Psychedelic stocks have a bright future with 13.5% compound annual growth expected through 2029. That growth will certainly draw in investment funding that seeks to capitalize on growth, as psychedelic drugs quickly become a hot topic in the mental health space.
Consumers are increasingly interested in mental health and overall awareness is increasing. Mental health advocates have long touted their benefits and favored their mainstream acceptance. Pharmaceutical firms and other traditional healthcare companies have caught on and are on board. That makes early psychedelic stocks potentially very lucrative.
COMPASS Pathways (CMPS)
COMPASS Pathways (NASDAQ:CMPS) is developing a variety of mental health treatments based on the science of psilocybin. The firm’s COMP360 psilocybin treatment is being investigated in multiple clinical trials for various efficacies.
Psilocybin is proving efficacious in treating Post Traumatic Stress Disorder (PTSD), Treatment Resistant Depression (TRD) and anorexia nervosa as it progresses through clinical stages. COMP360 is the most advanced in relation to TRD and is currently in Phase 3 testing.
Investors and mental health advocates must be interested in the upside present in CMPS stock which trades for $7.85 and has an average target stock price of $42.30. The company is pre-revenue right now, though.
While target prices suggest that any investment can multiply in value, the company must simply continue in order for that to ever happen. COMPASS Pathways used $24.2 million in the first quarter, leaving it with $117.1 million in liquidity. Management has noted that it expects to possibly use $86 million more of that at the upper end through the remainder of this year.
Mind Medicine (MNMD)
Mind Medicine (NASDAQ:MNMD) is developing a pipeline of drugs to treat depression, anxiety, addiction and other mental health issues. Mind Medicine is studying the utility of serotonergic psychedelics including LSD, psilocybin and DMT. The company is studying how those compounds can be used to increase the growth of neurons leading to changes referred to as neuroplasticity.
Mind Medicine is hopeful that the novel therapeutics it is developing will have increased benefits and fewer side effects than current modalities including antidepressants and psychotherapy. The firm is currently recruiting for multiple clinical studies throughout the United States and Switzerland.
While it is behind COMPASS Pathways in regard to that pipeline, it offers similar potential in that share prices could multiply several fold.
What’s also important to note is that Mind Medicine currently expects its cash runway to last into the first half of 2025. That should bring it through key clinical readouts that promise to catalyze price increases if positive.
GH Research (GHRS)
GH Research (NASDAQ:GHRS) is utilizing DMT in treating treatment-resistant depression. The lead candidate treatment said GH001 was useful in bringing 87.5% of patients into ultra-rapid remission. GH Research has also developed two follow-on products, GH002 and GH003, injectable and intranasal forms of the drug.
Of the three firms listed in this article, GH Research is financially the strongest of the psychedelic stocks. The firm’s liquidity position stood at $246.1 million as of March 31. Its first-quarter net loss was $10.9 million. Simple math suggests that its cash runway is very long, especially relative to other firms in the space. It’s fair to state that it is the most stable of the firms listed here in any case.
Lead candidate GH001 is also currently being investigated for potential efficacy in treating bipolar 2 disorder and postpartum depression. What’s particularly important to understand about GH Research is that GH001 is fast acting whereas current therapies are not. Remission rates are high. GH001, if commercialized, seemingly should see massive, potentially blockbuster-level sales.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.