atai Life Sciences could create value in the near-term with the release of key Phase 2 and 3 datasets for psychedelic drug candidates over the next 12 to 18 months, analysts at Jefferies believe.
“Seeing positive data could strengthen the notion psychedelics have an important role for hard-to-treat $1 billion-plus central nervous systems disorders, as well as reassure investors the FDA’s rejection of MDMA in 2024 was more of an idiosyncrasy,” analysts wrote in a note to clients.
“To us, the risk behind atai’s programs is less about whether they are inherently efficacious, but more on whether their drug/dosing profiles turn out to be as intended and how well management can execute in large clinical studies, i.e. controlling for placebo/control arm behavior and also advancing with speed (no shortcuts).
atai on Tuesday announced the release of data from Beckley Psytech’s Phase 2a study of BPL-003 (5-MeO-DMT) in alcohol use disorder which suggested a single dose meaningfully reduces alcohol consumption.
Despite the open-label trial design, analysts believe the results may have a positive read across to BPL-003’s other Phase 2b study in treatment-resistant depression being carried out by Beckley Psytech, in which atai has a 35.5% stake.
“In alcohol use disorder, we are encouraged by rapid (presumed) and durable effects out to week 12 upon, especially after a single dose bodes well for treatment-resistant depression,” they wrote.
“Also, literature suggests depression drugs and other central nervous system drugs can benefit major depressive disorder patients with co-morbid severe alcohol use disorder, in terms of both improving mood and/or reducing alcohol cravings.”
Analysts believe single-dose BPL-003 could show a “profound efficacy” in this Phase 2b study, noting a Breakthrough Therapy Designation from the FDA seems possible following the release of the trial’s results.
They awarded atai a ‘Buy’ rating and $5 price target, implying upside of approximately 245% from its share price at the time of writing.
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