The psychedelic-based therapeutics sector is heating up. In fact, currently targeted indications put a more than $30 billion revenue-generating opportunity into play. But that's for 2023. In the next seven years, analysts expect that psychedelic-based therapeutics will exploit a more than $100 billion combined market opportunity. And there's plenty to support that proposition. Foremost is that controlled, non-addictive psychedelic-based compounds are proving to be an effective alternative to highly addictive opioids. While that alone provides an excellent incentive for companies to explore a new frontier in how millions of patients can get treated, there's more to consider. And it's all positive.
Studies so far show that psychedelic-based therapeutics are overcoming patient treatment resistance, are attractive for their relatively short duration of use, and appear to lack the severe and unintended consequences of using prescription drugs, whose side effects can often become worse than the condition treated. Those advantages, still just a few, make strong the case that focused attention be given to the benefits compared to the risk of this new class of treatment sooner than later. Actually, that's happening.
In fact, a newly listed NASDAQ company, Lucy Scientific Discovery, Inc. (NASDAQ: LSDI), is already attracting attention and is well on its way to blazing its trail as a leader in this emerging generation of treatment. The company went public last week, and although shares felt some post-IPO pressure, investors shouldn't be discouraged. Broader markets are weak, the IPO market is sluggish, and financial headlines keep risk out of investors' portfolios. But that doesn't mean valuations accurately represent a company's current and future potential. Most don't.
And in LSDI's case, that point is shown by a Morningstar report indicating that at current levels, LSDI stock is appreciably undervalued. They model the fair value of LSDI to be $5.65. Thus, trading at roughly $2.80 on Friday, and with one of the most respected companies in the financial markets signaling a potentially bullish trajectory, the path of least resistance for Lucy Scientific Discovery could be to the significant upside. Over 101% from current prices.
Fully-Licensed By Health Canada's Office of Controlled Substances
That bullish presentation is well-supported, noting that beyond investors and medical sector professionals, LSDI is earning, in a good way, government regulatory attention. That's proven by LSDI being granted a Controlled Drugs and Substances Dealer's License under Part J of the Food and Drug Regulations promulgated under the Food and Drugs Act (Canada). That license was provided through Health Canada's Office of Controlled Substances in August of 2021 and at last check appears to be the only one granted to companies exploring the medicinal side of psychedelic compounds.
If that's the case, LSDI looks ideally positioned to emerge as a distanced leader in a sector estimated to generate upwards of $100 billion in total addressable revenues by 2030. That bullish estimate includes targeting opportunities related to Alcohol Use Disorder, psychiatric conditions, and potentially other indications where the wellness of the mind can offset physical ailments. Thus, when considering where to place focus, whether as an investor, patient, or sector follower, it may be best to align with a mind science company already researching, developing, and manufacturing psychotropic drugs. Lucy Scientific Discovery checks those boxes.
And they are timely to the opportunity. Remember, while the industry is expected to explode higher toward the $100 billion level in less than seven years, it's already an estimated $30 billion revenue-generating opportunity from just targeting AUD and psychiatric conditions. So, there's plenty of incentive for LSDI to expedite research and development to tap into that potential. Considering that the emerging psychotropics industry is paving the way to a brighter mental health and overall wellness future, few expect LSDI to waste time leveraging its strengths.
Leading A Sparse Competitive Landscape
Undoubtedly, as a fully licensed manufacturer of controlled compounds, they have a head-start against a competitive landscape still evaluating conceptual phases. Moreover, they are putting its valuable license to work, leveraging its value to advance the frontiers of mind science and facilitate the development of psychotropic and psychedelic treatment therapies, purposely dedicated to producing a variety of high-quality natural, synthetic, and biosynthetic products to meet the needs of the rapidly growing psychotropics-based medicines market.
Perhaps the better news is that unlike others trying to break into the space, LSDI is more than in it; they are creating partnerships to help drive value from its products and research services to expedite the development of medicines and experimental therapies to treat certain psychiatric health disorders and other medical needs, including addiction disorders. Leaning on its IP portfolio, LSDI is already positioned, perhaps even better than Pfizer (NYSE: PFE) and Johnson & Johnson (NYSE: JNJ), to accrue customer acquisitions, noting that an increasing number of leading universities, hospitals, and other public, private, and government institutions worldwide appear aligned in the same objective: research the benefits and conduct clinical studies aimed at understanding the therapeutic potential of a range of psychedelic substances.
Thus, with a NASDAQ listing providing credibility and assuring transparency, siding with LSDI at this early stage may be wise. Yes, there's a lot more to learn about this company, and that information will likely come quickly from a management team whose stated objective is to maximize its probability of success while minimizing the time and costs required to achieve its goals. Having expected news in the queue is never a bearish indicator. Moreover, with a low O/S count and significant insider holdings, investors will be buying into a company whose decisions should align with the broader shareholder base. After all, when it comes to instilling investor trust, nothing can be more persuasive than insiders putting their checkbooks toward the same objectives. Current key statistics indicate that LSDI checks that box as well.
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