Sales of Johnson & Johnson (NYSE:JNJ)’s esketamine nasal spray Spravato grew sequentially in the second quarter, marking a positive sign for the broader psychedelics sector, according to Jefferies analysts.
Spravato sales grew 29% quarter-over-quarter to $414 million worldwide. US sales grew 33% quarter-over-quarter to $366 million while ex-US sales were up 14% at $50 million.
The drug is tracking a $1.6 billion run rate, on pace to achieve J&J’s sales guidance of $3 billion to $3.5 billion by 2027 to 2028.
On its earnings call, J&J management attributed Spravato’s growth to increased physician and patient confidence, expansion of certified treatment sites, and the recent US Food and Drug Administration (FDA) approval allowing Spravato to be used as monotherapy in treatment-resistant depression (TRD).
Jefferies analysts see Spravato’s momentum benefiting other companies in the psychedelics space, namely atai Life Sciences (NASDAQ:ATAI, ETR:9VC), Beckley Psytech, Compass Pathways (NASDAQ:CMPS) and GH Research (NASDAQ:GHRS).
“Spravato's consistent quarter-over-quarter growth supports the commercial viability of psychedelics, as we anticipate sponsors can leverage J&J's infrastructure in the future,” the analysts wrote.
“Spravato's continued sales acceleration in TRD and major depressive disorder suicidal ideation supports the notion that psychedelics can benefit 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.”
They believe the company’s efforts to build out commercial infrastructure, such as by working with physicians, securing reimbursement with payors and marketing the drug, “should provide an uplift for psychedelic sponsors, potentially decreasing the barrier-to-entry.”
atai positioned to benefit
Jefferies analysts say atai Life Sciences and its partner Beckley Psytech could be a key beneficiary from J&J’s efforts following positive Phase IIb results for their lead candidate, BPL-003, in TRD.
atai/Beckley's BPL-003, a nasal spray version of 5-MeO-DMT, showed a significant improvement in depression scores (MADRS) four weeks after a single dose.
Patients given 12mg and 8mg saw score drops of -11.1 and -12.1 points, compared to -5.8 for the low-dose control. This translates to a placebo-adjusted benefit of -5.3 to -6.3, which Jefferies noted is comparable to Spravato’s Week 4 results.
Jefferies also highlighted the durability of effect out to Week 8, with MADRS scores remaining significantly improved: -10.2 (12mg), -10.8 (8mg), versus -5.2 for the control.
The sustained benefit from a single administration could have positive implications for dosing frequency, the analysts said.
Jefferies believes BPL-003 could receive a Breakthrough Therapy Designation from the FDA.
Meanwhile, Compass Pathways' COMP360 psilocybin therapy showed statistically significant results in a Phase 3 trial, with a -3.6 MADRS benefit at Week 6. atai has an approximately 7% stake in Compass.
While technically positive, Jefferies noted the Street was hoping for a larger benefit, closer to the -6.6 seen in Compass’ earlier Phase 2b results. Nonetheless, the data exceed the 2+ point efficacy threshold typically required for approval.
“The COMP360 data support the notion that psychedelics can produce meaningful efficacy in hard-to-treat central nervous system disorders,” Jefferies concluded.
Shares of atai traded up 9.5% at $3 on Friday, having surged more than 106% in the last 12 months.