3 Top Canadian Psychedelic Stocks for December 2022

Posted on November 15, 2022 by Dan Kent

Canadian psychedelic stocks were the cannabis stocks of 2021. They exploded onto the scene late in 2020 popping up among Canadian stocks, and already have their own psychedelics ETF (exchange-traded fund): Horizons Psychedelic Stock Index ETF (TSE:PSYK). The fund has fees of 0.99% annually, and total assets under management of $27M.

2020 was a challenging year for mental health as people struggled with anxiety, depression, and PTSD. Psychedelics could play a key role in potentially helping millions of people cope with mental health issues. There is a tremendous business opportunity in this space.

It’s no surprise that investors like Peter Thiel, of PayPal and Facebook fame, have invested in psychedelic firms and shroom stocks. While all of us might not have the kind of money that Thiel has, that shouldn’t be a reason to not invest in this space.

We're going to look into some of the top Canadian mushroom stocks and Canadian psychedelic stocks you can look at today for potential outsized gains. It's very important to keep in mind that psychedelic companies are in the very early stages of their business cycle. In fact, many companies are not even at the clinical-stage of testing.

If you're looking to invest, make sure to do so with a small portion of your portfolio, and only if it fits your risk tolerance.

Keep in mind that these psychedelic stocks are NOT in any particular order.

What are the top Canadian psychedelic stocks today?

  • Mind Medicine (MMED.NE)
  • Numinus Wellness (TSEV:NUMI)
  • Compass Pathways (NASDAQ:CMPS)

Mind Medicine (MMED.NE)

TSE:MMED Mindmed Stock

MindMed (MMED.NE or MNMD) says on the company's website that it helps “patients unlock the healing power of the mind through Psychedelic Inspired Medicines”.

The company is pre-revenue right now and recently underwent a reverse split. It has a diversified pipeline of clinical programs targeting a significant amount of unmet medical needs.

The company states that 1 in 5 U.S. adults are diagnosed with a mental health disorder, and health disorders that MindMed aims to treat cost the U.S. economy hundreds of billions of dollars.

The company currently has no drugs in phase 3 of trials, but its MM-120, which is used to treat generalized anxiety disorder and ADHD is near completion of phase 2 trials. The drug is a pharmacologically optimized form of LSD, and is showing very strong early stage results.

In fact, according to the company, there was a greater than 30% reduction in anxiety and depression symptoms among those who were given the drug.

On the investing side of things, the company's balance sheet is strong, something that is key when we look to a pre-revenue bio company. At the time of writing, Mind Medicine has $136.3M in cash equivalents on the balance sheet and only $10.14M in current liabilities. 

Yes, the company has collected most of this cash off of share offerings, with shares outstanding more than doubling over the last few years, but investors need to be comfortable with dilution at this stage of the company's business cycle.

Shark Tank mogul Kevin O’Leary invested in the company in 2021, stating that psychedelic drugs like magic mushrooms, LSPD, and other psychedelic compounds "far exceed" cannabis potential.

Overall, Mind Medicine is probably one of the most promising psychedelic stocks in the country today. The company does not produce any revenue and does not know when it will produce revenue, if it all, but if its products make it to market, there is massive upside potential here. Just don't ignore the risks.

Numinus Wellness (TSEV:NUMI)

Numinus Wellness Logo

Numinus Wellness (TSE:NUMI) develops proprietary, psychedelic-centered, therapeutic products and services through its own laboratory and research & development processes. 

The company's clinic network consists of Numinus Health, Mindspace Services, and the Neurology Center of Toronto. Its services include Ketamine-assisted psychotherapy for depression, neurological care and psychotherapy, and counseling by registered psychologists.

The company has 13 wellness clinics at the time of writing, along with a clinical and psychedelics research lab. It states that there is a total addressable market of over $380B and that current systems are not fit to handle the growing need for mental health treatment.

