The Ketamine Renaissance

  • Psychedelic drugs such as psilocybin, LSD and MDMA have tremendous medical and commercial future potential
  • For ketamine, the “future” is now
  • Drug developers and clinics specialists offer numerous ketamine-related commercial opportunities

Psychedelic stock investors are used to regularly reading about “the renaissance in psychedelic drugs”. Currently illegal drugs like psilocybin, LSD and MDMA are seeing an explosion in new medical research.

Part of this renaissance is need: a global mental health pandemic, where 2 billion treatable mental health disorders are leading to 8 million preventable deaths per year.

Part of this renaissance is potential: psychedelic drugs possess powerful medicinal properties, with the clear potential to actually cure these mental health disorders.

Ironically, however, the psychedelic drug that has benefitted most to date from this renaissance is the only one that was already broadly legal: ketamine.

Ketamine: the legal psychedelic

Ketamine was originally popularized as an anesthetic. However, it was been used off-label for many years to treat pain conditions. More recently, it has also been used off-label in the treatment of mental health disorders, most notably depression, PTSD and addiction.

Ketamine also produces a “dissociative experience” (or “trip”) like other psychedelics, and it is also used illicitly. But ketamine avoided the drug Prohibition deep-freeze that banished other psychedelic drugs from even valid research purposes for many years.

Medical professionals and industry entrepreneurs have begun building a new industry on the medical/commercial potential of psychedelics like: psilocybin, LSD, MDMA, DMT and ibogaine. A significant percentage of these people have gravitated to ketamine R&D and ketamine-based mental health therapies – because they are already fully legal.

Some of this explosion in greater usage of ketamine as a mental health therapy has been fueled by the approval of Spravato™, an esketamine derivative created by Johnson & Johnson (US:JNJ).

Ketamine-based therapy has already demonstrated greater efficacy in treating depression than conventional therapies. Its usage in treating addiction and PTSD is also spreading quickly.

Concurrent with this are a multitude of new R&D programs featuring ketamine-based therapies.

Commercial opportunities with ketamine

Like psilocybin, LSD and MDMA, a large-and-growing number of formal clinical trials are underway or about to commence involving ketamine. However, ketamine’s friendlier legal status means that ketamine-based R&D is generally more expedited.

Public companies such as Seelos Therapeutics (US:SEEL), atai Life Sciences (US:ATAI) and PharmaTher Inc (CAN:PHRM / US:PHRRF) are currently pursuing Phase II clinical trials involving ketamine therapies.

Seelos is working toward a treatment for Amyotropic Laterial Sclerosis (Lou Gehrig’s disease). Atai-partner Perception Neuroscience is targeting Treatment Resistant Depression (TRD). PharmaTher is initiating a Phase IIa clinical trial for Parkinson’s Disease.

Many other ketamine-based clinical research programs are at an earlier stage of development.

Drug development is a long-term investment proposition (but with huge potential payoffs). These R&D initiatives are still years away from commercialization.

Investors looking for strong revenue streams and near-term profit potential may prefer the public companies currently involved in ketamine-based treatment – via mental health clinics. Several public companies are already building strong footprints in mental health treatment.

Field Trip Health (US:FTRP / CAN:FTRP) is the largest and best-known public company specializing in ketamine-based therapy. The company is aggressively building a network of mental health clinics in the U.S. and Canada. Field Trip now has five U.S. clinics and one in Canada. Five other clinics are under construction.

Field Trip is also actively pursuing drug development and is preparing to commence clinical trials with its lead candidate, FT-104. So for investors interested in ketamine, FTRP may offer the best of both worlds.

Novamind Inc (CAN:NM / US:NVMDF) recently opened the 6th clinic in its U.S.-based Cedar Psychiatry chain of clinics. With each clinic generating ~$2 million/year in revenues (once up to full run-rate), Novamind is producing even greater revenue streams than Field Trip.

Another public company already generating substantial revenues is Canadian-based Levitee Labs (CAN:LVT / US:LVTTF). Levitee just reported (unaudited) clinic revenues of CAD$893,863 for the month of August alone. Levitee specializes in ketamine-based addiction therapy.

Numinus Wellness (CAN:NUMI / US:LKYSF) is another popular public company in the psychedelics space with a strong focus on treatment. Its Canadian-based clinics aren’t generating the same revenue streams as Novamind and Levitee as Numinus is positioning itself more to provide psilocybin-based therapies (as they become legalized in Canada).

Commercial opportunities in mental health

For investors new to the psychedelic drug industry, or perhaps even new to pharmaceutical companies, some context is in order.

As already noted, with mental health alone there are (globally) 2 billion treatable disorders leading to 8 million preventable deaths per year: the Mental Health Crisis. It became a “crisis” due to the failure of conventional healthcare to provide even adequate mental health drugs and therapies.

Psychedelic drugs are poised to revolutionize healthcare, in general, and mental health care in particular. Advanced clinical research (most of it non-ketamine R&D) is targeting treatment markets with a commercial value of $330 billion.
Yet the collective market caps for public companies in this emerging industry is well below $10 billion.

Over the long term, drug development of therapies involving currently prohibited drugs may very well dominate this healthcare Revolution.

Today, ketamine reigns supreme in terms of commercial opportunities. For ketamine (and investors), the future is now.

DISCLOSURE: The writer holds shares in Numinus Wellness, Novamind Inc and Levitee Labs.
ketamine (cover) by Andrey is licensed under Adobe Stock


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