Is Compass Pathways Stock a Buy?

Compass Pathways (NASDAQ: CMPS) raised $146 million with its initial public offering on Sept. 18. While the IPO's price was set at $17, on the first day of trading, it opened at $23.40 and closed the day at $29. The stock has been trading this week in the neighborhood of $36. The British pharmaceutical company is testing a synthetic form of psilocybin, a psychedelic compound that occurs naturally in "magic mushrooms," as a therapy for treatment-resistant depression.

Psilocybin works by binding to serotonin receptors in the brain. Serotonin is a neurotransmitter that regulates mood, sleep, and appetite.

Compass Pathways isn't the only pharmaceutical company looking into using psychedelic drugs as therapies, but it does have a head start because its synthetic psilocybin, COMP360, was granted breakthrough therapy status in 2018 by the U.S. Food and Drug Administration. The company is testing COMP360 in a phase 2b clinical trial.

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Source Fool.com