Analysts at Canaccord Genuity (TSX:CF, LSE:CF) have reiterated their ‘Buy’ rating and US$60 price target for COMPASS Pathways after the mental health care company adjusted the trial design for its COMP360 phase 3 program investigating psilocybin for treatment-resistant depression (TRD).
“We are not making any major changes to our model post-4Q22 results,” the analysts wrote in a note to clients.
“As a reminder, we include only COMP360 for TRD in our model at an unchanged 60% probability of approval,” they said. “Our peak unadjusted sales remain at $3.7 billion in 2033E in the TRD indication.”
COMPASS shares were trading up 4.3% at US$8.10 on Monday afternoon.
The analysts wrote that the key update in COMPASS’ fourth quarter 2022 results was that the company has adjusted its design for COMP360 to allow for 255 versus 378 patients while maintaining power for the 005 trial.
“Recall there are two Phase 3 pivotal trials, COMP 005 and 006,” the analysts wrote. “Pending further FDA feedback, the adjusted trial design makes sense to us.”
They noted this meant the top-line data readout for COMP 005 could come in the summer of 2024 versus the end of the year and COMP 006 could read out by mid-2025, with no change to its read-out date.
“So, we continue to acknowledge the potential for some dilution prior to having a pivotal trial readout in hand next summer,” they wrote.
“That said, we also continue to believe CMPS presents a particularly good opportunity for investors that have a strategic, longer-term focus, and would like to own shares of a bellwether in the mental health-focused psychedelic therapeutics space,” the analysts concluded.
Contact the author at emily.jarvie@proactiveinvestors.com
Follow her on Twitter @emilyjjarvie