MNMD - De-Risking Psychedelics: Compass Pathways Cybin And Atai

2024-01-09 12:00:00 ET

Summary

• Critical catalysts are approaching in the psychedelic sector, with the potential for the first FDA-approved psychedelic therapy by the end of the year.
• Alex Carchidi shares why Compass Pathways, Cybin, and Atai are the most promising companies for investors in the psychedelic sector.
• Pros and cons of 4 main industry stocks, including MindMed.

Listen above or on the go via Apple Podcasts or Spotify .

Alex Carchidi updates us on the psychedelic sector and what critical catalysts are approaching (1:30). Why Compass Pathways, Cybin, and Atai make the most sense for investors at this point (15:00). Pros and cons of 4 main industry stocks, including MindMed (29:50).

Transcript

Rena Sherbill: Alex Carchidi, super happy to have you back on the show talking the psychedelic sector with us. Thanks for joining us.

Alex Carchidi : I'm really happy to be here again. I look forward to talking with you about psychedelics actually, because there's more to speak about this time than the last time, I think.

RS : Yeah, I think so too. I feel like the first one was, you know, a big hit in terms of introducing certainly is Seeking Alpha audience, but I think the broader audience to some nice analysis that not everybody's used to in the psychedelics sector. And then, yeah, I think the second time we talked, which was in July, just some, just some bummer news and not so much good stuff happening.

AC : Yeah.

RS : So, what do you see for us as you're looking at the psychedelics sector, kind of broad picture, how would you parse out what you're seeing there?

AC : So, what I'm seeing is a lot of critical catalysts are approaching. And I think perhaps by the end of this year, we will have the first psychedelic therapy approved by the FDA, potentially. So, it'll be very exciting and there's been some good progress happening on the regulatory front as well.

Probably the most important development is the MAPS Public Benefit Corporation submitted their new drug application to the FDA to see if they could commercialize MDMA for post-traumatic stress disorder. And regulators have been pretty receptive to the company's filings and their mutual discussions in the past.

And basically now, I would say the question of the minute is whether the FDA will allow MAPS to get a priority review of their submission or a standard review. If it's a priority review, that means we'll definitely have a decision on whether this first psychedelic therapy, aside from Ketamine I'm talking about, the first kind of traditional psychedelic therapy could be on the market by October, or if they don't give it, don't give the priority review, it could be a few more months.

It could potentially drag into the start of 2025, but I think the chances of them getting approved are quite high. So, that's really exciting and the interesting thing is, the way that this development has been framed is that if the FDA gives a stamp of approval, then the DEA and the other elements, the regulatory apparatus that kind of keeps psychedelics controlled and prohibited for most purposes, that will be able to change very quickly once the FDA has given the green light.

So, I think that could potentially unleash the entire sector. I think the stocks could go wild once they're, you know once one company making a traditional psychedelic therapy has a foot in the door of the market, so to speak, it's a huge, huge green light for everyone else that they have a chance of actually commercializing something and not just getting stonewalled by regulators at the end of the day.

RS : And just quickly, how do you see that developing or for whom do you see that that development most benefiting or kind of the world that it could be benefiting specifically in the sector?

AC : Well anyone developing any program based off of MDMA is going to get the biggest boost from that because it's going to be an unmistakable signal that regulators are on board with developing medicines from that basic molecular structure.

It wouldn't surprise me if companies like Cybin Inc. ( CYBN ), Atai Life Sciences N.V. ( ATAI ), and COMPASS Pathways plc ( CMPS ) also get a huge boost for their programs as well, in part because the other, if the FDA approves the MAPS application, the other thing that it will kind of ratify is this idea of doing medication with the molecule it developed along with psychological support or integration therapy is what MAPS calls it.

So that framework will kind of get the validity it needs. And that'll stimulate those companies specifically because they're pursuing therapies along that framework, a combination drug plus talking with someone who's been trained to help you through the experience and get the most out of it.

So, I think it's for those three companies. And they're the ones that, they're the most active in the psychedelic space, the most likely to succeed, and the most well-capitalized still, even though it's been a couple years of hard times for them.

The other big general insight, it's not even that big. It's that the American Medical Association approved the current procedural terminology codes for psychedelic assisted therapies. So those are now in effect. Which means that if you get treated with a psychedelic therapy, who knows exactly what the confines of that are under this coding system, but you can apply for reimbursement with your insurance now.

