Though UK-based pharmaceutical company Compass Pathways reached its primary endpoint from its June 23 Phase 3 trial to use synthetic psilocybin for treatment-resistant depression (TRD), investors were seemingly underwhelmed. That same day, shares plunged 46% to a record low of $2.35 a share for the biotech firm.
But Kabir Nath, CEO of Compass, defends the results of the trial, telling Healthcare Brew the team isn’t focused on share prices. The results are significant, he said, and ample bipartisan support in the Trump administration means this changes nothing about the quest for more research into psilocybin to treat certain mental health disorders.
The psychedelic healthcare market has been ramping up since June 2023 when the FDA issued new guidelines for biopharmaceutical firms interested in pursuing research on psychedelic drugs to treat psychiatric and substance use disorders. The three main drug compounds of interest were psilocybin, LSD, and MDMA.
Trial deets
Trial participants were patients with TRD—a diagnosis given after first-line treatments such as antidepressants fail two or more times to manage symptoms—and were living with multiple episodes of chronic depression for an average of three years.
“This was a population with a high-level of suicidal thinking [in the past],” Nath said.
The first of Compass’s two Phase 3 trials started with patients completing a Montgomery-Åsberg Depression Rating Scale (MADRS). This is a common way of assessing severe depression in adults through a seven-point scale response rate.
Patients were then randomized into two groups: one that received a placebo in the form of a sugar pill and the second that was given a single 25mg dose of psilocybin on the first day. Researchers checked on patients for safety the following day and again two weeks later, then administered another MADRS test six weeks after the first dose.
Study results showed that after one dose of psilocybin, patient symptoms improved with an average 3.6-point decrease in MADRS scores, which is positive from both clinical and trial perspectives.
The subsequent stock drop can be attributed to the fact that investors had their sights set on a five-point MADRS decrease, which would be a stronger finding for a new field of study, even with limited available data on placebo response.
Promise for psychedelics
Psychedelics are an effective alternative to traditional pharmaceuticals for mental health disorders, according to the American Psychological Association, because they can target serotonin receptors and forge fresh neural pathways in people with severe depression. Over the last decade in the US, the CDC reports that rates of depression have increased 60%, and 1 in 10 adults have taken medication to combat it.
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By 2031, the global psychedelics market is estimated to exceed $3.3 billion. Currently three biotechs—Compass, Jamaica-based Minerco, and Canada-based Numinus Wellness—are working on developing psilocybin-based products. Minerco and Numinus are developing raw psilocybin materials or manufacturing processes to produce pharmaceuticals while Compass is actively developing a therapeutic for TRD.
Aside from other common treatments like SSRIs, Spravato (an esketamine nasal spray) by Johnson & Johnson is another non-psilocybin psychedelic drug in the US market for TRD. It received initial FDA approval in 2019 and was approved as a standalone treatment for major depressive disorder and suicidal ideation in January.
But psychedelics have been hit hard by roadblocks to FDA approval. In August 2024, pharma company Lykos Therapeutics’s MDMA therapy to treat PTSD and other mental health disorders was denied FDA approval. According to Lykos, this came following questions about its efficacy as a new body of research and whether existing interventions already address the need for this population, Healthcare Brew previously reported.
Compass has a second Phase 3 trial underway with preliminary results expected sometime in the second half of 2026. Psilocybin doses will be administered twice at three weeks apart, and the dosages will vary between 1mg, 10mg, and 25mg.
Hope for the future
Nath is optimistic about the existing and growing bipartisan support for alternative treatments to depression, including current vocal support from Health and Human Services Secretary Robert F. Kennedy, Jr.
Lynn Marie Morski, president of the Psychedelic Medicine Association, is also optimistic about the future of psilocybin research, even if these trial results were not what investors expected.
“[Psilocybin] is being investigated for such a wide range of indications that I believe it will still eventually get FDA approval for one or more of those, and show itself as a very versatile and safe option,” she told us.
Across the field, Morski said she has her eye on psychedelic therapies like biotech MindMed’s LSD-based therapy for generalized anxiety as well studies on DMT-based treatment for TRD.