Warning: This is probably not for you.
There are three kinds of investors in the world.
This research is not for the first two.
But if you have the ability to go against the herd and see what some truly visionary billionaires see, then this may be just for you.
Before we get into the details, here’s a quick way to figure out if it is for you.
Three Kinds Of Investors
There are three basic types of investors.
The first type of investor is the average investor.
They stick to the mainstream. Their portfolios are filled with mutual funds and the world’s largest stocks. They might even trade a few ETF’s here and there to spice things up.
This is not for them.
They haven’t even heard what we’re going to go over today.
The second type of investor may be interested in what we talk about today, but let’s face it, it’s going to be too new and innovative for them.
They’ve passed on everything over the years.
They were paying attention, but they took a “wait and see” approach to new technologies and early stage growth companies.
And now, let’s face it, despite the billionaire investors who have gotten behind what we’re going to look at soon and the proven exponential appreciation potential, they’re not going to do anything about it.
This is not for them either.
There is a third type of investor this is tailored for though.
This investor has been around long enough to know a “BIg Idea” when he or she sees it.
They’ve let a few slip past them, but they know the power of just one big early-stage investment has on multiplying wealth many times over.
They will vowed to not let the next big one.
And they will follow through when it comes.
This research is for this type of investor only.
Here it is.
The Next Biotech Revolution Starts Here
Huge chunks of capital have suddenly flooded into psychedelic drug companies.
Drug development is expensive. All investors with experience around the pharmaceuticals industry are aware of this.
Drug development costs can run into the $100s of millions. The clinical trials process (for formal drug approval) usually stretches out over several years.
As the emerging psychedelic drug industry has taken off, skeptical investors would want an important question answered. Are these startups capable of making it to the finish line in such a capital-intensive industry?
Over the past 10 weeks, the psychedelic drug industry has answered that question. Yes — with an exclamation mark.
Look at the size of these numbers, from both pubco financings and private equity rounds.
Compass Pathways (US:CMPS) — $146.6 million (IPO financing)
ATAI Life Sciences — $125 million (Series C financing round)
That’s over $270 million right there.
Over the same time period, MindMed Inc (CAN:MMED / US:MMEDF) and Cybin Corp (CAN:CYBN / US:CLXPF) have collectively raised in excess of CAD$100 million.
Given the size of Canadian capital markets, these deals are even larger in proportionate terms.
What does this mean for investors?
Along with smaller financings, close to $400 million dollars has recently been injected into an industry still in its infancy. This is sufficient to not only finance all of the near-term operations objectives for these companies, there is plenty left over for M&A activity.
Lots of news-flow + lots of acquisitions. No need for most of these companies to go back to capital markets in the near future.
In turn, this can drive enormous additional growth in market caps (and share prices) — on top of the big rallies that many of these stocks have already produced. Rally on!
Some of these companies will go back to capital markets for more cash, because they will have the luxury of doing additional financings at strong valuations.
It’s a good position for the industry to be in. It’s a good position for the companies to be. It’s a good position for investors to be in.
Small-cap investing is all about seeking to optimize the risk/reward equation. At the moment, investors in psychedelic stocks are staring at an equation for success.