So, that's another big catalyst. I think it was kind of the, it was announced that this would be probably happening in July, but now it's actually taken effect. So, that's one more barrier out of the way for anyone who can commercialize a therapy to actually become profitable. So it's kind of a bit of a wonky development, but things are really proceeding basically.

And aside from that, the last thing, which I don't believe will be a major catalyst, unfortunately, yet, is in the National Defense Authorization Act for this year, which has been signed into law at this point. The federal government has directed about $10 million of funding to study MDMA and a few other molecules for treating post-traumatic stress disorder in active duty members of the armed forces.

So, I think that that was kind of something that me and many other people saw coming last year, because it was being discussed extensively. But to see it actually put into action, that shows that the government stance is really changing in really tangible ways, in financially relevant ways.

And I think probably the thing to do would be to bet on more change in that direction, more investment in research, probably for now limited to post-traumatic stress disorder in the context of the armed forces for now, but that can change.

RS : I was just wondering, I saw that come out and I also just like, you know, I love kind of more forward thinking thoughts when it comes to treating trauma. And we've seen so many good studies and kind of good data from psychedelics. What does that announcement, the NDA announcement, what psychedelics does that cover?

AC : So, it covers MDMA, psilocybin, ibogaine, 5-MeO-DMT, and then a mix of "plant medicines". I don't exactly know what that category includes, but it's certainly all the big ones, all the big psychedelics.

RS : Is there anything, like just picking apart that legislation a bit, is there anything that you wish would have been done that wasn't included? Not necessarily a psychedelic, but some kind of language or regulation around it?

And then also in terms of the regulatory picture going forward in terms of you having and the experts looking at this field, kind of having that sense, what else do you see coming down the pike?

AC : So the one thing that I wish would have been a lot different is the amount of money. $10 million to do clinical studies for very preliminary work. Even then it's a crimped budget, especially when you're thinking about a huge organization like the American armed forces, $10 million is not going to go far at all. So, I wish that they had appropriated more money, maybe next time around, or a couple years down the line, that'll change.

Now, looking forward, as far as what the next legislative steps are going to be that I'm really not so sure of because it took a considerable amount of finagling and bipartisan cooperation to get this money appropriated for this next year. And it is not as though there is a massive momentum where people are calling up the representatives all the time saying, hey, you got to legalize psychedelic medicines, or you have to, you know, make sure that more money is funneled into these causes. I don't think that that is really there yet.

And there is some lobbying work going on by MAPS, as well as others. And that's all well and good. But for the near term, I kind of think that the legislation is going to be led by what companies are accomplishing and what the FDA is agreeing to.

And then perhaps after that, once there's a foot in the door, then something more formal on the legislative front can come along. But hopefully more money. Hopefully more money. I think that's probably the most realistic next step. I don't know when to expect that. It might be a year, it might be two years or potentially longer.

RS : Do you think that money comes in concert with the MDMA news?

AC : I'm sure. Yes. Yes. There's certainly, as I said, kind of like a changing of perspective to be more accepting of going down, you know, the road of psychedelics to see, okay, what value is there for all these various conditions that we need to treat?

I don't necessarily, I don't get the sense that there's any big advocate for psychedelics in Congress. Maybe there is someone that I just don't know of, but I don't really see anyone, kind of taking up the banner there. And I wouldn't expect it just yet.

Once we have some approved medicines on the market, then I think there's a constituency there that the politicians will respond to. But for now, it's not quite there yet. So, it's still cooking, but I do think that things are moving in the right direction and quite stridently now.

RS : Do you think it's, I mean, I know that these are kind of, I feel like I say this all the time talking about the cannabis and psychedelic sectors, but it's just true. There's a lot of crystal ball questions, but I do think it behooves us both as listeners and as, even, you know, people answering the question, I think it helps us all rethink things along the way.

Do you think it's a series of consecutive events that really unleashes capital into the space like institutional investors at all? Do you feel like it's one big thing? Like how do you see it, kind of really being unleashed or is it a gradual thing that a couple years down the road will be like, wow, this is really growing, but it's not necessarily one moment that we're, you know, is this huge inflection point?

AC : Yeah, that's a good question. I think the inflection point is probably going to be the way the things go. But it is not as though we're going to wake up at one point a year and a half from now, and then we're going to be able to access a psychedelic therapy on every corner or anything like that.

