Market reaction to recent readouts from Compass Pathways and Beckley Psytech/atai in treatment-resistant depression speaks to the hurdles psychedelic therapies must clear to quell concerns about commercial viability.
Over the past three weeks, psychedelics companies and investors have gotten their first look at two key readouts that could influence momentum in the space.
Late last month, Compass Pathways posted much-anticipated data from the first of two Phase III trials testing its psilocybin drug, COMP360, for treatment-resistant depression (TRD)—to little investor fanfare. A week later, Phase II results from two companies soon to merge, Beckley Psytech and atai Life Sciences, drew a much more positive reaction from Wall Street. Their candidate, BPL-003, is 5-MeO-DMT–based and delivered intranasally.
Though the notably different market impacts of these announcements came as a surprise to some, one thing is certain: Both Compass’ and Beckley/atai’s readouts have revived interest in the psychedelics space after the high-profile FDA rejection of Lykos Therapeutics’ MDMA-assisted post-traumatic stress disorder treatment last summer.
Excitement has been further fueled by current FDA leaders. In a May 19 note, Jefferies analysts recapped an interview in which FDA Commissioner Marty Makary acknowledged some important upcoming psychedelic clinical readouts and said, “we need to take a rapid and expeditious review of that data.”
In their most recent note on the topic, Jefferies analysts pointed to Makary’s recently announced Commissioner’s National Priority Voucher program, which aims to shorten NDA timelines for certain drugs—such as those that address a health crisis in the U.S.—from 10–12 months to 1–2 months.
“We think BPL-003 in TRD addresses a US health crisis,” the analysts wrote.
Compass Leads the Way
Although it hit its primary Phase III endpoint, reducing the severity of depression symptoms by 3.6 points on the Montgomery-Åsberg Depression Rating Scale (MADRS) scale over six weeks vs. placebo, investors appeared to be unimpressed by Compass’ COMP360, and the company’s stock shed more than a third of its value following the readout, according to Fierce Biotech.
In an interview with BioSpace, Guy Goodwin, Compass’ chief medical officer, attributed this to missed—or misunderstood—expectations.
“You’re kind of asking me to judge the mind of an investment community, which I am not equipped to do,” he said. “All I can say is I don’t think their understanding of statistics has really allowed them to make a very sensible judgment.”
In Phase II, Compass saw a reduction of 4.2 points on the MADRS. While Goodwin said the company “would have been happy to see that replicated, 3.6 and 4.2 are not statistically significantly different.” This, however, “was not the way it was viewed by the onlookers.”
Beckley CEO Cosmo Feilding Mellen added that investors were likely looking for more data. “[Compass is] one very big step closer towards getting that treatment approved and made available to patients, so we should applaud them,” he told BioSpace. “Of course, the market reaction was less positive, and I think that was partly because there was a limited amount of data that they could share.”
Indeed, Stifel analysts wrote on June 23 that “It’s simply impossible to compare” Compass’ results with those from other depression studies “without knowing how the placebo arm performed.”
This omission, Goodwin said, was by design. The topline data Compass reported were from the six-week mark, while the trial runs blinded through 26 weeks. “It is not regarded . . . particularly positively by the FDA to release data prematurely,” he explained. Compass encountered three episodes of suicidal behavior in Phase II, and Goodwin indicated that this was part of the motivation to release these early results, which had reassured the company that suicidality or suicidal ideation was not worse in patients who received COMP360.
Beckley and atai, on the other hand, enjoyed a much warmer reception from investors, with Jefferies calling the data from BPL-003 “robust.” A single dose of the intranasal psychedelic elicited an 11.1-point reduction on the MADRS.
The Phase II readout “strengthens the notion psychedelics can safely produce profound efficacy for tough . . . CNS disorders,” the analysts wrote.
Treatment-Resistant Depression Tops Psychedelics Targets
While it once seemed almost certain that PTSD would be the first indication approved, with Lykos leading the psychedelics space with the first application under FDA review, that distinction now belongs to TRD. Compass and Beckly/atai are not alone in chasing that indication, which, as the name implies, is difficult to treat. GH Research and Biomind Labs also have candidates in development for TRD. And in addition to Lykos, two other companies, Transcend Therapeutics and Tactogen, are still targeting PTSD.
Across the industry’s psychedelics pipeline, “I think depression is leading the way, swiftly followed by PTSD, anxiety and substance use disorders,” Feilding Mellen said. “I think we will see approvals in all of those areas over the coming years.”
