Psychedelics—psychotropic drugs that trigger altered states of consciousness—are gaining widespread attention. Over the past two decades, research in the area has increased, with a magic mushroom ingredient—psilocybin—showing promise for treating a range of mental health disorders and addictions.

In addition, a CB Insights market research report has shown that psychedelic medicine funding was set to cross $700 million in 2021, which is close to double the 2020 level and about eight times 2019 funding. The capital raised is expected to give the companies in the field the funds to continue drug development. The global psychedelic drugs market is forecasted to reach $8.02 billion by 2029, growing at a 13.3% CAGR.

Against this backdrop, Wall Street analysts expect the psychedelics stocks Cybin Inc. (CYBN - Get Rating) and Seelos Therapeutics, Inc. (SEEL - Get Rating) to skyrocket in price in the near term. Hence, we think these names might be reasonable additions to one’s watchlist.

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Cybin Inc. (CYBN - Get Rating)

Based in Toronto, Canada, CYBN is a biotechnology company that operates in the psychedelic therapeutics field to treat psychiatric and neurological conditions. The company functions through Serenity Life and Cybin U.S.; and Natures Journey. It went public by listing its shares on the NYSE American LLC stock exchange on Aug. 5, 2021.

On February 9, CYBN announced that the United States Patent and Trademark Office (USPTO) had granted U.S. patent 11,242,318 to the company’s investigational deuterated dimethyltryptamine (DMT) compound CYB004, which protects the drug substance as a putative new chemical entity. This patent might prove to be beneficial for the company.

CYBN’s net cash flows from financing activities stood at CAD35.71 million ($28.06 million) for the nine months ended December 31. Its cash and cash equivalents balance improved 58.8% from the prior-year period to CAD63.58 million ($49.95 million).

Analysts expect CYBN’s EPS to come in at a negative $0.08 for the fiscal quarter ending March 2022.

CYBN’s stock has gained 4.8% in price over the past five days and 1.2% intraday to close yesterday’s trading session at $0.84.

Of the two Wall Street analysts rating CYBN, one has rated it Buy, while one has rated it Hold. The 12-month median price target of $10.00 indicates a 1,097% potential upside.

Seelos Therapeutics, Inc. (SEEL - Get Rating)

SEEL in New York City operates as a clinical-stage biopharmaceutical company focused on developing and commercializing therapeutics used to treat the central nervous system, respiratory, and other disorders.

On March 8, SEEL announced that the Australian Government Department of Health’s Therapeutic Goods Administration (TGA) had granted an acknowledgment letter of a Clinical Trial Notification (CTN) for a pilot study of SLS-005 in the treatment of patients with Alzheimer’s disease. Raj Mehra Ph.D., Chairman and CEO of SEEL, said, “We expect to gain evidence and important insights into the suitability of SLS-005 in the treatment of these neurological conditions, which are so physically, emotionally, and financially devastating to patients and their families.”

On December 6, SEEL announced that it had received an issued patent from the Japanese Patent Office covering the composition of matter for SLS-007, a potentially disease-modifying gene therapy focused on Parkinson’s disease (PD). This development might benefit the company.

For its fiscal year ended December 31, SEEL’s net cash provided by financing activities increased 325.9% year-over-year to $112.07 million. The company’s cash balance came in at $78.73 million, registering an increase of 402.7% from the prior year.

The consensus EPS estimate for the quarter ending March 2022 indicates a 35.7% year-over-year increase.

The stock has declined 4.1% in price over the past five days and 1.5% intraday to close yesterday’s trading session at $0.88.

The two Wall Street analysts that rated SEEL have rated it Buy. The 12-month median price target of $4.00 indicates a 352.5% potential upside.

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CYBN shares were trading at $0.82 per share on Friday afternoon, down $0.02 (-1.86%). Year-to-date, CYBN has declined -31.67%, versus a -6.92% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...

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