- Atai Life Sciences has raised hundreds of millions as a private psychedelics company.
- Its IPO filing lays out its financials, patent strategy, and market plans.
- Insider pored over the psychedelic giant’s 373-page filing to find the key takeaways.
- See more stories on Insider’s business page.
Atai Life Sciences, the psychedelics giant backed by big name investors like Peter Thiel, is going public.
The company was founded in 2018 and has gained momentum over the past few years, raising over $350 million from investors. In documents filed with the US Securities and Exchange Commission on Tuesday, Atai said it plans to trade on the Nasdaq under the symbol “ATAI.”
Atai’s founders are Christian Angermayer, Florian Brand, Srinivas Rao, and Lars Christian Wilde.
The company started as a vehicle to fund psychedelics companies like Compass Pathways, which is focused on developing psilocybin-based medications for treatment-resistant depression.
Compass went public on the Nasdaq in September and now has a valuation of $1.2 billion. Atai owns 21.6% of Compass.
Atai has developed into a biotech platform company, Brand told Insider in an interview last year, meaning it invests in and works closely with companies looking to develop medicines for mental-health conditions using psychedelics like psilocybin, arketamine, and ibogaine.
Atai now has a portfolio of 10 therapeutic programs, around half of which are focused on developing psychedelics medications to treat mental illnesses.
Atai would become the second psychedelics company to list on a major US exchange. The banks leading the offering include Credit Suisse, Citigroup, Cowen, Berenberg, Cantor, RBC Capital Markets, and Canaccord Genuity.
Insider read through the company’s 373-page filing to learn more about its structure and strategy. Here are the 5 key takeaways.
Atai has had significant losses since it was founded and expects to continue to lose money
As a company focused on developing medications and then asking the US Food and Drug Administration to approve them, Atai doesn’t expect to make any money until its medications win clearance and are available for sale.
In 2019, the company posted a loss of $14.1 million. In 2020, its losses were about $170 million.
As of December 2020, Atai had $97.2 million cash on hand. In March, the company raised around $158 million through a Series D round, the filing says.
The company says it has not generated any revenue and does “not expect to generate any revenue from the sale of our product candidates for the foreseeable future.”
If its medications are approved, Atai says it could generate revenue from product sales, collaborations, and license agreements but notes that there is a risk that the company’s experimental products may not be approved.
One of the experimental treatments an Atai subsidiary is working on has progressed to a mid-stage trial in people. The rest are in early stages of research.
The company has 10 therapeutic programs in its pipeline, five of which are focused on psychedelic compounds
Over the past few years, Atai has acquired and incubated several portfolio companies, which are focused on either creating psychedelic compounds focused on treating mental illnesses or developing technology to aid treatment and research.
Atai has full ownership of three, a majority stake in five, and a minority stake in two of these companies. The company has options to acquire further shares in a number of its current portfolio companies.
Perception Neuroscience is developing a ketamine-based drug as a rapid-acting antidepressant that may have the potential to work as an alternative to Johnson & Johnson’s ketamine-based treatment called Spravato. Other portfolio companies are working with compounds based on ibogaine, DMT, and MDMA.
Not included among these 10 is Compass Pathways, in which Atai has a 21.6% stake, according to the S-1 filing. Atai notes it has limited operational control or influence over Compass.
Patents are an integral part of Atai’s strategy as the company plans for what happens after FDA approval
Several of Atai’s portfolio companies have applied for patents.
Atai notes in its S-1 that its success “depends in large part on our ability to obtain and maintain protection of intellectual property, particularly patents, in the United States and other countries.”
The company added that it also relies on trade secrets to protect parts of its business and says that because trade secrets are difficult to protect, it uses confidentiality agreements with its collaborators and scientific advisors as well as non-competition agreements with employees and contractors to protect its business.
Perception Neuroscience, Recognify, DemeRx IB, GABA Therapeutics, and Neuronasal all either own issued patents or have patents pending in the US and other countries. The patents range from pharmaceutical composition of compounds to methods of use and treatment. Atai says that IP is handled directly by its individual platform companies and the company is not actively involved in the management of IP.
Under a section entitled “risks associated with out business,” Atai notes that third parties that claim infringement, misappropriation, or violation of their intellectual property rights may “prevent or delay development and commercialization efforts.”
Three investment funds — Apeiron Investment Group, Galaxy Group Investments, and Kendall Capital Markets — have at least a 5% stake in Atai as of March 31.
Apeiron Investment Group, Angermayer’s family office, owns 1.9 million shares of the company. Overall, it controls a 20.2% stake. Galaxy Group has a 6% stake and Kendall has a 5.2% stake.
Thiel, the billionaire VC known for cofounding PayPal, invested in Atai’s Series A, Series C, and Series D rounds, according to PitchBook. He invested via his Thiel Capital fund and as an individual. His stake isn’t listed in the filing.
There are plenty of risks to investing in Atai — including the rocky path to market and the high failure rate of companies developing medications
Biotech companies that don’t yet have any approved medications on market carry high risk for investors, because clinical trials are expensive and often fail.
Atai is no exception, and the company lays out a plethora of additional risk factors in its S-1 filing, including the time and funding necessary to undergo clinical trials, the need to meet requirements set forth by regulatory bodies, the risk of dealing with substances regulated by the US Drug Enforcement Administration, and the cost of commercializing any products that are given approval.
In addition, the company says that its overall value may rest on the shoulders of a single — or select few — of its companies and programs because of the uncertain nature of clinical developments.
But if any of Atai’s companies are successful, approved, and commercialized? The company says it believes that several of its medications have the potential to treat common mental illnesses and compete in markets where annual sales top $1 billion.
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