With investors taking psychedelic drugs seriously as potential treatments for intractable cases of depression, addiction, or post-traumatic disorder, the stock plays are flying.
Since the September initial offering of
’ depositary shares, the developer of an experimental psilocybin treatment has seen its stock (ticker: CMPS) double, to a recent $35.73. More capital is on the way. On Monday, Compass’ biggest shareholder—a Berlin-based holding company called Atai Life Sciences—said it had raised $125 million, in Atai’s third round of private financing.
Atai will use the money to fund development and testing of psychiatric treatments based on psychedelics like the mushroom-derived psilocybin or the African compound called ibogaine. Most of the work will be carried out by companies that Atai has backed. Compass Pathways is conducting clinical trials of a psilocybin treatment for refractory cases of depression. A Miami-based venture with a firm called DemeRx is testing ibogaine treatments for addiction.
In total, Atai has more than 10 compounds under investigation, says its chief executive and co-founder Florian Brand.
In the last decade or so, anecdotal success stories have encouraged psychiatrists around the world to get permission from government regulators for clinical trials of a variety of psychedelic drugs. Before the recent enthusiasm for commercial ventures, research funding was hard to come by and the body of scientific evidence limited.
It’s still early, Brand concedes. “See where we are in 10 years,” he suggests.
But investors are psyched. Other psychedelic startups, including Field Trip Health (FTRPF) and Mind Medicine (MMEDF), have seen their penny stocks double since coming public this year.
Atai’s latest infusion was led by its co-founder Christian Angermayer, an entrepreneur and investor who has had a hand in starting firms like Ribopharma, which merged with the U.S. biotech company
When they launched Atai in 2017 to investigate psychedelic treatments, Angermayer says people called him crazy. Now that clinical trials are under way and designated by government regulators as potential breakthrough treatments, he’s having an easier time raising money.
Others who chipped in to Atai’s latest round include the billionaire investor Peter Thiel and the New York fund Falcon Edge Capital.
“These drugs need to become available through doctors and covered by health care insurance,” says Angermayer. “The only way for that to happen is to invest $100 million-to-$200 million per drug for approval trials.”
Write to Bill Alpert at firstname.lastname@example.org