There's a lot of infrastructure that needs to be built out for most of the late stage programs right now, things like treatment centers or therapy centers, these can be co-located in clinics that already exist. But my point is that even once this question of, can these drugs become approved for sale actually in a legal way, even when that is resolved, that's the big catalyst for the stocks.

After that, the build out in terms of actually being able to get people to access those therapies, that's much less exciting, but it all happens after that inflection point, right? Because once people can spend money on this, once their insurance company will reimburse them for it, it's really a matter of can you access the treatment? And that's going to take longer.

But for investors, I think that's kind of like the, that's the long-term picture , right? In the near term, we're almost going, almost certainly going to see a little bit more consolidation in the space over the next year, simply because a few of the companies are running low on cash now.

But interestingly, compared to July, when we last spoke , the cash position of many of these companies improved because they're able to secure investment more easily now that they're approaching the market. So I think that kind of supports the breakthrough catalyst event or, you know, sea change event where, like I said, once there's a medicine on the market, it really, it validates everything. It creates new money flowing in even before that.

And I think it'll be very different afterward. And then we're, you know, we're not even thinking about what comes after that because it's not as though there's going to be a million different advanced psychedelic therapy products out at the same time.

There's going to be one and then a year later, you know, another one and so on and so on. So, I would say that the next year and a half is probably the most exciting time to be investing your money in the space. Aside from the very, very early days when it was first shown to be legal that you could research this stuff in a public company context at all. Does that make sense?

RS : Yeah, very much so. Do you see it being because it's such a protracted or it's likely to be such a protracted process, especially to success. Do you see it being only, I mean, you talked about this a bit about this last time in terms of diversifying your approach to psychedelic investing, but do you see it being just a number, let's say a handful, let's say half a handful, three quarters of a handful of, in terms of successful players that are likely to be successful in the coming, let's say three years?

AC : Yeah, I mean, for me, it's kind of the same click as always. It's COMPASS Pathways, Cybin, and Atai. They're the ones that have the money to do it. They're the ones that have the good mid-stage and even late-stage clinical trial data. And they've got multiple programs in their pipeline. And they also have all sorts of other things that really make them the leaders in the space.

And I think their lead has actually increased over time because other companies have ran out of money. They haven't been able to show the good results to their investors. So then eventually people dump the stock and they can't issue any more stock to raise more money because no one will take it.

So, I think that those three, those three leaders are the ones that have the right combination of the science works, they have momentum, they're close enough to wrapping up the clinical trials for their lead programs that they can credibly bring a drug to the market. And that means they can access debt financing way more easily. That means that their stock is actually worth something. So if they do need to they can print more cash by issuing more stock and people will buy it.

And then there's also the fact that I don't want to say they have, those three companies have monopoly on the people in the psychedelic space, but certainly they have a lion's portion of the most influential researchers, of the most dynamic management, and just the best staff overall.

Not only that, but especially in the context of COMPASS, they have access to all the good therapy staff and the people who they have making their protocols for the psychological support portion of their lead program, they have the best people for that. They have some really prestigious researchers, leaders in the space that they're in.

And all of those things just contribute to the lead getting larger and larger and larger. The smaller companies can't afford those top quality people. They can't afford to do the fancy technology development anymore, and they can't afford to do the big and complicated clinical trials anymore either.

So if I was going to advise someone on how to invest in psychedelic space today, it would still be those three companies: COMPASS, Cybin, and Atai. And if I had to pick only one, at the moment, it would be COMPASS, because they are - it seems to me almost inevitable - I'm probably going to have to eat those words at some point - but it seems to me that they have an incredibly good chance of commercializing their therapy and they have plenty of money.

They had a fair amount of money before they just raised cash in a private placement very recently. So now they're stuffed. They're good. They're set for a few years now.

And then Atai would probably be the second option because their cash position is also incredibly strong. They think it will last them into 2026. So for a biotech company, hey, you got two years of cash, great. That's - it doesn't get much better than that until you get a product out the door.

And I wish Cybin had cash, but the research is so good that it's, once again, no one is really keeping up to that same extent in those, you know, in major depressive disorder, generalized anxiety disorder. They're the leader there.

So I would focus on those three companies. They are very risky, even now, because they're early stage biotech companies.

The big story I would say of the tail end of last year is de-risking. De-risking in the sense that now it doesn't sound as crazy that regulators will actually approve one of these medicines. And de-risking in the sense that people are willing to invest and to fund these companies.

