Why Compass Pathways Stock Rocketed 40% Today
Key Points
Compass Pathways has already reported two positive phase 3 trials for treatment-resistant depression (TRD).
The company's COMP360 synthetic psilocybin treatment could now be on a faster track for approval.
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A White House Executive Order over the weekend has some healthcare company stocks soaring today. One big winner is Compass Pathways (NASDAQ: CMPS). Shares of the biotechnology company rocketed more than 50% this morning and were still higher by 41.2% at noon ET.
Compass is a leader in the development of a new approach to mental health treatment, concentrating on achieving results through the creation of a synthetic psilocybin therapy. Psilocybin is a naturally occurring psychedelic compound found in certain types of mushrooms, commonly referred to as "magic mushrooms."
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Phase 3 trial success
President Trump's Executive Order (EO) seeks to "accelerate innovative research models and appropriate drug approvals to increase access to psychedelic drugs that could save lives and reverse the crisis of serious mental illness in America."
Compass CEO Kabir Nath put out a statement lauding the attempt to accelerate the research and availability of psychedelic therapies. Nath commented, "Today's announcement aligns regulatory urgency with patient need, and we applaud the Administration for taking this important step forward in accelerating access, without compromising rigorous science."
He noted that the company's COMP360 synthetic psilocybin has performed well in phase 3 trials, and that Compass is already working with the FDA toward submission for approval.
Biotech stocks can be binary investments, meaning a drug or treatment's success or failure will make the stock soar or plummet toward zero. The new EO gave investors hope that Compass Pathways' stock will be one that soars.
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Howard Smith has positions in Compass Pathways Plc. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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