The Complete 2022 Stock Market Analysis (PRO REPORT)

The past few months haven’t been kind to psychedelic investors and January was no exception. 

In 2021, we saw three companies IPO at a greater than $1 billion valuation. This includes Compass Pathways (CMPS), GH Research (GHRS), and ATAI Life Sciences (ATAI). We also saw MindMed (MNMD), which first went public in 2020, break the coveted $1 billion market cap as well.

As of today though, not a single company in the Psychedelic Invest Index is trading above $1 billion. 

In fact, those four companies were down on average more than 26% in the last 30 days.

And the same four companies are now on average down more than 55% over the last three months.

Looking further, we can see this play out in the psychedelic focused ETFs:

Horizons Psychedelic Stock Index (PSYK) is down 13%.

Advisorshares Psychedelics ETF (PSIL) is down 23%.

Defiance Next Gen Altered Experience (PSY) is also down 15%.

So what gives? …Why is the market slumping? …And why are some of the most promising companies in the world of pharmaceuticals down so much? 

Before we get to that, I’d first like to introduce myself.

Hi, I’m Adam Tubero.

I’ve recently joined Psychedelic Invest to help bring informative and actionable insights for psychedelic investors. I’m originally from New York where I worked for the hedge fund, Chart Prophet Capital. After working there for three years, I decided to move away from finance to focus on therapy and coaching, including with the use of psychedelics.

I’ve now joined Psychedelic Invest to bridge my two passions, investing and psychedelics, to help investors make informed decisions while also furthering the message of psychedelic healing.

Besides that, a few fun facts about me:
1. I have an irrational fear of caterpillars and worms.
2. I’m bilingual (English/Hebrew)
3. I have a black belt in Taekwondo.

Now, let’s get back to what is moving these markets…

Looking over the past few months (and even the past year), investors could point to a few different factors:

2021 was a banner year for psychedelics with dozens of companies going public. Although there was a ton of hype among retail investors about the potential of the space, there was also a large amount of confusion among them trying to discern which companies to put their money behind. Many of the companies in the space are targeting the same indications and oftentimes are doing research in stealth to protect their IP. This leads to long lag times of results which investors can point their fingers to as success. 

With rising inflation and interest rate concerns, investors are beginning to rotate out of growth stocks for value. With most of the psychedelics market having no (to even negative) profits, they are getting caught in this rotation.

With hundreds of millions of dollars pouring into private psychedelics companies in 2020 and early 2021, early investors may want to begin taking profits. Whether the profit-taking is leading to drawdowns or the perception of profit-taking is driving down returns is debatable, but regardless it is weighing heavily on the companies.

The bear market isn’t confined only to psychedelics. The S&P Biotech SPDR (XBI) for example is down more than 20% in January. 

In 2021, we saw many companies going public with simply a business plan. Oftentimes, these companies were preclinical and without a true business plan on how they are to make money. 

We also saw many companies that were not actually focused on psychedelics pivot their branding and/or company name to take advantage of the “psychedelic hype.” 

Many of these companies didn’t have the war chest or longevity in the market to weather potential downturns. 

Regardless of what is causing the psychedelic market downturn, here at Psychedelic Invest we have been recommending readers invest “with a VC mindset”.

Money is still flowing into the ecosystem, such as PsyMed Ventures’ recent $25 million raise, and high-quality companies in the space continue to show positive results.

Despite an opaque regulatory outlook, 2022 psychedelic fundamentals are moving in the right direction. The year will bring legalization to more states, company balance sheets will begin to show revenue and future cash flows, and there is potential for more interesting mergers & acquisitions. 

We continue to suggest looking at investing in psychedelics in a five-year timeframe. 

Psychedelic companies are an investment, not a trade. 

If you are looking at this game from a one-year mindset, you may soon be in for unfavorable results.

In our last stock market update in January we mentioned that “the past few months haven’t been kind to psychedelic investors.” 

Well, it’s three months later and from a price perspective, we can’t say much has changed. 

With that being said, there are some exciting stories at play which we will get to below, but first let’s go over the bad news.