So, they are still quite risky though, right? There's always the chance that their late stage clinical trial data will have some undesirable nuance that the earlier stages did not quite capture. I don't anticipate right now on getting any bad surprises in terms of safety or controllability of any of the lead programs for COMPASS, Cybin, or Atai.

Everything that I've seen, including the most recent data updates on other various programs. We're talking about several different molecules for several different conditions at this point. And yet there's still no major red flag safety signals there.

So I would say invest in that basket. Understand that it's quite risky. The risks are decreasing. And throughout the rest of this year, I think we'll see, as they inch closer to the market, there will be less upside, the longer that people wait to invest.

So that's what I think about that basically. But there's a tremendous amount going on and it's almost all, you know, these companies are reporting lots of wins and really not so many setbacks that, as far as I can tell.

RS : And you say, less upside as time goes on because of obvious reasons that it'll match more with fundamental - the price will match with their fundamental pictures?

AC : Yes.

RS : Okay. The first time you were on, if I'm not mistaken, you were most bullish on Cybin. Is that, am I remembering that correctly?

AC : Yes, I think that's accurate.

RS : So, would you say that Cybin , the data didn't come through in the way or in the timing that you thought it might, or COMPASS just kind of surpassed your expectations? How would you articulate that, that change there that happened?

AC : Well, the thing about COMPASS is that they were always a little bit further ahead to my knowledge. And so, it's not as though my appreciation of Cybin has dropped. I'm still quite confident in the programs they have going, especially their major depressive disorder program, which is starting Phase 3 early this year, by the way. The catch is kind of, it really is about the amount of money that they have in the bank relative to their expenses for a year.

Sometimes, for whatever reason, the market or investors don't really notice when a company has good data. And sometimes they do. So, in the case of COMPASS, I think there's a lot of media attention on their successes. Cybin and Atai, there's less attention and they have been producing good data. I haven't seen as much of the, kind of advanced technology development that Cybin was doing. I haven't seen so much about that from them recently, but I believe they're still working on it. So, I think that'll continue to be an advantage for them. Does that answer your question?

RS : Yeah, I think it does. Do you think Peter Thiel being invested has anything to do with it in terms of like the press coverage that they get? Do you think that helps both Atai and COMPASS? Do you think that, because also I know, I remember with Cybin, their CEO, just in terms of attracting, I guess, attractive capital or capital at attractive rates, that was sort of one of his compelling points. Doug Drysdale, the CEO, in terms of being in the public marketplace for a while. Do those things matter as much as they might seem to in the headline game?

AC : That's a good question. And the answer, in my opinion, is that it depends. So, it depends on what phase the company is in, what its profile is in, how good their science actually is. So, to have someone super influential that can connect your company to their correct resources, that's a huge advantage, right? And yet these companies have kind of had that access for a good while now.

So, as long as the value decreases there, it's just that, investors kind of price in their access to having a powerful ally on their side. And then it's kind of old news, unless there's some way that this influential figure can give a nudge at the right moment.

I've not actually seen that happening. Then again, I don't really pay too close attention to Peter Thiel specifically, so I don't know, maybe he's a big advocate in some way that I just have not picked up on.

Another thing is that right before a critical catalyst like an approval or some kind of interaction with the FDA, or even just a big clinical trial readout late stage, having someone powerful give, you know, hype, just contribute a little bit of hype to kind of alert people to, oh, hey, this company is doing something really important and, oh, how convenient. There's going to be new information released on it. That can be decisive, but I haven't seen that happen yet, right?

So, the answer is, it depends. I think as far as leadership goes, Drysdale is, in my opinion, the most effective, most knowledgeable, deepest background overall. Not to say that anyone else is bad, but he really seems to have the full biotechnology industry perspective and is employing it very effectively in Cybin. So, I don't know. We will see exactly how these high profile people who are not directly involved in the day-to-day are able to sway the course of the stock price or the course of the company.

I think doing fundraising behind the scenes right now would be probably a place where that value would show itself. And we wouldn't necessarily be able to know if that was happening.

RS : In terms of the consolidation that you spoke of, which I think goes a little bit hand in hand with having fresh powder to spend on distressed assets, depending on the, do you feel that these companies are going to take advantage of that? And do you think it's wise for them to, or what's your sense of how they're looking at the consolidating, kind of these other companies?

AC : So, I've not seen any of these companies specifically mention that they're cruising for acquisitions. However, if they have more than two years of cash in their pocket, I can't imagine that they would not be looking.

