If the test results are encouraging, companies that specialize in recreational psychedelics, which rallied due to legalization efforts, and those working on therapeutics, could also be bid higher. Some once high-flying stocks and exchange-traded funds tracking the sector have had their wings clipped this year. Defiance Next Gen Altered Experience ETF, which trades under the ticker PSY, has lost roughly 30 per cent since its inception in May.
Still, Wall Street is almost universally bullish on Compass and Atai. All 11 analysts covering Compass rate it a buy, while ten of the 11 following Atai have it at buy. The pair are leading a psychedelic medicine revolution, according to Citi analyst Neena Bitritto-Garg, who rates both at outperform.
Of course there are concerns. For instance, legalization efforts for recreational use could also put a damper on the stocks. Though Goldsmith is quick to point out that recreational use is more likely to bring a daytripper to the emergency room rather than finding the psychological resolution sought from a regulated experience.
Insurer reimbursement and administration may be a hurdle, the way it was for J&J’s Spravato. Compass is already working with payers to address this concern, according to Goldsmith. But first the company needs to show that its treatment works.Share this article in your social network
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