Last year we wrote about psychedelic stocks. Companies like Atai Life Sciences, Compass Pathways, Cybin, Mind Medicine, Numinus Wellness, GH Research PLC, and Seelos Therapeutics are all publicly traded companies. None of these stocks have done very well. This is basically because nobody in this group has had any medicines approved for general use. The only psychedelic medicine is an inhaled form of ketamine sold by Jansen, a subsidiary of Johnson & Johnson, whose use is restricted to individuals who have failed other treatments for depression. It does not appear to be a big money maker. So, are there any promising psychedelic therapy investments?
What Is New in the Psychedelic World?
Just recently the Therapeutic Goods Administration (TGA) which is Australia’s version of the Food and Drug Administration OK’d both psilocybin and MDMA for treatment of depression and PTSD (post-traumatic stress disorder). Access to the medicines for treatment will be limited to approved psychiatrists. The decision was based on a review of years of research carried out throughout the world. The decision does not specify treatment protocols but rather Oks the two psychedelics for use by specific professionals. This will be the first test of how well these medicines work in a general clinical setting, what sorts of problems emerge, and how profitable treatment regimens and these medicines will be.
What Is the Market for MDMA and Psilocybin?
There are many wonderful medicines in the world that cure terrible diseases. Not all of them are profitable for their makers or for those who buy stock in those companies. In order to be profitable for a pharmaceutical manufacturer a medicine needs to be prescribed to lots of people at a sufficient profit per dose. The most profitable medicines are given to patients routinely and are typically quite expensive. Cancer therapies fit in the expensive niche. Ulcer treatments fit into the constant use niche. One of the reasons that psychiatrists are excited about psychedelic medicines is that these medicines are quite effective with only one or two doses. This is in contrast to standard antidepressants used for depression and PTSD which must be taken every day for months or even years. This is great for patients but not so great for company profits.
How Many People Have PTSD or Are Depressed?
About six percent of the US population will suffer from post-traumatic stress disorder at some time during their life. About five percent of adults suffer from PTSD in any given year. How common PTSD is relates to potential use of psychedelic medicines and therapies for treatment. The numbers for depression are a little worse with just over seven percent of US adults having a major depressive disorder at some time during their life. In both cases these are serious mental health issues. In both cases these are major risk factors for suicide. As such treatment is important. The fact that psychedelics seem to work so well with just a couple of doses is exciting news for the psychiatric community. It is, however, not such great news for anyone interested in psychedelic therapy investments.
Benefits Versus Side Effects of Psychedelic Medicines
There is one big concern about the use of psychedelics for standard treatment of depression, PTSD, generalized anxiety, substance abuse disorders or other mental health issues. MDMA, psilocybin and others are strong medicines with potential side effects. A medicine for gastritis, heartburn or ulcers like omeprazole is virtually free of side effects. It has no addictive potential because there is no “high” when taken. Thus nobody worries about people taking too many of these pills. With a psychedelic medicine there is the potential for long term consequences of taking too much for too long. Some people will get continuing flashbacks and hallucinations, for example. As such any use within the US, Canada, or Europe is likely to be restricted. This will limit the number of doses prescribed and the potential profit.
How Profitable Will Psychedelic Therapy Programs Be?
While psychedelic medicines may not be especially profitable, therapy programs might well be. The best use of MDMA and psilocybin is in controlled settings with professional coaches or psychotherapists. This sort of treatment can be a no frills approach or something like detox and treatment programs with all of the bells and whistles for the rich and famous. Anyone who can monetize this niche may do very well.
Psychedelic Therapy Investments – SlideShare Version