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Market Health

The $100 Billion Opportunity Behind Psilocybin Mushrooms

Throughout much of human history, mental illness has been grossly misunderstood. And the so-called treatments ranged from ludicrous to barbaric.

The ancient Greek physician Hippocrates believed depression – or what he referred to as “melancholia” – was caused by an imbalance of the four bodily fluids: yellow bile, black bile, phlegm and blood. He believed too much black bile in the spleen caused depression.

To remedy this, he recommended bloodletting and baths.

Aulus Cornelius Celsus, who wrote the famed De Medicina, believed in beatings, leg-irons and starvation to treat mental illness… anything that would stir up the spirit.

Fast-forward nearly 2,000 years and treatments haven’t gotten much better.

In the 20th century, doctors used electroconvulsive therapy and lobotomies to treat depression.

It wasn’t until the 1950s that people noticed the tuberculosis medication Isoniazid appeared to help some patients suffering from depression. And over the next several decades, we saw the emergence of tricyclic antidepressants (TCAs) – like Anafranil, Norpramin and Tofranil – as well as selective serotonin reuptake inhibitors (SSRIs), like Celexa, Lexapro, Prozac and Paxil.

These have helped millions of patients and have created billions of dollars in revenue for companies.

But we’re still facing a crisis.

Depression is the leading cause of disability worldwide.

And it’s a major contributor to the overall burden of disease globally. For instance, in the U.S., the annual cost of depression is more than $200 billion. Not to mention that depression can lead to suicide. And more than 800,000 people around the world take their own lives each year.

Even worse, there’s treatment-resistant depression (TRD).

Antidepressants and counseling help ease the symptoms of depression for many people. They can help people manage the illness and live a “normal” life. But for others, these simply don’t work.

So not only does TRD impact a person’s quality of life, but it’s also a financial burden, as there’s a constant need for tweaks.

Just in the U.S., TRD patients face medical costs two to three times those of other major depression sufferers.

But here’s the truly staggering figure: It’s estimated that almost one-third of all patients with major depressive disorder suffer from TRD.

Thankfully, there is potential salvation for patients as well as a massive upside for investors. And the roots of this treatment can actually be traced back further than Celsus’ De Medicina.

A New Class of Antidepressants

As far back as 9000 B.C., humans have been consuming “magic mushrooms.”

A little more than 8% of the U.S. population has used them, whether they were used for spiritual trips, medical relief or recreational purposes.

The active ingredient, psilocybin – which is the engine for all the visual and auditory hallucinations – activates the serotonin receptors in the prefrontal cortex of the brain. This impacts mood, cognition and perception.

We’re on the cusp of a new era of medicine. And it’s, in part, thanks to those hallucinations.

Now, the neurotransmitters, the monoamines – dopamine, norepinephrine and serotonin – are what antidepressants target. In people with depression, these neurotransmitters are in low quantities. Besides TCAs and SSRIs, there are also serotonin-norepinephrine reuptake inhibitors (SNRIs), monoamine oxidase inhibitors (MAOIs) and atypical antidepressants, like Wellbutrin.

SSRIs and SNRIs are the most commonly prescribed. And that’s because over the past several decades, we’ve found serotonin’s role is center stage in treating depression.

Here’s where it gets interesting…

Starting in 2016, a study from Johns Hopkins University demonstrated that patients treated with psilocybin saw an effect “about four times larger than what clinical trials have shown for traditional antidepressants on the market.”

And in October 2018, the U.S. Food and Drug Administration awarded the “Breakthrough Therapy” designation to psilocybin to treat TRD.

This was a major milestone for psilocybin and the 100 million TRD patients suffering around the globe.

And the company granted this designation was Compass Pathways (Nasdaq: CMPS).

Its COMP360 drug is currently in clinical trials, which are expected to be completed later this year.

Compass was founded in 2016 to accelerate patient access to innovative treatments, such as psilocybin. Between going public last year and around March of this year, shares of the life sciences company decimated the market.

Shares have hit a rough patch recently, mostly because its performance is mirroring that of the AdvisorShares Pure US Cannabis ETF (NYSE: MSOS).

With Washington, D.C., dragging its feet on cannabis legalization, it’s brought the broader psychedelic medicine market down with it.

Dragged down by cannabis

But the sector is still seeing advances and is reporting great numbers. And that makes these lows such an attractive entry point.

Treatments like COMP360 could be a major turning point. And there’s potentially a lot more on the horizon…

Preclinical research is being conducted on using psilocybin to treat Alzheimer’s, attention deficit hyperactivity disorder, autistic spectrum disorder, cluster headaches, chronic pain, eating disorders, epilepsy, obsessive-compulsive disorder, Parkinson’s, sleep-wake disorders and general anxiety.

At the moment, the projected market for psilocybin and other psychedelic medicines could top $100 billion. And the push to legalize psilocybin in the U.S. and Canada has already begun.

As a trends expert, I think the psilocybin market is where the cannabis market was five to 10 years ago. But the upside is much different.

We’re witnessing a new class of antidepressants be born. And that could have a far larger impact than we can realistically put a price tag on.

Here’s to high returns,

Matthew

P.S. If you or someone you know is struggling with depression or suicidal thoughts, call the National Suicide Prevention Lifeline at 1.800.273.8255.

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