atai Life Sciences (NASDAQ:ATAI, ETR:9VC) has been awarded a 'Buy' rating from Jefferies analysts as the company’s pipeline of mental health therapies enters a catalyst-rich period.
“atai’s pipeline of psychedelics (and non-psychedelics) has the potential to safely, profoundly, and durably treat tough $1 billion-plus in central nervous systems indications,” analysts wrote in a note to clients.
Analysts see the stock as “cheap” ahead of key 2024 and 2025 events.
“atai has multiple Phase 2/3 datasets over the next six to 18 months that could strengthen the narrative that psychedelics have an important place in psychiatry, despite the FDA’s recent rejection of MDMA,” they believe.
Upcoming catalysts include data from a Phase 3 trial of COMP360 in treatment-resistant depression in the fourth quarter. atai has a 12% stake in COMP360, which COMPASS Pathways is advancing.
“Pivotal six-week Phase 3 data of single-dose COMP360 (psilocybin) in treatment-resistant depression (number of participants is 255; 25mg vs placebo) could stir renewed interest in the space,” analysts wrote.
“Ultimately, COMP360's benefit/risk seems favorably skewed. We'd like to see durability after a single dose, which has implications to re-dosing, pricing, and peak sales.
“We could six-plus additional placebo/randomized controlled Phase 2/3 readouts by year-end 2025 for atai.”
Another key data readout is from a Phase 2b trial of BPL-003 (intranasal 5-MeO-DMT) by Beckley Psytech, expected in the fourth quarter or early 2025. atai holds a 35.5% stake in Beckley Psytech.
Further, the analysts noted new Phase 1b data for oral DMT (VLS-01) released by atai this week as “positive,” supporting a Phase 2 trial in treatment-resistant depression kicking off by the year-end with data expected by the end of 2025.
“The Phase 1b data in healthies shows VLS-01 (oral transmucosal film formulation) reaching peak plasma concentrations within 30 to 45 minutes (comparable to traditional IV DMT), inducing a short psychedelic experience lasting less than 90 to 120 minutes,” they wrote.
“We think VLS-01 could have differentiated attributes versus existing therapies and other DMT approaches — including fast-acting properties for shorter clinic visits and durable effects for episodic dosing (convenience).”
The analysts have a $5 price target on atai, implying an upside of more than 300% from its share price of $1.24 at the time of writing.