The commercial success of Johnson & Johnson (NYSE:JNJ)'s esketamine nasal spray Spravato for use in treatment-resistant depression and major depressive disorder with suicidal ideation bodes well for other psychedelics companies, analysts at Jefferies believe.
When reporting its 4Q results Tuesday, J&J said Spravato sales grew 73% year-over-year to $206 million, implying an $825 million run rate since the product launched five years ago.
Management also guided Spravato’s peak sales will reach $1.5 billion plus.
“We think the strong sales trajectory supports the notion that psychedelics can be commercially viable for mental health (including in non-US regions), even if their use case were limited to the inpatient setting,” the Jefferies analysts wrote in a note to clients.
They also pointed out the potential approval of the Multidisciplinary Association for Psychedelic Studies (MAPS) MDMA-assisted therapy for post-traumatic stress disorder in the second half of 2024 and subsequent launch by early 2025 could stir renewed interest in the space and remind investors that the Food and Drug Administration (FDA) remains receptive to psychedelics.
“To be clear, the FDA is already conducive to helping sponsors by 1) approving Spravato, 2) awarding breakthrough therapy designation and special protocol assessments, 3) proactively holding a satellite workshop with several FDA participants, and 4) releasing a first guidance document in June 2023 that signal’s the FDA’s willingness to work collaboratively with sponsors,” they wrote.
The analysts also highlighted upcoming data readouts as catalysts for Compass Pathways (NASDAQ:CMPS), which is expecting pivotal data from its Phase 3 COMP360 psilocybin studies in 2024 or 2025, and atai Life Sciences (NASDAQ:ATAI), which holds a 16% stake in Compass.
“We think the two ongoing six-week Phase 3 studies are strategically designed to help elucidate the commercial launch model of COMP360,” the Jefferies analysts wrote.
“Also, COMP360 is leveraging psychological support (trained therapists) and digital tools, suggesting the agency does not view these tools to confound COMP360’s efficacy but instead maximize it.”