PSIL: 3rd Quarter 2023 Portfolio Review
Performance
PSIL had a negative period for the 3rd quarter of 2023. Based on net asset value (NAV), PSIL was down 15.28% for the quarter. The S&P 500 was also negative, down 3.27% for the quarter.
Portfolio
No new positions were added to the portfolio in Q3. Our position in Reunion Neuroscience Inc. (REUN) was removed from the portfolio due to acquisition, and other trades were smaller tactical adjustments to the portfolio.
Winners / Losers
For the quarter Small Pharma Inc. (DMTFF) was up 65.43%, Relmada therapeutics Inc. (RLMD) was up 18.58%, and Cybin Inc. (CYBN) was up 18.62%. Laggers in the portfolio were Clearmind Medicine Inc. (CMND) down 67.01%, Seelos Therapeutics Inc. (SEEL) down 84.67%, and Psybio Therapeutics Corp. (PSYBF) down 72.56% for the third quarter.
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| CYBN | CYBIN INC | 15.95% |
| CMPS | COMPASS PATHWAYS PLC | 10.19% |
| GHRS | GH RESEARCH PLC | 7.16% |
| ALKS | ALKERMES PLC | 6.23% |
| MNMD | MIND MEDICINE MINDMED INC | 5.66% |
| ENVB | ENVERIC BIOSCIENCES INC | 5.22% |
| RLMD | RELMADA THERAPEUTICS INC | 5.21% |
| SAGE | SAGE THERAPEUTICS INC | 5.20% |
| ITCI | INTRA-CELLULAR THERAPIES INC | 4.63% |
| HUGE | FSD PHARMA INC-CLASS B | 4.39% |
As of 09.30.2023. Cash is not included. Subject to change.
Please see our complete fund holdings at advisorshares.com/etfs/psil. The holdings details are updated each market day.
Market Update
In September, a study led by the University of California San Francisco (UCSF) paved the way for MDMA (3,4-Methyl enedioxy methamphetamine) to potentially become the first psychedelic substance seeking FDA approval. The Phase 3 trial demonstrated that, when used in conjunction with talk therapy, MDMA could emerge as a potent tool in treating individuals grappling with moderate-to-severe PTSD (post-traumatic stress disorder). The trial’s backer and financier, biopharmaceutical company MAPS Public Benefit Corp., aims to submit its drug application to the FDA this year and anticipates Federal Drug Administration (FDA) approval by the close of 2024.
MDMA induces the release of serotonin, a crucial neurotransmitter for mood regulation. This, in turn, triggers the release of oxytocin, a neuromodulator produced by the pituitary gland, which plays a pivotal role in fostering feelings of closeness and facilitating communication. Should it receive FDA approval, the Drug Enforcement Agency (DEA) would still need to reclassify the drug from its current status in the most tightly regulated category, Schedule I, to a less restrictive category that would allow for therapeutic use.
We want to always remind people to think about how they want to invest in the psychedelic space as PSIL is designed to be fully or mostly fully invested. It is not a tactical strategy. So if an investor wants to have a more aggressive risk managed approach to investing in this space, they should have a plan/strategy to trade around PSIL. Regardless of the type of investor you are, we appreciate your investment and trading of PSIL as we work to grow the ETF and raise awareness of this industry and its investment opportunities.
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To get updates on the funds, tune in to AdvisorShares’ AlphaNooner Show streaming live each regular weekday starting at 12:00 pm (East Coast time), where I am a guest almost every Tuesday. Other important guests from the psychedelics world often join too. Find it on most major social media platforms or visit our the AdvisorShares “Events” webpage for more information.
Cheers,Definitions:
The S&P 500 Index is a broad-based, unmanaged measurement of changes in stock market conditions based on the average of 500 widely held common stocks.
Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus, a copy of which may be obtained by visiting www.advisorshares.com. Please read the prospectus carefully before you invest. Foreside Fund Services, LLC, distributor.
There is no guarantee that the Fund will achieve its investment objective. An investment in the Fund is subject to risk, including the possible loss of principal amount invested.
Psychedelic drugs, also known as hallucinogens, are a group of substances, including psilocybin, that are used to change and enhance sensory perceptions, thought processes, and energy levels. Psychedelic medicines, therapeutics, and healthcare treatments may be used in the treatment of illnesses such as depression, addiction, anxiety and post-traumatic stress disorder. Psychedelic medicine companies include life sciences companies having significant business activities in, or significant exposure to, the psychedelics industry including producers or distributors of psychedelic medicines, biotechnology companies engaged in research and development of psychedelic medicines, and companies that are part of the supply chain for psychedelics.
Psychedelics Companies Risk. Psychedelics companies are subject to various laws and regulations that may differ at the state/local and federal level. These laws and regulations may significantly affect a psychedelics company’s ability to secure financing, impact the market for psychedelics and business sales and services, and set limitations on psychedelics use, production, transportation, and storage. There can be no guarantees that such approvals or administrative actions will happen or be favorable for psychedelics companies, and such actions may be subject to lengthy delays, and may require length and expensive clinical trials. Additionally, therapies containing controlled substances may generate public controversy. Political and social pressures and adverse publicity could lead to delays in approval of, and increased expenses for, companies and any future therapeutic candidates they may develop. All of these factors and others may prevent psychedelics companies from becoming profitable, which may materially affect the value of certain Fund investments. In addition, psychedelics are subject to the risks associated with the biotechnology and pharmaceutical industries.
In Canada, certain psychedelic drugs, including psilocybin, are classified as Schedule III drugs under the Controlled Drugs and Substances Act (“CDSA”) and, as such, medical and recreational use is illegal under Canadian federal laws. In the United States, certain psychedelic drugs, including psilocybin, are classified as Schedule I drugs under the Controlled Substances Act (“CSA”) and the Controlled Substances Import and Export Act (the “CSIEA”) and, as such, medical and recreational use is illegal under the U.S. federal laws. There is no guarantee that psychedelic drugs or psychedelic-inspired drugs will ever be approved as medicines in either jurisdiction.
In the United States, scheduling determinations by the Drug Enforcement Agency (“DEA”) are dependent on Food and Drug Administration (“FDA”) approval of a substance or a specific formulation of a substance. Unless and until psilocybin, psilocin, or other psychedelics-based products receive FDA approval, such products may be prohibited from sale, which could limit the growth opportunities for certain portfolio companies of the Fund. Even if approved by the FDA, the manufacture, importation, exportation, domestic distribution, storage, sale, and legitimate use of such products will continue to be subject to a significant degree of regulation by the DEA.
Security prices of small cap companies may be more volatile than those of larger companies and therefore the Fund’s share price may be more volatile than those of funds that invest a larger percentage of their assets in securities issued by larger-cap companies. These risks are even greater for micro-cap companies.
Shares are bought and sold at market price (closing price) not NAV and are not individually redeemed from the Fund. Market price returns are based on the midpoint of the bid/ask spread at 4:00 pm Eastern Time (when NAV is normally determined), and do not represent the return you would receive if you traded at other times.
Holdings and allocations are subject to risks and change.
The views in this commentary are those of the portfolio manager and many not reflect his views on the date this material is distributed or any time thereafter. These views are intended to assist shareholders in understanding their investments and do not constitute investment advice.