President-elect Donald Trump’s promise that Robert F Kennedy Junior (RFK Jr) will take on a “big role” in shaping health policy could be a positive for psychedelics given RFK Jr’s well-documented support of this drug class, analysts at Jefferies believe.
“RFK Jr seems positively inclined and sounds motivated to help foster psychedelic drug development,” analysts wrote in a note, highlighting that psychedelics have reportedly helped his family and friends recover from trauma, severe depression and obsessive-compulsive disorder.
“He is said to want the FDA to focus on ways to improve public health. One avenue could be to foster the drug development of psychedelics for central nervous system disorders.”
The analysts wish to see Trump's administration introduce a more concrete plan regarding the potential legalization of psychedelics.
“Recently, Trump said he is more inclined to safely legalize marijuana (via regulation and age restrictions), not necessarily psychedelics. However, we'd think the decriminalization of marijuana could have a positive read across to psychedelics,” they wrote.
“Until we learn more about their precise plans though and see them take action, we view comments to be mostly rhetoric at this juncture.”
The analysts continue to believe psychedelics can generate profound benefits in hard-to-treat central nervous systems disorders. They believe the drug holds a $1 billion-plus blockbuster potential, as demonstrated by the growth trajectory of Johnson & Johnson (NYSE:JNJ)'s esketamine nasal spray Spravato, which has achieved a $1.1 billion run rate.
“Regardless of what happens on Capitol Hill, establishing a psychedelic's efficacy should be fundamentally conducted in clinical trials,” analysts wrote. “In addition, sponsors must employ a disciplined/responsible approach in developing proprietary compounds.”
They highlighted several notable programs, including atai Life Sciences (NASDAQ:ATAI, ETR:9VC) and Beckley Psytech's 5-MeO-DMT, GH Research's 5-MeO-DMT, MindMed (NASDAQ:MNMD, NEO:MMED)'s MM120 (LSD), COMPASS Pathways (NASDAQ:CMPS)'s COMP360 (psilocybin), Abbvie Inc (NYSE:ABBV) and Gilgamesh Pharmaceuticals' non-dissociative GM-1020, and Cybin Inc. (NYSE-A:CYBN, NEO:CYBN)'s CYB003 (d-psilocin).
Further, traditional biotechnology companies like Relmada Therapeutics, Intra-Cellular Therapies, and AbbVie are advancing non-hallucinogenic psychedelics, the analysts noted.