma-as-breakthrough-therapy-for-ptsd/
4. Millar, Abi, “FDA greenlight for esketamine sheds light on ketamine’s potential,” Pharmaceutical Technology, 13 June 2019, https://www.pharmaceutical-technology.com/features/esketamine-benefits/
5. Millar, Abi, “FDA greenlight for esketamine sheds light on ketamine’s potential.”
6. Nichols, David E., “Psychedelics,” National Library of Medicine, April 2016, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4813425/
7. Hartney, Elizabeth, “How Psychedelic or Hallucinogenic Drugs Work” Very Well Mind, 25 November 2020, https://www.verywellmind.com/what-are-psychedelics-22075
8. Fielding, Amanda, “A New Era for Psychedelic Medicine,” Multidisciplinary Association for Psychedelic Studies, https://maps.org/news/bulletin/a-new-era-for-psychedelic-medicine/
9. “Depression,” World Health Organization,” https://www.who.int/news-room/fact-sheets/detail/depression
10. Czeisler, Mark É., et al, “Mental Health, Substance Use, and Suicidal Ideation During the COVID-19 Pandemic — United States, June 24–30, 2020,” 14 August 2020, https://www.cdc.gov/mmwr/volumes/69/wr/mm6932a1.htm
11. Mazza, Mario Gennaro, et al, “Anxiety and depression in COVID-19 survivors: Role of inflammatory and clinical predictors,” Science Direct, October 2020, https://www.sciencedirect.com/science/article/pii/S0889159120316068#b0015
12. “Depression,” World Health Organization,” https://www.who.int/news-room/fact-sheets/detail/depression
13. “Psychedelic Therapeutics Market worth $ 8.31 billion by 2028 - Exclusive Report by InsightAce Analytic,” Bloomberg, 18 July 2022, https://www.bloomberg.com/press-releases/2022-07-18/psychedelic-therapeutics-market-worth-8-31-billion-by-2028-exclusive-report-by-insightace-analytic

Disclosures:

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The information and data are as of December 28, 2022 unless otherwise noted and subject to change. This blog is sponsored by Magnifi.

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