And I think at this point with, for example, COMPASS, Cybin, Atai, even Mind at this point, because they have a little bit more money than they did before. They could be limited by the attractive assets that are out there that they think would make sense to purchase for themselves.

I think technologies that would make their drug development process a little bit better, those are at a premium right now. And in fact, COMPASS is, you know, exploring AI to see how it could help them evaluate the effectiveness of their therapies in clinical trials. So acquisitions, potentially and tools like that, like AI plays to improve the drug development process, excuse me, very popular in biotech and pharma right now to be talking about what you're doing with AI to fail less in your clinical trials and to spend less preclinically.

So I wouldn't rule out acquisition of like, you know, small AI company in biotech; wouldn't rule out acquisition of pharmaceutical assets. In my opinion, probably the preclinical assets would be the place to look at the moment. But the gist of it is that if they have enough money, they're definitely looking. The question is, are they finding what they want? And how could it improve what they're trying to do?

I don't think any mergers are on the books. And also, I don't believe that big pharma is so interested in trying to buy up any of these, kind of discounted assets or cheap small biotech companies that are, kind of, you know, they've had their shot and now they're struggling.

I don't think that there's so much desire for big pharma to be picking those up at the moment, at least, perhaps that will change, but not for now, which I think that's kind of a continuation of the same trend as before where big pharma is mostly on the sidelines.

RS : Yeah. It's interesting. Julian Lin has been on the podcast talking about the cannabis sector and how, you know, the M&A that's been done there has not, has, has mostly not led to, you know, the sum being greater than the parts. There's a lot of similarities, I think, in terms of, you know, also the big players being shy, especially once one or two have come in and it hasn't gone especially well. Can we get into kind of those three main companies and maybe throw in MindMed in there as well in terms of just dissecting them and listing the pros and cons and what investors should be aware of?

AC : Yeah, sure. So, I think I'll start from the riskiest, which is MindMed. So, pros and cons of Mind Medicine (MindMed) Inc. ( MNMD ). I think the thing to remember about MindMed is that it's kind of embroiled in a, I don't know if I would call it a governance dispute, but the management situation is what I would describe as messy. With that being said, over the last six months or so, they've been able to sort out their cash problem at least. So they have more than a year of cash in their hand.

And if they made some cuts, I think they could stretch it to two and a half years or so, which is really good news, which means it's a lot less riskier than it was six months ago.

That being said, I can't recommend that someone invest in a company where the management team is, kind of in disarray. There's some dispute with a big investor and their clinical trial data has not been, you know, it hasn't been home runs, but more than that, they're just, they're behind. So, they are still what could count as a leader in the space, but they're not on the A list. I would say that they're on the C list.

So I would try to probably avoid them unless you're really a keen investor in like a turnaround situation and you can really get down to brass tacks about, are they going to be able to kind of get over their internal issues to eventually get drug out the door. I don't really know either way.

As a former shareholder, I'm kind of over it. But that's just me. And as far as what their advantage is/was, I'm not sure that there is a serious advantage that they have anymore and really any category. Perhaps a few years ago, you could say that technology was one of their strong points, as well as just ownership of some valuable IP, but that's neither here nor there.

So, after that, I would say Cybin is the next riskiest. And really the thing about the risk associated with Cybin is that it's their cash. They don't have much cash and they've made a lot of cuts. They've scaled down a lot and they've prioritized their pipeline, all good moves that were necessary. And they've even raised a little bit of money, but they're still short relative to their trailing 12-month operating expenses.

So, they will need to raise more money. This entails the risk of getting your shares diluted if you invest. With that being said, their clinical trial data is consistently quite good. And although we've not heard as much about it, their ownership of key enabling technologies and their development of key enabling technologies, that is a huge, huge, huge, huge, they're the leader in that area by far. And by enabling technologies in this case, I'm talking about devices that are kind of like headsets that would enable them to visualize in a somewhat granular way what is going on in a person's brain as they are getting treated with their various programs and for various indications.

I believe they were developing such a technology in collaboration with this other company going back a couple of years. So, I assume that project has come along quite a bit and I assume that it's rendering all sorts of incredibly valuable data for them. And so in that sense, it's, I would say Cybin is the riskiest of the three leading companies, the A-list leaders. Nonetheless, it has so much value that I have to imagine between the valuable technology that they have and their advanced clinical trial programs. And their molecules clearly work. Their protocol clearly works and it's safe based on the data that's been released so far.

