Cashing In: Psychedelic Drug Makers Go Public

Psychedelics are undergoing a renaissance — and investors are diving in.

In the past year, three drug developers have listed on major US stock exchanges:

  • UK-based Compass Pathways (CMPS) broke ground in late 2020 as the first psychedelic drug company on a public market; valuation at IPO was $1B.
  • A few months later in April 2021, MindMed (MNMD) listed on the US Nasdaq.
  • This month, Peter Thiel-backed Atai Life Sciences (ATAI) went public on the NYSE at $2.6B, raising over $225M.

A crisis. Depression, addiction, and anxiety are hijacking our lives. Over 1 billion people suffer from one or more of these afflictions across the world. In the past year, the pandemic has catapulted mental ailments into the global consciousness.

A potential cure? A mounting body of evidence shows that, when administered therapeutically, psychedelic compounds like LSD, ketamine, psilocybin (magic mushrooms), and MDMA (ecstasy/Molly) are radically effective in treating mental health conditions.

Experts project that the psychedelic drugs market could reach $10.75B in 2027, and investors are steadily flocking. Christian Angermayer, founder of Atai Life Sciences, says he’s fielded interest from specialized biotech funds, large mutual funds, endowments, and ESG funds, adding:

“They all understood that this is not some fringe hippy project: we are a grown-up biotech company with a world-class team and a serious – and seriously impactful – mission.”

Consumers, too, are embracing the trip. 72% of Americans are in favor of legalization of specific psychedelic therapies.

  • Last year, voters in Washington DC decriminalized adult use of psilocybin mushrooms.
  • Around the same time, Oregon became the first state to legalize therapeutic uses of psilocybin.
  • The California State Senate passed a bill this month to legalize hallucinogenic drugs.

A long road ahead. Despite state wins, psychedelics are still illegal under federal law, and companies must await further legislation before widespread adoption.

When that happens, investors are bullish on psychedelics revolutionizing the mental health industry, complete with treatment clinics and ancillary software platforms.

“The negative effects of mental health disorders in our society are so high,” says Eric Scott of venture fund 8VC. “We don’t need to capture a big percent of the market to create massive value.”

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