Psychedelic stocks are gaining attention as new ways to treat mental illnesses like depression and post-traumatic stress disorder (PTSD). Companies in the niche use substances like psilocybin to develop treatments that present alternatives to traditional pharmaceutical compounds. Investors are hopeful, but the road to approval is risky and drawn out. 

Compass Pathways (CMPS) just faced one of those setbacks when it ran a late‐stage (Phase 3) trial of its synthetic psilocybin drug (COMP360) in 258 adults with treatment-resistant depression. Those receiving the treatment had a 3.6-point greater reduction in symptoms versus those receiving the placebo, which met the trial’s predefined goal of at least a 3-point difference, but came up short of the 5-point gap Wall Street had hoped for. As a result, shares plunged nearly 50% on Monday, June 23.

Despite the drop, analysts remain mostly bullish. The company has another major trial underway, with results expected next year. If that data is stronger, the stock could rebound sharply. Compass is also pushing ahead in studies for PTSD. 

For investors who believe in the future of mental health innovation, this dip might be an opportunity to get in at a better price.

About CMPS Stock

Based in London, Compass Pathways is a biotechnology company focused on developing innovative treatments for mental health conditions, primarily targeting psilocybin for treatment-resistant depression (TRD).

Valued at $248 million in market cap, shares of this psychedelic drug company have plunged 54% over the past 52 weeks and are down 27% year to date, significantly underperforming the broader S&P 500 Index ($SPX).

After the haircut, CMPS is more attractively valued with a price-book ratio of 1.31x, significantly cheaper than the sector median of 2.7x. This pricing suggests CMPS may offer a good entry point relative to its peers. 

COMP360 Advances Despite Market Reaction

While COMP360 met its goal in the COMP005 trial, the modest 3.6-point improvement disappointed markets, causing a sharp stock correction. Still, Compass Pathways is gearing up for a key catalyst in 2026, its 26-week readout from two Phase 3 trials testing its psilocybin-based treatment for treatment-resistant depression (TRD). 

While earlier data showed promising six- and twelve-week effects, investors remain cautious about long-term durability and patient variability. Some fear the treatment may be too niche or selective, especially with reports of adverse events in prior trials. Still, if the results are positive, Compass could gain serious momentum toward FDA approval. 

Financial Position and Cash Runway

Compass Pathways appears to be on stable financial footing as it advances its clinical programs. In Q1 2025, the company reported $260.1 million in cash and cash equivalents. This capital base was secured through a combination of financing mechanisms, including a private investment in public equity (PIPE) deal, a loan agreement with Hercules Capital, and an established at-the-market (ATM) offering program.

With a current quarterly cash burn of approximately $49.6 million, comprising $30.9 million in research and development expenses and $18.7 million in general and administrative costs, Compass projects that its existing cash reserves will support operations through the second half of 2026. This timeline aligns with the anticipated data release from its ongoing Phase 3 COMP006 trial.

Analyst Opinions and Final Thoughts

Wall Street analysts remain confident about the company’s future growth prospects, as reflected in their consensus “Strong Buy” rating. Among the 10 analysts covering the stock, eight rate it a “Strong Buy,” one gives a “Moderate Buy,” and one rates it a “Hold.” The 12-month average price target is $16.40, implying upside potential of 483% from current levels.

Compass Pathways is still a high-risk bet, with regulatory hurdles and clinical uncertainty ahead. But for investors who believe in the future of psychedelic medicine, this dip could be an attractive entry. While caution is warranted, the upside remains compelling for those with a long-term view.