Psychedelics have gone from a countercultural fad of the 1960s to mainstream medicine in the 2020s. Quite a few psychedelic pharmaceutical companies are developing drugs that follow the legal, regulatory pathway to approval. Hallucinogens, including psilocybin, are showing considerable promise in treating illnesses such as depression and schizophrenia.
Several of these drugmakers are publicly traded and are receiving increased attention from investors. We've seen a similar phenomenon with marijuana stocks over the past several years. Cannabis was once on the fringe but is now a significant and growing industry.
Whether you call them magic mushroom stocks, 'shroom stocks, or psilocybin stocks, psychedelic stocks are hot right now. Let's explore four of the best publicly traded psychedelic companies on the market today.
The top four
Best psychedelic stocks
Psychedelic stocks are simply healthcare stocks focused on the use of hallucinogens to treat diseases. Because the area is still fairly new, most of these companies have relatively low market capitalizations. However, many are growing rapidly. Here are four of the top psychedelic stocks:
| Company | Market Cap | Description |
|---|---|---|
| Atai Life Sciences (NASDAQ:ATAI) | $243 million | Developing multiple drugs based on psychedelic substances, including ibogaine and ketamine |
| Compass Pathways (NASDAQ:CMPS) | $448 million | Developing one psilocybin therapy, COMP360 |
| Cybin (NYSEMKT:CYBN) | $215 million | Developing three clinical-stage psilocybin therapies, CYB003, CYB004, and SPL028, with other psychedelic candidates in preclinical testing |
| Mind Medicine (NASDAQ:MNMD) | $566 million | Developing several clinical-stage programs, with lead candidate MM120 using LSD across multiple therapeutic areas |
1. Atai Life Sciences
1. Atai Life Sciences
With prominent backing from venture capitalists, including billionaire Peter Thiel, it's unsurprising that Atai Life Sciences ranks as one of the biggest biotech stocks focused on psychedelic drugs. Founded in 2018, the company went public in June 2021. Atai has also acquired or made significant strategic investments in several other psychedelic companies.
Atai's pipeline features eight programs in clinical testing, including the company's strategic investments. The company has two candidates in phase 2 clinical studies: BPL-003 for treatment-resistant depression and non-psychedelic drug RL-007 for treating schizophrenia.
Atai's Perception Neuroscience unit teamed up with Japanese drugmaker Otsuka (OTSK.Y 1.85%) to develop R-ketamine for treating depression. It's the first major collaboration between a psychedelic-focused biotech and a big pharma company. Atai is also one of the largest shareholders in Compass Pathways, the next psychedelic drugmaker we'll look at in this list.
2. Compass Pathways
2. Compass Pathways
Compass Pathways' roots go back to 2015. That's when George Goldsmith and Ekaterina Malievskaia founded a nonprofit organization, Compass Trust Limited, to support the research and development of psilocybin therapy for individuals with end-of-life anxiety.
Their efforts led to Compass Pathways becoming a for-profit company the following year. In September 2020, the company listed its shares on the Nasdaq Stock Market.
The drugmaker is currently conducting two phase 3 studies evaluating COMP360 in treatment-resistant depression. It expects to report results from one of these studies in late 2024 and the other in mid-2025. COMP360 is Compass Pathways' only pipeline candidate.
There are other diseases for which COMP360 could be used. At the Institute of Psychiatry, Psychology & Neuroscience (IoPPN) at King's College London, Compass Pathways has initiated a phase 2 study of the experimental therapy in treating post-traumatic stress disorder (PTSD). Additional investigator-led studies are also underway for other indications, including major depressive disorder.
3. Cybin
3. Cybin
Founded in 2019, Cybin went public in 2020 on Canada's NEO Exchange through a reverse takeover of Clarmin Explorations. Its shares began trading on the New York Stock Exchange (NYSE) in August 2021.
The company reported positive results in November 2023 for its lead candidate, CYB003, in a phase 2 clinical study targeting the treatment of major depressive disorder. It also announced positive results in January 2024 from phase 1 clinical studies of CYB004 and SPL028 in treating generalized anxiety disorder. Cybin plans to advance CYB003 into a pivotal phase 3 study in major depressive disorder in 2024.
Cybin picked up SPL028 through its October 2023 acquisition of Small Pharma. The transaction also added Small Pharma's experimental psychedelic drug, SPL026, to Cybin's pipeline.
4. Mind Medicine
4. Mind Medicine
Mind Medicine (also known as MindMed) was the first psychedelic drugmaker to conduct an initial public offering (IPO) on Canada's NEO Exchange in March 2020. The company was founded less than a year earlier, in May 2019.
In March 2024, MindMed announced positive results from a phase 2 study evaluating its lead candidate, MM120, in treating generalized anxiety disorder. The company plans to advance the program into phase 3 testing in the second half of 2024. It's also evaluating MM402 in a phase 1 clinical study for treating autism spectrum disorder.
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Risks vs. rewards
Risks and rewards
None of the four psychedelic drugmakers has approved therapies on the market yet. There is a risk that pipeline candidates will be unsuccessful in clinical testing. Even if the drugs prove safe and effective in clinical studies and win regulatory approvals, it's still possible they won't achieve commercial success.
Also, none of the companies has reached profitability yet. They might need to raise additional capital through stock offerings that dilute the value of existing shares.
On the other hand, there are reasons to be optimistic about the potential for psychedelic substances in treating various neurological and psychological disorders. It's still early days, but any or all of these leading pharmaceutical stocks could become big winners over the next few years.
FAQ
Investing in psychedelic stocks: FAQ
What are the best psychedelic stocks to buy?
The best psychedelic stocks have experimental psychedelic drugs already in clinical testing. They include Atai Life Sciences, Compass Pathways, Cybin, and Mind Medicine.
Are psychedelic stocks a good investment?
Psychedelic stocks are risky. No company developing psychedelic drugs has obtained regulatory approvals or achieved profitability yet. These stocks will be unsuitable for many investors. However, certain psychedelic stocks could appeal to aggressive investors who aren't risk-averse.
What is the forecast for psychedelic stocks?
The psychedelic market is still in its early innings. However, with several psychedelic drugs making progress in clinical studies, the market could grow significantly over the next few years.
Data Bridge Market Research projects that the global psychedelic market will increase by a compound annual growth rate of 13.3% through 2030 to about $6.4 billion. This bodes well for the stocks of top psychedelic drug companies.