And they have great leadership, great people. I think that they will be able to figure out this cash crunch and they will be able to continue forward, I think. But if you're the kind of person that is stashing away money for your retirement, very carefully trying to build up your nest egg, none of these stocks are appropriate at all. They have not performed well whatsoever over the last year or even longer than that. And Cybin is no exception.

Sorry, I'm actually looking at the stock chart right now. Their stock has gained 26% over the last 12 months. So, it has actually done well, but if you were a shareholder three years ago, you're still down 74%. So that's the kind of risk that we're talking about here. Sorry, do you have any questions?

RS : Incidentally, do you have a, kind of a broad strategy around getting into psychedelic names? Like, do you bite a little bit at a time and see where it goes and then take on more or sell or what's your strategy or is it very specific to each of the stocks?

AC : I usually try to do investing in advance of a catalyst. So, the basic strategy is buy the rumor, but you don't have to sell the news necessarily. And by buying the rumor, I mean, so these companies will announce roughly when their clinical trials are going to deliver an update or conclude, or, you know, they also report when they have a meeting with regulators about something.

So, knowing those dates, you can look for an opportunity to buy shares. And then ideally, after those catalysts have passed, you're a little bit ahead, and then you can kind of do the same maneuver again if you were to wish, or you can dollar cost average, which for these companies for now, I think that's a perfectly valid strategy as well. Just because the biggest catalysts are, you know, approaching, but there are ways off still. And I don't think that there's any big advantage to making a huge lump sum basically.

And they're very risky. There's not been any huge clinical trial wipeouts or anything. But for example, Atai, they've had the occasional stumble, they've terminated a couple of programs, I think. And yet, if you really are approaching as an investor, you have no previous position in any of these companies, I think it really pays to kind of look at any bad data that they report.

That could be an opportunity to start your position in this company, assuming that the bad data is not in their lead program, or if it isn't their lead program, it's something that could be worked around potentially, or, you know, something that that makes you think, oh, this company will survive. Bigger pipeline, bigger chance of survival.

Some of these smaller companies have two programs. So, if one of them reports bad data, especially any safety problem, then that company's going away. So most likely, right? For the bigger ones, that's less of a problem. So for the three leaders, look for the opportunity either before a catalyst that could be favorable or after a catalyst, that is unfavorable. But yeah, and for a company like Atai, it has a very interesting model where it has these semi-independent units that have their own, usually one drug in the pipeline or a few, maybe two. And that model to me is interesting. And they have enough money to distribute their resources appropriately.

I haven't seen the big value from doing things in that way yet. But I believe that eventually, I will see that. I think that eventually Atai is, kind of a little bit more decentralized approach to doing things is going to be one of their big advantages. But that's more of a five year term thing than a one year term thing as well.

And I think that Angermayer at Atai is a capstone player in the psychedelics industry as well. Capstone participant, whether just even touching a project that is something or touching a company that makes that company have a much higher stature.

So of course Atai's fate is intertwined with COMPASS Pathways because they have an equity investment there. So, once again, moving kind of down the list, sorry, the risk ladder from riskier company to less risky, COMPASS is the least risky. It's the closest to commercialization for a public company.

MAPS is a nonprofit. It's a public benefit corporation. So I often don't even talk about them in the context of investment, even though they're kind of the industry's leader. If MAPS commercializes their MDMA for PTSD, there's no way that investors can get any exposure to that specifically. The way that you get exposure is by investing in a company like COMPASS, who is kind of next in line, their projects are inching towards completion.

They seem to have good regulatory buy-in. They seem to have the right people, right resources, good strategic plan, not trying to hype things up, have a good messaging, good communications, very upfront with all their data. That's the least risky play that there is. And a lot of it has to do with just how much money they have in the bank relative to what their expenses are and what they need to do in the near term.

So, I had to pick only one it would probably right now be COMPASS, just because risks are decreasing for that company at this moment. The big catalysts coming up are going to be Phase 3. Those tend to be powerful catalysts in the sense that the stock price can move quite a bit, but also a lot of the big problems that can happen in the clinical trial process have already, kind of been investigated to say, okay, is there going to be a safety concern with their therapy?

Well, no, because they've built this entire system of psychological support and treatment centers and all this other infrastructure, as well as work in the laboratory to refine their molecule and create delivery mechanism that is controllable. So they're not going to be having, most likely, right? They're not going to be having safety concerns that pop up really late in the game. Those can be devastating. So that is largely de-risked.

