It's been a roller coaster ride for Compass Pathways ( CMPS) shares over the past two days.
Unfortunately, the coaster ran out of track and crashed to the ground by lunchtime Tuesday. The end result is a stock that broke above $60 for a brief moment in the pre-market was trading at nearly half that price by the time lunch ended for many people on the East Coast.
This morning, the company released both its quarterly report and the topline results for its phase IIb COMP360 psilocybin therapy for treatment-resistant depression (TRD). In terms of the quarterly results, no one expects much. This is still a company in research, development, and testing mode, so it should be no surprise the market focused on the topline results from its current trial more than the financial numbers.
Initially, the market responded favorable, likely driven by the headline lead "Positive topline results..." and they were positive, but they were far from perfect. That's the honest truth. But did anyone expect the first sizable trial to produce pristine results?
The larger, single 25mg does showed significant results compared to the 1mg group with lasting remission. Unfortunately, the 10mg group didn't experience statistical improvement. That was likely one reason the market faded the initial pop. The concern may have been the 12 patients that expressed suicidal thoughts or behavior. Half came from the 10mg group and an additional five from the 25mg group. The question became did the drug cause that behavior or did it simply not work for them?
What the study does show is psilocybin has the potential to help; however, it is not yet a panacea or even a standalone treatment based on these results. It also pointed to the current need for a high dose and reinforces the need for treatment centers. In short, it won't be the first line treatment any time soon.
Shares did manage the $30 support level and regain the 21-day simple moving average (SMA) by the close. It's not a pretty picture but the $30 level becomes a clear stop for holders or new buyers.
I'm still optimistic in the space.
This type of volatility is unpleasant, but also expected. All right, maybe this week's action is extreme, but that's going to continue as long as we have trials and data. Additionally, I'm looking forward to Cybin's ( CYBN) use of Kernel Flow Technology as they may be able to further the understanding on what happened or did not happen in the brains of the 12 individuals who suffered from suicidal thoughts/behavior. As much as we need data, we also need an understanding on what may or may not have worked. Self-reporting surveys don't get us completely across that line. Kernel might, though, which is why I remain high on Cybin.
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After another GME earnings blunder and change of players, I see the stock as this: pure speculation with a strong balance sheet. But I believe the company can find a way to the next level -- though it could get zapped before getting there.
I'm eyeing this biotech name as the Nasdaq 100 moves up -- again -- and small calls slip.
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