• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Cannabis

As the Focus on Psychedelic Stocks Increases, So Do the Valuations

The only companies that have Phase 2 clinical trials now are Compass Pathways, Mind Medicine, Cybin, and Mydecine Innovations.
By DEBRA BORCHARDT
Jan 11, 2021 | 04:30 PM EST
Stocks quotes in this article: CMPS, MMEDF, CLXPF, MYCOF, CGC

With so many new IPOs and companies launching in the psychedelic industry it's important to fully evaluate the major factors of success or failure in the industry. There are various steps that companies take to have a drug approved and to successfully complete them it takes years and tens of millions of dollars. The further ahead a company moves in the approval process, the more valuable the company becomes, and that is why there is so much excitement for Compass Pathways (CMPS) . Institutional and retail investors are in a frenzy to get a position. The company is in Phase 2b and has received a "Breakthrough Therapy" designation from the FDA, meaning that their therapy has the potential to be more effective than available medications.

Currently there are only a handful of companies that have:

  • Access to psychedelic compounds
  • A clear idea of the disorder they are targeting, also known as drug indication
  • Are actively running a clinical trial.

It's important for investors to be mindful of the stage a company is in and to fully evaluate if a company they are investing in has the potential to be successful.

The only companies that have Phase 2 clinical trials now are Compass Pathways, Mind Medicine (MMEDF) , Cybin Inc. (CLXPF)  , and Mydecine Innovations Group (MYCOF) . Here's an analysis of these biotech players and we highlight the most undervalued company in the industry. 

What is the Drug Discovery Process?

The drug development process being undertaken is to ensure these treatments are safe and effective for consumption. 

  1. The drug is investigated and screened tested on animals to prove safety (can be skipped since psilocybin has been proven safe and effective)
  2. Investigational drug application to FDA and Health Canada is submitted that includes, drug composition, formulation and manufacturing process
  3. Clinical Trial Plan including selection of location
  4. Recruitment of volunteers
  5. Analysis of findings and submission
  6. Approved to move to next Phase in larger population

Psychedelic Companies with Phase 2 Trials Valuation Comparison 

Biotechnology companies are hard to value as it's hard to predict success of clinical trials. Biotech companies are unique types of investments that can either pay off handsomely or end with a complete loss of capital. One of the best ways to value a company is by looking at the size of the addressable market and estimating the potential market penetration. 

The reason Compass Pathways is leading the charge in psychedelics is they have a drug that is more effective than anything available, has a total addressable market of 16 million adults, and can upend this entire market as a whole.

What key parameters to look for valuing biotech companies? 

  1. Experienced Science team
  2. Experienced Management Team
  3. Intellectual property protection
  4. Large addressable market
  5. Potential Market Penetration Possible
  6. Access to patients
  7. Access to active ingredients
  8. Unique R&D Capabilities
  9. Scientific Community Collaborations

Compass Pathways 

COMPASS Pathwaysoperates as a mental health care company in the UK and the U.S. It develops COMP360, a psilocybin formulation, which is in Phase IIb clinical trial to treat patients with treatment-resistant depression. The company is currently the most valuable and most well-known company in the industry and has raised over $250 million since its inception. 

Current Market Cap: $1.57 Billion

Drug in development: COMP360 Psilocybin for Depression

Indication: Treatment Resistant Depression

Total Addressable Market: $1.12 billion by 2024

Stage: Phase 2B

Location: Multiple sites globally

Mind Medicine Inc.

Mind Medicine, also known as MindMed, is a neuro-pharmaceutical company that discovers, develops and deploys psychedelic inspired medicines to improve health, promote wellness and alleviate suffering. The company's immediate priority is to address the opioid crisis by developing a non-hallucinogenic version of the psychedelic ibogaine. In addition, the company has established a microdosing division to conduct clinical trials of LSD microdosing for adult ADHD. The company has also added MDMA to its R&D pipeline to explore MDMA's potential to treat mental health disorders.

