The psychedelics industry may appear to have suddenly emerged as one of the hottest corners of the stock market, but researchers have been working for decades to show the efficacy of these treatments and regulators are just starting to appreciate the possibilities.
Investors could see strong growth in the industry as companies commercialize breakthrough therapeutics while patients could finally have access to life-changing treatments for a range of mental health conditions that have no effective treatment options today.
Let’s take a look at the nascent psychedelics industry in terms of both its revenue potential and the valuations that investors are assigning to companies in the space.
Psychedelics by Revenue
The market for psychedelic drugs is projected to grow from just over $2 billion last year to about $6.9 billion by 2027, according to Data Bridge Market Research, which represents a blistering 16.3% compound annual growth rate over the forecast period.
The report authors note that psychedelic drugs are becoming increasingly accepted in the treatment of major depressive disorder, treatment-resistant depression, panic disorder, post-traumatic stress disorder, opiate addiction, eating disorders, and fibromyalgia, among other things.
The global behavioral health market, where psychedelics have shown tremendous potential, could hit $240 billion by 2026, according to Acumen Research and Consulting. Given the ineffectiveness of many existing treatments, psychedelics have blue sky potential in the space.
In addition to the growing body of research, governments have taken an increasingly permissive stance on the drugs. Health Canada recently granted exemptions to a number of healthcare professionals who wanted to possess and consume psilocybin mushrooms.
Several U.S. states have also moved to decriminalize psychedelic drugs, which could enable practitioners to treat patients. Given the size of the largely decriminalized cannabis industry’s sales, these moves could create significant revenue potential even without full legalization.
Psychedelics by Valuation
The growing body of research supporting psychedelics and more widespread acceptance has led to an explosion of investment in the sector. In addition to more than 25 public companies in the space, there are hundreds of privately held companies drawing investment dollars.
Peter Thiel, a famous investor in Facebook and PayPal, became the industry’s most high-profile investor in the space. Meanwhile, Compass Pathways plc (NASDAQ: CMPS) has nearly doubled since its debut on the NASDAQ with a market capitalization of nearly $2 billion.
Despite the impact of COVID-19, psychedelic companies have had little trouble raising substantial amounts of capital to finance their operations. Private companies that have gone public have also seen strong performance in the stock markets.
Tryp Therapeutics Inc., a pharmaceutical company focused on developing synthetic psilocybin for neuropsychiatric disorders, is one of the latest companies to file its final prospectus with plans to go public on the Canadian Securities Exchange (TRYP:CSE) on or about December 18th, 2020.
The company’s Psilocyin-for-Neuropsychiatric disorders, or PFN™ program is focused on developing orally-delivered drug therapies for neuropsychiatric disorders that have ineffective first line treatments in disease categories with high unmet medical needs.
The company’s two development programs include TRP-8802 targeting fibromyalgia, a range of eating disorders (including Prader WIllie Syndrome) and TRP-1001 targeting soft tissue sarcomas. TRP-8802 is the lead indication under its PFN™ program while TRP-1001 could qualify for Orphan Drug status.
Many investors are looking to the psychedelics industry to replicate the success of the cannabis industry—another instance of a once-illegal drug becoming legal for sale. While recreational cannabis has become a commodity, psychedelics could revolutionize medicine.
Investors looking to participate in the industry’s growth can choose from a growing number of public companies in the space, which are primarily traded in Canada on the CSE, where regulations are more permissive and investor appetite is strong.
To learn more about Tryp Therapeutics, visit the company’s website or download their investor presentation.
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