Taking a look at the four psychedelics companies that we covered in January [Compass Pathways (CMPS), GH Research (GHRS), ATAI Life Sciences (ATAI) and MindMed (MNMD)]​​, we can see that a blended portfolio would be down on average more than 44% year to date (YTD).

A few of these companies are now trading nearly 80% off of their all-time highs (ATH).

In other unfortunate company news, we saw Mindcure report that it was shutting down operations.

Of course, the psychedelics-focused ETFs haven’t fared much better with active management.

Horizons Psychedelic Stock Index (PSYK) is down more than 69% from its ATH.

Advisorshares Psychedelics ETF (PSIL) is down more than 68% off its ATH. 

Defiance Next Gen Altered Experience (PSY) is down nearly 76% from its ATH.

There’s no sugar coating it, being a public markets psychedelic investor has been brutal in 2022.

Taking a look at comparable markets, we can see that psychedelics aren’t alone in having a rough past year. 

Since peaking in February, 2021, we can see that the SPDR S&P Biotech ETF (XBI), has fallen more than 50%. 

Simply put, biotech investors across all markets are having a rough time.

With all of the bad news out of the way, we can now focus on some good news arising from the sector.

While the public markets are hurting, that doesn’t mean that funds have stopped putting money to work. Over the last few months, we saw a couple of exciting fundraising including Nue Life Health raising $23 million, Homecoming raising $4 million in a Seed round, and word that Gilgamesh will soon complete their Series B. 

We have been predicting this at Psychedelic Invest for the past few months, but in April we finally saw the first true M&A in the sector with Numinus acquiring Novamind for $20.8 million. The acquisition will give Numinus a foothold in the United States ketamine market. More signs of consolidation will be good for the industry.

Believing that biotech companies are undervalued at the moment, the founder of ATAI Life Sciences, Christian Angermayer, announced that he would be buying 1 million shares of his own company’s stock. At current prices, that represents an investment of ~$5 million.

In the last quarter, Psychedelic Invest has added a new constituent to the Psychedelic Invest Index: Relmada Therapeutics (RLMD). Although not a pure-play psychedelics company, Relmada states that they are “developing a novel psilocybin formulation and are synthesizing psilocybin derivatives with promising activity for the treatment of CNS disorders.” The company now represents the second-largest constituent in the Psychedelic Invest Index.

Although we don’t know for sure what will happen in the psychedelic markets over the next few months, we agree with Christian Angermayer that the market is beginning to look attractive. 

With that being said, the macro environment continues to look shaky, the Fed is looking to raise rates, and inflation has begun to put a hole in individuals’ wallets – all factors that don’t bode well for investor appetite in capital-intensive companies. 

If you have turned away from the psychedelics stock market over the past year, we can’t say we’d blame you. 

There are multiple — high-profile — psychedelics stocks down 60%, 70%, and even 80% year to date. 

For example, taking a look at any publicly traded psychedelic company with a greater than $50 million market cap as of June 1, 2022, we’d see an average loss of ~40%.

As we’ve pointed out in previous updates, the bleeding isn’t confined simply to psychedelics stocks, with ETFs such as the SPDR S&P Biotech ETF (XBI) and the iShares Biotechnology ETF (IBB) down -40.43% and -26.63% respectively.

And for those that like to compare psychedelic stocks to the cannabis industry, the AdvisorShares Pure US Cannabis ETF (MSOS) is also down -45.64% year to date. 

But, the past month — and more specifically the past week — may be pointing to a change in the market. 

Now that’s a headline sure to turn some heads…

Especially when you take a look at the performance of the same largest market cap stocks and see that they returned -5.40% on average during the month of May.

But underneath the surface, a few psychedelic stocks are beginning to make some moves.

Zooming in, you can see that the same stocks we listed above are predominantly in the green, with an average gain of 5.65%. 

The gains were largely due to a few companies such as Revive Therapeutics (RVV), and MindMed (MNMD). 

Revive, for example, is now up more than 100% since May 12, 2022. Now to be clear, much of that gain may be due to their announcements around their Phase 3 clinical trial for Bucillamine in COVID-19, rather than specifically a psychedelics-related announcement. 

