In this article, we discuss the 10 psychedelic startups investors are flocking to. If you want to skip our detailed analysis of these startups, go directly to the 5 Psychedelic Startups Investors are Flocking To.
One of the key developments in the psychedelic industry over the past year and a half has been the stock market debut of companies like Atai Life Sciences N.V. (NASDAQ: ATAI), the German biopharma firm that aims to treat mental health disorders through psychedelics, and COMPASS Pathways plc (NASDAQ: CMPS), the United Kingdom-based pharma firm specializing in psychedelics. The former was valued at over $2.6 billion on the first day of trading earlier this month while the latter raised $146 million from an initial public offering in September 2020.
The interest in psychedelic treatments and novel therapies for treatment of mental health conditions like depression, anxiety, and resistant depression has spread all over the biopharmaceutical industry, with industry giants like AbbVie Inc. (NYSE: ABBV), Bristol-Myers Squibb Company (NYSE: BMY), and Abbott Laboratories (NYSE: ABT), who have top-selling mental health-related drugs in the market, all possibly eyeing up investments in the area that offers explosive growth potential in the coming decades.
The interest is not without cause. In addition to the blockbuster stock debut of psychedelic companies in the past few months, market experts have also been urging investors to realize the true potential of psychedelics. According to a report by Data Bridge Market Research, the global psychedelic market was valued at over $2 billion in 2019, a number expected to jump to close to $7 billion by 2027. This represents a compound annual growth rate of a scary 16% for an industry that is still very much in infancy.
Another report on the industry, by Research and Markets, contends that the value of the industry was over $4.7 billion in 2020 and will climb to over $10 billion by 2027, growing at a compound annual growth rate of 12% in the next six to seven years. There is little doubt that psychedelic research is already making giant strides in the field of mental health and will likely act as a disruptor in the health sector unless big pharma embraces the new technology. The winds of change in this regard are already blowing and big finance has been the first to fall.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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With this context in mind, here is our list of the 10 psychedelic startups investors are flocking to. These were ranked keeping in mind the amount of money they have raised so far, the quality of services and products they offer, and the basic business fundamentals of each company.
Psychedelic Startups Investors are Flocking To
10. Diamond Therapeutics
Diamond Therapeutics is a pharmaceutical company that focuses on psychedelics. It is based in Toronto and placed tenth on our list of 10 psychedelic startups investors are flocking to. The Ontario Brain Institute is one of the leading investors in the company. The latest round of funding for the startup was held in January this year, raising an undisclosed amount. The company markets itself as a developer of sub-perceptual, non-hallucinogenic treatments that could treat different kinds of mental health disorders.
Investors interested in Diamond Therapeutics should also check out Seelos Therapeutics, Inc. (NASDAQ: SEEL), another pharma firm focusing on psychedelics. However, Seelos Therapeutics, Inc. (NASDAQ: SEEL) primarily concentrates on drugs for the treatment of diseases related to the central nervous system.
At the end of the first quarter of 2021, 11 hedge funds in the database of Insider Monkey held stakes worth $47 million in Seelos Therapeutics, Inc. (NASDAQ: SEEL), up from 4 in the preceding quarter worth $1.3 million.
Just like Atai Life Sciences N.V. (NASDAQ: ATAI), COMPASS Pathways plc (NASDAQ: CMPS), AbbVie Inc. (NYSE: ABBV), Bristol-Myers Squibb Company (NYSE: BMY), and Abbott Laboratories (NYSE: ABT), Seelos Therapeutics, Inc. (NASDAQ: SEEL) is one of the best companies to watch in the health sector.
9. Synthesis
Synthesis is ranked ninth on our list of 10 psychedelic startups investors are flocking to. It is a firm that markets itself as a psychedelic research, wellness, and education platform. It has so far raised more than $2.7 million in funding over one round. The latest round was held in the summer of 2020. A lead investor in the startup is Novamind, a clinical research entity that focuses on psychedelic medicine and emerging mental health therapies. The startup is based in the Netherlands and operates a retreat as well.
As the benefits of psychedelics become more apparent, drug giants like Pfizer Inc. (NYSE: PFE) could also step in to capture a slice of the growing market in novel therapies for mental health diseases. Pfizer Inc. (NYSE: PFE) is an American pharmaceutical company with a thriving business in anti-depressants.
At the end of the first quarter of 2021, 65 hedge funds in the database of Insider Monkey held stakes worth $2 billion in Pfizer Inc. (NYSE: PFE), up from 63 in the preceding quarter worth $1.8 billion.
