There are the garden-variety situational blues in which a person feels temporarily depressed about, say, the outcome of the U.S. presidential election. This state of mind shouldn’t be confused with clinical depression or depressive disorder, which is a serious malady that still lacks sufficient treatment in the general population.
Clinical depression is a condition that reportedly affects 1 in 10 Americans at one point or another. It is also estimated that 80% of these people receive no treatment whatsoever.
It is regrettable that depression is prevalent and rising in America, but the fact is the need for treatment is one of the most salient investment opportunities you can find.
Social research firm Zion Research this year released a study showing that the market for antidepressants is on track to generate revenue of as much as $16.8 billion by the end of 2020, up from $14.5 billion in 2014, for a compound annual growth rate of 2.5% between 2015 and 2020.
A leading edge treatment for depression is the drug ketamine. Originally developed as a veterinary anesthetic and analgesic, scientists have adapted the drug for human use, without addiction or other deleterious side effects.
Unlike Pfizer's (PFE, Financial) Prozac and other well-known antidepressants, ketamine only takes a few hours to become effective rather than requiring a regimen that can last weeks. That is a significant advantage, especially for depressed people who are so miserable they are contemplating suicide.
If you are looking for a play on ketamine’s use as an antidepressant that packs a wallop of profit potential, consider small-cap biotech company VistaGen Therapeutics (VTGN, Financial). This company’s treatment, dubbed “AV-101,” is expected to begin Phase IIb trials by the end of the year with completion in 2018.
VistaGen could be a particularly good takeover target for a larger company, and it has announced that it is open to partnerships with Big Pharma.
To be sure, the company is betting a lot on its AV-101 trials. Although the company is working on developing other treatments for depression and even cancer, its future funding is reliant on AV-101. That makes it a bit riskier than blue chip drug firms such as Johnson & Johnson (JNJ, Financial), which also are pursuing ketamine treatments but enjoy the cushion of vast portfolios and market caps.
Nonetheless, VistaGen confers an exponentially huge profit potential for investors who act now.
With a market cap of $31.44 million, VistaGen is appropriate for aggressive investors who can shoulder additional risk. The company would struggle if AV-101 trials do not pan out, but if they do, the payoff would be considerably bigger than anything a mega-cap Big Pharma play could provide.
Shares of VistaGen now trade at $3.75; the average analysts' one-year price target for the stock is $23.50. For patient investors looking for new growth opportunities, this "small-cap rocket" is worth a shot.
Disclosure: The author is an independent contributor who at the time of publication owned stock in Johnson & Johnson.
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