Three biotechs to invest in now: LSD therapy, competition with the leader, first sales

Late spring and early summer is the busiest season in biotech. In May and June, major industry conferences and investor meetings take place, at which companies reveal the results of their drug research. For small-cap biotechs, such an event is a moment of truth: one strong data release can double the share price in a day, and a weak one can bring it down. We have selected three companies, each of which will have a decisive event in the coming weeks or months.

The choice was deliberately made of three small-caps at different stages of development to show how differently risk is arranged in biotech. For Definium, everything depends on clinical data: it does not have an approved drug yet, and its prospects will largely be determined by the results of trials. Viridian is a story of regulatory risk: clinical trials have been completed and now the FDA verdict becomes key. Kura is a commercialization risk: the drug is already approved and on the market, so the main question is how quickly it will be prescribed by doctors.

The main thing for investors to keep in mind is that in biotech, promising does not mean safe. Companies can be dramatically overvalued because of a single event - strong clinical data, regulatory approval, a deal with a major pharma company or a successful commercial launch. But the same factors can just as quickly bring down quotations in case of a negative outcome. Therefore, it is logical to consider such securities as a small, deliberately risky part of the portfolio - an addition to more stable investments, not their replacement.

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Capitalization: about $2.2 billion

Definium is not a new player in the market: until January 2026, the company was known as MindMed and was considered one of the most prominent players in the psychedelic medicine market. The basis of its key drug DT120 is a modern pharmaceutical form of LSD, a psychedelic that became a symbol of the 1960s counterculture. The drug comes in the form of a tablet that dissolves in the mouth and is undergoing phase three clinical trials as a potential treatment for depression. And the company emphasizes the origin of the substance: LSD was first synthesized in 1938 by Swiss chemist Albert Hofmann during his search for ergot-based drugs, and he discovered its psychoactive properties in 1943.

The next major milestone is the publication of the final results of the Emerge study, which the company expects at the end of the second quarter of 2026. This is a Phase 3 study in patients with major depressive disorder, the most common form of clinical depression. It involves 149 participants, with about half receiving placebo. The effectiveness of therapy is assessed using the MADRS scale, the most common tool for measuring the severity of depression. DT120's approach is fundamentally new: the company expects to achieve sustained improvement after one or more administrations of the drug under the supervision of a physician, rather than through continuous therapy.

There is also an important risk: because LSD causes pronounced psychoactive effects, study participants and doctors can guess who received the drug and who received a placebo. To reduce this risk, Definium has added a low-dose group in the next trials (Panorama and Ascend), which should make it more difficult to determine which treatment a participant is receiving

Definium estimates the potential market at 21 million patients, but it could be significantly smaller: LSD-based therapy requires medical supervision, and its spread will depend on the stance of regulators and doctors, as well as the willingness of insurers to cover the treatment.

The main risk for investors is the lack of a commercial product. The complex regulation of psychedelic drugs remains an additional uncertainty.

Since the beginning of the year, Definium's quotations have grown by almost 84%, in 12 months - by 229%. All 16 analysts tracking the company advise them to buy (Buy and Overweight ratings). The average target price is $39.5, which is about 63% above the last closing price.

Capitalization: about $1.8 billion

Viridian is in the transition from research to commercialization. Its drug veligrotug is not yet approved, but could be the company's first product on the market. It is designed to treat thyroid ophthalmopathy (TED), a rare autoimmune disease in which the tissues around the eyes become inflamed and noticeable changes in appearance reduce patients' quality of life.

The nearest important event is the FDA decision on veligrotug, which is expected by June 30, 2026. For investors, such an event has a binary character: approval will open Viridian's way to the first sales, while rejection or postponement of the decision will bring down quotations.

The only approved therapy on the market for thyroid ophthalmopathy is Amgen' s TEPEZZA. Veligrotug and TEPEZZA act on the same biological target - IGF-1R receptor, the efficacy of which has already been proven in this disease. Viridian has the advantage of greater ease of use.

The market potential has already been confirmed by the commercial success of TEPEZZA: in 2025, sales of the drug in the US reached about $1.9 bln. The number of patients with active thyroid ophthalmopathy in the country is estimated at 44-100 thousand people. In case of successful market launch, peak sales of Viridian drugs may approach the level of the current market leader - about $2 bln in the USA.

The main risk is related to the FDA's decision: the regulator may postpone the application review or request additional data on the drug's safety and production. But even if approved, Viridian will have to compete with TEPEZZA, which already has a strong market position. In the longer term, next-generation subcutaneous therapies, including Viridian's own products, could put pressure on sales.

Viridian shares have fallen 46% since the beginning of the year. 16 Wall Street analysts have rated them Buy, one has given them a Hold rating. The average target price is $33.9, about twice the last closing price.

Capitalization: about $800 million

Kura is no longer a story of expectations, but a functioning business. Its drug KOMZIFTI (active ingredient ziftenib) received FDA approval in November 2025. It is the first and only approved oral drug for adults with relapsed or refractory acute myeloid leukemia, an aggressive blood and bone marrow cancer with a specific gene mutation. About 21,000 cases of acute myeloid leukemia are diagnosed each year in the United States, of which about 30% are associated with the NPM1 mutation.

The upcoming key events are public triggers that investors will be watching closely. At the EHA Hematology Congress in June, the company, together with partner Kyowa Kirin, will present updated data on the use of ziftenib in first-line therapy: they may expand the range of patients for whom the drug is suitable.

Kura's second quarter report will be released in early August, revealing the first sales figures for KOMZIFTI and management's comments on the pace of commercial launch. This will be a key test of the business model: in the previous quarter, the drug generated $5.8m in revenue, and now the market will assess whether the momentum is accelerating.

Kura's valuation depends not only on further approvals, but also on the speed at which the drug is introduced into clinical practice. This makes Kura a more "commercial" story compared to early-stage biotechs, where the main driver is research data.

But there are risks: the market is limited in size, competition in the class is intensifying, and the safety profile requires monitoring. The FDA has noted the risks of a severe inflammatory response to therapy, as well as effects on heart rhythm. In addition, one strong sales quarter does not guarantee sustained demand: initial prescriptions may reflect pent-up physician interest rather than a stable growth trajectory.

Since the beginning of the year, Kura quotes are down 10.5%; over the past 12 months, they are up 47.5%. According to MarketWatch, the stock has 14 "buy" ratings from analysts and only one "hold" rating. The average target is $31.2, implying a potential upside of about 240% to the closing price on June 1.