It was only a little over five years ago that Canopy Growth, the biggest pot stock based on market cap, was valued at close to $60 million. Today, Canopy’s market cap tops $9 billion. There are at least half a dozen other pure-play cannabis stocks with market caps of $1 billion or more.
A big opportunity
Psychedelic drugs have long been used recreationally and, for the most part, illegally. Today, the focus is on psilocybin, a psychoactive chemical found in certain types of mushrooms. Like cannabis, psilocybin is currently a Schedule I substance under the Controlled Substances Act. Data Bridge Market Research projects that the psychedelic drug market will reach $6.85 billion by 2027.
Mostly small players
The based Compass Pathways is the biggest in the group of biotechs focused on psychedelic drugs. Its market cap quickly vaulted above $1 billion. The company is currently evaluating its lead pipeline candidate, COMP360 psilocybin therapy, in a phase 2b study for treatment-resistant depression. Mind Medicine has a market cap of around $435 million.
The company hopes to soon move forward with a phase 2a study of LDS microdoses in treating adult attention deficit hyperactivity disorder . Cybin is a case in point. The stock currently has a market cap of a little over $100 million. Cybin is developing a psilocybin therapeutic candidate targeting major depressive disorder.
But while Cybin is small, it’s attracting talent from big drugmakers. The company hired Doug Drysdale as CEO in September.
An early market to closely watch
Psychedelic stocks won’t have as big of a market opportunity as cannabis stocks do. Psychedelic drugs are much more heavily restricted. The companies with the greatest opportunities in the psychedelic market are pursuing the FDA approval path, similar to what GW Pharmaceuticals did with its CBD drug Epidiolex.
Source: Keith Speights | The Motley Fool
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