As psychedelics stocks trade higher following the release of positive data for GH Research’s 5-MeO-DMT drug for treatment-resistant depression, analysts at Jefferies believe Beckley Psytech’s intranasal 5-MeO-DMT candidate BPL-003 could have an even better value proposition.
This could have a positive readthrough for atai Life Sciences (NASDAQ:ATAI, ETR:9VC), an investor in Beckley.
Analysts believe Beckley’s Phase 2 trial of BPL-003 in treatment-resistant depression should be “partially derisked now” by GH Research’s data for GH001.
GH Research on Monday released data showing the drug led to an “ultra-rapid anti-depressant effect” with a 15.5 point placebo-adjusted MADRS benefit at the eight-day primary endpoint, translating into a high 58% remission rate.
Beckley’s study compares single doses of 12mg and 8mg to a subactive 0.3mg dose at the four-week primary endpoint (MADRS). For a favorable outcome, the drug will ideally show at least a 5-point separation at day 28.
Jefferies noted several differences between GH001 and BPL-003 which could have clinical, regulatory and commercial implications.
They highlighted that BPL-003 offers more precise dosing than GH001 due to its dry powder formulation, which ensures more than a 90% absorption via an Aptar device, while GH001 requires multiple breaths, leading to potential dosing variability.
BPL-003's Phase 2b study follows an eight-week active-controlled design aligned with approved depression drugs, whereas GH001's placebo-controlled portion lasted only seven days before patients transitioned to an open-label extension.
Additionally, BPL-003 has a Food and Drug Administration (FDA)-approved Investigational New Drug (IND) and a composition-of-matter patent, while GH001 lacks US IND approval and uses a free-base formulation, potentially making BPL-003's regulatory and commercial pathway more favorable.
“Although Beckley is an independent entity with full control of BPL-003, a successful Phase 2b should still yield upside to atai stock, given atai’s passive 35.5% stake in Beckley,” analysts wrote.
Based on conservative assumptions of $1 billion in peak sales, a 3x revenue multiple, a 65% probability of study success, and atai’s 36% ownership, the valuation impact could exceed $700 million, they believe.
They added that given Johnson & Johnson's esketamine nasal spray Spravato has already achieved a $1 billion plus run rate with peak sales guidance of $1 billion to $5 billion, BPL-003's market potential could be even higher.
They have a ‘Buy’ rating and $5 price target on atai, which traded hands at about $2.20 on Thursday afternoon. It is up 35.7% in the last five days, boosted by GH Research’s results.