The catalysts that are coming up, they're late stage catalysts. Most of the safety concerns have been controlled, addressed, the data has looked great. In terms of their efficacy data, it has also been consistently pretty darn good without any major holes or gaps that you could say, oh, this might be a problem, might not be effective for XYZ, ABC.

There's not really those loose ends as it seems right now. Of course, we will need to see the final data to really make sure. We'll need to see their Phase 3 data from their main projects before we can really say, oh, yes, of course, this is going to go to the market. But all the preliminary data and all the data leading up to this point looks quite good.

And most recently they reported, I think I mentioned this earlier, but they reported Phase 2 data for their COMP360 therapy for post-traumatic stress disorder. And that was just a really just an update to say, oh, okay, people are, they're doing okay when they're on this medicine. They're not having extreme reactions to it. They're not having extreme safety concerns.

And of course the efficacy, it's impressive in the sense that nothing else has been able to accomplish this level of relief for this particular population of patients. So in my opinion, it's the single best bet.

RS : I know you're a busy guy. I really appreciate you sharing so many insights in a sector that really does not have a lot of insights shared around it, especially cogent and intelligent ones.

I'm curious if you feel like we left anything out that you would share with listeners and also I know you're a biotech guy . If you don't have anything or in addition to anything that you left out, I'm just curious and I imagine some people listening are as well, what you're maybe most excited about or what has you most impassioned these days, just looking at the sector out of curiosity?

AC : So, in biotech, the thing that I'm the most excited about right now is new gene therapies, new gene editing therapies. That will not make its way to the psychedelics industry for quite some time, I think.

As far as what I have not yet covered, I think we covered pretty much everything major that has happened recently. This is going to be a big year. This is probably, this could be the year where psychedelics are really able to break through as a group of stocks and also as like a therapy concept that is legal to administer. And also there's a product that you purchase or protocol that you can license to actually do to treat people.

I think by the end of the year, we might almost be there, if not already there. So, it's very exciting. I'm very pleased to see that things are developing in the right direction. Just to tie things back to where we started, I have been very pleasantly surprised at how quickly the legislature and also regulators and also just, you know, the DEA among other agencies, I'm very impressed with how quickly they seem to be reorienting in light of these new realities where we have the clinical trial data to say that these therapies could be amazing.

They could be huge and they could help so many people. And it's great to see that the government is being responsive to that data finally and moving quite quickly. So, I'm very optimistic, very different picture than when we last spoke when things were looking very gloomy.

RS : Just in time for a bright new year, we'll take that optimism. What has you, like in a line or two, what has you most passionate about gene splicing?

AC : Well, it's the potential to help people with really cool scientific way of doing that. I mean, some of the programs that are in early phase clinical trials right now are correcting hereditary genetic diseases that people have and curing them permanently.

And then of course there's all these gene therapies that were just launched by Vertex Pharmaceuticals Incorporated ( VRTX ) in collaboration with CRISPR Therapeutics AG ( CRSP ), and bluebird bio, Inc. ( BLUE ) also launched their therapies for beta-thalassemia and sickle cell disease, I think still waiting on regulatory approval for beta-thalassemia program. But basically it's super exciting because it's a gene therapy that enables people who have a hereditary disease to no longer be affected by that.

It is not as though they're editing the patient's genes directly just to make that clear. There's a different scientific process that they use for that gene therapy, but soon enough they will be able to directly edit the genes in the living people to correct the in-born genetic issues. And that is, you know, that's man's mastery over nature. And to me, that's the most exciting thing because it improves human life at the end of the day.

RS : Yeah. No big deal. Just some small stuff that's been worked on. No major implications. I wouldn't worry too much. Yeah. It's wild. It's wild what's happening out there. You're at the forefront of it. We should get you on Talking Biotech. Well, I'll talk to you, but we should get you on talking biotech on Investing Experts .

AC : Yeah, I'd love to.

RS : Awesome, awesome. Because it's really fascinating and to have somebody fascinated by it, I feel like it makes it even more fascinating.

AC : Yes.

RS : Alex, appreciate you very much. Appreciate you sharing so much insight and analysis with myself and with our community of listeners. Appreciate it and here's to next time.

AC : Of course. Happy any time. Thank you so much for having me on. I really enjoy talking about this stuff. I find it super interesting.

For further details see:

De-Risking Psychedelics: Compass Pathways, Cybin And Atai