With that being said though, we can’t discount the large gains made by the other psychedelic pure plays. For example, MindMed has been on a steady rise since it announced Q1 earnings on May 14th.

As we have said in recent updates, it seems that while the public markets are having a bit of a reset back to sane valuations, the private markets are continuing to raise money. 

For example, in just the past week, we have seen Tripp raise $11.2 million from Bitkraft Ventures, Amazon Alexa Fund, Qualcomm, HTC, Niantic, and Mayfield, as well as MycoMedica’s large $60 million raise from Obvious Ventures, True Ventures, and Kittyhawk Ventures.

So, are we at the bottom? 

Or is this just a market tease waiting to capitulate eager investors looking to enter the market?

It’s a little too early to tell, but we believe it’s time for investors to start paying attention to the space once again.

In our psychedelic stock market update for May 2022, we asked a few simple, but important questions…

Were we at a market bottom with the psychedelic stock sector ready to explode higher? 

Or, were the positive returns during the last few weeks of May just a market tease waiting to capitulate eager investors looking to enter the market?

Looking back now, 30 days later, the answers seems to be a resounding – yes. 

Yes, some psychedelic stocks began to perform positively in June, while others continued their downward trend, reaching new all time lows.

As we can see in the table below, a diversified portfolio of psychedelic companies with market caps greater than $50 million was down -6.52% in June. This, after being down -5.42% in May.

But as investors have noted, the drawdowns in June were primarily subject to companies trading for less than $100 million market caps. If we were to take only the five largest publicly traded psychedelic stocks, we would have seen a total return in June of .79%.

Although .79% is not a bad one month return, especially when considering the S&P 500 and NASDAQ respectively returned -7.07% and -8.05% in the same period, if we compare to the sort of “benchmark” we have been using over the past few months – the SPDR S&P Biotech ETF (XBI) – the portfolio didn’t come anywhere close. XBI scored a 9.98% return for the month of June. 

Still, a portfolio of only the largest psychedelic stocks is still worth exploring in a time like today, which is why this month we published a deep dive into the earnings results and future pipelines of three of them: Atai Life Sciences (ATAI), Mind Medicine (MNMD), and Compass Pathways (CMPS).

In our last two psychedelic stock market updates, we mentioned that while the public markets were nosediving, the private markets were continuing to make progress and raise hundreds of millions of dollars. Although this continues to be the case, in June there were some significant happenings in publicly traded psychedelic stocks that we would like to update investors on – specifically around patents.

In December 2021, a non-profit known as Freedom to Operate (FTO) attempted to challenge two of Compass Pathways’ patents on a synthetic form of psilocybin. FTO claimed that Compass’ patents were technically not “new” and therefore shouldn’t be able to be patented. 

After sending petitions to the Patent Trial and Appeal Board (PTAB) last year, in June a decision was reached with the PTAB siding with Compass on its patent claims. 

Compass Pathways’ stock is up more than 33% since the decision was handed down. 

On June 22, MindMed (MNMD) was granted a US patent for “administering an empathogen/entactogen and a psychedelic in the same single oral dosage form to an individual.”

Simply, this means that MindMed has now patented the combination of an empathogen and an entactogen such as MDMA and LSD, or MDMA and mescaline, as examples. 

The patent was given to Dr. Matthias Liechti, a University of Basel in Switzerland professor who is also an advisor to MindMed. MindMed had originally exclusively partnered with Dr. Liechti’s lab in 2020.

Although the process of taking MDMA and LSD at the same time has been around for decades and is colloquially known as “candyflipping,” MindMed claimed that the process of ingesting “the same single oral dosage form” was patentable as opposed to the recreational use case of taking MDMA and LSD in separate dosages. 

Whether or not this patent is ultimately a game changer is yet to be seen, but rest assured it will be hotly debated.  

To learn more about both of these happenings, you can check out our five-minute update from our new series Weekly Extractions.

Overall, the psychedelics public markets continue to deal with a few major headwinds that could continue to have negative impacts on their stock prices… but that doesn’t mean July doesn’t have anything to look forward to.

In the coming month we have Field Trip spinning out its clinics business, CaaMTech collaborating with the Alexander Shulgin Research Institute, and a new Netflix series based on Michael Pollan’s How to Change Your Mind.

