I’d like to challenge the discussion regarding these psychedelic stocks a bit further. I have a “gut feeling” that this could be this year’s big thing.
In psychiatry, the efficacy of current medications is quite limited. We have antipsychotics. They are certainly useful when a person has schizophrenia/psychosis.
We have SSRIs/SNRIs (“antidepressants”). These are by no means miracle drugs, but people need to be treated with something; they have some efficacy, and the “care effect” or placebo is also important. They are more effective than calcium tablets, but there are also side effects. These are suggested for “a bit of everything” in addition to depression.
We have benzodiazepines; they are indeed effective anxiolytics (much like alcohol is during the initial buzz). These are not exactly in fashion right now.
I believe those were the main groups.
Do psychedelics offer a new type of paradigm for treating mental health disorders? Is it a bit like pharmacological electroconvulsive therapy? I suspect it’s better and has fewer side effects (?). Apparently, people gain insights and perspectives; there is talk of neuroplasticity. It seems (based on preliminary research results) that depressive symptoms are alleviated. Relief has also been found in generalized anxiety disorder, post-traumatic stress disorder, addictions…
To me, it sounds good if a session can provide a “new beginning,” which is perhaps maintained every few months as needed with a booster. One wouldn’t (necessarily) need to be constantly medicated.
Regarding validation, there is also the fact that these substances have been used historically (albeit more in a spiritual context) and psilocybin, in particular, has been studied extensively outside the commercial context, academically. Apparently, there is enough efficacy and safety to justify use, as several countries/states have already legalized and enabled psychedelic-assisted therapy. There is no toxicity. There can certainly be psychological risks, and I don’t want to underestimate them. So far, however, these risks have not materialized in clinical trials.
The path has been blazed by Spravato (esketamine administered as a nasal spray), which is often classified as a psychedelic, though it isn’t a classic one, and which has an indication for treatment-resistant depression. This drug is reaching a sales level of 2 billion/year, and the view is that it’s heading toward peak sales of 3-4 billion. This is an important reference because a) it shows that expensive treatment provided at specialized clinics is in demand. It is administered in a clinic under supervision and monitoring. b) Earlier when I brought up psilocybin, for example, there was concern about patent exclusivity. Well, the patent for ketamine (originally an anesthetic) expired decades ago; it was enough for someone to patent the nasal spray and demonstrate through proper clinical trials that the nasal spray works for treatment-resistant depression. c) This Spravato treatment is initially given a couple of times a week, then weekly, and eventually 1-2 times a week as maintenance therapy, and for example, in the US, insurance companies pay for all of this — tens of thousands of dollars a year. The idea is that these actual psychedelics might only need to be administered a few times a year to maintain remission/treatment effect. Versus DOZENS of times with Spravato. I’m tempted to add d), if actual psychedelic therapy truly offers insights, or a “psychic reset” on a very personal level, I believe this is better than what ketamine is capable of.
Possibly as early as this year, the first classic psychedelic will receive FDA approval. Compass Pathways’ latter Phase 3 will be completed this quarter, meaning the primary endpoint topline and six-month data will come at the beginning of Q3 (the last required data point for the marketing authorization application). Also, the former Mindmed, now Definium, is in the home stretch of Phase 3 (LSD for generalized anxiety disorder), and the former Cybin, now Helus Pharma, will have its first Phase 3 results at the end of the year.
So, over the next few months, it’s in a way a moment of truth for the sector, as the first molecule either receives FDA approval or doesn’t. (In my understanding, the consensus view considers approval likely).
This first generation of potential drugs under study is long-acting. They require all-day monitoring (which has worried investors due to commercial viability — Spravato requires 2 hours of monitoring — note however, dozens of sessions per year and the patient does not drive home themselves or go to work after the session). Short-acting ones are coming in the next generation, especially 5-MeO-DMT, which can be handled with a 1.5–2 hour clinic visit and appears even more effective than psilocybin. (Companies Atai/Beckley - BPL-003 and GH Research - GH001). They are about 2 years behind Compass’s psilocybin. In between, there is Helus/Cybin’s deuterated psilocin, which is intended to be a psilocybin optimized to be slightly faster (the Phase 2 results here make me a bit suspicious; the 3-week efficacy was surprisingly weak, they are riding on 1-year efficacy in a major depressive disorder population, but have the patients just recovered on their own?).
So, very soon we will see if these molecules truly begin their commercial path. Could there actually be a significant new “basic class” of psychiatric drugs? I believe there is a good chance that this is the case. If so, and once the acceptability of the drug group begins to be confirmed, will there be M&A activity?
In fact, this has already begun; two 1-2 billion dollar deals came at the end of 2025: the Gilgamesh company’s molecule, which was psychedelic-like but does not produce a “trip,” and also a completely new molecule; as well as another company’s “breticilocin,” which apparently produces a trip but was a new molecule (which is, of course, a clearer matter from a patent perspective).
I think that if Compass’s results “validate the sector,” M&A deals may also start occurring for these “next-generation” molecules (especially 5-MeO-DMT) very quickly (in these, Atai and GH, Phase 2b is done and Phase 3s are starting this year).
My own final thought on this patentability: I’m not sure if being a completely new patentable molecule is such a huge advantage in this field. Because medical research is already far advanced for these naturally occurring ones as well. And if they face “generic” competition, that competition will also affect these molecules that have more traditional patent protection.
