Psychedelic Penny Stocks Continue Gaining Ground Among Mainstream Investors
Like any “fringe industry,” there’s plenty of hype and speculation driving momentum behind penny stocks in certain industries. Those of you who’ve been in the markets for the last few years are likely familiar with this trend. We saw it during the early days of cannabis legalization, as well as during the 2018 bitcoin craze and most recently with all of these “NFT stocks.”
Many of these trends go on to evolve into something much bigger than ever thought. A prime example of this is the cannabis industry. Marijuana stocks have gone through the paces. They’ve reached the highest highs and fell to the lowest lows, all while carving out a brand new industry during the last half-decade. The interesting part is that many of the early analysts doubted the industry’s future, saying it was just a fad.
A lot has changed since the first cannabis company went public. This isn’t just based on the birth of a new industry. It’s also based on changes in the mentality of investors. Now it isn’t so “unlikely” for a trendy industry to actually become something more than just a fad. This is something that we’ve begun to see in psychedelics.
Early Adopters In Psychedelics Spark Interest In Penny Stocks
Unlike cannabis, psychedelics haven’t had as hard a time gaining traction in the public markets. Most notably, the IPO of Compass Pathways (NASDAQ: CMPS) brought validity, in some respect, to this as a viable industry. It also helped that famed investor Peter Thiel was behind the CMPS IPO.
Aside from notable investors, you’ve also got to consider that big pharma has taken a considerable interest in this uncharted territory as well. Johnson & Johnson had initially broached the opportunity to develop a ketamine-like drug for treating depression a few years back.
However, it didn’t stop there with Big Pharma’s blooming interest. In fact, recent headlines have emphasized the opportunity in psychedelic stocks. Merck (NYSE: MRK) recently inked a partnership deal with Novamind (OTC: NVMDF). Merck selected Novamind’s Cedar Clinical Research as a research site for a clinical trial focused on treatment-resistant depression. The study focuses on Merck’s drug for treatment-resistant depression. Though there weren’t many details about the treatment, it is an interesting tie-in between a market leader like Merck and a psychedelic company.
Psychedelic Penny Stocks To Watch This Year
This industry’s early stages have become an attraction to those who’ve focused on “emerging growth” type companies. It’s no wonder why so many of these psychedelic stocks are currently penny stocks in this light.
- PharmaDrug Inc. (CSE: BUZZ) (OTC: LMLLF)
- Seelos Therapeutics Inc. (NASDAQ: SEEL)
- Mind Medicine Inc. (NEO: MMED) (OTC: MMEDF)
Blending Cannabis With Psychedelics On A Global Scale
PharmaDrug is unique on several levels right now. Not only does it have a portfolio that includes both cannabis and psychedelic developement, what is being developed is a bit different from your average “mushroom stock”. PharmaDrug is focusing on the medical attributes of N, N-dimethyltryptamine or DMT.
Last week the company announced the official start of research via an agreement with the University of Michigan. DMT will be evaluated for its potential role in normal, diseased, and altered states of consciousness in animal models. The main objective is developing the therapeutics of DMT for clinical unmet medical needs not immediately addressable by the drug.
Research has become the hallmark of PharmaDrug. This is especially true after its acquisition of Sairiyo Therapeutics. This biotechnology company focuses on repurposing and developing improved formulations of naturally derived compounds for severe, rare, and life-threatening diseases to obtain European Medicines Evaluation Agency and U.S. Food and Drug Administration approval. With this latest DMT focus, management said it aims to initiate pivotal preclinical and clinical development activities.
What’s more, helping to advance the progress of PharmaDrug is cannabis industry and M&A veteran, Terry Booth. His previous endeavors included a spear-headed initiative to carve out the path of the initial cannabis industry as he was at the helm of Aurora Cannabis during its early days of growth.
Psychedelic Stocks Get Their Own ETF
Another one of the psychedelic penny stocks to watch has been Seelos Therapeutics. Aside from Compass Pathways, Seelos is among a handful of names that are listed on major exchanges. It’s also the largest position held by the newly launched psychedelic ETF, The Horizons Psychedelic Stock Index ETF (NEO: PSYK). As of March 12th reporting, Seelos was weighted at 16.69% of the PSYK ETF.
The company recently completed enrollment of patients in Part 1 of its registrational Proof of Concept study of SLS-002. This is Seelos’ intranasal racemic ketamine treatment for Acute Suicidal Ideation and Behavior (ASIB) in patients with Major Depressive Disorder (MDD). This is where SEEL stock finds itself as one of the psychedelic penny stocks to watch.
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The company expects to release key open-label data next quarter. Part 1 of the study has a 16-day treatment period. Then there is a safety follow-up period to day 30. Seelos said that the last patient could complete Part 1 of the study on April 1, 2021. So this could give a bit of speculative timing for those looking at SEEL right now.
Another catalyst that has added to momentum recently came from analysts. BTIG initiated coverage on the company. The firm gave it a Buy rating and announced a price target of $14.
Are Psychedelic Penny Stocks On Your Watch List?
One of the pioneering companies in the industry, MindMed, has remained a focus for those searching for psychedelic stocks. The company was first brought to the market’s attention by its notable investors. These included Kevin O’Leary, Bruce Linton, and others credited as building an early foothold in certain areas of psychedelic treatment development.
MindMed has taken up a roll-up strategy recently. Considering that the psychedelic space is still relatively fragmented, this strategy has become popular for certain companies. That includes PharmaDrug mentioned early. Most recently, MindMed bought HealthMode, a machine learning company. The focus on involving technology in psychedelic-assisted treatment is someone unique to a few companies; MindMed included.
This acquisition builds upon MindMed’s current offerings. Co-Founder and CEO J.R. Rahn explained that “In effect, we see a future mental health treatment paradigm where potential drug products such as our LSD experiential therapy might be prescribed right alongside software application programming interfaces (APIs) to prepare the patient for treatment and optimally monitor the after-care of one’s anxiety disorder.”
This week the company announced that it gained inclusion in the FTSE Russell Indexes. Effective as of Friday, MindMed joined the FTSE Global Micro-Cap Index and the FTSE Total-Cap Index.