Stay tuned. The psychedelic market isn’t going anywhere.

July was a positive month for psychedelic investors with the market showing signs of price growth. 

Individual stocks such as Compass Pathways (CMPS), Relmada Therapeutics (RLMD), and Seelos Therapeutics (SEEL) were up 38.33%, 34.75%, and 29.56% respectively in the month.

The overall positive performance in the psychedelic sector led to Psychedelic Invest’s Index being up 9.43% during the month of July. 

Although the past year has been brutal for those invested in psychedelic stocks, the market really seems to have bottomed out in May right around when we asked: Are we at the bottom?

So, what’s the deal? 

Is it the performance derived from positive happenings among market constituents? 

Or, is the psychedelic sector just responding to macro events? 

Well, it looks like a bit of both. 

Although it is still a bear market in biotech stocks, the main benchmark ETF that we use for psychedelic stocks here at Psychedelic Invest has also been performing quite well. 

The SPDR S&P Biotech ETF (XBI) was up 15.4% in July. To be clear though, the XBI was still down 24.6% in 2022 as of July 31. 

Regardless, this is a positive indicator for psychedelics investors as it shows a change in investor attitude.

As reported by Barron’s, this has caused investors to begin pouring money back into the biotech sector:

In the psychedelics market, there were a few events in the month of July impacting investors. 

On July 12, Netflix launched the brand new docuseries, How to Change Your Mind, based on the amazing book from Michael Pollan of the same name. 

If you haven’t yet seen it, we highly recommend it. The series highlights several leaders in the psychedelics space including MAPS and Dr. Ben Sessa of Awakn, to name a few. 

The series was a Top 10 release on Netflix and has hopefully helped “change the minds” of many of the psychedelic-doubters and will help propel the industry forward.

As always, if you are interested in keeping up to date with the entire psychedelics market on a weekly basis, our very own Adam Tubero has been publishing a new series: Weekly Extractions.

In 2021, one of the leading stories for psychedelic stock investors was the introduction of ETFs focused on the burgeoning sector. 

Here at Psychedelic Invest, we published multiple news alerts (here and here for example) and deep dives around the introduction of said ETFs. 

But with the announcement from ETF provider Defiance last month that they would be shutting down their psychedelics focused ETF on August 30th, many investors began to fear that the hype around psychedelics was over. 

But is it? 

Obviously psychedelics have an important role to play in the future of mental health. To add, the industry on any long enough timeline should be multiples of where it is today… 

But in hindsight it looks like some companies jumped the gun in going public as we can see with even industry leaders like ATAI Life Sciences (ATAI) down nearly 80% since IPO. 

This also seems to be the truth with psychedelics-focused ETFs. 

Simply put, the air has been sucked out of the room when it comes to investor’s appetite for psychedelics stocks. 

So, today we are going to take a look at where we stand in the psychedelics sector from the viewpoint of the four psychedelics ETFs (three live, one dead). 

But before we take a look at how each ETF has performed, we need to understand how the ETF business works. 

Although there are a couple different ways that ETF providers earn money, they primarily generate revenue through management fees. 

Note: For this exercise we are going to specifically discuss actively managed ETFs as opposed to passively managed ones in which there is much less effort to maintain the ETF from the managers perspective and thus less fees. 

Because active ETFs take a lot of effort and capital to maintain, fund providers charge a fee for their effort. Although these fees can range anywhere from 0-10%, most actively managed ETFs charge ~1%. 

Therefore, in order to understand how much a fund provider is making from an ETF, you can simply take the assets under management (AUM) and multiply it by the management fee to get a rough calculation of their revenue. 

So, to put this in perspective, if an ETF has $100 million in AUM and charges a 1% management fee, it would generate $1 million in revenue annually all else being equal. Pretty simple right? 

Now, with the above calculation we skipped over the fact that the ETF also will have some performance (either positively or negatively) which will impact that AUM number. For example, if the ETF had an outstanding year and increased in value by 100%, the AUM would now be $200 million, in turn generating $2 million in fees. 