Just like Atai Life Sciences N.V. (NASDAQ: ATAI), COMPASS Pathways plc (NASDAQ: CMPS), AbbVie Inc. (NYSE: ABBV), Bristol-Myers Squibb Company (NYSE: BMY), and Abbott Laboratories (NYSE: ABT), Pfizer Inc. (NYSE: PFE) is one of the best companies to watch in the health sector.
8. Bexson Biomedical
Bexson Biomedical is a California-based firm that is working on developing therapies for pain management, addiction and mental health disorders. It is placed eighth on our list of 10 psychedelic startups investors are flocking to. The company has raised close to $5 million in funding so far over one round. The latest round was held in February this year. Noetic Fund, one of the premier venture capitals backing psychedelic startups, is a lead investor in the company. Bexson hopes to treat chronic and acute pain disorders with psychedelics.
Another great investment in mental wellness would be Eli Lilly and Company (NYSE: LLY), the firm that makes and sells Prozac, a popular anti-depressant. Eli Lilly and Company (NYSE: LLY) has been monitoring the advances in the psychedelic industry to position itself for investments.
At the end of the first quarter of 2021, 55 hedge funds in the database of Insider Monkey held stakes worth $2.5 billion in Eli Lilly and Company (NYSE: LLY), up from 50 in the preceding quarter worth $3 billion.
Just like Atai Life Sciences N.V. (NASDAQ: ATAI), COMPASS Pathways plc (NASDAQ: CMPS), AbbVie Inc. (NYSE: ABBV), Bristol-Myers Squibb Company (NYSE: BMY), and Abbott Laboratories (NYSE: ABT), Eli Lilly and Company (NYSE: LLY) is one of the best companies to watch in the health sector.
7. Gilgamesh Pharmaceuticals
Gilgamesh Pharmaceuticals is ranked seventh on our list of 10 psychedelic startups investors are flocking to. The company is developing drugs for the treatment of mental health conditions like depression, anxiety, and cognitive deficits. The startup has raised close to $30 million in funding so far over four rounds. The latest round was held a month ago. Some of the lead investors in the company include Prime Movers Lab and Y Combinator, among others. The firm is based in New York.
Another solid investment opportunity in the drug business is GlaxoSmithKline plc (NYSE: GSK), the British pharmaceutical firm. One of the top drugs marketed by GlaxoSmithKline plc (NYSE: GSK) is Seroxat, an antidepressant that is non-addictive and widely popular. As psychedelic research moves ahead, the British firm could also explore possible investments in the area.
At the end of the first quarter of 2021, 25 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in GlaxoSmithKline plc (NYSE: GSK), down from 30 in the preceding quarter worth $1.7 billion.
Just like Atai Life Sciences N.V. (NASDAQ: ATAI), COMPASS Pathways plc (NASDAQ: CMPS), AbbVie Inc. (NYSE: ABBV), Bristol-Myers Squibb Company (NYSE: BMY), and Abbott Laboratories (NYSE: ABT), GlaxoSmithKline plc (NYSE: GSK) is one of the best companies to watch in the health sector.
6. Cyclica
Cyclica is a company that uses machine learning and artificial intelligence to provide drug firms with the data they need in developing novel therapies with a focus on psychedelics. It is placed sixth on our list of 10 psychedelic startups investors are flocking to. The startup has raised close to $24 million in funding so far over seven rounds. The latest round was held in the summer of 2020. Some of the lead investors in the firm include Drive Capital and GreenSky Capital, among others. The firm is based in Toronto.
For investors looking to jump on the psychedelic bandwagon, Atai Life Sciences N.V. (NASDAQ: ATAI), a biopharmaceutical firm developing drugs for mental health disorders, might be a good option. Atai Life Sciences N.V. (NASDAQ: ATAI) is backed by legendary investor Peter Thiel, who is known as the man with the golden touch when it comes to investing in startups. .
At the end of the first quarter of 2021, 3 hedge funds in the database of Insider Monkey held stakes worth $782,000 in Atai Life Sciences N.V. (NASDAQ: ATAI), up from 1 in the previous quarter worth $118,000.
Just like COMPASS Pathways plc (NASDAQ: CMPS), AbbVie Inc. (NYSE: ABBV), Bristol-Myers Squibb Company (NYSE: BMY), and Abbott Laboratories (NYSE: ABT), Atai Life Sciences N.V. (NASDAQ: ATAI) is one of the best companies to watch in the health sector.
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Disclose. None. 10 Psychedelic Startups Investors are Flocking To is originally published on Insider Monkey.
