3 Big New Catalysts for Psychedelics Stocks in 2024

Core Insights - The biotech sector focused on psychedelics has faced significant challenges since mid-2021, with stocks of leading companies down over 75% compared to three years ago, but 2024 is expected to bring new opportunities for investors willing to take risks [1] Industry Developments - Late 2023 saw three key developments that could lead to a transformative year for the psychedelics industry, particularly in treating PTSD, which affects approximately 13 million people in the U.S. [2] - Compass Pathways reported positive early results from its phase 2 clinical trial of COMP360, a psilocybin therapy for PTSD, indicating good tolerance among patients [3] - Compass is also set to release data from a phase 3 trial for treatment-resistant depression (TRD) in summer 2024, which could serve as a significant catalyst for the company and its peers [4] Regulatory Milestones - The Multidisciplinary Association for Psychedelic Studies (MAPS) submitted a request to the FDA for approval of MDMA combined with psychotherapy for PTSD, marking a potential first for psychedelic-derived treatments [5] - The FDA is expected to decide on the priority review request by February 12, 2024, which could lead to a decision on approval within six months [6] - The approval of MDMA therapy would represent a major milestone for the industry, likely boosting share prices across clinical-stage competitors and reducing perceived risks associated with psychedelic biotech stocks [7] Investment Considerations - Investors are encouraged to consider the potential for significant derisking events in the psychedelics industry, as successful outcomes from the described catalysts could lead to increased approval rates for additional therapies [8]