Last week atai Life Sciences reported its financial results and business update for this year’s second quarter. Being the industry’s perennial powerhouse and current market cap leader, a deeper look at the results might be a good idea.
Here are some of the highlights (information taken from the company’s press release).
NASDAQ IPO raises $258.8 million
Atai going public on the NASDAQ was big news. Although the stock price has recently dropped below pre-IPO levels, the addition of such a major player to such a major exchange was a seminal moment for the industry. We expect that Atai’s presence will continue to draw more investor attention to the sector.
“In the second quarter of 2021, we made significant advancements to build our business and successfully completed an initial public offering on Nasdaq, raising approximately US$258.8 million in gross proceeds,” said Florian Brand, CEO and co-founder of atai.
“We have the financial resources to maximize the value of our decentralized drug development platform for improved probability of clinical success and leverage the value of our transformative pipeline. 2021 continues to be a pivotal year for atai with multiple upcoming catalysts across our expanding pipeline.”
Licensing agreement and payment from major pharma partner
Atai received a $20 million upfront payment from Otsuka as part of the first major collaboration between a biopharmaceutical company developing psychedelics and large pharma.
Years from now, this news might go down in history as a major milestone in the development of the psychedelic medicine industry. Otsuka is one of the world’s major pharmaceutical companies, and this deal is the first commercial relationship between a psychedelic firm and “big pharma”.
The deal is a licensing agreement for the use of one of atai’s subsidiary’s molecules. Perception Neuroscience’s lead molecule PCN-101 (R-ketamine) will be developed in Japan by Otsuka as a potential treatment for depression. From the press release:
“Under the terms of the license, Otsuka will have exclusive rights to develop and commercialize products containing PCN-101 in Japan. Otsuka will undertake development, regulatory, and commercialization activities in Japan, with input and guidance from both companies. Perception will receive an upfront payment of $20 million, which will help fund the company’s overall development of treatments. In addition, Perception will be eligible to receive development, regulatory and commercial milestones, as well as tiered, double-digit royalties on future sales.”
The specter of Big Pharma looms large over the future of psychedelics, but this deal is a good sign of potential future autonomy, with atai retaining rights of the molecule and collecting fees for licensing it out to certain markets.
Pipeline advancement
Advancement of 11 therapeutic programs, including initiation of Recognify’s Phase 2 and GABA’s Phase 1 trials; 18 significant catalysts across Atai’s platform anticipated over next 18 months including two clinical trials to be completed and four clinical trials to be initiated in 2021
Atai’s claim to fame, besides its famous investors and fat bank account, is its extremely diversified product portfolio. While few companies can compete with its development pipeline, the one knock was that none of atai’s candidates were in any advanced trials as of yet.
While the company continues to lag behind MindMed, Cybin, Compass and a few others in terms of trial advancement, the advancement of these trials is good news for Atai and its investors.
Cash position of $453.6 million
This is arguably the company’s strongest attribute. After the proceeds from the NASDAQ IPO, atai now has over $450 million in cash, miles ahead of anyone in the industry. For comparison, the next closest in terms of cash on hand are Compass Pathways and Mind Medicine with $316.3 million and US$157 million respectively.
In an early-stage pre-revenue industry like this one, cash is king. The cost of running a drug through the full clinical trial process can cost between $60 to $100 million per candidate, so access to mountains of money is a necessary prerequisite to getting a product to market.
In this measure, atai is way ahead of the competition.
For more details on the financial and business highlights, see the full press release here.