MW A small company can now advance its psychedelic into Phase 3. Here's why that matters to other psychedelic biotechs.

By Jaimy Lee

GH Research's stock rallied after saying the FDA lifted a hold on its experimental depression treatment

The FDA lifted its hold on GH Research's psychedelic drug, sending the company's shares soaring.

A small biopharma company said its experimental depression drug is moving into Phase 3 trials, sending its shares soaring about 35% in premarket trading on Monday.

GH Research $(GHRS)$ now plans to put GH001 into late-stage research sometime this year after the FDA lifted a clinical hold on the psychedelic, which it's testing in patients with treatment-resistant depression. Cantor Fitzgerald analysts expect the trial to kick off in the second half of the year.

The Irish company is part of a growing class of drugmakers that aim to harness the power of psychedelic compounds against challenging-to-treat depressions like bipolar and postpartum.

Johnson & Johnson's $(JNJ)$ Spravato, which is derived from ketamine, was first approved in 2019 for treatment-resistant depression. Other companies, such as Compass Pathways $(CMPS)$, have struggled to get their medicines cleared by the FDA. Compass recently told investors it expects an FDA decision on its experimental psychedelic later this year or in early 2027. Its stock (CMPS) was up about 3% on Monday morning.

But 2026 may turn out to be an important year for psychedelic medicines. There are a handful of developers, like MindMed and Cybin (CYBN), with psychedelics that are expected to have Phase 3 readouts in 2026.

"GHRS shares will benefit from what we expect will be growing investor enthusiasm around the psychedelics space this year, especially as other pivotal programs read out," RBC Capital Markets analyst Brian Abrahams told investors on Monday morning.

GH and the regulator still have to agree on the design of the pivotal trial.

GH001 is an inhaled version of mebufotenin, which combines 5-methoxy-N, N-dimethyltryptamine and 5-MeO-DMT. In a Phase 2b trial, it produced a placebo-adjusted 15.5-point reduction on the Montgomery-Åsberg Depression Rating Scale by day 8.

Patients experienced a psychoactive experience of about 11 minutes, though most were ready to go home one hour after dosing. GH said no psychotherapy is needed.

The stock is up about 28% over the last year, though it never fully recovered from the biotech industry's rise in 2021 - the year it went public - and 2022.

-Jaimy Lee

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January 05, 2026 09:01 ET (14:01 GMT)

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