Numinus was the first public company in Canada to receive a license to produce and extract psilocybin from mushrooms, and the first to complete a legal harvest of psilocybin mushrooms using this license.

Numinus also possesses a dealer's license from Health Canada to import, export, possess, test, and distribute MDMA, psilocybin, psilocin, DMT, mescaline, LSD, and Ketamine. Numinus holds a cannabis testing license from Health Canada, allowing them to provide third-party analytics and testing services for revenue generation.

The company has made numerous acquisitions over the years, its most recent one being Novamind on June 10th 2022. The acquisition gave the company revenue-producing clinics and significantly increased its clinical research sites and lab expertise. The acquisition will no doubt accelerate the company's path to profitability.

There is no doubt the company is rapidly expanding its presence. In early 2021, the company had 1 total wellness clinic. Now, as of August 2022, it sits with 13 wellness clinics and 4 clinical research sites.

Although revenue generation is small, it is at least there and growing at a relatively fast pace. In fact, the company typically puts up 50%+ growth on a year-over-year basis. It is expected to put up revenue of $6M in Fiscal 2022 and $22.35M in 2023.

Compass Pathways (NASDAQ:CMPS)

Compass Pathways Logo

Compass Pathways (NASDAQ:CMPS) is based out the UK and the US. Its priority is the development of a new model of psilocybin therapy, in which psilocybin is administered in conjunction with psychological support. 

Its focus is on treatment-resistant depression, or TRD, a subset of depressive disorder, or MDD, comprising patients who are inadequately served by the treatment paradigm. It has developed a proprietary, high-purity polymorphic crystalline formulation of psilocybin, COMP360.

The biggest USP for Compass is that it has been proven to be a good treatment option for depression, specifically treatment-resistant depression. However, this also means that Compass drugs will come into play only once other treatments have been tried and failed.

This could be seen as a risky bet, even in the volatile psychedelic space, for newer investors to get into. That said, the global depression drugs market was valued at $18.9 billion in 2019 and is projected to expand at a CAGR (compounded annual growth rate) of ~2% from 2020 to 2030.

Its COMP360 drug has completed phase IIb trials for TRD, which was the largest psilocybin therapy clinical trial to date. In terms of post-traumatic stress disorder, the drug is still undergoing phase 2 trials. Considering mental health disorders cost the world $16 trillion in damages every year, there is large-scale potential for these drugs.

Much like Mind Medicine, Compass Pathways has very little revenue. In fact, analysts predict the company will only generate $200,000~ in revenue in Fiscal 2022 and $1.429M in Fiscal 2023. With EBITDA losses expected to be north of $100M annually over the next few years, there is no doubt we will see more equity raises or debt from a company like Compass.

The company does have cash and equivalents to the tune of $207 million at the end of June 2022, but the cash burn here is a lot.

Analysts have given the stock a target price of $65, which is a significant upside from current levels. This could be a bet with massive payouts. The difficulty right now in late 2022 is the fact the market is very risk-off, and a company like Compass may take a while to break out if it ever does.

Disclaimer: The writer of this article or employees of Stocktrades Ltd may have positions in securities listed in this article. Stocktrades Ltd may also be compensated via affiliate links in this post.

Dan Kent

About the author

An active dividend and growth investor, Dan has been involved with the website since its inception. He is primarily a researcher and writer here at Stocktrades.ca, and his pieces have numerous mentions on the Globe and Mail, Forbes, Winnipeg Free Press, and other high authority financial websites. He has become an authority figure in the Canadian finance niche, primarily due to his attention to detail and overall dedication to achieving the highest returns on his investments. Investing on his own since he was 19 years old, Dan has compiled the experience and knowledge needed to be successful in the world of self-directed investing, and is always happy to bring that knowledge to Stocktrades.ca readers and any other publications that give him the opportunity to write. He has completed the Canadian Securities Course, manages his TFSA, RRSPs and a LIRA at Qtrade, and has compiled a real estate portfolio of his primary residence and 2 rental properties, all before his 30th birthday.