Shares of Compass Pathways Plc plunged as much as 37% during pre-market trading on Monday after the company’s experimental psilocybin treatment for a form of hard-to-treat depression produced results that, while technically successful, fell short of investor expectations.
The late-stage trial tested a synthesized version of psilocybin—the psychoactive compound in magic mushrooms—on 258 adults suffering from treatment-resistant depression.
The study found a 3.6-point reduction in symptoms compared to a placebo over six weeks.
“A single 25 mg dose of COMP360 led to a “statistically significant” and “clinically meaningful” reduction in depression severity compared with placebo at six weeks as measured by the Montgomery-Asberg Depression Rating Scale,” the company said.
While this met the company’s target, investors had anticipated a more robust five-point difference.
In a recent note to clients, RBC Capital Markets analyst Leonid Timashev had pointed to a five-point improvement as the benchmark needed to satisfy Wall Street.
The narrower result sent Compass’s American depositary receipts sharply lower in early trading.
Company defends clinical significance of results
Despite the market reaction, Compass executives emphasized the meaningful impact the results could have for patients.
“We’ve always said we were looking for a three-point or greater difference,” said Chief Medical Officer Guy Goodwin.
“Seeing this kind of meaningful improvement from a single dose is incredibly important — for patients, for caregivers, and for the entire field,” said Compass Chief Patient Officer Steve Levine.
The trial specifically targeted patients who had not responded to at least two prior antidepressant treatments, a group that accounts for roughly 30% of the 21 million US adults living with major depressive disorder.
Chief Commercial Officer Lori Engelbert highlighted the durability of the drug’s effect, noting that many participants experienced sustained improvements six weeks after a single dose.
“I don’t think psychiatry has seen anything like this,” she said.
Placebo effect and trial design remain key concerns
Compass acknowledged that placebo comparisons in psychedelic trials are often complicated, since patients can typically sense whether they have received the actual drug.
“If we’d come out with a massive difference between active and placebo, then people would have said ‘Oh, well, you can’t trust placebo,’” Goodwin said.
Safety, another central issue in the development of psychedelic treatments, received a positive review.
An independent safety board monitoring the trial found no meaningful increase in suicidal ideation among patients receiving psilocybin, a concern that has dogged the field.
Broader implications for psychedelics in mental health
This trial marks the first of two pivotal late-stage studies for Compass’s psilocybin therapy.
A second trial, which examines the effect of two doses, is expected to deliver results next year. The company is also conducting research on the drug’s potential use in treating PTSD.
Compass joins a small group of biotech companies racing to bring psychedelics into mainstream medicine.
Its closest commercial rival is Johnson & Johnson’s Spravato, a ketamine-based treatment for depression that generated over $1 billion in sales last year.
Other competitors include GH Research PLC and Atai Life Sciences NV.
While the US Food and Drug Administration recently rejected a separate application for MDMA-assisted therapy by Lykos Therapeutics, the psychedelics sector has gained renewed political backing.
US Health Secretary Robert F. Kennedy Jr. has signaled support, stating last year that patients should have the liberty to explore such treatments.
For Compass, the trial results may not have dazzled investors, but company leadership believes they mark an important step forward in legitimizing psychedelic medicine.
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