H2/23 Catalyst Rich for Biopharma Co.
Research Report

Biopharma company, atai Life Sciences NV (ATAI:NASDAQ), has several possible stock-moving events slated to happen in H2/23, reported H.C. Wainwright & Co. analyst Patrick Trucchio in a July 10 research note.

In conjunction with H.C. Wainwright's recently held fourth annual Virtual Neuropsychiatry Conference, atai executives discussed their lead drug candidates for depression and anxiety, and mental health key opinion leaders shared their related insights.

"We have come away from these discussions with increased confidence in several of atai's lead compounds," Trucchio wrote. "Ahead of the next updates on these programs and others expected over the next year, we reiterate our Buy rating and $20 [per share] price target on the company's shares."

880% estimated gain

Now, Germany-headquartered atai is trading at about $2.04 per share, Trucchio noted. The difference between the target and current share prices implies a large potential return, of 880%.

Depression trial expanded

Trucchio provided updates on two of atai's lead drug candidates.

One is VLS-01, a form of DMT, or N,N-dimethyltryptamine, and a psychedelic agent for treatment-resistant depression. The company just completed Parts 1 and 2 of an ongoing Phase 1 open-label, single-ascending dose trial assessing VLS-01 in healthy adults, noted Trucchio. In both, patients tolerated VLS-01 well and did not experience any dose-limiting toxicities. VLS-01's safety profile was shown to be favorable.

The biopharma is adding a Part 3 to assess additional doses. More data from the VLS-01 program are expected to be released in Q3/23.

Also for treatment-resistant depression, COMPASS Pathways is developing COMP360, a psilocybin therapeutic, in which atai holds a 22.4% interest. COMP360 is further along than VLS-01, in Phase 3 versus Phase 1, and has been discussed with the U.S. Food & Drug Administration (FDA) for about seven years.

"The COMP360 and VLS-01 development programs appear largely consistent with FDA draft guidance on psychedelic drug development issued on June 23, in our view," Trucchio commented.

Anxiety drug progressing

Another of atai's lead drug candidates is GRX-917, or deuterated etifoxine, for generalized anxiety disorder. It is expected the biopharma will advance this program to a Phase 2 trial, a potential stock-moving event, based on positive and promising results of the completed Phase 1 study.

"Broadly, the early stage data appear supportive of the therapeutic hypothesis of GRX-917, in our view," Trucchio wrote.

H.C. Wainwright estimates that if approved, GRX-917 at its peak, could generate at least $3 billion in annual revenues, not adjusted for risk, and could be worth $7 per share, adjusted for risk.