Shares of psychedelic drug developers rose in premarket trading on Monday after President Donald Trump signed an executive order directing health regulators to speed up reviews of psychedelic drugs and boosted federal research funding.
Shares of Atai Life Sciences jumped 26% before the bell, while Definium Therapeutics rose 14% and Compass Pathways climbed 24%. GH Research gained 17%, Enveric BioSciences added 5% and U.S.-listed shares of Cybin were up about 15%.
The executive order, issued on Saturday, tells the U.S. Food and Drug Administration to fast-track reviews of treatments such as ibogaine, a psychedelic compound being studied for mental health conditions including post-traumatic stress disorder, depression and addiction.
The order directs the agency to give Commissioner’s National Priority Vouchers to psychedelic drugs that have the "breakthrough therapy" tag, potentially cutting the review time to 1 to 2 months from the usual 6 to 10 months.
FDA Commissioner Marty Makary on Saturday said decisions on the drugs could come as soon as this summer.
Jefferies analyst Andrew Tsai said the order is an "official stamp of validation to the class," showing that government support is real.
Trump also said the government would allocate $50 million for federal research into ibogaine.
Ibogaine is derived from a shrub native to Africa and is classified as a Schedule I substance in the U.S., meaning it is considered to have no accepted medical use.
RBC analyst Brian Abrahams said the signing of the executive order "is a substantial step towards diminishing regulatory risk" for psychedelic drugs.
Health Secretary Robert F. Kennedy Jr. has championed the idea of using ibogaine as an alternative treatment for mental health conditions such as depression.
Lawmakers from both Republican and Democratic parties have also said they would pursue legislation to expand access to psychedelic therapies.
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