Anyone following the psychedelic medicine markets knows that it’s been a bit of a bumpy ride as of late. The markets entered a pullback that’s lasted longer than anyone expected, with prices reaching historic lows, seemingly incapable of extracting themselves from the current slump.
This has caused a lot of confusion and concern around the industry’s capital markets, which is why H.C. Wainwright’s appearance at Mircrodose’s last Psychedelic Capital event was a timely addition to the conversation.
Patrick Trucchio is a Managing Director of Equity Research at H.C. Wainwright, with a research focus on biotechnology, CNS, and rare diseases. Mr. Trucchio has fourteen years of research experience on the sell-side and prior to joining H.C. Wainwright, was a senior equity research analyst at Berenberg Capital Markets (BCM) covering biotechnology and specialty pharmaceutical companies.
Mr. Trucchio took to the virtual stage for a deeper look at the psychedelic medicine markets and H.C Wainwright’s industry research. Here are some highlights.
Compass Pathways trial results were more positive than the market reaction
One of the most anticipated milestones this year was Compass Pathways’ phase 2b trial results for the COMP360 psilocybin for treatment resistant depression.
In what is likely a case of overblown expectations (and some Buy the Rumor, Sell the News trading) the market reacted somewhat negatively to the release of the trial results. CMPS price had increased in anticipation of the news and dropped sharply after their release, causing some frowns with those hopefull the results would jumpstart and validate the entire space.
Mr. Trucchio, however, had a more positive outlook on Compass’ historic trial.
“The feedback from investors generally has been that the efficacy data looked very good, so I don’t think anyone is questioning that the improvement relative to the 1 milligram sub perceptual dose was very impressive. I don’t think there’s any question around that.
“I think where the questions are coming in are what is the path forward. There could be the need for another phase two trial…what would the phase three program look like? How many arms are going to be in the study? How many studies are going to be needed?
“So there’s just a lot of questions around what the pivotal program looks like going forward, but in terms of the experts that we spoke to, I think everyone believed that the there was profound efficacy, demonstrated by psilocybin, and this really was the strongest data.”
H.C. Wainwright releases industry update with positive news for 2022
On November 22, H.C. Wainwright published an update titled Psychedelic Space Poised for Breakout Year in 2022, and despite the current protracted market slump, the investment firm is very bullish about the upcoming year in the psychedelic medicine space. Many companies not only maintained their Buy rating but received price target increases.
Interestingly, a significant factor in this positive outlook was Compass’ trial results.
“We cover eight names in the space. I think we have a good mix of the some of the larger names, and some of the smaller names in the space. Just to give some of the key highlights, for atai Life Sciences we raised our price target in the piece from $40 to $50. And I I think the main reason was because we view the platform as being essentially validated by the COMP360 data and the Phase 2B positive outcome.”
Some other highlights and predictions for 2022.
“Of course we covered Compass Pathways and we did raise our price target to $120 from $100 in this piece.”
“MindMed’s price target was unchanged at $10. In addition to update on clinical programs that were provided on their lead programs 18 MC and LSD…the most meaningful update though for Mind Medicine was that they’ve initiated an MDMA program with lead indications here expected to be social anxiety and autism spectrum disorder. To us this is very interesting.”
“We also cover Field Trip and also raised our price target to $25 from $20. And this again reflects the read through of their FT-104 program. This is a psilocybin like compound in preclinical development for TRD and postpartum depression. So we updated our model for that and we also updated it for kind what we view as a positive read through from COMP360. And we expect hopefully phase one data on FT-104 in 2022.”
Several other firms were mentioned, like PharmaTher with a $5 price target, over 1300% its recent stock price.
Closing thoughts
Overall it was a prescient and relevant presentation and conversation. In a time of market insecurity H.C. Wainwright’s resident expert reminded us that investment professionals continue to have a positive outlook on the long term viability of the space. Mr. Trucchio showed that the path forward is a patient one, keeping an eye on the upcoming milestones, with 2022 shaping up to be a crucial year in the industry’s development.
H.C. Wainwright & Co. is a full-service investment bank based in New York City and one of the country’s oldest and most trusted financial institutions. H.C. Wainwright & Co. blends traditional values with innovative services, operating with integrity and offering leading-edge investment banking, corporate finance, and strategic advisory services to public and private growth companies across multiple sectors and regions.
