Can psychedelics benefit portfolios?

Niche market could be of interest to investors familiar with mental health issues

Can psychedelics benefit portfolios?

If you have clients interested in investing in something new that could support progress in mental health treatment, this new Toronto-based bio-pharmaceutical company has just the thing for them: psychedelics!

“Our focus is to discover and develop psychedelic-based molecules and turn them into therapeutics, with the focus on the mental health and psychiatric industry, specifically, because there’s a body of evidence out there now that shows that psychedelics can actually change the paradigm of how we treat mental health disorders because they go after the underlying cause,” Leah Gibson, Cybin Inc’s. vice-president of investor relations and strategic communications, told Wealth Professional.

“They’re actually helping the brain to heal and make those neurotransmitters go where they need to go instead of blocking them with many of the current treatments for mental health conditions. They help to heal the brain and make sure that all of those sparks are getting to where they need to be, ultimately allowing the person to be free of their mental health condition.”

Gibson recognizes that this is a niche investor market, probably of most interest to those who have had mental health issues – or family with them. She also differentiates it from the cannabis market, which has been primarily recreational. But, it’s a growing business that clients can get in on the ground floor with, and worth checking out, given the progress that this new company is already making, which could impact both the mental health and, eventually, Alzheimer’s fields.

Cybin, Inc. was founded in December 2019. It went public and started trading on Canada’s NEO stock exchange in November 2020 and on the New York Stock Exchange in August 2021.

Cybin has already raised about CAD$120 million, and now is preparing three molecules for human trials and further study. Those are:

  • CYB003 – a tryptamine for the potential treatment of major depressive and alcohol use disorders, which will start human trials this summer;
  • CYB004 –  another tryptamine to potentially treat anxiety disorders, which will go into a human pilot study this fall; and
  • CYB005 – a phenethylamine to potentially treat neuroinflammation, for which Cybin is collecting preclinical data right now.

While the company is still quite new, it’s built an impressive team and is getting close to filing a submission for testing the first molecule – CYB003 – with the Federal Drug Agency. Born in the pandemic, it is fully remote, and is working with the capital that it’s raised so far.

“Right now, we’re in a good position from a capital and cash balance perspective, particularly if you look at some of our peers and competitors, who have had a really hard time building their pipeline. So, that’s certainly a plus when we’re talking to prospective, and current, investors. We’ve also done a really good job with bringing on, and retaining institutional investors,. So, right now, the company is owned about 11.5% by institutions, which is actually quite good for an industry in its infancy,” she said, noting that BlackRock is among those investors.

“We also have a very group of large retail or family office, high-net-worth individuals, who are investing in us. That shows there is a lot of interest for the space and an understanding from people that we need to change how we treat mental health disorders.

“A lot of people that we speak to invest in the company because they have either been impacted personally by a mental health condition or they’re a caregiver for someone with a mental health condition. Their family, close friends, neighbours, or community have been impacted by mental health conditions, it’s a really personal investment for a lot of people.”