Over the weekend, President Donald Trump pulled out his pen to sign an executive order meant to accelerate research around psychedelic drugs, “including ibogaine compounds,” in the treatment of serious mental illnesses.
That news has given a major boost to a small, niche corner of the pharmaceuticals market that often faces roadblocks in the form of funding, testing, and regulatory approvals. The AdvisorShares Psychedelics ETF (PSIL) closed up 10%, notching its best day in over a year.
Jefferies analyst Andrew Tsai writes that psychedelics have been “safely generating rapid, profound and durable efficacy” in clinical trials, and Trump’s EO means that “the path to commercialization could be even faster now.”
In a new note from Oppenheimer, analyst Jay Olson agreed, writing that the moment “represents a structural inflection for the US psychedelics sector by facilitating research, regulatory timelines, and patient access.”
Our own Senior Market Strategist John Rowland, CMT, has a psychedelic stock watchlist ready to go for investors looking to track this trade. It includes some of today’s biggest movers, like Compass Pathways (CMPS), Psyence Biomedical (PBM), and AtaiBeckley (ATAI).
John’s also tracking a halo trade timed to 4/20:
“I watched the news conference around the executive order that opened up the pathway for streamlining psychedelics through the FDA. And if you watch carefully – as Trump always does, he can't help leaking or hinting about the next great thing. Well, as he was running down the benefits and how he got this done in record time, he leaned to his right and pointed to someone off-camera and said, paraphrasing, 'We're going to get that deregulation done soon too' – most likely a reference to cannabis, something that has been on hold for months.
“Maybe it's just the algos reacting to Sunday's news, or today's date, but the cannabis space is up today. Putting the two together, one of the stocks on our cannabis watchlist – and one that I own – is Jazz Pharmaceuticals (JAZZ), which has been at the forefront of cannabis derivative drugs. Nice-looking chart, I must say.”
