Shares of psychedelic startup backed by Peter Thiel debut on Wall Street

Shares of Peter Thiel-backed psychedelic startup Atai Life Sciences surged on Friday on their first day of listing on Wall Street.

Newly listed Nasdaq stock opened 40% before falling. The shares closed up nearly 30% at $ 19.45 each.

The initial German biotech public offering was valued Thursday night at $ 15 per share, the high end of the expected range. The company, which aims to make psychedelic drugs to treat mental health disorders, has raised $ 225 million at a valuation of $ 2.3 billion.

Atai is the third psychedelic biotechnology to go public in the United States, following in the footsteps of MindMed, which went public on Nasdaq in April, and Compass Pathways, backed by the Founders Fund, which was listed in September. As of Thursday’s close, Compass Pathways was up 26% since its inception, and MindMed, which just announced the resignation of its CEO, was down about 19% since its IPO.

Each biotech is developing therapies using the psychedelic mushroom compound psilocybin, LSD and MDMA derivatives to treat drug addiction and mental illnesses such as depression, anxiety, schizophrenia and traumatic brain injury. Three years after its inception, Atai Life Sciences has 10 therapeutic programs in its pipeline, each in different stages of clinical trials.

Atai founder and chairman Christian Angermayer said on CNBC’s “Squawk Box” Friday: “The world we are building is a bad place for our brains, so mental health issues are going to increase. But I think we are. we have real hits in our wallet to end the mental health crisis.

Investor interest in psychedelic treatments has grown alongside the growing interest of the medical community in these therapies.

Johns Hopkins University, Yale University, University of California at Berkeley, and Icahn School of Medicine are among the centers studying psychedelics and psychology. Recent studies establishing the promise 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 not shown. that increase interest in space.

Angermayer was an early investor in Compass Pathways, and his own company Atai serves as a holding company for various psychedelic start-ups pursuing alternative treatments for mental illness. He told CNBC on Friday that new age biotechnology builds on centuries of practice in shamanic cultures and religions.

There are currently federal restrictions on psychedelic mushrooms, MDMA – commonly known as molly or ecstasy – and LSD around the world. However, last year, Oregon became the first US state to legalize psychedelics for therapeutic use. Residents of Washington, DC, also recently voted to decriminalize the use of psychedelics for medical purposes.

Atai Life Sciences on Nasdaq for its IPO on June 18, 2021.

Source: Nasdaq

Angermayer is betting that federal approval of these therapeutic drugs could make a huge difference for people with mental illness. “These are very, very powerful drugs, but they need to be taken under supervision.… You will trip over while you sit with your therapist.”

Atai Life Sciences is backed by billionaire investor Thiel, as well as Galaxy Investments from Mike Novogratz and Apeiron Investment Group from Angermayer, among others.

VC transactions in psychedelics have increased dramatically over the past three years, according to venture capital tracker CB Insights: 2018 and 2019 saw less than $ 100 million in venture capital invested in start-ups psychedelics, but 2020 saw $ 346 million. As of April 2021, VCs had already invested $ 329 million in the industry.

It’s no wonder that Atai’s IPO has been over 12 times oversubscribed, according to a market source who requested to remain anonymous due to the nature of the discussion. “Much of it was taken by existing investors,” the person said, adding that Thiel is the largest existing investor and that he “doubled” on the IPO.

The Palo Santo investment fund said it has taken a significant stake in Atai’s IPO. “There is an urgent need to fix our broken mental health system,” Daniel Goldberg, co-founder of Palo Santo, said in a statement. “We believe psychedelics will expand treatment options and transform the outdated system.”

Atai submitted an S-1 filing to the Securities and Exchange Commission in April which showed he had raised a total of $ 362.3 million from private investors at that time.

The company, which describes itself as a drug development platform, was formed to acquire, incubate and develop psychedelics and other drugs that can be used to treat depression, anxiety, drug addiction and others. mental health problems.

Atai, which has approximately 50 employees in offices in Berlin, New York and San Diego, is currently in partnership with 14 companies specializing in the development of drugs and other technologies.

In return for a controlling stake in the drugs and technologies they develop, Atai helps scientists raise funds, work with regulators, and conduct clinical trials. None of Atai’s drugs have been officially approved by regulators to date.

Thiel invested $ 11.9 million in Atai through his venture capital firm, Thiel Capital, in November.

“The great virtue of Atai is to take mental illness as seriously as we should have taken all illnesses from the start,” said Thiel, co-founder of Palantir and PayPal, in a statement shared with CNBC at the time. “The company’s most valuable asset is its sense of urgency.”

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