Psychedelics company stock prices have seen some mad swings, especially in the early years when speculation ruled and investors were just taking a shot.
Take Mind Medicine (Nasdaq: MNMD), for example. MindMed swung from $5.09 on Sept. 7, 2020, to $58.80 June 7, 2021. Now, it’s been steadily hovering around $12-$18 since January 2022.
The swings sometimes match broader Nasdaq or New York Stock Exchange market swings, but any analyst knows that those market-reactive swings aren’t really a true indicator of what is going on inside a company.
It’s really standard operating procedure for the public markets. Researchers at the New York Times examined historic swings in the Standard and Poor’s 500 stock index beginning in 1962. What the study revealed is proof of larger and more frequent market swings beginning in 2000.
Young psychedelics startups, along with some more mature heavy hitters, are still finding their way in a complicated industry, researching and developing a complicated product that they are trying to bring to a complicated mental health and wellness market. There will continue to be hits and misses in their efforts.
But these businesses today are seeing a new, steady uptick in acceptance and demand for medical psychedelics to treat a growing variety of mental health issues, from alcoholism to Parkinson’s disease to Alzheimer’s disease.
There’s even a sort of back-handed business momentum coming through black and gray psychedelic market enterprises in both Canada and the U.S., such as in Vancouver, British Columbia’s Coca Leaf Café, a medicinal mushroom dispensary where a reported 100 customers a day spend $5,000 on magic mushrooms.
It’s as if the industry is at a new starting line for a race to market leadership, where singular company achievements are causing the stock to rise and stay there, instead of the former speculative stock buys that would cause a company’s stock to temporarily rise for a week or two and then sink again.
There is much more clarity, more informed decision-making, amid the clutter of who does what and how their molecule or compound is working its way to final FDA approval.
Yes, there will still be swings in stock prices. There will always be swings in stock prices.
But this time, those swings are based on a proof of market performance, rather than knee-jerk moves. It’s a signal that the psychedelics industry has entered a new phase.
Here are three examples:
1. Cybin (NEO: CYBN) (NYSE: CYBN): The company just announced that the first two participants have been dosed in its Phase 1/2a trial evaluating CYB003 for treatment of major depressive disorder, a “tremendous milestone” for the company. Preclinical data showed that CYB003, a synthetic psilocybin analog, has the potential to reduce time and resource burden on patients, providers and payers, and potentially improve scalability and accessibility of treatment, according to a news release. Cybin’s stock price more than doubled this year since a low of $0.41 in May to high of $1.11 on Aug. 31.
Even more impressive, the stock jumped 71% in August alone. It’s still way off its high stock price of $3.05, recorded on July 30, 2021, but looks like the growth demonstrated since May will continue.
The Motley Fool reported that shares of Compass Pathways rose by 15.8% through the first four days of trading in the last week of August. The company’s stock is up by 129% over the prior 90 days.
The big instant stock swings the company’s stock experienced earlier have tapered off to a slow, more even buildup as investors take another look at recent developments and respond to the steady progress of the company’s psilocybin-based depression therapy COMP360 in the clinic.
Compass has been one of the psychedelic companies on the radar of stock watchers since the middle of 2021, picked to double or even triple its stock price.
3. Seelos Therapeutics (Nasdaq: SEEL): This is probably one of the best examples of a settled-down psychedelic company, where huge spikes in stock prices back in 2018 calmed down and led to a stable stock performance over the last 2-3 years.
Seelos, too, has provided proof of its validity as a force to be reckoned with. The company just got a grant from The Michael J. Fox Foundation for Parkinson’s Research to advance preclinical research and development of its gene therapy delivered SLS-004 program. This is significant, as Parkinson’s disease is the second most common neurodegenerative disorder in the world, and there is no effective treatment to prevent it or to halt its progression.
In the news release, Seelos Chairman and CEO Raj Mehra called the grant “strong validation of our program” that should “significantly raise the profile of our program.”
The company is also working on developing clinical trials for treating Alzheimer’s and Huntington’s disease.
An investor consultancy firm noted that, due to their newness, none of the publicly traded psychedelics companies has proven ability to produce revenue and profits – yet. But that’s not stopping investors who are seeing more and more positive results from clinical trials.
“As we have seen time and time again, investments in companies that are pre-revenue and then go on to be profitable produce huge returns,” Marcia Wendorf, a contributor to Seeking Alpha, wrote.