The shares of the psychedelic start-up supported by Peter Thiel Atai Life Sciences rose sharply on Friday on their first day of trading on Wall Street. The newly listed Nasdaq stock opened up 40% before falling slightly.
The IPO of the German biotech was valued at $ 15 per share on Thursday evening, the upper end of the expected range. Atai is the third psychedelic biotech companies, which goes public in the US. The company that wants to produce psychedelic drugs for the treatment of mental disorders, collected $ 225 million at a valuation of $ 2.3 billion.
Third IPO of a psychedelic biotech company in the USA
Atai is the third psychedelic biotech companies, which goes public in the US, and thus follows in the footsteps of MindMed, which went public on the Nasdaq in April, and the Gründerfonds-funded Compass Pathwayswhich were listed in September. At the close of trading on Thursday, Compass Pathways by 26% since its debut, and MindMed, which just announced the resignation of its CEO, has declined by about 19% since its IPO.
All of the mentioned biotech companies develop therapies with the psychedelic mushroom compound psilocybin, LSD and MDMA derivatives used to treat addiction and mental illnesses such as depression, anxiety, schizophrenia and traumatic brain injury. Three years after its foundation, Atai Life Sciences 10 therapeutic programs in its pipeline, each of which is at different stages of clinical trials.
Atai founder and chairman Christian Angermayer said on CNBC’s “Squawk Box” on Friday:
“The world we are building is a bad place for our brain, so psychological problems will increase. But I think we have some real approaches in our portfolio to end the mental health crisis.“
Investors ‘ interest in psychedelic treatments has grown with the growing interest of medical professionals in these therapies.
The centers for psychedelics and psychology include the Johns Hopkins University Press, which Yale University, which University of California, Berkeley, Berkeley and the Icahn School of Medicine. Recent studies have shown the effect of MDMA in the treatment of post-traumatic stress disorder and the effectiveness of psilocybin, a hallucinogenic chemical found in psychedelic mushrooms, in the treatment of drug-resistant depression have further increased interest in this area.
Angermayer was an early investor in Compass Pathways, and his own company Atai serves as Holding company for various psychedelic start-upswho pursue alternative treatment methods for mental illness. He told CNBC on Friday that new-age biotechs build on centuries of practice in shamanistic cultures and religions.
Currently there are worldwide restrictions on psychedelic mushrooms, MDMA – commonly known as Molly or ecstasy-and LSD. However, Oregon became the first U.S. state last year Psychedelics legalized for therapeutic purposes. Residents of Washington, D.C., also recently voted to decriminalize the use of psychedelics for medical purposes.
Angermayer is betting that the state approval of these drugs for therapeutic use for people with mental illness could make a big difference. Behind Atai Life Sciences are among others the billionaire investor Thiel well Mike Novogratz’s Galaxy Investments and Angermayer’s own Apeiron Investment Group.
Interest in psychedelic start-ups increases
According to venture capital tracker CB Insights, VC deals in psychedelics have increased significantly in the last three years: less than $ 100 million in venture capital was invested in psychedelic startups in 2018 and 2019, However, 2020 $ 346 million. By April 2021, VCs had already invested $ 329 million in the industry.
It is no wonder that the IPO of Atai was oversubscribed more than 12 times, according to a market source who wanted to remain anonymous due to the nature of the discussion. “A good portion was taken over by existing investors, “the person said, adding that Thiel was the largest existing investor and had” doubled ” its investment in the IPO.
The investment fund Palo Santo said it participated in the IPO of Atai. “There is an urgent need to address our broken psychiatric health system”.
Atai filed an S-1 filing with the Securities and Exchange Commission in April, which showed that a total of $ 362.3 million was raised by private investors at that time.
The company, which describes itself as Platform for drug development was established to acquire, incubate and develop psychedelics and other drugs for the treatment of depression, anxiety, addiction and other mental illnesses.
Atai employs around 50 people in offices in Berlin, New York and San Diego, and currently works with 14 companies focused on drug development and other technologies.
In exchange for a majority stake in the drugs and technologies they are developing, Atai is helping scientists raise money, work with regulators and conduct clinical trials. None of Atai’s drugs have yet been officially approved by regulators.
In November, Thiel invested $ 11.9 million in Atai through its venture company Thiel Capital. Thiel said about the company:
“Atai’s great virtue is to take mental illness as seriously as we all should have taken illness all along. The most valuable capital of the enterprise is its urgency.“
Last updated on June 20, 2021
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