Mind Medicine Holdings (MNMD  ) completed its reverse merger on April 27 to become the second psychedelics company listed on a U.S. stock market after Compass Pathways (CMPS  ) in September of last year.

Of course, attitudes towards psychedelics as a treatment option have only changed in recent years. Part of the shift is the increased focus on mental health as a major challenge for people. Another is the adverse side effects of many different treatment options. In contrast, early research on psychedelics such as MDMA and psilocybin have shown promising results in treating depression and PTSD with much fewer side effects and nearly zero risks of addiction.

MindMed Profile

MindMed develops medicines to help patients with mental illness, anxiety, addiction, and ADHD using LSD, MDMA, psilocybin, and DMT. It has a number of treatments in different phases of clinical trials.

Currently, it has no revenue, meaning buying the stock is essentially a bet on its ability to develop a treatment that delivers a revenue stream. However, many investors are optimistic due to the company's data from the first stage of its MDMA study.

The study was to help optimize doses for MDMA delivery and showed that dose sizes could be optimised based on weight, sex, age, genetics, personality, and mood. Essentially, the study will help the companies provide customized doses to potential patients.

Stock Price Outlook

Following the completion of its merger, the stock jumped more than 125% in a few days. However, in recent days, it's given back the bulk of these gains.

The company should trade along with other growth stocks as it's likely years away from generating significant cash flow. This makes the company's current valuation of $1 billion interesting. It's certainly not cheap based on its lack of product. However, it will likely look cheap in a few years if MindMed can be successful in developing even one product.

And, there's always the chance that the psychedelics industry could rapidly expand if research continues to show promising results with rapid legalization at the state level. MindMed certainly has an early mover advantage with its listing and research efforts, so if it can become the dominant company in this category, then that is another reason why its current price could look like a bargain in hindsight.