After a brief lull in media coverage, news articles about psychedelic drugs (and psychedelic drug companies) are now appearing more frequently than ever in mainstream outlets
Psychedelic drug stocks remain in their
2021 trough, aggravated by the recent selloff in U.S. tech stocks. Contributing to this problem has been persistent low trading volume with many of these stocks.
There simply aren’t enough investor dollars (and investors) at present to drive the public companies in this emerging sector. However, if a recent explosion in media coverage of psychedelic drugs is any indication, this problem should soon correct itself.
This new media coverage reverses a recent trend.
At the beginning of the year and early into 2021, psychedelic drugs seemed to vanish from the radar of the mainstream media. To some extent, this was understandable.
Media companies were focused (obsessed?) with covering the rollout of new COVID-19 vaccines. Certainly with respect to pharmaceuticals, vaccines were all the media cared about for several months.
However, as vaccine distribution spreads, this is starting to become old news. And psychedelic drugs are definitely a
new (and exciting) story.
Now they are back in the media spotlight.
A month of mammoth media coverage
The explosion in new media coverage of psychedelic drugs – and the psychedelic drug industry – commenced April 14th.
The prestigious
New England Journal of Medicine published a (heavily edited) study by noted psychedelics researcher, Dr. Robin Carhart-Harris. The study compared the efficacy of a psilocybin-based treatment for depression versus a popular antidepressant already on the market.
In less than a month since then, no less than
17 feature articles on psychedelic drugs have appeared on mainstream media sites – better than one every second day.
That’s a boatload of media coverage for an emerging industry where the public companies are little more than a year old. And leading public companies like
Compass Pathways (US:CMPS),
MindMed Inc (US:MNMD / CAN:MMED), and
Field Trip Health (CAN:FTRP / US:FTRPF) were at least mentioned in this flurry of media exposure.
Uneven media coverage of psychedelics
It could have been better.
The Carhart-Harris study on psilocybin vs. a leading antidepressant showed better numbers on efficacy for the psilocybin-based therapy. But the difference (in mathematical terms) was not “statistically significant”.
The most that Dr. Carhart-Harris could state (with statistical certainty) is that psilocybin performed at least as well as the antidepressant. But apparently this statistical nuance was too difficult for MSM reporters to grasp.
Both
The Guardian and
NBC News reported on April 14th that psilocybin was “as effective as” the antidepressant.
This was an inaccurate understatement of results. But true to the mainstream media’s follow-the-leader tradition (where no one thinks for themselves), several other media outlets that also covered the NEJM article parroted the “as effective as” language.
The Guardian, at least, attempted to redeem itself for its previous mediocre coverage. It subsequently published a summary of the study
from Dr. Carhart-Harris himself. But in the English-speaking world, it was (ironically) only The Bangkok Post that managed to accurately report on the Carhart-Harris study.
A different article in the (very conservative) UK publication, The Telegraph, took a much more neutral tone towards psychedelic medicine. But that is to be expected. The fact that mainstream publications like The Telegraph are taking psychedelics seriously is, itself, major progress on the media front.
Other coverage has generally been better. Positive and accurate.
Media coverage fuels sector growth in multiple ways
Obviously, seeing psychedelic drugs (and psychedelic drug companies) getting regular ink in the leading mainstream publications is bullish for the sector and will help to draw in new investors.
But the benefits go well beyond this. We are all “media consumers” to a greater or lesser degree, and all this coverage will do more than just influence investors.
In just the past two weeks, we’ve seen new analyst coverage for
Cybin Inc (CAN:CYBN / US:CLXPF) and
Compass Pathways – with bullish price targets.
These analysts aren’t covering psychedelic stocks only because they read about them in the news. But seeing this industry (and the companies themselves) appearing in the news more frequently certainly encourages such coverage.
We may sometimes forget, but politicians are people too. They are also media consumers.
Standing in the way of the commercialization of these drugs (and potentially
1+ billion medicinal consumers) are our antiquated drug laws.
We require our political leaders to correct their past mistakes here and normalize these drug laws ASAP -- so that psychedelic medicine can begin its quest to revolutionize healthcare.
We’re seeing a steady thaw here on the political front, but obviously there is a long distance to go.
Media reporting on the spectacular success of MDMA-assisted therapy to treat PTSD will go a long way in terms of bringing politicians on board. Indeed, even the conservative state government in Texas is
expressing strong interest in this treatment option.
The future continues to look brighter for the psychedelic drug sector
Psychedelic drug development (and a healthcare revolution) is a multi-year process, closer to a marathon than a sprint. In the greater scheme of things, the 2021 trough in these stocks is little more than a speed-bump for sector development.
With
public companies already cashed-up, the present slump is doing no material damage in terms of operations. Indeed,
news releases from the public companies on their operational advances have been even more frequent than the broader media coverage.
Institutional investors are still showing no hesitancy to bankroll these public companies – despite the slide in stock prices.
Canadian-listed
Small Pharma Inc (CAN:DMT)
just raised CAD$58 million when it went public via RTO. Private industry leader, atai Life Sciences, has filed for a
$100 million IPO financing as it goes public.
The current low share prices and trading volume paints a very deceiving picture of what is a very robust emerging industry – by any standards.
Institutional investors see this. So do many iconic private investors from both
Silicon Valley and Wall Street.
More retail investors are needed, to drive the stocks of a growing number of public companies. But those retail investors won’t be far behind if reporting on this sector continues to be anywhere near this robust.
No one is suggesting that investors should immediately rush out and buy psychedelic stocks just because of a bunch of favorable news articles (there are
better reasons to buy these stocks). But for current shareholders who may be getting uneasy about the shock to their portfolio, it’s a good reason to keep the faith – and hold onto these undervalued companies.
DISCLOSURE: The writer holds shares in MindMed Inc and Cybin Inc.
