Executive Order Sparks New Phase for Psychedelic Biotech, Risks Remain
On April 18, President Trump was joined by top health officials in the Oval Office to sign Accelerating Medical Treatments For Serious Mental Illness, an executive order to expand research into ibogaine.
This signals the strongest federal endorsement yet of psychedelic medicine as an alternative treatment for conditions like PTSD and addiction.
While that shift has driven a rally in psychedelics-focused biotech stocks, Dan Ahrens, managing director at AdvisorShares, reminds Investing News Network (INN) readers that these names remain volatile, micro-cap bets whose fortunes hinge on binary clinical trial outcomes and intellectual property strength.
Market reacts positively
The EO was taken as a major validation signal for market watchers. Stocks surged leading up to the announcement following reports that the president was preparing an EO that surfaced around April 16, and gains extended into the following days after the official announcement.
Enveric Biosciences, which focuses on psychedelic-derived neuropsychiatric therapies, experienced an astonishing 100 percent gain in its stock price. Psyence Biomedical, a company developing non-synthetic psilocybin-based psychedelic medicines, rose 111 percent.
AdvisorShares Psychedelics ETF (NYSEARCA:PSIL), an actively managed fund tracking companies in this space, rose as much as 19.88 percent this week from its closing price on April 17. Ahrens, who manages PSIL, called the executive action “a pivotal moment for psychedelic medicine,” citing a rare convergence of clinical progress, policy support and urgent unmet mental health needs.
“I think it’s a true repricing,” said Ahrens on a call with INN. “I’m almost surprised that it wasn’t even more of a move than it was.”
Part of that conviction comes from how far the sector had fallen. As a group, these stocks have had a “rather terrible” performance since 2022, leaving ample room for upside even after the recent bounce.
While markets responded with enthusiasm, it is crucial to clarify the EO’s actual capabilities.
The order focuses on research and review to create a faster federal pathway for psychedelics in clinical development within the existing legal framework. It does not legalize psychedelics broadly or reschedule them.
It grants FDA review priority for psychedelic drugs that meet the specific criteria, like those with Breakthrough Therapy designation. There is a particular focus on Ibogaine treatments for veterans with PTSD.
Additionally, the HHS is directed to put up US$50 million in funding to match state investments in psychedelic research programs in Texas, Arizona, New Jersey, Indiana, Missouri, New Hampshire, Massachusetts and New Mexico.
Finally, the DOJ, HHS, VA and FDA are told to coordinate on labeling and scheduling issues so approved treatments can seamlessly move through the system.
Practical impact and broader policy…
Read More: Executive Order Sparks New Phase for Psychedelic Biotech, Risks Remain