Crisis Meets Opportunity (cover) by Psychedelic Stock Watch is licensed under
- The global mental health pandemic dwarfs the Covid-19 pandemic and conventional mental health therapies are impotent in addressing this crisis
- Recent developments show that psychedelic medicine is poised to explode as an answer to the crisis
A common myth in Western cultures is that the Chinese have a word that represents both “crisis” and “opportunity”. While this cliché may be false, the logic behind the myth is worth contemplating.
Even framed in extreme terms, from any crisis opportunities will arise.
If a region suffers an earthquake, opportunities arise to rebuild after the damage. If a corporation is forced into bankruptcy, the subsequent restructuring provides an opportunity to put the remaining assets to more productive use.
A New Crisis worsens an Old Crisis
Today, the world is facing a health crisis, squared.
Attracting the most attention is the Covid-19 pandemic. But as the virus morphs into a more-contagious but less-dangerous strain, we appear to be past the worst of this flu crisis.
Getting much less attention is a much larger crisis: the Mental Health Crisis. More than two billion people suffer from treatable (but generally untreated) mental health disorders. Nearly ten times the total number of global Covid infections.
Eight million preventable deaths per year globally.
Government reactions to the Covid pandemic have greatly exacerbated the Mental Health Crisis, everything from depriving people of their livelihoods to extended periods of unnatural isolation.
In the United States, the percentage of Americans exhibiting symptoms of depression has nearly quadrupled since the start of Covid, with 80 million Americans now suffering from symptoms.
In Canada, “nearly everyone” has had their mental health impacted by onerous lockdown restrictions and vaccine mandates.
Crisis squared.
Covid-19 is a new crisis that arose without warning. The Mental Health Crisis is an ongoing pandemic characterized by decades of gross neglect from governments.
Two billion people didn’t develop mental health disorders overnight.
For decades, rates of stress-related disorders like depression, anxiety, PTSD and substance abuse have been rising at an alarming rate. For decades, archaic and ineffective conventional mental health therapies have failed to provide relief for most sufferers.
In 2022, Western societies (and other nations around the world) are reaping the consequences of decades of government neglect and grossly inadequate treatment options in mental health. Everything from labor shortages to a serious decline in global productivity.
In the United States, a Suicide Epidemic has been raging for at least 8 years. An even worse Suicide Epidemic in the U.S. military is now 20 years old.
Both epidemics continue to worsen rapidly. Conventional mental health therapies have been impotent.
An opportunity arises from crisis
While mental health treatment has been neglected for decades, for several years a genuine solution to this mental health pandemic has been materializing on the horizon: psychedelic medicine.
Heavily criminalized by over-zealous governments in the infamous “War on Drugs”, psychedelic drugs such as psilocybin, LSD, MDMA and DMT have been in a regulatory deep-freeze for most of the last 50 years.
However, even before that Prohibition, research into mental health applications for these drugs was already well advanced. This research has now been dusted off and built upon – as a regulatory thaw for these substances slowly emerges.
The (new) psychedelic drug industry was seeing its first public companies emerge before the world had ever heard of “Covid-19”. Fortunate timing.
The Mental Health Crisis was already spiraling out of control before the coronavirus pandemic. Covid has caused this mental health pandemic to worsen exponentially. Worse still, existing therapies to treat these billions of mental health disorders are little more than crutches for those suffering from these conditions, with few ever truly cured.
Where conventional medicine can provide only crutches, formal clinical trials are showing that psychedelic drugs can deliver cures – sometimes in just a single therapy session.
Miracle Drugs. The improvement in the standard of care in mental health from psychedelic medicine parallels the improvement in the treatment of bacterial infection with the introduction of antibiotics.
A huge crisis. A great opportunity.
The psychedelic drug industry shifts into overdrive
The public companies that have mushroomed into existence in the psychedelics industry (pun intended) are well-aware of the magnitude of the Mental Health Crisis, and the commercial opportunity it represents.
They are equally cognizant of the healthcare Revolution represented by psychedelic medicine.
These companies have pushed the pedal to the metal in drug development, clinics expansion and IP development.
In 2020 and 2021, the industry raised a lot of capital. New companies in the space were identifying opportunities, planning strategies and beginning to execute.
Now the seeds that were planted have started sprouting. In the 4th quarter of 2021 alone, results were announced for two advanced clinical trials.
Compass Pathways (US:CMPS) reported results for its Phase IIb trial of a psilocybin-based therapy for Treatment Resistant Depression (TRD). GH Research (US:GHRS) announced results for its Phase IIa clinical trial of 5-MeO-DMT derivative, also for TRD.
In the Compass trial, ~1/3rd of patients were in remission after a single therapy session. There were no “treatment-emergent adverse events” (TEAEs) associated with the therapy. And it worked equally well for patients already taking antidepressants (i.e. no “drug compatibility” issues).
In the GH Research trial, 7 out of 8 patients in the trial went into “ultra-rapid remission”.
These are results that completely outclass the mediocre therapeutic results obtained from conventional therapies for depression, where:
- Most patients derive no therapeutic benefit from the antidepressants prescribed for depression.
- Patients often spend years in conventional therapy just to achieve a modest reduction in the severity of their symptoms.
Success vs. failure. A revolutionary improvement in the standard of care.
In 2022, we can expect the pace of these ground-breaking announcements to accelerate rapidly. In just one day (January 11th), the industry announced the following advances:
- Field Trip Health (US:FTRP / CAN:FTRP) announced being awarded a new patent from the USPTO. Robust protection for its lead drug candidate, FT-104 that includes composition of matter, method of use, and manufacturing.
- Awakn Life Sciences (CAN:AWKN / US:AWKNF) announced the successful completion of a Phase IIa/b clinical trial of a ketamine-based therapy for Alcohol Use Disorder (AUD). Awakn already owns the intellectual property of a successful Phase IIa/b clinical trial of an MDMA-based therapy for AUD.
- Wesana Health (CAN:WESA / US:WSNAF) announced the scheduling of a pre-IND meeting with the FDA, to set the stage for clinical trials of its lead drug candidate for Traumatic Brain Injury (TBI). TBI is perhaps the largest individual treatment market currently being pursued by this emerging industry.
The exponential upside for psychedelic stocks
A crisis that is worsening exponentially is about to collide with an opportunity that is expanding exponentially.
That alone should be enough to whet the appetite of any true investor. But it gets better.
Despite offering investors the greatest opportunity in life sciences in the 21st century, most of these stocks are currently trading near their lows. Another absurd disconnect in value produced by the dysfunctional trading algorithms that now dominate our markets.
The greatest opportunity in life sciences in the 21st century may also represent the best value proposition in markets today. Period. Incredibly, some of these companies are actually trading below cash.
Meanwhile, in Canada the federal government has just announced “amendments” to its health code that now allow physicians to apply to legally administer these next-generation psychedelic therapies to Canadians. In the U.S., as with cannabis normalization, regulatory reform is proceeding from the bottom up: state and local government reforms along with a growing number of voter ballot initiatives.
In short, as the treatment markets for psychedelic medicine expand to absurd proportions, drug development and regulatory reform is lining up to power this healthcare Revolution.
The revenues on the table are mind-boggling.
Over $300 billion per year is spent on mental health in the United States alone, with very little to show for it. Virtually all of those dollars are up for grabs for psychedelic drug companies – armed with drugs and therapies that actually work.
Crisis meets opportunity.
We don’t have one word that encompasses that concept. Maybe we should.
Whatever that word would be, it is epitomized by the psychedelic drug industry today.
