- GH Research’s clinical results demonstrate yet again that psychedelics are the future of mental health
- Numerous cash-rich companies pursuing multi-billion-dollar treatment markets are currently trading at pennies on the dollar
Once upon a time…
No, this not a fairy tale. It’s a reminder to investors.
Once upon a time, investors looked for value with stocks. Buy low, sell high. Many things may have changed in markets, but “buy low and sell high” remains the best way to make money.
For investors who haven’t forgotten that lesson, two words: psychedelic stocks.
The overall investment equation here could not be simpler. Psychedelic medicine is in the process of revolutionizing healthcare with respect to 2+ billion people suffering from generally untreated mental health disorders.
These mental health disorders are generally “untreated” because conventional medicine has tried and failed to treat them with existing therapies.
Epic breakthrough in treating depression with psychedelic medicine
Where conventional medicine is failing, psychedelic medicine is succeeding. The latest example of this are the Phase IIa clinical results just reported by Ireland-based GH Research (US:GHRS).
- 7 out of 8 patients with Treatment Resistant Depression (TRD) went into “ultra-rapid remission” after psychedelics-assisted therapy with GH Research’s drug candidate, GH001
Let’s put this into context.
More and more depressed patients are being diagnosed as “treatment-resistant” because there are no generally effective conventional therapies for depression. In other words, for conventional medicine all depression is “treatment-resistant” to a greater or lesser degree.
Where conventional medicine is failing (completely), psychedelic medicine is succeeding – spectacularly.
87.5% success (GH Research) vs. ~0% success (conventional medicine)
It’s not just the revolutionary success with this TRD therapy that is so impressive (and commercially valuable). Of at least equal importance is that these results were achieved at Day 7 after dosing.
Using conventional therapies, patients typically spend months or years in therapy – just to achieve minor incremental improvements in their symptoms.
In relative terms, psychedelic medicine is instant. Totally revolutionary.
Naturally, GH Research itself is strongly higher on the news (+21.86%). But here is where the outstanding opportunities arise for investors. Other psychedelic stocks are actually lower on this news.
Let’s put that into context.
Psychedelic stocks sell off on Compass Pathways’ sort-of-disappointing news
Even before the latest slide in psychedelic stocks, most companies had already slipped considerably following the release by Compass Pathways (US:CMPS) of its Phase IIb clinical results, also for a psychedelics-based therapy for TRD.
The market punished Compass as well as the rest of the industry for results that were deemed somewhat disappointing – but only in comparison to the extremely high bar set by other psychedelic clinical trials and studies.
In comparison to conventional therapies for TRD, Psychedelic Stock Watch’s back-of-the-envelope calculation is that Compass’s COMP360 psychedelics-assisted therapy is roughly 40 times as efficient as conventional depression therapies.
Imagine the market punishing Big Pharma stocks because a drug company reported a drug development breakthrough that was ‘only’ 40 times as efficient as existing therapies. You would have to imagine such an event because it would never happen in real life.
The market was grossly mispricing psychedelic stocks after the CMPS results. Now, dysfunctional trading algorithms have distorted valuations for psychedelic stocks even further after GH Research’s near-perfect results.
Psychedelic stocks are “speculative” as individual companies. But there is nothing speculative about the sector itself. Psychedelic medicines aren’t merely the best hope in addressing a global Mental Health Crisis that afflicts over 2 billion people.
Psychedelic drugs are the only hope in mental health.
The only hope for the Mental Health Crisis
Multinational drug companies had roughly 50 years (during the infamous War on Drugs) to come up with at least moderately effective drugs in treating disorders such as depression, anxiety, PTSD and addiction. Not only has Big Pharma failed miserably, it has largely even quit trying to come up with better mental health drugs.
An analogy with physical health illustrates the breakthrough represented by psychedelic medicine.
Suppose that the only existing “treatment” for a broken bone from conventional medicine was crutches and painkillers. The broken bone itself is never reset and thus never properly heals.
That’s conventional mental health care.
Now the same person with a broken bone gets treated with psychedelic medicine, where an integral part of the therapy is to literally “reset” the patient.
The bone is reset (properly). The patient makes a full/rapid recovery.
This is what psychedelic medicine does in treating mental health. In-depth scientific research has discovered that psychedelic drugs can “reset” our minds. Fixing broken minds the same way that (competent) conventional healthcare fixes broken bones.
Big Pharma represents Old Medicine for mental health. The future belongs to psychedelic medicine.
Healthcare revolution = massive commercial opportunity
How much money can investors make backing a healthcare revolution that will (for the first time) provide effective mental health therapies to more than 2 billion patients currently in need?
Before you answer that question, consider this. There is a lot of money already on the table.
In the United States alone, over $300 billion per year is spent on mental health – with virtually nothing to show for it.
The U.S. is the biggest treatment market. But it’s only one market, in an entire world grappling with untreated mental health disorders.
Trillion-dollar revenue potential over the long term. Yet the collective market caps of every public company in the industry is less than $5 billion.
And these companies are generally cash-rich. Indeed, some of the promising smaller companies are trading at little more than cash (or cash + revenues). Psychedelic Stock Watch highlighted some of these outstanding value propositions in a recent article.
That article was released before the GH Research results. Now the sector looks even stronger – but these psychedelic stocks are even cheaper.
The ultimate market disconnect.
Buy low, sell high.
Investors can choose to enter psychedelic stocks after the industry has taken off. Buy high, (try to) sell higher. That’s how most people “invest” today: chasing momentum.
However, for investors interested in maximizing their profits in psychedelic stocks, we recommend that you buy into the leading public companies while they are still priced at pennies on the dollar.