11. March 2021 | 07:30 CET
Compass Pathways, Canopy Growth, PsyBio Therapeutics - Cannabis or psilocybin?
Cannabis stocks have been a bit forgotten after an early-year rally caused a 500% increase in some cases. Most stocks have already corrected back up 50% from the top and have been running more sideways recently. Speculation in psychoactive substances has recently shifted to a new industry, the mushroom applications around psilocybin. These substances are said to treat particular forms of depression, a fact that is becoming more explosive against the backdrop of increasing loneliness due to Covid lockdowns. Let's take a look at some prominent representatives.
time to read: 3 minutes by André Will-Laudien
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Canopy Growth - Neatly under the radar
Canopy Growth is a global leader in cannabis and cannabinoid-based consumer products that aim to improve lives, end prohibition and empower communities by unlocking the full potential of cannabis.
The Company follows a continuous learning process from the insights and experiences of hemp product users. It offers diverse product variants in the form of dry flowers, oils, softgel capsules, beverages, and specialized vaporizer devices. Canopy Growth is undoubtedly one of the most innovative among publicly traded cannabis stocks. However, the pivotal point is the US market, which is being addressed by Canopy but is ultimately in the hands of US suppliers such as Curaleaf or Tilray. Here, full legalization of cannabis is expected in 2021/2022. The Canadians will have a hard time growing sustainably in the US.
The beginning of 2021 saw a century rally across the industry. Canopy's shares rose from CAD 18 to CAD 70 within 3 months. However, the value corrected sharply to prices around CAD 40, which can go even further. Tilray shows the same chart, so we expect further declining quotations. To find a possible reason for the current downturn, a look at the second psychedelic wave is worthwhile.
Compass Pathways - The first mover in psilocybin
Compass Pathways is a UK mental health Company primarily dedicated to accelerating patient access to evidence-based innovations in the human psyche. Its focus is on improving the lives of those suffering from mental distress who cannot find help under currently available treatments. Compass thus works with entirely new agents and uses new therapeutic methods.
Compass has pioneered the development of a new model of psilocybin therapy that uses a proprietary formulation of synthetic psilocybin (COMP360) in conjunction with psychological, therapeutic support. COMP360 has been designated by the US Food and Drug Administration (FDA) as a "Breakthrough Therapy for Treatment-Resistant Depression (TRD)." A Phase IIb clinical trial of psilocybin therapy for TRD is currently underway at 22 sites in Europe and North America. If the results are positive, psilocybin therapies are likely to have broad application in TRD.
High costs still mark Compass' overall numbers. Accordingly, the net loss for the 12 months ended Dec. 31, 2020, was USD 60.3 million, with research and development (R&D) expenses reaching USD 23.4 million. Compass stock is one of the beacons of hope for an entire industry that is in the process of re-establishing itself. However, with a market capitalization of USD 1.6 billion, the first valuation leap has already been made.
PsyBio Therapeutics Corp. - Brand new on the list
A brand new stock is PsyBio Therapeutics Corp. from Florida. PsyBio is a biotechnology Company developing novel formulations of psychoactive drugs produced by genetically engineered bacteria to treat mental and other disorders. The team is highly skilled in drug innovation based on synthetic biology.
Research and development is currently focused on naturally occurring tryptamines found in various types of "magic mushrooms," as well as other tryptamines and phenethylamines and combinations thereof. The Company is also researching and developing new molecular structures that do not occur in nature but could have unique therapeutic properties. Overall, research is still extensive and under-researched, which naturally gives the entire industry great future significance. As with cannabinoids, the so-called "entourage effect" is also used with psilocybin.
PsyBio, in collaboration with Albany Molecular Research Inc. (AMRI), a leading global provider of advanced contract R&D solutions, has begun building its proprietary biosynthetic formulation of psilocybin. AMRI has already completed Phase I of this process, including the necessary technology transfer activities and analytical methods. Further progress and announcements are expected to be made here in the coming weeks.
PsyBio shares were listed on the Toronto Stock Exchange at the end of February and as per today in Frankfurt. Its market capitalization with its about 113 million listed and unlisted shares is still a manageable CAD 40 million. Remembering the gigantic 2018-2021 cannabis bull market, this new industry is one to keep an eye on.