What happened

Shares of Seelos Therapeutics (SEEL -1.66%) were jumping 11.4% higher as of 12:28 p.m. EDT on Tuesday. The gain came after the company announced that it has been included in the Defiance Next Gen Altered Experience ETF (PSY). This is the first exchange-traded fund (ETF) focused on psychedelics-related stocks listed on a U.S. exchange.

So what

It's good news any time a small biotech stock is included in an ETF. As investors buy the ETF, the fund will buy more shares of the individual stocks that it holds. However, it's still too early to know for sure the full impact that the inclusion of Seelos in the Defiance Next Gen Altered Experience ETF will have. This ETF only began trading on May 28, 2021.

Letters made of hundred-dollar bills spelling ETF.

Image source: Getty Images.

Still, the launch of this new ETF should help further validate the emerging psychedelics industry. Seelos stands as one of the leaders in psychedelics, with two clinical-stage candidates in its pipeline targeting four indications.

This wasn't the first time that Seelos has been included in a psychedelics-focused ETF, though. In January, the company announced that it was one of 17 businesses included in the Horizons Psychedelic Stock Index ETF, which is traded on Canada's NEO exchange.

Now what

The main thing to watch with Seelos is its pipeline progress. Seelos recently announced positive results from part 1 of an open-label study evaluating SLS-002 (ketamine) in treating acute suicidal ideation and behavior in patients with major depressive disorder. It's also conducting clinical studies of SLS-005 (trehalose) in treating neurodegenerative disease amyotrophic lateral sclerosis (ALS), rare genetic disease Sanfilippo syndrome, and rare genetic muscle disorder oculopharyngeal muscular dystrophy (OPMD).