Shroom stocks have been a fashionable choice for investors looking to get behind psilocybin before it becomes widely available for recreation and medical treatment.
Voters in Colorado have made the State the second in the US to legalize magic mushrooms, making psilocybin stocks a hot topic. So, let’s dig in to three shroom stocks that appear to offer compelling investment opportunities.
Field Trip Health & Wellness
Field Trip (TSXV: FTHW.VN) (OTC: FTHWF) is a rare breed among psychedelic stocks. It's a company that has already started generating significant revenues.
In the business’ most recent quarter, which covered the three months ended 30 June, it earned CA$1.8m in revenue. Even so, the business is a long way from becoming profitable. The same period has seen it record a net loss of CA$8.2m as operating expenses dwarfed revenues at CA$12.0m.
However, revenue growth of 110% compared to the same quarter in 2021 significantly outstrips the 25% growth of costs.
With this considered, how does the company make its money?
Field Trip delivers psychedelic therapies across 12 operating clinics. The business aims to offer a blend of digital and in-clinic experiences going forward. The company says this will provide a more holistic wellbeing and lifestyle approach to mental health.
The business has undergone fairly seismic change over the months since its last earnings update, splitting into two separate entities. This saw the company’s drug development efforts spun out into a new business called Reunion Neuroscience (TSX: REUN).
Field Trip retained the 12 centres for psychedelic therapies. It also keeps hold of a digital platform that has gained over 80,000 installs in around two years, as well as a research and cultivation facility for psilocybin production at the University of West Indies. It’s worth noting that, having shed potentially costly drug development efforts, Field Trip could be making progress towards becoming profitable.
Following the split, the company said it is focused on scaling to address an upswing in interest in psychedelic therapies.
What’s more, the company has recently teased major new developments in a letter to shareholders. The letter stated:
“In the coming weeks and months, we plan to announce a number of new initiatives, programs and tools that it expects will greatly expand access to, and education around the use of, legal psychedelic compounds and non-ordinary states of consciousness, meaning that more people will be able to access our clinicians and our tools for their mental health and well-being.”
Field Trip is far from a guaranteed returns, but the stock looks like one to watch over the near future.
Cybin Inc
Our second stop on the shroom stocks tour is Cybin Inc (NYSEAMERICAN: CYBN), a Canadian business which started life in 2019.
The business is a long way from bringing its treatments to the market, with its most progressed candidates currently in the midst of phase 1 clinical trials. These are a psilocybin treatment for major depressive disorder and a DMT therapy for anxiety disorders.
The company’s psilocybin treatment is actually a constructed proprietary molecule dubbed CYB003, which offers more control than natural psilocybin. These methods of control include safer dosing capabilities and lower variation in user outcomes. Additionally, the company has paid particular attention to creating candidates which are rapidly effective.
Cybin’s share price has tumbled by more than 60% since the start of 2022, leaving it in penny stock territory. This means the share price is likely prone to volatility, meaning that CYBN is probably not the right stock for all investors.
Cybin is an exciting business which appears to be operating at the cutting edge of mental health treatment. However, its potential for volatility might be too much to stomach for people with a low tolerance for risk.
Atai Life Sciences
Atai Life Sciences (NASDAQ: ATAI) is a clinical stage business focused on developing mental health treatments. The business lists depression, anxiety, schizophrenia, substance use disorders and traumatic head injuries as key areas of focus which have significant unmet needs.
Atai has some paralells with Cybin. In order to meet patient needs, Atai is focused on exploring the use of potentially unconventional treatments involving psychedelic drugs such as ketamine, DMT and MDMA.
Atai’s PCN-101 (R-Ketamine) and RL-007 therapies are both currently in the latter stages of phase 2 clinical trials. The business has five further treatments at the phase 1 stage.
Additionally, the business has exposure to psychoactive mushrooms through its equity interest in Compass Pathways’ (NASDAQ: CMPS) COMP360 psilocybin treatments. This interest stems from the company’s 24% ownership stake in Compass.
As such, Atai offers investors the opportunity to invest in a shroom stock which is diversified beyond total reliance on effectiveness of psilocybin treatments.
Even so, the business’ share price has dropped sharply across the year to date, declining by more than 60% at the time of writing. However, the business has received a recent vote of confidence from analysts at Loop Capital. Analysts there last week initiated coverage with a Buy rating and target price of $18.
With a low share price and significant diversity of opportunity, ATAI stock has several routes to offer significant returns to investors.