Another quarter of consistent growth for Johnson & Johnson (NYSE:JNJ)’s esketamine nasal spray Spravato bodes well for other psychedelics, analysts at Jefferies believe.
They see consistent quarter-over-quarter Spravato sales growth supporting the notion psychedelics can become commercially viable in mental health.
J&J on Tuesday reported that Spravato sales grew 8% quarter-over-quarter to $320 million, with a $1.3 billion run rate tracking in line with its $1 billion to $5 billion peak sales guidance.
The company now highlights Spravato as a “key franchise” in 2027 to 2028, guiding $3 billion to $3.5 billion in annual sales, which is more than 50% above the Street consensus.
“Spravato's continued sales acceleration in treatment-resistant depression (TRD) and major depressive disorder suicidal ideation provide evidence that psychedelics can generate meaningful sales in hard-to-treat central nervous system disorders, even if their ultimate use were restricted to hospitals or treatment clinics (versus at home) — incrementally increasing the perception psychedelics are an investable space,” Jefferies wrote.
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The analysts believe that, even though the drug class remains in the early stages, existing players such as atai Life Sciences (NASDAQ:ATAI, ETR:9VC) will eventually leverage the global infrastructure built by J&J.
“J&J's commitment to building out the infrastructure (e.g., working with hospitals/physicians, securing reimbursement with payors/countries, marketing the drug) should only help facilitate the adoption of future psychedelics,” they wrote.
The analysts highlighted the upcoming release of data from a Phase 2b trial of BPL-003 in TRD, expected mid-year.
Positive results from the trial, led by Beckley Psytech in which atai is invested, should yield upside for atai stock. They see a potential 100%+ stock move.
Notably, BPL-003 could fit into the two-hour, in-clinic treatment paradigm established by Spravato for TRD.
“Compared to Spravato, BPL-003 has a more convenient dosing schedule, possibly requiring 1 to 2 doses during a potential 4-week induction period (versus 8 doses for Spravato) and one dose every 8 to 12 weeks during maintenance (versus 1 dose every 1 to 2 weeks for Spravato),” analysts wrote.
They highlighted that 5,300+ US intervention psychiatry clinics are offering J&J's Spravato, up from 4,500 in 2024 and 100 in 2019.
“Interestingly, we estimate approximately 56% of Spravato's sites may not have dosed a patient in the past six months, so the existing infrastructure appears to have additional capacity to support the entry of psychedelics,” analysts wrote. “Also, we estimate greater than 90% of the US population is within less than 25 miles of a Spravato center.”