Current Market Cap: $977 Million

Drugs in development: LSD for Adult ADHD, LSD for Suicide Headaches, Ibogaine for Addiction

Indication: Various

Total Addressable Market: Unknown but the largest of all studied companies

Stage: Phase 2a

Location: Multiple sites globally 

Cybin Inc.

Cybin is a life sciences company advancing psychedelic pharmaceutical treatments for various psychiatric and neurological conditions. Cybin is developing technologies and delivery systems, aiming to improve bioavailability, to potentially achieve the desired medicinal effects of psychedelics at low dosage levels. The new delivery systems are expected to be studied through clinical trials to confirm safety and efficacy. 

Current Market Cap: $203 Million

Drug in development: Sublingual Psilocybin Delivery Mechanism for Depression

Indication: Major Depressive Disorder

Total Addressable Market: $5.8 billion by 2025

Stage: Phase 2 A

Location: University of West Indies Jamaica

Mydecine Innovations Group

Mydecine Innovations Group is a life sciences company dedicated to developing and commercializing innovative solutions for treating mental health problems and enhancing well-being. The company's world-renowned medical and scientific advisory board is progressing a robust R&D pipeline of psychedelic derived therapeutics, novel compounds, therapies, and controlled drug delivery systems. Mydecine has exclusive access to a full cGMP certified pharmaceutical manufacturing facility with the ability to import/export, extract, and analyze natural and synthetic psychedelic compounds with full government approval through Health Canada.

Mydecine was the first company to offer CGMP naturally sourced psilocybin and recently made history again by making the first legal export of Magic Mushrooms. Mydecine has a big focus on intellectual property and is utilizing genome technology (editing plants like what GW Pharma did in Cannabis) under the leadership of Rob Roscow the ex-Canopy Growth (CGC) head of genetics and at Mydecine's U.S. and Canadian laboratories. The company now has over 20 kilos of psilocybin mushrooms - most in the industry - and has active ingredients for their trials at a fraction of the cost that Compass Pathways or Cybin ever can with their synthetic drugs.


Current Market Cap: $56 Million

Drug in development: Naturally Sourced Psilocybin

Indication: PTSD

Total Addressable Market: $10.6 B by 2026

Stage: Phase 2 A

Location: Multiple Sites Globally

As illustrated above, by making side by side comparisons of companies that are in Phase 2 trial studies, investors can quickly see the size of the addressable audience and the market cap of the company. This makes it easier to see if there is a stock that might have more room for upside than others. As the focus on psychedelic stocks increases, so do the valuations. There is concern that some company valuations have gotten ahead of themselves and investors may want to take that into consideration before hitting the buy button.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Debra Borchardt had no position in the securities mentioned.

TAGS: Investing | Markets | Stocks | Trading | Cannabis

More from Cannabis

None of These Stocks Are Short-Term Trades for Me

Timothy Collins
Apr 15, 2021 1:39 PM EDT

No one likes seeing a name they hold decline in value.

Indices Fail to Tell the Story of This Market

James "Rev Shark" DePorre
Apr 13, 2021 7:38 AM EDT

Stay focused on sectors and rotational action if you want to navigate the action.

The Rolling Correction Is Rolling Along

James "Rev Shark" DePorre
Apr 12, 2021 1:20 PM EDT

This market is not nearly as strong as it looks.

Liquidity Dries Up and Small-Caps Are Slammed

James "Rev Shark" DePorre
Apr 12, 2021 10:55 AM EDT

There is some very ugly action under the surface.

Shares of Aphria Are Burning Out

Bruce Kamich
Apr 12, 2021 9:10 AM EDT

Charts look vulnerable for the cannabis name as earnings disappoint.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 08:05 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    How recency bias and the Pareto Principle impact y...
  • 02:42 PM EDT PAUL PRICE

    Wednesday on Real Money Pro

    Make this stock a 'part' of your portfolio.
  • 04:44 PM EDT PAUL PRICE

    Pretty Incredible + Hard to Believe

  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login