Billionaire Steve Cohen Trips as Psychedelics Edge Closer to Mainstream

Shrooms, ayahuasca, LSD… most know of psychedelics as party drugs or shamanic brews in the Amazon region. They’re illegal under US federal law, but like cannabis, there’s a growing movement to change that as public acceptance grows.

• A recent survey said 8% of US adults aged 19 to 30 used hallucinogens in the past year, up from 5% in 2017.
• California is moving closer to becoming the third US state (behind Oregon and Colorado) to decriminalize the personal use of certain psychedelics.

The “psychedelics renaissance” in medicine: Researchers say these mind-altering substances can be used to treat mental health conditions, substance abuse and even obesity. According to a breakthrough study published last week, talk therapy combined with MDMA seems to be effective in treating post-traumatic stress disorder (PTSD), which affects roughly 5% of the US population each year.

• After three treatment sessions, 71% of those who received MDMA and therapy no longer met the criteria for PTSD, versus 48% of those who received a placebo and therapy.
• The results will be used to seek regulatory approval and could become “the first novel treatment for PTSD in over two decades,” said Berra Yazar-Klosinski, the study’s senior author (NYT).

Avoid a bad (stock) trip

Despite promising results, psychedelics are still undergoing clinical testing, with a long way to go before they can be considered safe or replace antidepressants. And for investors, they might not be as miraculous as expected.

In July, Ambria Capital’s managing partner warned that the industry is in the “shakeout stage” — predicting that around half of the companies that have gone public since 2019 are either selling assets or shutting down (BBG).

Since launching in 2021, the AdvisorShares Psychedelics ETF (NYSE:PSIL) is down over 80%. But that hasn’t stopped billionaire investor Steve Cohen from buying an 8.1% stake in psychedelics company Cybin (NYSE:CYBN) — sending the stock up over 30% since last Friday.

Forward-looking: Earlier this year, Australia became the world’s first to approve psychedelics to treat depression — but in the US, some experts are concerned that the recent results weren’t decisive enough and the treatment could add significant costs with little benefit, per NYT.