MJBiz - July 2023 - 12

SECTOR SNAPSHOT
Is the Psychedelics Sector
Outperforming Cannabis?
Cash flow and other metrics reveal that some public companies
could not survive a major hiccup
By Frank Colombo, , Viridian Capital Advisors
P
sychedelics and cannabis
draw from overlapping
investor audiences. Both
categories were formerly associated
with " sin " but have now gained
wide acceptance for their medical
applications. Ongoing research is
likely to continue to uncover new
therapeutic applications for both.
Psychedelics have in some ways
leapfrogged medical marijuana in
terms of regulatory approval. For
example, in 2020, London-based
Compass Pathways received a
" Breakthrough Therapy " designation
for a psilocybin therapy to
treat depression.
Similarly, in 2022, the U.S. Food and
Drug Administration granted " Fast
Track Designation " to New York
Based Mind Medicine (MindMed)
for an LSD-based therapy to address
treatment-resistant depression.
Additionally, some psychedelics
companies are involved entirely in
research and clinical trials and have
not commenced any commercial
activities.
Accordingly, several psychedelics
companies, including Berlinheadquartered
Atai Life Sciences
(Nasdaq: ATAI), Compass Pathways
(Nasdaq: CMPS) and Mind Medicine
(Nasdaq: MNMD) are able to trade
on senior stock exchanges, which
allows them to attract significantly
more institutional investor interest
than large, U.S. cannabis multistate
operators.
12 July 2023 | MJBizMagazine
Psychedelics versus cannabis
Indexed stock price
Viridian Psychedelics Basket
$120
100
MSOS ETF
80
$76.68
60
JAN
FEB
MAR
APR
MAY
JUN
Source: Viridian Capital Advisors © 2023 MJBiz, a division of Emerald X, LLC
Psychedelics Segments
The chart " Psychedelics versus
cannabis, " above, shows that
psychedelics stocks have
outperformed the MSOS ETF, the
bellwether indicator for cannabis
stocks. The open question is
whether psychedelics can obtain
the funding required to justify
the fascination by institutional
investors.
The psychedelics sector is split
into two segments: larger, liquid
companies with sufficient cash to
fund clinical trials for at least the
next year, and smaller competitors
with red-line-level liquidity. The
latter might struggle to obtain
sufficient funding to continue
operations.
The good news for psychedelics
is that several companies with
strained financial leverage also have
stocks that trade with relatively
strong liquidity.
The bars in the chart " Psychedelics
trading liquidity vs. financial liquidity "
on page 13 show the market cap
divided by the stock's average daily
dollar trading volume. The lower the
bar, the greater the relative trading
liquidity of the company.
Companies with better trading
liquidity tend to be better able to
raise new equity. Toronto-based
Cybin, for example, has strained
financial liquidity (shown by the
orange line). Still, its stock trades
June 2
$98.20
Sign up for
Viridan's
Deal Tracker
by using code
MJBIZVDT
https://dealtracker.viridianca.com/account/ https://dealtracker.viridianca.com/account/
MJBiz - July 2023

Table of Contents for the Digital Edition of MJBiz - July 2023
