Click here to read the previous psychedelics outlook. 

With interest in psychedelics investing starting to gain steam, companies and experts continue to point to the long road ahead in 2021 and beyond for the market.

Investor patience and belief in the sector will be tested as companies continue the arduous task of proving the efficacy of psychedelic drugs. While money-making opportunities will appear, new drug development programs will still take significant time.

Following the most critical year for psychedelics investment, how will 2021 stack up in the grand scheme and what’s at stake for investors?

Here the Investing News Network (INN) offers investors a look at what’s to come for the new segment in 2021 directly from experts and those involved in this space.

Psychedelics outlook 2021: What should investors know before diving in?

New marketplaces can be challenging to jump into, and psychedelics is no different. So far executives and experts agree in recommending a long-term approach to investors.

“Drug development takes time and is capital intensive, so investors should focus on those companies that are sufficiently capitalized and have a team with a strong track record to bring these treatments to market,” Doug Drysdale, CEO of Cybin (NEO:CYBN), told INN.

Drysdale’s comment hints at the psychedelics industry’s biggest identifier, which is that it is most closely related to the often slow-paced life science sector. According to one executive, this means companies’ plans will require significant time to develop.

“In many regards, we, and many other companies in the space, are traditional biotechpharmaceutical and drug discovery firms, advancing psychedelic molecules through the conventional and established scientific, regulatory and legal framework required to bring any drug to a mass market,” said Timothy Ko, CEO at Entheon Biomedical (CSE:ENBI).

While companies may still perform as they work through these long pipelines, many experts cautioned that investors will not see a new rush similar to the one seen previously in Canada’s cannabis arena.

“It is a drug discovery, mental health, biotech play — not recreational and not cannabis,” Bill O’Hara, managing partner at LACG Capital and former managing director of institutional equity sales with Haywood Securities, explained to INN.

Ko agreed with O’Hara, telling INN that he thinks one of the biggest misconceptions in the psychedelics industry is that it is similar to the cannabis space.

Kelsey Ramsden, president and CEO of Mind Cure Health (CSE:MCUR,OTCQB:MCURF), said investors should pay close attention to the revenue horizons for companies in the space, and should also look for strong management teams and unique strategies.

“I think this will help investors land safely with companies who will create realizable value,” she said.

Psychedelics outlook 2021: Could big acquisitions be on the way in 2021?

With increased investor attention and potential upcoming medical approvals quickly changing the realities of the psychedelics space, one question has started to gain steam in this market: How likely is it for a big-name pharmaceutical entity to eye an early entry?

“It’s sort of becoming impossible to ignore in terms of the scientific evidence that’s accruing … and the potential that these compounds have for treating mental health conditions,” Adele Byrne, senior analyst with drug research firm Prohibition Partners, told INN.

During an online forum in August, Kris Miks, partner at Norton Rose Fulbright Canada, went so far as to say that major entries will be born out of companies’ desire to not be left behind.

“I think there’s going to be more of an appetite and more of an interest from large pharma to get into the space early and see if they can get involved,” Miks said at the time.

While the industry awaits a potential entry, it is undeniable that the sector has already seen significant investment from large figures in the market at large. Players like Peter Thiel, Kevin O’Leary and Bruce Linton have all thrown their support behind the psychedelics opportunity.

“Psychedelics are finally having their day in the sun — not as recreational drugs but as medicines to address society’s problems with mental illness and addiction — and I’m one of the many Wall Street investors who are now backing them,” O’Leary wrote in an op-ed.

When it comes to predictions, Leonard Lerer, CEO and founder of Back of the Yards Algae Sciences, a sustainable biotechnology firm that has committed to the benefits of entheogens, said 2021 may bring big opportunities for mergers and acquisitions.

“In 2021, we will see the first serious moves by the biopharmaceutical giants in this space,” Lerer said.

Josh Bartch, CEO of Mydecine Innovations Group (CSE:MYCO), told INN he sees next year as an opportunity for knowledge about psychedelic substances to grow.

“We see 2021 as a year of progress and continued public acceptance. With numerous clinical and R&D initiatives happening globally, much-needed information and discoveries will be uncovered during the upcoming year,” Bartch said.

Psychedelics outlook 2021: Investor takeaway

The psychedelics investment market is on pace to keep expanding and commanding the attention of more investors in 2021. With this uptick in attention, the industry will have to continue delivering results and proof of its promise in treating various mental health conditions.

As with any new market, it’s important for investors to remember that these are still the early days, and with this particular space the key theme is how much time it will take to mature.

“We have only just begun, there are a lot of companies entering the space who will not be here a year from now — the beginning of a new segment is always like this,” Ramsden said.

Don’t forget to follow @INN_LifeScience for real-time updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Cybin and Mind Cure Health are clients of the Investing News Network. This article is not paid-for content.

The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.