Our resident Psychedelic Investor explains why this is an important moment for the psychedelics sector.
Since the first psychedelic stocks began going public, an overlap has existed between retail investors interested in investing in psychedelic medicines, and those who follow Cathie Wood and her ARK Invest ETFs.
It makes sense. The base thesis for investing in psychedelic stocks, as is elaborated on in a piece I wrote for Psychedelic Spotlight this week, is that the “new” technology of psychedelic medicines will disrupt the pharmaceuticals industry when it comes to healing mental health. Cathie Wood, and all of ARK Invest’s ETFs, are focused specifically on disruptive technologies that will scale exponentially and bring alpha returns to its investors.
Despite this synergy, in March 2021, when the Shroom Stocks Reddit page managed to get the question of investing in psychedelics asked to Cathie Wood during a live conference, she responded dismissively, saying “we tend not to invest in binaries.” What she was implying was that the risk of failure for the psychedelic space for her was too high.
It appears time, however, has changed her mind.
On Tuesday, February 8, it was disclosed that the ARK Genomic Revolution fund (BATS: ARKG), opened an initial position in the psychedelic medicines company atai Life Sciences (Nasdaq: ATAI).
To be fair, it’s a minuscule stake of only 114,729 shares. Putting that into context, atai is the smallest position in the entire ARKG fund, representing only 0.02% of its total assets.
Nevertheless, this is an important moment for the psychedelics sector.
Cathie Wood is not just any old Wall Street investor. Her past accurate predictions and bold bets have granted her a megaphone with which she communicates to retail investors interested in innovative tech. Her buying of atai will legitimize not only that company as a potential investment, but also the entire psychedelics field to her large following. As more people learn about this move, they will begin researching both atai and the psychedelic public markets in general.
Plus, it is possible this is but the first investment ARKG makes in the psychedelics space. In the future, if they like what their research shows them, they could either up their position in atai, or expand to other psychedelic stocks such as MindMed (Nasdaq: MNMD, NEO MMED) or Compass Pathways (Nasdaq: CMPS).
Looking at the specific investment, atai is a company which has 10+ different programs in development, including treating depression with a form of ketamine, PTSD with an MDMA derivative, and addiction with ibogaine, though not all of their programs are strictly psychedelic related.
Of all the psychedelic medicines companies, atai is by far the best financed. It is backed by controversial billionaire Peter Thiel, with more than $400 million in the bank as of the end of Q3 2021, and a market cap just shy of $1 billion.
Atai Life Sciences’ stock, at the time of writing, is up over 21% since the news was released.
This article has been updated to reflect the total amount of shares purchased since publishing.