Compass's antidepressant data disappoints the market, leading to a widespread plunge in the U.S. psychedelic drug sector

According to the Zhitong Finance APP, after Compass Pathways (CMPS.US) released disappointing late-stage trial data for treatment-resistant depression based on psilocybin on Monday, the stock prices of most U.S. companies focused on the psychedelic pharmaceutical sector plummeted significantly by the close of U.S. markets on Monday. By the close, Compass's stock price had dropped by as much as 49%.

Robert F. Kennedy Jr., who has been nominated by U.S. President Donald Trump to serve as the Secretary of Health and Human Services (HHS), has long held an open attitude towards psychedelic-type drugs, believing they have potential in treating mental health issues. He advocates for more research on psychedelics and supports their use in medical settings. During the 2024 U.S. presidential election, Kennedy discussed health policy collaboration with Donald Trump, including the promotion of psychedelic-type products that are considered "long suppressed."

However, the top-line results of the first Phase III trial (COMP005) for COMP360 psilocybin, released on June 23 Eastern Time, showed that the change in the MADRS score at week 6 was only 3.6 points better than the placebo for the primary endpoint. Although statistically significant, this was below the ≥5 points expected by most analysts and weaker than its own Phase II data (6.6 points) as well as the historical trial data for the competitor Spravato®. This has led investors to question the substantive efficacy, sustainability, and scalable commercial potential of psilocybin, dragging down the valuations of the entire psychedelic sector. J&J's Spravato® has shown efficacy in the range of 4.0 to 4.5 points, which is considered "marginal."

COMP360 is the first classic psychedelic to enter Phase III and has received FDA breakthrough therapy designation; its data is viewed as a valuation benchmark compared to other pipelines (DMT, LSD, 5-MeO-DMT, etc.). Therefore, the disappointing trial expectations for Compass Pathways triggered a chain sell-off, prompting Wall Street analysts to begin downgrading industry penetration rates, pricing, and insurance reimbursement assumptions, as well as ratings for psychedelic stocks, leading to declines of 5% to 15% in the stock prices of peers such as atai, MindMed, Cybin, and GH Research.

Compass serves as a valuation anchor for the psychedelic treatment-resistant depression sector. When leading projects perform "below expectations," the risk appetite for other psychedelic stocks significantly diminishes, resulting in increased trading volume and expanded declines throughout the day. Although the 3.6-point difference shown in the trial is statistically significant, it falls below the market's estimated threshold of 5 points and is lower than the 6.6 points shown in the company's Phase II data at week 6.

atai Life Sciences (ATAI.US): Its oral film DMT (N,N-Dimethyltryptamine) is in Phase II trials, also targeting treatment-resistant depression, and the company's stock price followed Compass Pathways downward, plummeting over 15% MindMed (MNMD.US): Its LSD derivative is currently in the critical phase III trial stage for the treatment of major depressive disorder, with the stock price dropping about 6% on Monday.

Cybin (CYBN.US): The oral deuterated psilocin metabolite is in phase II trials as an adjunct therapy for depression, with the stock price falling about 5%.

GH Research (GHRS.US): The inhaled mebufotenin (5-MeO-DMT) candidate is in phase II, primarily targeting treatment-resistant depression, with the stock price declining about 5%.

Other psychedelic stocks that suffered significant losses on Monday include Clearmind Medicine (CMND.US), Enveric Biosciences (ENVB.US), and Bright Minds Biosciences (DRUG.US)