Mental health issues are a growing concern in the United States. According to the National Institute of Mental Health (NIMH), nearly 20% of adults, or 43 million people, suffer from some form of mental illness annually. Conditions can range from mild states like depression and anxiety to more severe conditions like dementia, bipolar disorder, and schizophrenia. Below we will cover three pioneering biotech stocks with unique product offerings looking to address mental illness needs:
ATAI Life Sciences
When you think of drugs such as Ketamine or Psilocybin, you probably think of hippies and Woodstock, not medical treatments.
ATAI Life Sciences
ATAI
is trying to flip that narrative. The German-based company, which IPOed in mid-2021, was founded by Florian Brand, a serial tech entrepreneur who struggled with mental health issues early in life before conquering them. After seeing a close friend struggle with mental health issues before self-treating successfully with psychedelics, Brand realized that patients across the world were underserved.
The Science
According to ATAI’s website, the company’s mission is to “Pioneer the development of highly effective mental health treatments that address the unmet needs of patients.” ATAI’s pipeline includes drugs to treat anxiety, depression, schizophrenia, substance use disorder, and traumatic brain injury. Psilocybin (the hallucinogenic compound found in “magical mushrooms”) and Ketamine (a powerful anesthetic and pain reliever) are both used recreationally. However, ATAI Life Sciences is embarking on the study of these drugs and others for their potential to treat mental health issues. Proponents of the treatments suggest positive impacts on mood, emotional processing, and overall brain health.
Investor Outlook
Because ATAI treatments are in the clinical research phase, barring any drastic changes, it is too soon to invest in ATAI Life Sciences beyond a speculative bet.
Image Source: Zacks Investment Research
Picture: ATAI’s EPS estimates for the next 12 months (green line) overlayed on a price chart. ATAI is expected to be unprofitable over the next 12 months.
Like other biotech firms in clinical trials, ATAI has yet to produce an annual profit. Even so, ATAI is worth monitoring from a distance. If the firm can successfully demonstrate the merits of its treatments for mental health disorders, the rewards will be rich. ATAI counts legendary Silicon Valley investor Peter Thiel and Cathy Wood, the portfolio manager of the popular
ARK Innovation ETF
ARKK
,
as backers.Other public companies looking to roll out similar treatments include
Cybin
CYBN
,
Compass Pathways
CMPS
, Seelos Therapeutics
SEEL
,
and
Mind Medicine
MNMD
.
Biogen Inc
Contrary to most biotech stocks,
Biogen Inc
BIIB
is highly profitable and has a deep and well-established pipeline of drugs. Founded in 1978 by several leading biologists, the firm has offered treatments or solutions to some of humanity’s biggest health problems, such as neurological disorders, autoimmune disorders, and cancer. Perhaps, this is why Biogen is taking it upon themselves to offer a solution to Alzheimer’s.
Giving Alzheimer’s Patients a Glimmer of Hope
Alzheimer’s is a progressive, irreversible disorder that affects the brain’s capacity to function properly. Currently, no cure exists, and as the disease worsens, patients face the debilitating experience of slowly losing memory and the ability to think in real-time. Despite the gargantuan amount of time and effort spent to combat the most popular form of dementia, little progress has been made.
Biogen and its Japanese partner on the project
Eisai
ESALY
provided a glimmer of hope in September when they announced that patients who took their Lecanemab drug saw a notable slowdown in the disease’s progression. Biogen is currently awaiting results for fast-track approval which are set to be announced in the first few months of 2023.
Investor Outlook
Biogen’s fundamental framework provides investors with a messy picture. Though the company is highly profitable, sales and earnings growth have come to a screeching halt in recent quarters as revenue from royalties on the firm’s multiple sclerosis and other existing drugs decreased. Nevertheless, all eyes are on Lecanemab and the future. When news broke in September that Lecanemab slowed Alzheimer’s progression in study groups, shares of Biogen vaulted higher by 40% on volume 1255% above average –
Image Source: Zacks Investment Research
Pictured: BIIB vaulted 40% in September after releasing positive drug data. The stock is looking to find support at its 50-day moving average (red line).
Biogen is currently trending higher and finding support at its 50-day moving average. If the company can achieve fast -track FDA approval for the drug, the stock should continue to move higher. As is always the case with biotech stocks, investors should know their risk. FDA decisions lead to two-way risk; and when the binary risk goes against you, the results can be devastating.
Sage Therapeutics
Sage Therapeutics Inc
SAGE
is a biopharmaceutical company developing novel therapies for brain health disorders, including postpartum depression (PPD) and major depressive disorder. Though a plethora of anti-depression treatments exist today, none specifically target PPD.
Helping New Mothers Conquer Postpartum Depression
Postpartum depression is common in new mothers. During and after pregnancy, rapid hormone fluctuations put mothers at risk of the mental disorder. PPD can lead to intense feelings of inadequacy as a mother, anxiety, sadness, and fatigue. In partnership with Biogen, Sage is working on a developmental drug known as Zuranolone to treat PPD. If approved, the drug would be the first of its kind to treat PPD.
Investor Outlook
Like Biogen and ATAI, Sage’s outlook largely depends on upcoming data decisions. The company has yet to turn a profit, however, the firm’s partnership with industry leader Biogen ensures that the firm is in a stable financial position.
Image Source: Zacks Investment Research
Pictured: SAGE popped above its 200-day moving average recently.
In November, the stock retook its 200-day simple moving average, a level used by many investors to size up the longer-term trend of a stock. In a recent statement, Sage noted, “From the perspective of people living with depression, weeks matter, days matter, and the moments missed matter. We believe that with Zuranolone, if approved, we can help transform the way depression is treated.”
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