Recent Psychedelic Trials in Depression Show Promise, but Challenges Remain

Compass Pathways and Beckley Psytech/atai Lead the Way in Treatment-Resistant Depression

The psychedelics industry has seen a resurgence of interest following recent clinical trial readouts for treatment-resistant depression (TRD). Compass Pathways and the soon-to-merge Beckley Psytech and atai Life Sciences have both reported positive results from their respective trials, reigniting enthusiasm in the space after last summer's high-profile FDA rejection of Lykos Therapeutics' MDMA-assisted treatment for post-traumatic stress disorder.

Compass Pathways announced data from the first of two Phase III trials testing its psilocybin-based drug, COMP360, for TRD. The trial met its primary endpoint, reducing depression symptom severity by 3.6 points on the Montgomery-Åsberg Depression Rating Scale (MADRS) over six weeks compared to placebo. However, investor reaction was muted, with the company's stock losing over a third of its value following the announcement.

In contrast, Beckley Psytech and atai Life Sciences reported more favorably received Phase II results for their intranasal 5-MeO-DMT-based candidate, BPL-003. A single dose elicited an 11.1-point reduction on the MADRS, which analysts at Jefferies called "robust" data that "strengthens the notion psychedelics can safely produce profound efficacy for tough CNS disorders."

Differing Approaches and Market Reactions

The contrasting market reactions to these announcements highlight the hurdles psychedelic therapies face in proving their commercial viability. Guy Goodwin, Compass' chief medical officer, attributed the lukewarm response to COMP360's results to misunderstood expectations and limited statistical understanding among investors.

Beckley CEO Cosmo Feilding Mellen suggested that investors were likely looking for more comprehensive data from Compass. The company's decision to release only topline data at the six-week mark, while the trial continues blinded through 26 weeks, may have contributed to the muted response.

Key differences between the two approaches include the duration of psychoactive effects and time required in clinic. COMP360 requires patients to be under supervision for an entire day, while BPL-003 necessitates only a couple of hours in the clinic. This distinction could have significant implications for scalability and patient access.

Regulatory Landscape and Future Outlook

FDA Commissioner Marty Makary has acknowledged the importance of upcoming psychedelic clinical readouts, stating the need for "rapid and expeditious review of that data." The recently announced Commissioner's National Priority Voucher program aims to shorten NDA timelines for certain drugs addressing health crises in the U.S. from 10-12 months to 1-2 months.

Despite this apparent regulatory flexibility, psychedelic companies are not currently seen as likely M&A targets. Paul Matteis, head of therapeutics research and biotechnology at Stifel, noted ongoing investor skepticism around the commercial potential and feasibility of psychedelics.

As the field progresses, questions of durability and cost-effectiveness remain. Jennifer Mitchell, professor of neurology and psychiatry at the University of California, San Francisco, emphasized the importance of long-term efficacy data to justify the costs associated with administering these treatments.

With Compass' second Phase III trial results not expected until the second half of 2026 and Beckley/atai anticipating the start of Phase III in early 2026, the psychedelics industry faces a period of cautious optimism tempered by the need for more comprehensive, long-term data to fully convince investors and regulators of their potential to revolutionize mental health treatment.