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During the last month, the psychedelic sector has come under pressure and has traded lower with the overall market. Over the period of this time, high-risk asset classes have been under the most pressure and psychedelic stocks have not been immune to this.
To better understand the recent performance of the psychedelic sector, we want to highlight two exchange traded funds (ETFs) that act of a barometer of sorts for the performance of the sector and believe our readers should be aware of these funds.
AdvisorShares Psychedelics ETF (NYSE: PSIL) is a non-diversified actively managed ETF that has at least 80% of its net assets (plus any borrowings for investment purposes) in securities of companies that derive at least 50% of their net revenue from or devote 50% of their assets to psychedelic drugs. The fund primarily invests in publicly listed life sciences companies which are focused on psychedelic medicines as well as operators which are levered to some part of the psychedelic sector.
PSYK ETF (NYSE: PSYK) is a non-diversified ETF which uses a passive management (or indexing) approach to track the performance of the index. Earlier this year, the ETF commenced trading on the NYSE and the rules-based index was developed to track the performance of a portfolio of companies which have a business activity in the fields of psychedelic treatment that is used to address medical conditions.
So far this year, AdvisorShares Psychedelics ETF has lost almost 30% of its value while PSYK ETF has lost more than 50% of its value. During the last month, the ETFs fell approx. 13% and 30%, respectively (performance is as of September 28th). We plan to monitor how the sector performs in the last calendar quarter of the year and plan to use the ETFs as barometers for its performance.
After we analyze the performance of ETFs that are levered to the psychedelics sector, we conduct a deeper dive on the sector to better understand how top-tier operators have performed in comparison to the funds. Some of the operators we follow include (performance is as of September 28th):
- Compass Pathways (Nasdaq: CMPS) -Down 31% in the last month and 45% this year
- MindMed (Nasdaq: MNMD) – Down approx. 52% in the last month and 72% this year
- Numinus Wellness (TSX: NUMI) – Down 25% in the last month and 52% this year
Although the psychedelic sector seems to be unable to find a bottom, we believe sentiment is nearing an inflection point. Over the next year, we expect leading psychedelic biotech firms to report data from advanced FDA clinical trials. We believe that positive data would serve as a major catalyst for the sector and consider the possibility to be priced out of the market.
We expect positive clinical trial data from leading psychedelic biotech firms to be the catalyst the sector needs to bounce back and believe it would improve investor sentiment for all companies in it. If you are interested in learning about psychedelic companies that should benefit from the trend, please send an email to support@mushroomstocks.com with the subject “Psychedelic Stocks” to be added to our distribution list.
Forward-looking statements
This article contains forward-looking statements within the meaning of applicable securities laws. All statements that are not historical facts, including without limitation, statements regarding future estimates, plans, programs, forecasts, projections, objectives, assumptions, expectations or beliefs regarding future performance are “forward-looking statements”. Forward-looking statements can be identified by the use of words such as “expects”, “does not expect”, “is expected”, “believes”, “intends”, “anticipates”, “does not anticipate”, “believes” or variations of these words, expressions or statements, that certain actions, events or results “may”, “could”, “would”, “might” or “will be” taken, will occur or will be realized. Such forward-looking statements involve risks, uncertainties and other known and unknown factors that could cause actual results, events or developments to differ materially from the results, events or developments expected and expressed or implied in such forward-looking statements. These risks and uncertainties include, but are not limited to, dependence on obtaining and maintaining regulatory approvals, including the acquisition and renewal of federal, provincial, state, municipal, local or other licenses, and any inability to obtain all necessary government authorizations, licenses and permits to operate and expand the Company’s facilities; regulatory or policy changes such as changes in applicable laws and regulations, including federal, state and provincial legalization, due to fluctuations in public opinion, industry perception of integrative mental health, including the use of psychedelic-assisted therapy, delays or inefficiencies or any other reason; any other factor or development likely to hamper the growth of the market; the Company’s limited operating and profitability track record; dependence on management; the Company’s need for additional financing and the effects of financial market conditions and other factors on the availability of capital; competition, including that of more established and better funded competitors; the impact of the Russia–Ukraine conflict on the global economy; the continued impact of the COVID-19 pandemic; and the need to build and maintain alliances and partnerships, including with research and development companies, customers and suppliers. These factors should be carefully considered, and readers are cautioned not to place undue reliance on forward-looking statements. Despite the Company’s efforts to identify the main risk factors that could cause actual measures, events or results to differ materially from those described in forward-looking statements, other risk factors may cause measures, events or developments to materially differ from those anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in forward-looking statements. The Company does not undertake to revise forward-looking statements, even if new information becomes available as a result of future events, new facts or any other reason, except as required by applicable laws.
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