Second Half of 2023 Is Catalyst Rich for This Biopharma Co.

Source: Patrick Trucchio 07/19/2023

The firm continues advancing its lead drug candidates, including those for anxiety and treatment-resistant depression, noted an H.C. Wainwright & Co. report.

Biopharma company atai Life Sciences NV (ATAI:NASDAQ) has several possible stock-moving events slated to happen in H2/23, reported H.C. Wainwright & Co. analyst Patrick Trucchio in a July 10 research note.

In conjunction with H.C. Wainwright's recently held fourth annual Virtual Neuropsychiatry Conference, atai executives discussed their lead drug candidates for depression and anxiety, and mental health key opinion leaders shared their related insights.

"We have come away from these discussions with increased confidence in several of atai's lead compounds," Trucchio wrote. "Ahead of the next updates on these programs and others expected over the next year, we reiterate our Buy rating and $20 [per share] price target on the company's shares."

880% estimated gain

Now, Germany-headquartered atai is trading at about $2.04 per share, Trucchio noted. The difference between the target and current share prices implies a large potential return, of 880%.

Depression trial expanded

Trucchio provided updates on two of atai's lead drug candidates.

One is VLS-01, a form of DMT, or N,N-dimethyltryptamine, and a psychedelic agent for treatment-resistant depression. The company just completed parts 1 and 2 of an ongoing Phase 1 open-label, single-ascending dose trial assessing VLS-01 in healthy adults, noted Trucchio. In both, patients tolerated VLS-01 well and did not experience any dose-limiting toxicities. VLS-01's safety profile was shown to be favorable.

The biopharma is adding a part 3 to assess additional doses. More data from the VLS-01 program are expected to be released in Q3/23.

Also for treatment-resistant depression, COMPASS Pathways is developing COMP360, a psilocybin therapeutic, in which atai holds a 22.4% interest. COMP360 is further along than VLS-01, in Phase 3 versus Phase 1, and has been discussed with the U.S. Food & Drug Administration (FDA) for about seven years.

"The COMP360 and VLS-01 development programs appear largely consistent with FDA draft guidance on psychedelic drug development issued on June 23, in our view," Trucchio commented.

Anxiety drug progressing

Another of atai's lead drug candidates is GRX-917, or deuterated etifoxine, for generalized anxiety disorder. It is expected the biopharma will advance this program to a Phase 2 trial, a potential stock-moving event, based on positive and promising results of the completed Phase 1 study.

"Broadly, the early stage data appear supportive of the therapeutic hypothesis of GRX-917, in our view," Trucchio wrote.

H.C. Wainwright estimates that if approved, GRX-917 at its peak, could generate at least $3 billion in annual revenues, not adjusted for risk, and could be worth $7 per share, adjusted for risk.

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H.C. Wainwright & Co. Disclosures for Atai Life Sciences Company Update, July 10, 2023.

Investment Banking Services include, but are not limited to, acting as a manager/co-manager in the underwriting or placement of securities, acting as financial advisor, and/or providing corporate finance or capital markets-related services to a company or one of its affiliates or subsidiaries within the past 12 months.

I, Patrick R. Trucchio, CFA , certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.
None of the research analysts or the research analyst’s household has a financial interest in the securities of Atai Life Sciences N.V. and COMPASS Pathways Plc (including, without limitation, any option, right, warrant, future, long or short position).
As of June 30, 2023 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Atai Life Sciences N.V. and COMPASS Pathways Plc.
Neither the research analyst nor the Firm knows or has reason to know of any other material conflict of interest at the time of publication of this research report.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.
The firm or its affiliates received compensation from COMPASS Pathways Plc for non-investment banking services in the previous 12 months.
The Firm or its affiliates did not receive compensation from Atai Life Sciences N.V. and COMPASS Pathways Plc for investment banking services within twelve months before, but will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
The Firm does not make a market in Atai Life Sciences N.V. and COMPASS Pathways Plc as of the date of this research report.
The securities of the company discussed in this report may be unsuitable for investors depending on their specific investment objectives and financial position. Past performance is no guarantee of future results. This report is offered for informational purposes only, and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such would be prohibited. This research report is not intended to provide tax advice or to be used to provide tax advice to any person.
H.C. Wainwright & Co., LLC’s and its affiliates’ salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies that reflect opinions that are contrary to the opinions expressed in this research report.
H.C. Wainwright & Co., LLC and its affiliates, officers, directors, and employees, excluding its analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives (including options and warrants) thereof of covered companies referred to in this research report.
The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data on the company, industry or security discussed in the report. All opinions and estimates included in this report constitute the analyst’s judgment as of the date of this report and are subject to change without notice.
Securities and other financial instruments discussed in this research report: may lose value; are not insured by the Federal Deposit Insurance Corporation; and are subject to investment risks, including possible loss of the principal amount invested.

( Companies Mentioned: ATAI:NASDAQ, )

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