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3 Drug Development Companies Leveraging Psychedelic Compounds In Clinical Trials

Jan 5, 2021 • 7:59 AM EST
6 MIN READ  •  By Michael Berger
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Although 2020 was a banner year for the psychedelic therapy market, we expect 2021 to be an even better year for the sector as leading biotech firms are set to report Phase 3 Food and Drug Administration (FDA) clinical trial data.

We have seen the psychedelic sector evolve over the past year much like when the cannabis sector became legitimized in 2016. A major inflection point for the cannabis sector was when GW Pharmaceuticals plc (GWPH) announced positive data from an FDA Phase 3 clinical trial. The positive data proved that there are medical benefits associated with cannabis and served as a catalyst for the entire cannabis industry.

As it relates to the psychedelic therapy market, we believe there are a few companies that can have an impact that is as significant as GW Pharmaceuticals’ impact on the medical cannabis industry. Today, we highlighted 3 psychedelic therapy biotech firms that we expect to announce key developments in 2021.

ATAI Life Sciences: A Leading Private Psychedelic Biotech Firm

ATAI Life Sciences is considered to be a leading psychedelic therapy firm and recently closed a $125 million funding round that included what we consider to be smart money. We believe the size of the raise and the types of the investors that were involved with the financing add additional credibility to the emerging industry and are bullish on the growth prospects that are associated with ATAI’s drug development platform.

ATAI plans to use the capital to fund the clinical development of drugs that have already been backed by the business. The company said that the funding will also be used to identify new drugs and support their development. We are favorable on the direction the management team is bringing the business and believe that it has significant potential catalysts for growth.

ATAI Life Sciences was structured to acquire, incubate and develop psychedelics and other drugs that can be used to treat depression, anxiety, addiction and other mental health conditions. In 2018, ATAI was founded and has raised $210 million since then. With this amount of cash on hand, the company is well positioned to execute on late stage FDA clinical trials and is a private opportunity that we are closely following.

Currently, ATAI has partnered with around 10 drug development companies and we are favorable on the structure of the operation. The company receives majority ownership interests in drugs that are being developed by these partners and in return, it provides support on the fundraising, regulatory, and clinical trial sides of the business.

Tryp Therapeutics: An Opportunity that is Flying Under the Radar

In late 2020, Tryp Therapeutics Inc. (CSE: TRYP) commenced trading on the Canadian Stock Exchange (CSE) and is a psychedelic biotech      company that we are closely following. Since inception, the company has put a major emphasis on acquiring strategic human capital and intellectual property (IP) and is an operator that is flying under the radar.

Tryp Therapeutics is a clinical stage pharmaceutical company that is creating a diversified portfolio of product candidates that target neuropsychiatric and oncology indications that have large unmet medical needs. Currently, the      company is in the process of developing two unique chemical entities and its pipeline includes:

  • The company is developing a PFN Program (Psilocybin-for-Neuropsychiatric) disorders and plans to go through the US FDA regulatory pathway to complete Phase 2 clinical trials and monetize their assets prior to Phase 3.
  • A late-stage Phase 2 oncology asset that leverages an extensive amount of clinical research and efficacy in humans, familiarity of regulatory pathways to hopefully efficiently expedite development of this asset and transact.

Tryp Therapeutics has been able to differentiate itself from other psychedelic biotech companies through a number of ways. First of all, diversification in its PFN™ program. While most of the sector is focused on mental health disorders, TRYP Therapeutics     is focused on developing orally delivered drug therapies for different      neuropsychiatric disorders. Less competition creates a      distinct advantage      over other psychedelic biotech companies in the sector.      They also have a seasoned management team with a long track record of building profitable biotech companies, completing successful transactions with big pharma, and extensive drug development experience.

One of the reasons we are excited about Tryp is related to its focus on the development of therapies for illnesses that have no effective front-line treatments or competition. From a near-term monetization standpoint, Tryp plans to develop product candidates through Phase 2 clinical trials and then monetize the asset through a transaction with a large pharmaceutical company, lowering their risk and capital burden of getting through Phase 3 trials.

In 2021, we believe that one of the most significant potential catalysts for Tryp Therapeutics is related to how the fibromyalgia treatment progresses. If the treatment proves to be effective in FDA clinical trials, we believe that would prove to be a game-changer for the business.

When compared to other psychedelic therapy companies, we believe that Tryp Therapeutics has a favorable risk-reward profile, a compelling valuation, low competition around their indications and is trading at a considerable discount on a comparative basis. We believe that the potential catalysts for growth for the company are significant and is an opportunity to be aware of.

COMPASS Pathways: Bellwether of the Psychedelic Sector

In late 2020, COMPASS Pathways commenced trading on the Nasdaq and we consider it to be one of the best positioned psychedelic therapy operators. The business is a mental health care company that is dedicated to accelerating patient access to evidence-based innovation in mental health.

Currently, COMPASS is developing psilocybin therapy for treatment-resistant depression and we are favorable on the total addressable market (TAM) that is associated with this indication. We believe the company has significant potential catalysts for growth and is an opportunity to be aware of.

One of the most exciting aspects of the COMPASS story is related to the work that it has completed with clinical trials. In 2019, the company completed a Phase 1 study on COMP360 (psilocybin). There were 89 participants in the study and COMPASS reported that the treatment was well tolerated. The company did not report any serious adverse effects from the clinical trial and we found this to be significant.

In the near future, COMPASS is expected to complete the world’s largest Phase 2b psilocybin study (216 participants). The company is conducting a dose ranging study in the United States, in Canada, and in Europe and this is an opportunity that we are excited about.

In 2018, COMPASS received a breakthrough therapy designation from the US Food and Drug Administration (FDA) for its psilocybin therapy for treatment-resistant depression. The company has been focused on the psychedelic market for several years and represents a more advanced opportunity. By being focused on developing treatments for mental health disorders, the company has an attractive growth profile and is an opportunity to be aware of.









Pursuant to an agreement between StoneBridge Partners LLC and Tryp Therapeutics Inc. we have been hired for a period of 180 days beginning January 1, 2020 and ending July 1, 2021 to publicly disseminate information about (TRYP) including on the Website and other media including Facebook and Twitter. We are being paid $7,500 per month (TYRP) for or were paid “0” shares of restricted common shares. We own zero shares of (TRYP), which we purchased in the open market. We plan to sell the “ZERO” shares of (TRYP) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (TRYPw) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.

*Stonebridge Partners own a position in COMPASS Pathways (NASDAQ:CMPS) that we purchased in the open market with no intent to sell.

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Authored By

Michael Berger


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