By Jack Hough
I've never gone on one of those self-discovery trips where an Amazonian shaman administers hallucinogenic brew made from the ayahuasca vine. But I did overshare here recently about my Atomic Fireball habit, and while they're usually individually wrapped, I found a packet with two the other day, so I doubled up. During the deep introspection that followed, a spirit guide whispered into my ear: Are psychedelic stocks overpriced? I didn't answer; I have a hard enough time figuring out momentum stocks in this dimension. But he might have been on to something.
Shares of AtaiBeckley, which is testing a nasal spray with an ayahuasca ingredient for depression, are up 212% in a year. Compass Pathways, which is also working on depression with a lab-made compound of psilocybin, the stuff found naturally in magic mushrooms, is up 134%. And Definium Therapeutics, which is in late-stage trials for LSD-based pills to treat depression and anxiety, and looking into whether a form of the party drug Molly can help with autism, is up 283%. Together these three companies are valued at close to $6 billion, factoring in potential share dilution. None has meaningful revenue, but there are high hopes for closer to the end of the decade.
Oppenheimer is bullish. There's a new White House push to accelerate clinical reviews of psychedelics. Many of these medicines are aimed at patients for whom other treatments have failed, including military veterans who suffer from post-traumatic stress disorder.
But there is a long history of recreational drugs falling short on promised medical breakthroughs. A decade ago, cannabis, which has long been used medically, for example to ease nausea in chemotherapy patients, was the subject of a drug-development hype wave, and money poured into new stock listings and exchange-traded funds. This past week, the government reclassified cannabis as a less-dangerous drug. But treatments have been few, and stock losses, profound. Holders of a cannabis ETF with the ticker WEED are down 74% in a decade. Another, ticker MJ, has lost 87%.
Consider pot's drop before piling into psychedelics. A 2023 study of psychedelic medical research found myriad problems, including small sample sizes, selection bias, placebo effects, and lack of control groups.
Heard of Mrs. Winslow's Soothing Syrup for teething infants, or Godfrey's Cordial for women with "nerves"? These 19th-century patent medicines worked a treat for pain relief and calming, but their active ingredients, morphine and opium, brought other problems. We're a long way from those incautious days. But that doesn't mean that future psychedelic cash flows will support today's stock highs.
Read the rest of this week's Streetwise column here.
Write to Jack Hough at jack.hough@barrons.com. Follow him on X and subscribe to his Barron's Streetwise podcast.
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April 24, 2026 11:58 ET (15:58 GMT)
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