Psychedelics are drugs that have a psychotropic effect on the senses. The substances, which can be natural or made in laboratories, have recently been lauded as treatments for mental illnesses. Psychedelics, such as “magic mushrooms” and MDMA are being used to treat patients with post-traumatic stress disorder (PTSD), depression, and substance addiction. Last month, federal funding was granted for a psilocybin study for treating tobacco addiction, indicating the acceptance of the drug as a potential medication.

Over the past couple of years, drug development companies have rushed to seek authoritative approval for MDMA and psilocybin, adding to their role as disruptors in the nervous system disorder treatment field. In addition, the sector is also geared at creating more jobs.

Indeed, as per a Data Bridge market research report, the psychedelic drugs market is expected to grow at a 13.3% CAGR to $7.57 billion in 2028. Considering the industry’s growth potential, Wall Street analysts expect psychedelic stocks Mind Medicine (MindMed) Inc. (MNMD), Cybin Inc. (CYBN), and Field Trip Health Ltd. (FTRP) to deliver major gains.

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Mind Medicine (MindMed) Inc. (MNMD)

New York City-based MNMD is a psychedelic biotech medicine company that discovers, develops, and deploys psychedelic-inspired medicines and therapies to treat addiction and mental illness.

On October 26, MNMD announced the expansion of its product pipeline by launching a development program to treat social anxiety and functioning in diagnoses that include autism spectrum disorder (ASD). This is expected to diversify MNMD’s pipeline and enhance its operational capability.

Also in October, the company partnered with a physician-founded employee benefits provider, Sphere Health, to collect and analyze data for improving the understanding of mental-illness-associated biomarkers. The partnership should harness MNMD’s ability to treat patients with mental illnesses.

For the nine months ended September 30, MNMD’s net cash provided by financing activities increased 252.6% year-over-year to $98.70 million. The company’s cash balance came in at $145.92 million, up 700.2% from the same period last year.

Analysts expect MNMD’s EPS to improve 13% year-over-year next year, representing its fiscal period ending December 2022.

The stock has gained 31.6% in price over the past year to close yesterday’s trading session at $2.04.

The $8.00 12-month median price target indicates a 292.2% potential upside. The price targets range from a low of $6.00 to a high of $10.00.

Cybin Inc. (CYBN)

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

On November 4, CYBN announced that its research lab in the Boston area had been granted a Schedule I manufacturing license from the U.S. Drug Enforcement Agency (DEA), which allows the company to produce, analyze, and work with Schedule I controlled substances. The license should further increase the company’s capacity to become an innovation and drug-discovery hub.

On October 26, CYBN declared that the United States Food and Drug Administration (FDA) had authorized an Investigational New Drug (IND) application to conduct a study using neurotechnology company Kernel’s flow technology to measure ketamine’s psychedelic effect. “This study of ketamine’s psychedelic effects while wearing headgear equipped with sensors to record brain activity could open up new frontiers of understanding,” said Dr. Alex Belser, Cybin’s Chief Clinical Officer.

CYBN’s net cash flows from financing activities stood at CAD33.98 million ($26.74 million) in its  second fiscal quarter, ended September 30, up substantially from its negative year-ago value. Its cash and cash equivalents balance improved 1,843.6% from the prior-year quarter to CAD75.18 million ($59.16 million).

CYBN’s stock has declined 2.6% in price intra-day to close yesterday’s trading session at $1.47.

The 12-month median price target of $8.50 indicates a 478.2% potential upside. The price targets range from a low of $6.50 to a high of $10.00.

Field Trip Health Ltd. (FTRP)

FTRP in Toronto, Canada, develops and delivers psychedelic treatments over North America by operating Field Trip Health centers, Field Trip app, and a drug development division that develops next-generation psychedelic molecules. The company went public by listing its common shares on the Nasdaq Global Select Market on July 29, 2021.

On October 19, FTRP announced the opening of its sixth clinic in the United States in Seattle, alongside openings at Fredericton and Vancouver in Canada. The new clinics should expand the company’s operational capability.

For the second fiscal quarter, ended September 30, FTRP’s revenue increased 860.3% year-over-year to CAD0.91 million ($0.71 million). And for the six months ended September 30, its cash related to investing activities came in at CAD6.39 million ($5.03 million), up substantially from its negative year-ago value, while its cash balance rose 63.9% from the same period last year to CAD23.01 million ($18.10 million).

The Street’s $19.05 million revenue estimate for the next year (its fiscal 2023), indicates a 257.4% year-over-year increase.

The stock declined in price marginally intra-day to close yesterday’s trading session at $4.26.

The 12-month median price target of $12.36 indicates a 190.1% potential upside. The price targets range from a low of $8.03 to a high of $19.69.

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MNMD shares were trading at $2.00 per share on Wednesday morning, down $0.04 (-1.96%). Year-to-date, MNMD has declined -34.43%, versus a 25.98% 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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