Thanks to the Shroom Boom, This Small Stock Could Soar

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Oftentimes, the best way to score enormous returns in the stock market is by buying leading stocks in emerging megatrends… before those megatrends go mainstream.

That’s why you should consider buying psychedelic stocks today.

Arguably the most defining pharmaceutical megatrend of the 2020s will be what we like to call the Shroom Boom — or the mass de-stigmatization, legalization and utilization of psychedelic-inspired medicines for the treatment of various mental health disorders.

Antiquated beliefs that psychedelics like “magic mushrooms” and MDMA are “bad for you” are being thrown out the window, and replaced by a wave of academic research which shows that the active ingredients in these psychedelics can actually provide meaningful benefits for patients suffering from depression, anxiety, anorexia, addiction, etc.

Over the past few months, the Shroom Boom has started to go mainstream.

Multiple Netflix documentaries — like Have a Good Trip: Adventure in Psychedelics and The Business of Drugs — have shone a favorable light on psychedelics in 2020.

Last month, UC Berkeley launched a new center for psychedelic science and education, with its media relations department saying in a press release:

Fifty years after political and cultural winds slammed shut the doors on psychedelic research, UC Berkeley is making up for lost time by launching the campus’s first center for psychedelic science and public education.

Last week, widely followed Freakonomics did a podcast on psychedelic-inspired medicines.

Also last week, Joe Rogan — the king of podcasts — highlighted psychedelics in a segment.

The barriers are being broken. It has started. The Shroom Boom is going mainstream.

This is a $30+ BILLION market in the making — and multiple stocks will score 1,000%-plus returns over the next decade as this market disrupts the mental health treatment status quo.

There is a small-cap stock that is pioneering a new era of psychedelic-inspired medicines. Like others in the sector, it could soar by much more than 1,000% over the next few years.

The Leader in Psilocybin Treatments with Visibility to 30X Gains

A few months ago, MindMed (OTC:MMEDF) was the most established public company pushing forward on psychedelic-inspired medicines.

I say “at the time” because that’s no longer true.

In mid-September, the true leader of the Shroom Boom — COMPASS Pathways (NASDAQ:CMPS) — finally came public via an IPO that was a huge success.

For a few reasons, COMPASS Pathways is the unrivaled leader in psychedelic-inspired medicine commercialization — and, by extension, the best bet on the Shroom Boom.

First, the company has a leading, proprietary psychedelic treatment that is already going through clinical trials.

COMPASS is hyper-focused on using the active ingredients in “magic mushrooms” — something called psilocybin — to treat treatment-resistant depression, or TRD.

The company has created a proprietary psilocybin formulation dubbed COMP360 which completed Phase 1 trials in 2019, in which the treatment was shown to be “well-tolerated.” Phase 2 trials have commenced in 2020. Results are expected in late 2021.

Importantly, this timeline puts COMPASS miles ahead of everyone else in this space. Most of COMPASS’s peers are in the experimentation phase, still trying to come up with their own proprietary psychedelic-inspired medicines… meanwhile, COMPASS is in the midst of clinical trials.

Second, COMPASS’s board includes some of the pharma industry’s brightest stars, and its early backers include some of the world’s most well-respected VCs.

The former Chairman of Johnson & Johnson sits on COMPASS’s board. So does the former Director of the US National Institute of Mental Health. And the former executive director of the EMA. The board also counts leading psychiatry professors from Stanford, Harvard, and Imperial College London as members.

As if that roster weren’t enough, legendary VC investor Peter Thiel — best known as Facebook’s first investor — also owns a 7.5% stake in COMPASS.

So… if anyone is going to crack the code of making a best-in-market psilocybin treatment for depression… it’s going to be these guys.

Third, the company has a clear pathway to being first-to-market — and first mover’s advantage matters in the Shroom Boom.

Because COMP360 is already in Phase 2 trials and because the team here knows a thing or two about commercializing therapeutics, COMPASS has a clear pathway to being first-to-market with an FDA-approved psychedelics-inspired treatment.

That’s a big deal, because FDA approval takes a long time, meaning that COMPASS will likely have a two- to three-year window in the 2020s in which COMP360 will be the only psych treatment out there — a period long enough for COMPASS to establish dominance in the market.

How big is this market?

Well, the global anxiety and depression treatment market measures somewhere around $20 billion. Plus, COMPASS can leverage its psilocybin treatment to address other markets like addiction and ADHD, which together comprise a $12 billion treatment market.

So, you’re talking a total addressable market north of $30 billion.

COMPASS projects as the leader in that market.

Is 20% market share doable? Absolutely. That would put COMPASS’ annual sales at $6 billion.

Pharma stocks today fetch around a 5-times sales multiple. That implies a potential future market cap for COMPASS of $30 BILLION.

The company’s current market today is $1.2 billion.

Not many stocks out there have a realistic chance to rise 30X over the next several years… COMPASS is one of them… and for that reason alone, this stock should be on your radar today.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

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The post Thanks to the Shroom Boom, This Small Stock Could Soar appeared first on InvestorPlace.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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