Atai Life Sciences Archives - Green Market Report

Adam JacksonNovember 10, 2022
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4min4750

Clinical-stage biopharmaceutical company atai Life Sciences (Nasdaq: ATAI) reported financial results for the third quarter ending Sept. 30, providing updates on its clinical trials looking at the treatment of depression using ketamine – particularly an at-home therapy for treatment-resistant depression.

“In addition to multiple study initiations this quarter, we have announced two positive clinical trial results, with more on the way,” CEO Florian Brand said in a news release. “We’re excited about the upcoming Phase 2a topline results of PCN-101 that could represent a meaningful shift in the current treatment paradigm for patients.”

atai’s operating use of cash was $28, in line with expectations, CFO Stephen Bardin said on a call with investors Thursday. The company’s debt facility worth $175 million with Hercules Capital, which it drew $15 million from during the quarter, as well as its $304.1 million cash position help stretch its cash runway into 2025.

R&D costs totaled $19 million versus $13.4 million in the prior year. General and administrative expenses were $19.4 million versus $20.3 million last year. Net loss was $33.9 million versus $31.2 million during the same time last year.

In the investor call, Brand said that Phase 2a study for its PCN-101 ketamine drug to treat depression is about testing “whether we have a greater therapeutic index compared to other approved treatment options.”

Without getting into details, he said, “Regarding specific thresholds, efficacy of a single dose below what is considered clinically meaningful would certainly lead to us reassessing the current clinical development plan in treatment-resistant depression.”

But, he added, “Based on all the existing preclinical and clinical data that we have from third parties and internally studying our ketamine, we remain very confident to achieve … trial objectives from this specific Phase 2A.”

Srinivas Rao, co-founder and chief scientific officer, noted that the trial is about testing the first study’s hypothesis confirming that “we will have a therapeutic index,” he said.

Jefferies analyst Andrew Tsai asked whether or not BioGen’s drug to treat cognitive impairment associated with schizophrenia (CIAS) failing in studies earlier this year shakes atai’s confidence in embarking on a Phase 2b trial for its RL-007 drug looking at CIAS, which the company plans on initiating by end of this year with results expected in the first half of 2024.

Rao said the “challenging indication” is also part of its appeal.

“Obviously theres a huge medical need here,” he said, noting the societal and personal costs of struggling with the mental health disorder. “In terms of biomarker data, I don’t recall seeing anything published on that, personally. So, it will be interesting to get a better read sense of that or even get a more granular read on the results that they have.”

Brand concluded the call as Tsai attempted to follow up.


StaffAugust 15, 2022
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13min1530

The Daily Hit is a recap of cannabis business news for August 15, 2022.

ON THE SITE

Auxly Revenues Improve, Tries to Cut Costs

Auxly Cannabis Group Inc. (TSX: XLY) (OTCQX: CBWTF)  released its financial results for the three months ending June 30, 2022. Total net revenues from the sale of adult-use cannabis in Canada were $27.3 million for the quarter, a 31% increase from the same period last year. The net losses for Auxly in the quarter almost doubled from last year’s $8.6 million to this year’s $14.2 million. Read more here.

Columbia Care Gets Boost From New Jersey Sales

Columbia Care Inc. (CSE: CCHW) (OTCQX: CCHWF) reported financial results for the second quarter ending June 30, 2022, with revenue rising 18% to $129 million over last year’s $109 million. Revenue grew 5% sequentially from the first quarter. The company reported a net loss of $54 million versus last year’s net loss of $18 million, higher than the previous quarter’s net loss of $27 million. This is also expected to be the last quarterly earnings report before the company combines with Cresco Labs. Read more here.

Agrify Reports Losses, Lowers Guidance

Agrify Corporation (Nasdaq: AGFY) up-ticked in early trading Monday despite the company posting results far below analysts’ expectations — showing the waning demand for hydroponics amid the economic slowdown. Red more here.

4Front M&A Strategy Pays Off, Plans for Bloom Farms Bought Deal

After the market closed on Monday, 4Front Ventures Corp. (CSE: FFNT) (OTCQX: FFNTF) posted positive results — buoyed by growth from lucrative M&A deals over the past year. The vertical multi-state operator announced its financial results for the second quarter ended June 30, 2022. Read more here.

