Psychedelic Stocks: Atai Life Sciences IPO Seeks To Raise $100 Million

Atai Life Sciences, which supports psychedelic drug developers seeking new ways to treat mental illness, hopes to raise $100 million in an initial public offering. The move pits the company against a growing number of psychedelic stocks seeking investor cash.


The company disclosed the target amount in a filing on Tuesday. Atai, which was founded in 2018 and is backed by billionaire investor Peter Thiel, would trade on the Nasdaq Global Market under the ticker symbol “ATAI.”

Credit Suisse, Citigroup, Cowen, Berenberg, Cantor Fitzgerald and RBC were bookrunners for the deal. Also Canaccord Genuity — a prominent deal maker for the cannabis industry.

Atai, in the filing, said it had raised an aggregate $362.3 million from investors to date. In November, Atai announced that it had closed a $125 million funding round.

Joining Other Psychedelic Stocks

Atai first submitted its draft registration statement confidentially on Jan. 29. In going public, it hopes to use companies it backs — which are researching drugs based on substances like ibogaine, or derivatives of ketamine or MDMA — to tackle a widening mental health crisis exacerbated by the coronavirus pandemic.

“While current treatments, such as selective serotonin reuptake inhibitors, or SSRIs, and serotonin-norepinephrine reuptake inhibitors, or SNRIs, are well established and effective for certain patients, a significant percentage of patients either respond inadequately or relapse,” Atai said in its IPO paperwork. It added that this translates “to a significant unmet patient need.”

Atai would join Compass Pathways (CMPS) as the second psychedelics-focused company to go public on a major U.S. exchange. Atai is also a large investor in Compass.

Compass Pathways stock rose 2.2% in the stock market today.

MindMed, another company researching psychedelic drugs that trades over the counter and in Canada, submitted an application for a Nasdaq up-listing in September. Other psychedelic stocks trade in Canada.

Johnson & Johnson (JNJ) also develops Spravato, which uses a derivative of the drug ketamine to treat more severe forms of depression.

Atai’s Development Programs

Atai invests in, acquires, or otherwise provides backing to companies taking alternative approaches to mental health. In the filing, it said it had a pipeline of 10 development programs and six enabling technologies.

One of the companies it supports, Recognify Life Sciences, has started a Phase 2a trial in the U.S., the filing said. Atai said it expects to initiate a Phase 2 trial for another program this year, with three Phase 2 trials for other programs next year. It expects to initiate Phase 1 trials for several more programs this year and next.

Atai currently has no revenue. The company reported a net loss of $178.6 million last year, far steeper than the $24.4 million it logged in 2019. Operating costs ballooned over that time to $104.1 million. Atai had $97.2 million in cash at the end of last year.

More investors have become open to investing in psychedelic companies over the past few years. But regulatory approval isn’t guaranteed. Developers will need to find ways to tweak the composition of hallucinogenic compounds that can be found in nature. That would make them patentable and thus profitable.

CEO Cautious In Approach

Oregon in November voted to legalize psilocybin therapy. However, Compass Pathways, and Florian Brand, Atai’s CEO, have signaled caution.

Brand, in an interview in November, said Atai wouldn’t begin offering any form of therapy before they had data from controlled clinical trials.

“We still need to show, with data, that those therapies work in a safe way at scale, and that’s kind of the whole rationale for clinical trials,” he said then. “And applying this rigor is especially important for substances that have been stigmatized for so long and vilified due to political reasons.”


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