Sunday, September 20, 2020

Over a Dozen Psychedelic Stocks to Choose From

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 by Fred Fuld III

It was one year ago at the San Francisco MoneyShow that I gave a speech called Stocks of Leading Future Industries. In that presentation on August 16, 2019, I covered seven leading industries, plus one bonus industry.

The bonus industry was Legalized Hallucinogenic Drugs, primarily the legalization of psilocybin and the industry around its use for therapeutic purposes.

First Public Psilocybin Stock

At that time, there was only one publicly traded stock involved in researching psilocybin, Wuhan General (WUHN), which had a division, M2BIO, that was exploring the medical use of psilocybin for treatments of various conditions.

I didn't recommend the stock during the speech, (I never make any recommendations, I only come up with suggestions for you to research), but I did say that one of these days, this stock will start to move up, other psilocybin companies will go public, and these stocks could take off just like the cannabis stocks did in the past. I told the audience to watch this stock and the industry. You can see my speech below. The section on the psilocybin and psychedelic pharmaceutical industry is at the 25 minute mark.


If you want to see a pdf of the slides from the presentation, you can go HERE.

The Alert About Psychedelic Stocks

So why was it important to keep an eye on this stock? From November 20, 2019 to May 20, 2020, the stock traded between 2 cents a share to 4 cents a share. The next day, the stock almost doubled to 7 cents a share. It then traded at 8 cents a share for a couple days, and jumped by 50% to 12 cents a share the next day. After that, it really started to move.

So there were exactly six months that you could have picked up the stock for, let's say, 3 cents a share, halfway between the trading range. The stock closed at 33 cents on Friday (actually 32.75 cents but I rounded to make the calculation easier).

This works out to a 1,000% profit on Wuhan. In other words, if you had invested $5,000 at 3 cents per share, the shareholdings would now be worth $50,000. Actually the stock has even traded above 42 cents since May.

The movement of the shares should have been an alert to investors and traders.

Why the Potential for the Psychedelic Drug Industry

In my presentation, I discussed how extensive research is being done with health treatment studies on the use of psilocybin to treat:

•Anxiety disorders
•Major depression
•Drug dependence
•Mood disorders
•Treatment Resistant Depression
I also mentioned that psilocybin and magic mushrooms have been decriminalized or legalized in:
–Denver, Colorado (May 2019)
–Oakland, California (June 2019)
–Austria (possession decriminalized 2016)
–Iceland (fresh mushrooms only)
–Netherlands (legal as truffle)
–Portugal (decriminalized)
–Spain (decriminalized for personal use)
Since then, Santa Cruz has decriminalized psilocybin in January of this year.

Is There a Precedent for Using Hallucinogenic Drugs Medically?

There have actually been examples of hallucinogenic drugs being used for medical purposes. One example is Lorcaserin [BELVIQ], which is a hallucinogen, but has been marketed for weight loss in very low doses. The Schedule I hallucinogen psilocybin has the same mechanism of action as Lorcaserin, according to the U. S. Government National Institute of Health. Arena (ARNA) markets the drug in the U.S. and South Korea, and Eisai Co Ltd (ESALY) manufactures and distributes the drug.
Another example is Spravato, which is a derivative of the psychedelic ketamine, and is being used for depression. It is produced by Johnson & Johnson (JNJ).

What's Happening Now with Psychedelic Drugs and Stocks

On Friday, September 18, 2020, Compass Pathways (CMPS) went public, trading on the NASDAQ. The company's IPO was priced at $17 per share, up from a range of $14 to $16, due to the huge demand.
Once it started trading it skyrocketed to $29 a share, an increase of over 70%, and putting the market cap at almost a billion dollars.
The company, which is based in England, is doing therapeutic research on the use of psilocybin for depression.
There are now over a dozen stocks involved in the psilocybin and psychedelic drug industry. To see a list of these stocks, click HERE.
Maybe some of these stocks will get higher and higher.
Disclosure: Author owns a very small amount of CMPS (less than 10 shares) at the time the article was written.

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