Why Atai Life Sciences Stock Crushed It on Tuesday

Key Points

• The biotech published a readout from a clinical study of an antidepressant drug.

• It is developing the medication in collaboration with a privately held peer.

• 10 stocks we like better than Atai Life Sciences ›

Atai Life Sciences (NASDAQ: ATAI), an ambitious biotech that targets mental health disorders, was a hot item among equity investors Tuesday. The company saw its share price rise by just under 15% that day, thanks to quite positive results from a clinical trial of an investigational drug. That rise came during a session when the S&P 500 index fell by 0.6%.

A most promising drug

That drug, tagged BPL-003 by Atai, is an antidepressant that was recently evaluated in an open-label phase 2a study. The company is developing the medication in collaboration with a privately held healthcare company based in the U.K., Beckley Psytech. The study aimed to evaluate the medicine's effect on patients with treatment-resistant depression.

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Atai and Beckley divulged the results of that testing, and they wrote in a press release that the treatment "demonstrated rapid, clinically meaningful and durable antidepressant effects." It added that these effects were sustained for up to three months in the recipients.

Further, a second, higher dose of BPL-003 produced continued reductions in the Montgomvery-Asberg Depression Rating Scale (MADRS), a gauge of the affliction's severity.

In their press release discussing the results of the study, Atai and Beckley said they aim to advance the drug to phase 3 clinical testing. That will be subject to talks with the relevant regulatory authorities.

Second in a row

The open-label study is only the latest test of BPL-003 that's produced encouraging results. In July, Atai and Beckley revealed that a phase 2b trial of the treatment showed it produced efficacious and lasting results with only a single dose.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.