Today is a groundbreaking day for the psychedelics sector as Compass Pathways, the largest pure play company in the emerging psychedelic sector, goes public.
Investors and competitors alike will be using today as comp for the rest of the psychedelics market.
Trading begins today, on September 18th, 2020 under the symbol CMPS on the NASDAQ.
Compass had priced their shares at $17.00 for total gross proceeds of $127.5 million. This is above the original quoted range of between $14 and $16 per share. When trading opened up on the NASDAQ, prices opened up at $23.40 per share – ~56% higher than the company’s original estimate.
The updated price values the company over $750 million.
As we have previously covered, all signs currently point to Compass being the largest and most influential company in the psychedelic domain, but not without difficulty…
Investors must keep in mind that this is a clinical-stage biotechnology company. COMPASS Pathways is not profitable and will remain so for a very long time. So far, they have piled up a deficit of more than $64 million.
While they had about $67 million cash in hand at the end of June and expect to take in at least $100 million for the offering, they will burn cash pretty quickly as they continue to spend heavily on research and development. Clinical trials are very expensive, and the current trial is not the last one they will have to conduct.
– Source: https://psychedelicinvest.com/compass-pathways-ipo/
With any emerging market, investors should also take note of the competition. Compass is not the only company with a “breakthrough therapy”…
Earlier this week, the non-profit Usona Institute placed a new technique to synthesize pharmaceutical grade psilocybin into the public domain, where it cannot be patented.
This move, along with previous moves made by Usona, will continue to be a thorn in the side of Compass Pathways and potentially impact it’s long term valuation.
Regardless, early interest is high as investors are holding their breath to see what happens today during trading.
Considering Compass is a first mover in the space, they’ll have a huge advantage amongst competitors going forward. Backed by prominent investors such as Peter Thiel, Michael Novogratz, and Christian Angermayer, Compass is riding the coattails of a remarkable new market that is often compared to the early days of cannabis investing.
It’s too early to tell how the stock will pan out in the long run, but it’s fair to suspect that today’s IPO will usher a new wave of investors into the psychedelic market.