Psychedelic companies have appeared to be pretty sensitive to stock market changes, reacting to ups and downs on the Nasdaq and NYSE like any other company in a nascent industry would.
But that sensitivity seems to be lessening for some psychedelic companies, which have maintained their solid stock market standing even through the tough spring and early summer of 2022.
How tough? An article by the Canadian business press in late June showed that the Toronto Stock Exchange was down 11% for the year, while the Dow Jones industrial average is down 15%. The S&P 500 is off 20.6%, for the worst six months in 50 years, and Nasdaq fell a record 29.5% in that period.
There are many reasons:
- A war in Europe the likes of which has not been seen since World War II.
- The effects of the pandemic still doing economic damage
- Inflation appears to be right around the corner
- A 96% likelihood that the U.S. will be in recession within the next 12 months, according to a recent survey of CEOs by The Conference Board, a nonprofit business research group.
The Federal Reserve maintains it can get high inflation under control without triggering a recession. But the cost of borrowing is going up, and there have been wild swings in stocks, bonds, and currencies, a Conference Board reporter wrote.
Steve Odland, former CEO of Office Depot and now head of The Conference Board, said that, as a CEO, “if you are going into a recession, what you want to do is you want to batten down the hatches. So we’re down to a level now that is the lowest level of CEO confidence since the Great Recession.”
Stern stuff. Warning bells going off. Not what a CEO working to build a business within a nascent industry like the psychedelics industry wants to hear.
The psychedelics industry is already facing serious obstacles, with being stuck in expensive research and development work with a federally illegal plant.
Yet some psychedelics companies are doing fine and even have accelerated development while the market moves out of the turbulent economic times of summer into more potential economic troubles in fall 2022.
There doesn’t seem to be the same “batten down the hatches” mentality underway. Consider what is going on in three of the top psychedelic companies:
Compass Pathways (Nasdaq: CMPS)
Compass Pathways’ stock price jumped to $20.07 a share on Aug. 8, steadily climbing from a low of $7.63 in May. The largest group of investors, at around 33%, is made up of individual insiders, a factor that investors like because the group faces the maximum upside potential, according to Simply Wall St.
Cybin (NEO: CYBN) (NYSE: CYBN)
Cybin’s stock price followed about the same pattern as Compass, falling hard in May, then rising heroically in August, from $0.68 on May 1 to $1.11 on Aug. 28. Cybin’s focus has been on developing its CYB003 psilocybin program.
But on Oct. 27, Cybin also showed a leadership role in one of the more important developments in the psychedelics industry by graduating its first class of psychedelics facilitators under their Embark program. The program is working on a transdiagnostic treatment model that can be adapted to different clinical indications and problems including depression, alcohol use disorder, and anxiety.
Investors like that the company has a robust patent program as well. Cybin has access to more than 35 patents and applications through a combination of internal filings and licensing arrangements.
Numinus Wellness (TSX: NUMI) (OTC: NUMIF)
Numinus Wellness’ stock crashed hard on July 13, falling to $0.23, but it fought back up to $0.38 by Sept. 7. This occurred while Canada’s resource-heavy TSX was in the middle of posting its biggest decline, as oil prices tumbled and investors grew more worried about the global economic outlook.
Numinus nevertheless is charging ahead with developments, announcing the launch of their Ketamine for Chronic and Serious Medical Illness program. This new program will be introduced first in Numinus’ clinics in Utah, British Columbia, and Quebec. The program will offer ketamine-assisted therapy alongside additional community support and has a targeted focus on improving patients’ physical, emotional, mental, and spiritual suffering caused by their illness.
The resiliency these psychedelics businesses – and others – have demonstrated during tough economic times surprised psychedelics drug analysts, who revised their forecasts to reflect a faster compound growth rate of the industry over the next five years, up to $6.3 billion by 2027, or nearly triple the size of the market in 2021.