Therefore, as we can see, the two components that matter when it comes to running an ETF are: 

To be clear, oftentimes the ETFs stock performance causes more money to flow into the ETF. Therefore, it is imperative that the ETF has positive performance if it wants to stay alive. 

This is where psychedelic ETFs have run into some trouble… 

Combine these two facts, and being a psychedelics-focused ETF right now is a hard business. 

So with that in mind, let’s take a look at how each of the ones on the market have and are performing. 

As previously explained, Defiance shut down their psychedelics-focused ETF on August 30, 2022. 

Although we don’t have any insider information, we have to assume this has to do with the dwindling AUM. With an expense ratio of 0.75%, and less than $10 million AUM, the fund was most likely pulling down less than $75,000 in revenue. 

The ETFs original prospectus stated that it would invest 35% of the fund in psychedelics healthcare companies and 65% in medical cannabis companies. But with both markets – psychedelics and cannabis – down significantly since Defiance’s psychedelic ETFs launch, the fund really never had a chance for success. 

Billed as the “world’s first psychedelics ETF,” the Horizons Psychedelic Stock Index ETF (PSYK) was launched in January, 2021 on the NEO exchange. 

As opposed to the Defiance psychedelics ETF (PSY) which diversified by including cannabis companies, the Horizons Psychedelic Stock Index ETF (PSYK) aimed to diversify its holdings by including large-cap pharmaceutical stocks such as Johnson & Johnson (JNJ) and Abbvie (ABBV). To be clear though, over time the ETF has become much more concentrated in psychedelics stocks with companies such as Seelos, Compass Pathways, and GH Research making up 17%, 14.5%, and 11% of the fund respectively. 

Regardless, the ETF is still down more than 65% since inception and ~30% year to date. 

At a 0.85% management fee and currently ~$25 million in AUM, the fund is currently generating more than $200,000 in revenue. This isn’t enough to continue forever, but it should be enough in our opinion to try to weather the bear market in psychedelics. 

Launched almost exactly one year ago on September 16, 2021, the Advisorshares Psychedelics ETF (PSIL) was lauded by investors due to its pure-play nature of investing in psychedelic companies and lower fees (0.60%). 

And although the fund showed initial success (as seen in the chart above) with the run-up of the Compass Pathways (CMPS) IPO, the fund is ultimately down more than 65% since inception and more than 45% year to date. 

Now, with less than $10 million in AUM, PSIL seems to be in much of the same boat that PSY was in. With that being said, much of the retail investing community continues to support PSILs gameplan when it comes to investing in psychedelic stocks. 

The newest fund on the market, having launched in February, 2022 is the Elemental Advisors PSYK (NYSE: PSYK). Investors should note that this ETF is not to be confused with the Horizons Psychedelic Stock Index (NEO: PSYK).

Although the fund claims on its homepage that it has “focused exposure to the medical psychedelic drug industry,” this isn’t necessarily true. A quick look over the funds top holdings and one would be pressed to find many psychedelics-focused companies. 

Now to be fair to the fund, the prospectus does state: “If fewer than 25 psychedelic treatment companies qualify for inclusion in the Index, the Index will also include neurology biopharmaceuticals companies.”

Having launched only eight months ago, it is hard to make many conclusions yet on this ETF, but we can note that it has a 0.90% management fee which has been waived to 0.75% through 1/25/23. The fund also currently only has ~$1.6 million in AUM, so unless something picks up soon we can’t imagine the ETF will be around for long. 

As we have hopefully shown above, being a provider of psychedelics-focused ETF is difficult right now. 

Stock prices down…

Cash inflows down…

The overall macro environment…

Simply put, trying to invest in a cutting-edge industry is more difficult than it might seem on face value. And as these ETFs continue to run into trouble they help increase the flywheel effect which is falling stock prices as they have to sell stock in the companies they hold. 

But with all that being said, there are a couple areas of the market that are still hot on acquiring stock in psychedelics-focused companies. And in large amounts at that.

Run by the infamous Cathy Wood, ARK Investment Management LLC, is a provider of multiple actively managed ETFs with more than $15 billion in AUM (although this number has been as high as $50 billion). 

