This Psychedelic Biotech Play Could See a Leg Up After Encouraging LSD Trials

The big question this week is whether the market can build on the recent strong price action. Many market participants were caught underinvested which triggered some FOMO and a scramble to add exposure.

So far on Monday the action is slower. Breadth is running only about 40% positive and, most notably, the number of stocks moving up more than 10% has dropped sharply. There currently are around 65 stocks up more than 10% which isn’t bad, but there were more than 200 10% movers on Friday. There are still some pockets of strong speculative interest in small caps even though the Russell 2000 (IWM) is down slightly.

Blowout From an Energy Services Name

One name I highlighted recently is National Energy Services Reunited (NESR). This is a company focused on providing oil and gas related infrastructure in the Middle East. It had a blowout report on Monday morning and is currently trading up about 16%. This stock still looks cheap to me with a forward PE of 16 and EPS that is doubling this year and expected to increase 50% in 2027. I’m holding my shares and looking for entries.

Psychedelic Biotech With Catalysts Coming

Another name that I’ve discussed a few times in the past is Definium Therapeutics (DFTX). It was my featured stock back on June 15 prior to a big move.

Definium is a late-stage biotech working on a refined version of LSD, which it calls DT120, as a treatment for generalized anxiety disorder and major depression. PTSD is a longer-term target. The idea behind the whole category is that psychedelics appear to do something for mood disorders that conventional antidepressants do not, and the work now is turning that into a drug that can be dosed, prescribed and administered in a clinical setting like anything else.

The stock has been a steady trender since I put it on my radar back in April 2025, when it was still trading under the ticker MNMD. One of the main driving forces here is that the White House issued a major Executive Order in April aimed at accelerating mental health innovation and expanding access to psychedelic-based medical treatments for severe mental illness.

On June 22, shares jumped sharply higher on about 10 times average volume after the company announced the Phase 3 Emerge trial in major depressive disorder hit its primary and all key secondary endpoints, marking the first positive Phase 3 result for an LSD-based therapy. Management called it the largest effect ever reported in a Phase 3 depression study, with benefits showing up as early as week one and holding through week 12. The stock saw solid upside follow-through, nearly doubling over the next several days, with RBC Capital raising its price target to $57 and reiterating an Outperform rating on the news.

There are two additional pivotal readouts expected in the near term. The Voyage trial in generalized anxiety disorder could report as early as Monday, and the Panorama trial in the same indication should follow later in the quarter. The company ended the last quarter with $1.1 billion in cash, which is enough to fund operations through 2030, so there is no danger of a secondary offering in the short term.

The average price target from 13 analysts is $62.08, with a range from $50 to $75, implying more than 34% upside from current levels.

Over the past several weeks the stock has been basing at the highs, pushing toward the upper end of its range on a slight uptick in volume into the end of last week, and could be in position for another leg higher depending on how the Voyage results turn out. I am holding a core position and will look to trade any post-news volatility.

Game Plan

I see some other good action in names I’ve discussed, including Hewlett Packard Enterprise (HPE), Delcath Systems (DCTH), ClearPoint Neuro (CLPT) and Ondas Holdings (ONDS). These pockets of strength are keeping me bullish but I’m going to keep stops tight and be stingy about giving back gains.

At the time of publication, DePorre was long NESR, DFTX, HPE, DCTH, CLPT and ONDS.