Jefferies Rates Compass Pathways Stock as Buy on Promising Depression Drug

Jefferies Initiates Coverage#

Jefferies has started coverage on Compass Pathways (NASDAQ:CMPS), giving the stock a buy rating and setting a price target of $18.00. Currently, the stock trades at $9.01, indicating a potential upside of nearly 100% based on the analyst's target. Over the past year, CMPS shares have surged by 115%, with a notable 36% increase in the last six months.

COMP360: A Potential Breakthrough Treatment#

The focus of Jefferies' optimism is COMP360, an oral psilocybin treatment that could become the first psychedelic therapy approved for treatment-resistant depression by the end of 2026. This condition affects over 4 million patients in the U.S. COMP360 has received FDA breakthrough designation, which can expedite its approval process. The treatment is expected to launch in early 2027.

Comparison with Existing Treatments#

Currently, Spravato is the only other approved therapy for treatment-resistant depression. It requires patients to stay at clinics for two hours per session due to its side effects. In contrast, COMP360 involves a six-hour hallucinogenic session but allows for a less frequent dosing schedule of four to six times a year, compared to Spravato's potential 52 sessions annually.

Regulatory Developments and Analyst Ratings#

Recently, the FDA granted Compass Pathways a rolling New Drug Application (NDA) review for COMP360. This includes participation in the FDA’s Commissioner’s National Priority Voucher program, which aims to speed up the review process. Following these developments, Morgan Stanley reiterated an Overweight rating with a $16.00 price target, while Oppenheimer set a $20.00 target. TD Cowen also maintained a Buy rating with a $29.00 target, highlighting the positive implications of the FDA's actions on Compass Pathways’ future.