Psychedelics stocks jump on Trump executive order easing FDA restrictions
Trump signed an executive order to expedite research and access to psychedelics used outside the U.S. to treat post-traumatic stress disorder / Photo: whitehouse.gov
Psychedelic drug developers’ shares jumped at least 15% in early trading on Monday, Seeking Alpha reports. The move followed an executive order signed by U.S. President Trump aimed at accelerating research and expanding patient access to psychedelics for the treatment of post-traumatic stress disorder. On Wall Street, the move is being described as a structural turning point for the sector.
Details
UK-based Compass Pathways, which has a market capitalization of about $640 million on Nasdaq, saw its American depositary receipts rise more than 27% to $8.50 per ADR, the highest level since early April 2024.
Shares of U.S. biotech AtaiBeckley, with a market capitalization of less than $1.5 billion, gained nearly 18% to $4.74 apiece, the highest level in almost six months.
Definium Therapeutics, which focuses on therapies for neuropsychiatric disorders, rose about 17% to $26.45 per share, the highest level since late 2021. Its market capitalization stood at about $2.3 billion at the close on Friday.
Ireland-based GH Research, with a market capitalization of $1.1 billion, climbed just under 17% to $21.40 per share on the Nasdaq. The stock last traded at higher levels in late 2022.
Canadian biopharmaceutical company Cybin, with a market capitalization of $1.4 billion on the Nasdaq, rose nearly 15% to $6.30 per share, the highest level since early March.
Context
On Saturday, Trump signed an executive order aimed at accelerating research and expanding access to psychedelics intended to treat PTSD but not currently used in the U.S., Bloomberg reported. “Today’s order will ensure that people suffering from debilitating symptoms might finally have a chance to reclaim their lives and lead a happier life,” Trump said.
Under the order, the U.S. regulator, the Food and Drug Administration, must develop a mechanism allowing patients to access experimental psychedelics before they are approved in the country. This includes drugs based on ibogaine, a psychedelic compound extracted from the iboga plant in Africa and used to treat depression, anxiety, and PTSD in military veterans, according to Bloomberg. The hallucinogen is currently classified as a Schedule I controlled substance and is prohibited for use in the U.S., Bloomberg noted. The executive order also provides for $50 million in federal funding for ibogaine research.
The order will remove legal barriers preventing American researchers, scientists, physicians, and clinicians from properly studying psychedelic drugs, U.S. Health Secretary Robert F. Kennedy Jr. said. He added that it was “disturbing” to him and Trump that U.S. veterans have to travel to Mexico and other countries to experiment with such treatments.
CNBC reported that Trump was joined in the Oval Office by top health officials, as well as podcaster Joe Rogan and former serviceman Marcus Luttrell, whose memoir about a mission in Afghanistan formed the basis of the film Lone Survivor. Rogan said he texted Trump information about ibogaine, and the president replied: “Sounds great. Do you want FDA approval? Let’s do it.”
The order also directs the regulator to issue national priority vouchers for psychedelics. The U.S. introduced these vouchers in 2025 to accelerate approvals for drugs considered critical to the country. The regulator will issue them for three psychedelics next week, CNBC wrote, calling it the first time such fast-tracking has been offered for psychedelics. The report also noted that the FDA is taking steps to prepare for the first-ever human clinical trials of ibogaine in the U.S.
Compass Pathways said it is already “actively working” with the FDA on submitting an application for approval of its psychedelic therapy, which recently completed its final stage of clinical trials.
What analysts say
Oppenheimer analyst Jay Olson said Trump’s order “represents a structural inflection for the US psychedelics sector by facilitating research, regulatory timelines, and patient access, which reinforces our positive outlook,” Bloomberg reported. Olson remains bullish on AtaiBeckley, Compass Pathways, and Definium Therapeutics.
Jefferies analyst Andrew Tsai said that with alignment across multiple executive branches, including the administration, the Department of Health and Human Services, the FDA, and the Department of Veterans Affairs, “investor mindshare should rise meaningfully ahead of pot’l approvals in 2027-2030,” Seeking Alpha reported. Tsai added: “The path to commercialization could be even faster now.”
RBC analyst Brian Abrahams said the order “accelerates psychedelics as key next wave of mental health treatments,” according to Seeking Alpha.
