There are five reasons why investors should seriously consider investing in the fledgling neuro-pharmaceutical stock sector.
This article is an edited ([ ]) and abridged (…) version of the original post by Dynamic Wealth Research. Please note that this complete paragraph must be included in any re-posting to avoid copyright infringement.
1. Demand for New Mental Health Technologies is Off the Charts!
According to the National Institute of Mental Health, an estimated:
- 47 million Americans (19.1%) suffer from some form of mental illness of which at least
- 11 million suffer from serious mental illness.
The conditions range from depression, anxiety and post-traumatic stress to severe addiction, bipolar disorder and schizophrenia.
Unfortunately, the situation appears to be getting worse – much worse.
- A new survey from the Centers for Disease Control (CDC) found that a staggering 41% of respondents are struggling with mental health issues stemming from the COVID-19 pandemic, resulting in skyrocketing rates of homelessness, drug addiction, violent crime and domestic abuse.
- Another study found a surge in the number of attempted suicides, emergency room hospitalizations, and police calls associated with mental illness.
In addition, the economic costs are staggering.
- In 2010, the global cost to treat mental health disorders was estimated at $2.5 trillion and,
- according to the World Economic Forum, between 2011 and 2030 mental health disorders will cost the global economy $16 trillion in lost output.
As a result, the U.S. Food and Drug Administration (FDA) has recently given the go-ahead for new research into psychoactive compounds that could revolutionize mental health treatment…and that leads to the second reason investors are intrigued.
2. The supply of mental health solutions is limited and getting smaller
- …The demand for mental health treatment is so high that in some parts of the United States patients must wait for up to a year before even seeing a specialist,
- …the drugs currently offered for many conditions haven’t changed in nearly a century…and [many] have debilitating side effects of their own,
- …the number of drug research programs for new mental health drugs has declined by 70% in just the past 10 years,
- …Big Pharma has largely abandoned the development of new solutions [because,]…the cost of developing new drugs is hugely expensive….[causing] many Big Pharma companies to…[apply their resources to developing] new cancer or diabetes treatments [rather] than drugs for mental health.
- MDMA (the active ingredient in the drug known as Ecstasy),
- Psilocybin (the active ingredient in what are commonly referred to as “Magic” Mushrooms) and
- Esketamine (a well-known anesthetic and tranquilizer).
There currently are more than 100 clinical trials underway investigating the medical potential of psychedelic compounds and that leads to another reason investors are looking at mental health stocks…
3. Silicon Valley and the U.S. Military Are Pouring Millions into Mental Health Research
- The Multidisciplinary Association of Psychedelic Studies (MAPS) just raised $30M in six months to fund new mental health startups that are providing much of the basic science research with help from some of the biggest names in Silicon Valley…namely:
- Peter Thiel, a co-founder of Paypal;
- Tim Ferris, bestselling author and tech entrepreneur;
- Bob Parsons, the founder of Go-Daddy;
- Steve Jurveston of Space X and Tesla;
- George Sarlo, founder of Walden Venture Capital.
- Another research group attracting millions in funding is the Center for Psychedelic and Consciousness Research at John Hopkins School of Medicine. It received $17 million in funding from Silicon Valley entrepreneurs, including:
- Matt Mullenweb, co-founder of WordPress;
- Balke Mycoskie of the TOMS shoe brand;
- and investor Craig Nerenberg.
- Another source of major funding for research is the U.S. military. In June, the U.S. Department of Defense’s – Defense Advanced Research Projects Agency (DARPA) announced it was investing $27 million…in a new research initiative to develop a new class of psychedelics-inspired drugs at the University of North Carolina (UNC) School of Medicine…as fast-acting treatments for post-traumatic stress, depression and anxiety…without any mind-altering affects.
- The involvement of the U.S. military in funding research into next-generation mental health therapies could provide a huge boost to small companies [see here for companies to consider and why]
4. Companies Researching New Mental Health Treatments Are Mostly Based in Regulatory-Friendly Canada
Another reason many investors are interested in mental health stocks is because they are often based in Canada, not the U.S..
- The country has state-of-the-art research facilities and scientific talent yet faces far fewer of the regulatory and political obstacles that often exist in the U.S. when it comes to developing new drugs.
- It is often far easier and faster to gain approval for clinical trials for new treatments in Canada – something seen with the CBD and medical cannabis industry.
- In contrast, drug research in the U.S. is often controversial, expensive and risky. It sometimes happens that a company pours hundreds of millions of dollars into developing a new drug and investors flock to the company, only to be stymied by last-minute regulatory or political obstacles and that leads to another important consideration:
5. A Potential Blockbuster Opportunity for Investors
Investors who recognize a new industry and invest in the earliest stages often see the biggest profits. This was true of such industries as online shopping (Amazon), smart phones (Apple) and streaming video (Netflix) and early investors who bet on small Canadian medical cannabis stocks often made life-changing gains.
Investors are betting that the same thing could be happening with mental health stocks such as (see here) [but even more so given]…the sheer size of the market for new mental health treatments:
- The size of the legal cannabis market is around $19 billion annually while the estimated size of the psychedelic stock market, according to a report by investment bank Canaccord Genuity…is $100 billion — or five times larger.
- What’s more, at the moment there are…[only 35] publicly traded companies developing these products, often with share prices below $1. [Go here for a list of the 30 fledgling companies in this sector]. If the use of psychoactive compounds continues to grow in popularity as a realistic treatment for mental health disorders, the shares of these stocks could see significant increases in value. Indeed, just in the last 2 weeks the 15 stocks in the munKNEE Pure-Play Psychedelic Drug Stocks Index have appreciated by 30.7% and this is what happened with early investments in Canadian medical marijuana stocks.
Editor’s Note: The authors’ views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
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