Ark Invest’s second largest fund is the ARK Genomic Revolution ETF (ARKG) which as of August 2022 has more than $2.7 billion in AUM. 

The fund has a stated goal of investing in companies that “are focused on and are expected to substantially benefit from extending and enhancing the quality of human and other life by incorporating technological and scientific developments and advancements in genomics into their business.”

Although the fund does not explicitly state its intent to invest in psychedelic stocks, it hasn’t stopped it from gobbling up shares in some of the largest psychedelic companies. As of September 15, 2022, ARKG holds 6,242,194 shares (market value of $24,968,776) of ATAI Life Sciences and 394,986 shares (market value of $5,561,402).

To put that in perspective, ARKG holds more stock in psychedelics companies than all four psychedelic-focused ETFs combined. It is worth noting though that the two companies represent only ~1% of ARKGs fund. 

As should be obvious, ATAI Life Sciences is not a traditional fund in any way. Besides being a leading psychedelics company and one of the largest by market cap at that, ATAI also takes large positions in other psychedelics companies – both private and public. 

On the public side for example, ATAI currently owns 22.5% of Compass Pathways (CMPS) as of June 30, 2022. 

And now, after adding the $175 Million loan they took in August to the more than $300 million in cash on hand, ATAI has quite the war-chest to either go acquire private or public companies and/or double down on previous investments. 

In a sense, ATAI is a sort of proxy for the large-cap psychedelics environment. 

As active investors in the space, it’s quite obvious that we have seen better times. As shown in the performances of each psychedelic ETF covered above, investors would’ve been better off if these indexes were completely avoided for most of 2022.

Interestingly though, and as we discussed in more detail in May, a bottom appears to have formed this past summer. If you were to look at each ETF (with the exception of Elemental Advisors), for example, you’d notice that stock prices have bounced back between the months of June and July.

Even our own index, which captures the entire basket of public psychedelic stocks, has gained back nearly all of its 2022 losses.

Good News? Yes. The latest rally is certainly promising for ETF providers and retail investors alike.

A reason to celebrate? Not quite.

Any downturn from here, given today’s gloomy economic and inflationary backdrop, could easily spell more trouble ahead. And with ETF money managers already skating on thin ice, there is a possibility of both share volumes and investor interest catering back to their lows.

As long-term investors, any subsequent bumps in the road should come as no surprise.

In the meantime, we’ll keep doing what we always do by stocking up our portfolio on only the down days and diversifying across this exciting sector as much as possible.

Although the Psychedelic Invest index had been performing well since the lows in May, September turned out to be a bad month for the market with the index down -9.02%.

As you can see in the chart below, that’s because the large cap psychedelic stocks had a mixed performance in September.

While some stocks such as Relmada Therapeutics (RLMD) and Allied Corp (ALID) had positive performance, others such as Cybin (CYBN) Reunion Neuroscience (REUN) and MindMed (MNMD) brought down the index. 

Although Relmada had positive performance in September – up 23.44% – as investors were looking forward to their Phase III results, the company ended up not meeting its primary endpoint, causing the stock to drop more than 80%. 

In case you have missed it, our very own Adam Tubero was all over this story to explain what is going on at the company and why it was down more than 70% in September. 

Due to the macro environment and the performance of psychedelic-focused stocks over the past year, many companies in the space have begun to shut down or pivot away from psychedelics. 

In September, Psychedelic Invest began investigating the amount of shutdowns in the space and concluded that as many as 15 psychedelic companies that were previously in our index have shut down in the past year. These include: 

As unfortunate as this is to see, we don’t see this trend slowing down any time soon. There are many other psychedelic-focused companies trading right now that unless something miraculous occurs soon, will be forced to shutter. 

Slowly, the psychedelic stock market is becoming more and more homogenous, with only the largest companies surviving. 

Although Psychedelic Invest accurately called the bottom in May 2022 for the overall sector, unfortunately, it wasn’t the bottom for individual stocks.

October was a pretty brutal month for the psychedelic stock market no matter which way you look at it. While the rest of the stock market performed well, individual psychedelic-focused stocks and ETFs performed poorly. 

