As someone working in the psychedelic medicine space, I’ve had my fair share of questions sent my way during this extended market funk. It’s been a long 4 quarters and the psychedelic markets have taken a serious beating, so we sat down with Elemer Piros, analyst at Roth Capital, to discuss the state of the industry and market (Note: the interview took place before the recent surge in stock prices)
Mr. Piros had a positive outlook on the space, noting that biotech research and development had dried out over the last decades and psychedelics offer a whole new avenue of both commercial and medicinal opportunities.
“When we issued a review in March of 2021, we had approx 20 clinical trials ongoing with these drug candidates. Today we have 40 plus trials, including Phase 1, 2 and 3. So all phases of development are covered, which will ensure that we’ll have news flow during the next 12 to 24 months. Which will be meaningful, especially if we are dealing with more advanced clinical trials.”
It seems there was a perfect storm of difficult market conditions hitting a new psychedelics industry that had just finished a big run-up in prices. A lot of early-stage and VC investors weren’t necessarily long-term investors, and with people worried about the state of the market, recessions potentially coming, COVID, inflation, etc — they started to pull their money.
But with FDA trials advancing to new stages, will we get a new crop of longer-term biotech investors who had been waiting for the industry to reach Phase 2 and Phase 3? Will this cause a new and steadier influx of capital from the market?
“Yes there were some amazing IPOs that performed wonderfully. But then there was profit taking. And if you look at their ownership today, it’s again just a handful of the original investors. Now we are waiting for some regrouping. But there are some signs in the NASDAQ and even in the biotech indexes that there is some leveling off. If inflation has peaked, I think the overall appetite to own equities, even speculative equities, will start to increase.”
Predictions for 2022? How do you see the rest of the year unfolding?
“The second Phase 3 readout from the MAPS trial would definitely be something that would generate interest. And Compass Pathways is at a crossroads. They just had a discussion with the FDA. What is their Phase 3 redesign? Do they have to conduct one or two Phase 3 trials? Would the previously reported Phase 2B be large enough or significant enough to be considered as one of those studies? So if we get something that would clearly delineate the timeline for their Phase 3 plans and potential launch, that would help set expectations in a more narrow channel and time frame. These two events are significant and I think would be the representatives of some renewed attraction towards the sector.”
See the full interview below:
