The stocks of several companies developing psychedelic treatments for mental illnesses soared on Monday after President Donald Trump put his support behind them.
Compass Pathways shares closed 42.3% higher; AtaiBeckley gained 22.2%; GH Research rose 16.9%; and Definium Therapeutics added 2.4%. All four stocks were still up in after-hours trading on Monday.
They rose again in overnight trading. GH Research rose 5.4%; Compass Pathways rose 3.6%; AtaiBeckley rose 2%; Cybin rose 1.1%.
In an executive order on Saturday, Trump announced several changes aimed at opening up access to these drugs, including putting $50 million into research for psychedelics. He specifically cited ibogaine, a psychoactive alkaloid from a Central African shrub, as a possible treatment for veterans. Texas last year passed a law that puts $50 million into research studying ibogaine for mental-health conditions like opioid-use disorder.
“It’s for a lot of people, but it’s for our military in particular,” Trump said. “The suicide epidemic among veterans is a national tragedy.”
The executive order has several components. It says companies that already received what is called a breakthrough-therapy designation from the Food and Drug Administration can get a voucher that speeds up the regulatory process. This includes Definium’s LSD drug for major depressive disorder and generated anxiety and Compass’s psilocybin for treatment-resistant depression.
Plus, patients can now access psychedelic drugs via the Right to Try Act, which allows people to use experimental drugs if they have a life-threatening condition and have maxed out other treatment options. Per the order, the government will quickly reschedule any Schedule 1 drugs that have gone through a Phase 3 trial for a mental illness.
“We see the signing of this EO as a substantial step towards diminishing regulatory risk in this emerging class of therapies, enabling investor comfort,” RBC Capital Markets analyst Brian Abrahams told investors. “While not explicitly recommending psychedelics, the nature of the EO strongly suggests a broad openness to psychedelics.”
Definium has readouts on the horizon. Its first Phase 3 data on depression should arrive by July and the first data on anxiety sometime in the third quarter.