Before we get to psychedelics, let’s take a step back and review how other sectors of the market performed in October. 

Overall, 10 out of the 11 sectors of the S&P 500 rose in October.

The psychedelics market missed this historic rise in prices though with only a handful of stocks ending the month positive.

Using the Psychedelic Invest Index as a proxy for the psychedelics sector, one can see that the market was down more than 37% in October.

Now, much of the index’s poor performance was due to Relmada Therapeutics being down nearly 82% (which we will get to below), but regardless, other large-cap psychedelics stocks were also significantly down in the month. 

For example, GH Research, Cybin, and ATAI Life Sciences were down 17.7%, 22.53%, and 11.14% respectively for the month. 

Looking at other benchmark indexes, we can see that the psychedelics market in October was truly unique. 

For example, the SPDR S&P Biotech ETF (XBI) was fairly range-bound, finishing October up a little more than 3%, while the iShares Biotechnology ETF (IBB) did very well, up ~10%. 

As alluded to above, the main reason for the psychedelic sector’s poor performance in October was due to Relmada Therapeutics. 

On October 13, Relmada reported that their lead asset had failed a phase 3 trial for major depressive disorder (MDD) when it did not achieve its primary endpoint. 

Although the stock was steadily rising in the months leading up to the results, the negative outcome sent the stock plummeting nearly 80%. 

Now that we have covered the happenings in the psychedelic stock market for October, let’s take a look at what the rest of the year might hold and make some predictions for going into 2023.

The psychedelic (and greater biotech) market right now seems to have reached a sort of stalemate. 

On one hand we have positive progress in the sector with good clinical data, positive regulatory happenings, and M&A activity. On the other hand though, we have major macro related headwinds including rising interest rates, rising inflation, and uncertainty around worldwide happenings (Russia, Ukraine, China, etc). 

It seems as though for the remainder of the year – at a minimum – the greater biotech market will be dependent on macro factors. 

With that, let’s make some predictions for Q4 and into 2023. 

Let’s get straight to it: The psychedelic stock market continues to underperform. 

Taking a look at our Psychedelic Invest Index, we can see that only two companies that trade for a greater than $50 million market cap were up in the month of November: atai Life Sciences (ATAI) & GH Research (GHRS).

Wait, there are only stocks trading at a greater than $50 million market cap?… You are probably asking yourself. 

They sure are. 

Psychedelic Invest’s Index now only has eight companies trading over a $50 million market cap…

Five trading over $100 million…

And only two trading over $500 million. 

Simply put, the psychedelic stock market has taken a beating. If you were to add up the market capitalizations for every psychedelic stock, it would ring up to less than $2.5 billion. 

To put this in perspective, atai’s IPO at the height of the psychedelic bull market was worth more than $3 billion. 

With that being said, let’s try to look at a few positive pieces of news from November.

The votes are in, and Colorado citizens want access to psychedelics. On November 8, 2022, Colorado became the second US state to vote on a measure that legalizes psilocybin access in a therapeutic setting and decriminalizes personal use. Learn more here.

In November we saw two funding rounds that caught our attention. Although these rounds are not for public companies, the amount raised and valuations are worth noting for future public listings. 

Sensorium Raises $30 Million

Sensorium Therapeutics announced it closed a $30 million Series A financing round for its compounds SENS-01 and Biodynamic Discovery Platform (BDP.) The funding round was led by healthcare and life sciences investment firm Santé Ventures, along with Iter Investments, Route 66 Ventures, CU Healthcare Innovation Fund, WPSS.bio, Palo Santo, Ocama Partners and re.Mind Capital.

Lusaris Therapeutics Raises $60 Million

Lusaris Therapeutics announced its launch with $60 million in Series A financing to advance LSR-1019, a sublingual formulation of 5-MeO-DMT for patients with treatment-resistant depression (TRD) and other severe neuropsychiatric disorders. The round was led by RA Capital Management, with participation from Venrock Healthcare Capital Partners, Deep Track Capital, and Boxer Capital.

For specific news into the public markets, in November our very own Adam Tubero did deep dives into both atai Life Sciences (ATAI) and MindMed (MNMD). You can view those below.