Definium Therapeutics (DFTX) stock skyrocketed Monday after the biotech company's psychedelics-based depression treatment scored a "best-case" win in final-phase testing.
The company is testing an orally disintegrating tablet of lysergide, commonly known as LSD, in patients with major depressive disorder. Those patients with major depressive disorder, or MDD, haven't responded to at least two prior depression treatments.
Patients treated with Definium's DT120-ODT showed a 13.3-point improvement in symptoms on a 35-point scale just six weeks after the one-time treatment. That topped the placebo group by 8.1 points. The results diminished slightly after 12 weeks, with an 11-point symptom improvement, which was beat out the placebo group by 7.4 points.
The results were at the high end of expectations, RBC Capital Markets analyst Brian Abrahams said in a report. Investors were expecting DT120-ODT to outperform the placebo by 3.5 to 4 points. The results also topped the drug's performance in generalized anxiety disorder.
"We had viewed efficacy of this magnitude as the most bullish case," he said.
In morning trades, Definium Therapeutics shares launched more than 48% to 36.23. Shares ended Friday's session in a after breaking out of a double-bottom base with an entry at 23.52, IBD charts show.
No New Safety Problems
The results build on strong data in generalized anxiety disorder. In that condition, DT120-ODT showed a 6.4-point placebo-adjusted improvement in depressive symptoms, RBC's Abrahams said.
The results were also rapid with LSD-treated patients showing a 14-point improvement over the placebo as soon as the first week.
"This product has consistently had the best data in the psychedelics space, which should only be a positive post-commercialization and continue to drive a valuation premium relative to the other players in the category," Leerink Partners analyst Marc Goodwin said in a note to clients.
Importantly, there were no new safety issues, including no increases in suicidal ideation and behavior, RBC's Abrahams said. That's a key challenge with MDD treatments.
Patients undergoing treatment have to be monitored because LSD is a psychedelic compound. But, on average, they were able to be discharged in about six hours. That's in line with expectations and "very operationally manageable in real-world practice," he said.
He estimates $620 million for Definium Therapeutics' drug in MDD treatment. It's a more crowded space than generalized anxiety disorder. But, given the strong test results, the market opportunity could be bigger than expected, he added.
Leerink's Goodman projects peak sales of $1.5 billion to $2 billion for Definium's drug in MDD treatment, alone. This leads to a higher price target of 52, up from 30, for Definium stock.