In February, GH Research reported positive data from a Phase IIb trial of its own inhaled 5-MeO-DMT psychedelic, GH001. In the treatment cohort, which consisted of 40 patients, GH001 elicited a 15.2 drop on the MADRS compared to a 0.3 gain for the 40-patient placebo group after eight days, sparking enthusiasm from Stifel analysts who said the results “[offer] another dataset that supports the promise of psychedelic drugs in treating depression.”
Notably, both BPL-003 and GH001 are competing with Johnson and Johnson’s Spravato, an inhaled esketamine treatment for TRD that recently won FDA approval as a monotherapy. (J&J previously told BioSpace that it does not consider Spravato to be a classic psychedelic.)
As for which investigational asset will reach the market first, Rob Conley, chief scientific and medical officer at Beckley, was pragmatic. “Compass is clearly in the lead, and they just had a very successful trial, so they should be able to go forward,” he told BioSpace. He clarified, however, that the companies are targeting slightly different patient populations. While Compass is looking to treat classic TRD—which occurs when two drugs fail a patient within one depressive episode—Beckley is zeroing in on poorly responsive depression, defined as less than a 50% reduction in depression-rating scores on a drug.
There are also key differences between psilocybin and 5-MeO-DMT, the executives explained.
Conley and Feilding Mellen emphasized the shorter time-in-clinic required by Beckley’s BPL-003, requiring only a couple of hours in the clinic, if that, to provide similar efficacy and tolerability to COMP360. “The big challenge that [psilocybin-based drugs] face is that the psychoactive effects last six to eight hours, so you’re talking about a patient being in the clinic under supervision for an entire day.” From a scalability and patient access perspective, “that poses a real challenge.”
This was a point emphasized by Jefferies analysts as well. “To us, BPL-003 seems differentiated from the other psychedelics, due to its (1) single-dose durability and (2) short, 2-hour in-clinic paradigm,” they wrote in a July 1 note.
Feilding Mellen also emphasized BPL-003’s durability in comparison to Spravato, noting that a single administration achieved similar efficacy in Phase II to treatment with J&J’s approved drug after 8 to 12 administrations.
Long term, however, not everyone is sold. “The question is really durability, and no one’s showing us durability data yet,” Jennifer Mitchell, professor of neurology and psychiatry at the University of California, San Francisco, told BioSpace.
Currently, Compass’ admittedly early Phase III data only extend out to 6 weeks, while in Phase II, COMP360 demonstrated a “rapid and durable response for up to 12 weeks,” according to the company’s website. Beckley/atai, meanwhile, showed Phase II data for BPL-003 up to 29 days.
Mitchell pointed to the costs associated with administering these treatments, including for support staff and special training, as potentially prohibitive if the drugs do not have long-lasting effects. If data from a single dose of a psychedelic showed durability of two years, “it’s absolutely worth it, insurance companies will underwrite it [and] the world would be a happier place,” Mitchell said. “But if it turns out that durability is only there for three to six weeks, it’s not fiscally appropriate. It’s not fiscally desirable.”
Paul Matteis, head of therapeutics research and biotechnology at Stifel, agreed that market viability is a concern for investors. “There’s still a lot of investor skepticism around the commercial potential and feasibility of psychedelics,” he told BioSpace.
Matteis said he was “really surprised by the reaction” to Compass’ Phase III readout and attributed this partly to the smaller than expected effect size. “A three-and-a-half-point delta on the MADRS, that’s actually pretty solid for depression, but it’s not an outlier massive effect.” He speculated that investors want to see outliers, or at least results that stand out as significantly better than average.
Doug Drysdale, CEO of psychedelic drug developer Cybin, agreed, saying that what the biopharma industry and investors are looking for is a “clear improvement” over the standard of care in depression. “I think the expectation is a leap forward from SSRIs, not just another step forward.” On June 30, Cybin announced up to $500 million in financing through a convertible debt agreement with High Trail Situations LLC, marking a significant vote of confidence in the future of next-generation psychedelic therapeutics.
For now, the field will have to wait. Data from Compass’ second Phase III trial aren’t expected until the second half of 2026. As for Beckley/atai, Conley is anticipating an end of Phase II meeting in the third quarter, with ambitions to begin Phase III early in 2026.
While FDA leaders’ vocal support of psychedelic therapies seems to signal regulatory flexibility, psychedelic companies are not currently seen as likely M&A targets, Matteis said. “So there’s a little bit of, like, why do I have to be there now?”
