- With ever-broadening drug R&D applications and outstanding clinical results, psychedelic drugs are emerging as the new “miracle drugs”
- For investors, the psychedelic drug sector offers nearly unlimited biopharma potential
The story around psychedelic medicine continues to get bigger.
When investors initially began to flock to this emerging sector, the attraction to psychedelic stocks was relatively narrow: new medicines/therapies for mental health disorders.
The future of mental health care
This part of the story continues to unfold. Formal clinical trials involving psychedelics-based therapies for mental health disorders like depression, anxiety and post-traumatic stress disorder (PTSD) continue to progress – with generally outstanding treatment results.
However, the potential of psychedelic medicine (and the opportunity for investors) has continued to grow. Addiction and substance abuse is another area where the capacity of psychedelics to “reset” the human brain is showing enormous potential.
Not just substance addiction like opioids, nicotine and alcohol. Psychedelic medicine is also being explored as a treatment for behavioral addictions. Gambling and sexual addictions, binge-eating and other forms of compulsive behavior are being targeted by this research.
As Psychedelic Stock Watch regularly reports, increasing bodies of clinical research are establishing that psychedelic drugs have the potential to not only reset or rewire the human brain. Preliminary research is showing that psychedelic drugs like psilocybin may actually rebuild neural connections in the human brain.
If psychedelics-based therapies can not only reset/rewire the human brain but also repair it, this opens up a whole new spectrum of R&D possibilities.
Research into the use of psychedelics for cognitive decline, including conditions such as Alzheimer’s disease is already underway. Similarly, researchers are also looking at the potential of psychedelic drugs to address other neurodegenerative conditions.
In fact, if psychedelic drugs can both rewire and repair the human brain, the medical possibilities are almost limitless.
Miracle drugs with an ever-increasing list of research possibilities
Psychedelic drugs are being researched (and have successfully been used) to treat concussions and post-concussion syndrome. Recently announced research is exploring the potential of psilocybin as a treatment for (adult) autism, another natural R&D application for drugs with the potential to rewire/repair the brain.
However, this is still just the starting point.
With many categories of pain, both acute and chronic, the pain is largely a state of mind. An obvious example is phantom-limb pain: very real “pain” sensations from a limb that no longer exists. But researchers are also targeting other categories of pain for psychedelics-based R&D.
Moving even further ‘outside the box’, scientists are now researching whether many autoimmune disorders may originate with some sort of imbalance in the brain. If this thesis holds, psychedelic drugs may have potential for addressing many of the most-pernicious autoimmune disorders – in their infancy.
Psychedelic Stock Watch has previously hailed psychedelics as the “miracle drugs” of the 21st century, and compared them to the first miracle drugs, antibiotics.
Antibiotics revolutionized the treatment of bacterial infections. Infections that were hard-to-treat (and frequently fatal) suddenly could be quickly cured.
The parallel is very close with the use of psychedelics to treat mental health disorders like depression, anxiety, PTSD and addiction.
Currently, conventional therapies have a dismal success rate in treating mental health disorders. And with 8 million (preventable) mental health-related deaths per year, the life-saving potential of psychedelic drugs also rivals that of antibiotics.
Psychedelics-based therapies have not only demonstrated the capacity to produce quick results (in formal clinical trials), but actual cures – where conventional therapies can only provide crutches.
However, unlike the first Miracle Drugs, psychedelic drugs may eventually revolutionize the treatment of numerous fields of medicine. Perhaps an order magnitude greater as “miracle drugs”.
Battered stocks, tremendous value propositions
Investors looking only at the beaten-up stocks in this sector may erroneously conclude that the commercial opportunity with psychedelics drugs doesn’t match their medicinal potential. Nothing could be further from the truth.
Looking only at mental health, over 2 billion people globally suffer from treatable (but generally untreated) mental health disorders: the Mental Health Crisis.
The Mental Health Crisis dwarfs the Covid pandemic in scope for one fundamental reason. While Big Pharma was able to crank-up treatments for Covid-19 in a matter of months, these pharmaceutical giants have failed to come up with adequate mental health drugs in the fifty years that psychedelic drugs have been (heavily) criminalized.
Conventional therapies for mental health generally don’t work. Big Pharma has largely given up even trying to come up with other mental health drugs.
Psychedelic drugs are not merely the best hope for a global Mental Health Crisis that is spiraling out of control. They are our only hope.
There are billions of potential patients/consumers of psychedelic medicine in mental health alone. Large economic efficiencies, and strong margins in providing these treatments.
Scratching the surface on drug patents
First-generation psychedelics, the well-known drugs like psilocybin, LSD, MDMA and others are generally not patentable since they are already in the public domain. However, second- and third-generation derivatives of these drugs (with enhanced treatment parameters) could be the next big money-makers in the pharmaceutical industry.
Then there are the lesser-known psychedelics.
Dozens of other psychedelic drugs are complete unknowns from a drug R&D standpoint. Unlike the first psychedelics to enter the public domain, these other psychedelic drugs were criminalized (in the War on Drugs) before any health-related research even began.
Decades of fertile soil for additional drug R&D.
Belatedly recognizing this potential, larger pharmaceutical companies are starting to move into the sector.
Psychedelics junior, Mindset Pharma (CAN:MSET / US:MSSTF), inked a deal with Japanese pharmaceuticals giant, Otsuka Pharmaceutical. Otsuka will fund drug R&D of “novel molecules” through the end of Phase I clinical trials, obtaining right of first refusal for drug candidates emerging from the research.
More recently, private company Terran Biosciences announced a drug development deal with Sanofi (US:SNY) to help take two late-stage drugs through clinical trials.
The biggest opportunity in life sciences today
With $300 billion spent each year on mental health in the United States alone, just the mental health applications for psychedelic drugs could generate numerous ten-baggers as the industry evolves.
Throw in dozens of other major healthcare treatment markets and it’s easy to see why heavy-hitters from both Wall Street and Silicon Valley have piled into this sector. Simply, psychedelic stocks are the largest opportunity in life sciences today.
Panicked markets and perverse valuations for psychedelic stocks have only added to the potential upside.
How much would you be willing to pay to invest in the best opportunity in life sciences? Your answer would probably not be “less than cash”. Yet that’s where many of these psychedelic stocks are currently trading, with most others at very lean multiples.
Buy low, sell high.
Before you can do the latter, you have to do the former. Investors have been gifted with dirt-cheap valuations for these stocks. A dream set-up for contrarian investors.
Psychedelic drugs will revolutionize healthcare, starting with mental health. For investors with the vision to see the opportunity here (and the courage to invest in adverse market conditions), psychedelic stocks could be portfolio-makers.
DISCLOSURE: The writer holds shares in Mindset Pharma.
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