IM Cannabis Revenues Rise as Company Burns Through Cash

IM Cannabis Corp. (CSE: IMCC) (NASDAQ: IMCC) reported financial results for its second quarter ended June 30, 2022. IMCC said that revenues rose 114% in the second quarter and were $23.8 million versus the same quarter last year. Total dried flower sold was 3,210 kilograms at an average selling price of $5.72 per gram, compared to 1,842 kilograms for the same period in 2021 at an average selling price of $3.92 per gram. Read more here.

Atai Life Cuts Expenses, Extends Cash Runway

Atai Life Sciences (NASDAQ: ATAI) announced fiscal second-quarter results today for the quarter ending June 30, 2022 with no revenue, but an update on expenses and cash levels. Read more here.

Rubicon Organics Sales Rise as Premium Brand Grows

Rubicon Organics Inc. (OTCQX: ROMJF) delivered mostly positive results on Monday as the company begins to post profits — buoyed by its premium flower and pre-roll line. The Vancouver cultivator released its financial results for the second quarter ending June 30, 2022. Rubicon reported approximately $8.8 million in net revenue during the period, a 92% gain versus the same period last year. Read more here.

Planet 13 Misses on Revenue Despite Quarter Uptick

Planet 13 Holdings (OTC: PLNHF) posted results that missed expectations — showing how waning demand and slimming margins are affecting even the largest operators. The Nevada-based cannabis superstore delivered its financial results for the second quarter ending June 30, 2021. Read more here.

Sundial Sees Record Revenue as Expansion Bid Pays Off

SNDL Inc. (NASDAQ: SNDL) posted positive results as the company reaps record revenue from this year’s M&A bets. The Canadian vice operator — formerly known as Sundial Growers Inc. — delivered its second-quarter results ending June 30, 2022. Read more here.

CV Sciences Misses Expectations as Hemp Demand Stutters

CV Sciences, Inc. (OTCQB: CVSI) sales fell in the quarter as demand for hemp-derived products continues to fade. The hemp operator announced its financial results for the quarter ending June 30, 2022. Read more here.

Psychedelics Aren’t for Everyone

Before any clinical trials for psychedelics are begun, there is a standard but critical vetting process. A hopeful participant can get excluded from a trial because of uncontrolled hypertension; a history of additional risk factors such as heart failure; evidence or history of significant medical disorders; symptomatic liver disease; or because they are abusing illegal drugs. Read more here.

IN OTHER NEWS

Avicanna Inc.

Avicanna Inc. (TSX: AVCN) (OTCQX: AVCNF) (FSE: 0NN), a commercial stage, international biopharmaceutical company focused on the commercialization of cannabinoid-based products, announced the filing of its interim financial statements for the three-month period ending June 30, 2022. Read more here.

TPCO Holding Corp.

TPCO Holding Corp. (NEO: GRAM.U) (OTCQX: GRAMF), a consumer-focused California cannabis company, today announced its financial results for the quarter ended June 30, 2022. All amounts are expressed in U.S. dollars. Read more here.

Ascend Wellness Holdings, Inc.

Ascend Wellness Holdings, Inc. (CSE: AAWH.U) (OTCQX: AAWH), a vertically integrated multi-state cannabis operator, today reported its financial results for the three months ended June 30, 2022. Financial results are reported in accordance with U.S. generally accepted accounting principles and all currency is in U.S. dollars. Read more here.

Flora Growth Corp.

Flora Growth Corp. (NASDAQ: FLGC), a manufacturer and distributor of global cannabis products and brands, reported today its financial and operating results for the six months ended June 30, 2022. All financial information is provided in U.S. dollars unless indicated otherwise. Read more here.

The Flowr Corporation

The Flowr Corporation (TSX.V: FLWR; OTC: FLWPF) announced the closing of the previously announced sale of the Flowr Forest property to an arm’s length third party for aggregate proceeds of $3.4 million. The company used a portion of the proceeds from the sale of this non-core asset to repay the outstanding balance of its ATB-led credit facility in full. The company, now bank debt free, intends to the use the remaining proceeds for working capital. Read more here.

InterCure Ltd.

InterCure Ltd. (NASDAQ: INCR) (TSX: INCR.U) (TASE: INCR) announced its financial results for the second quarter of 2022 and provided shareholders with a business update. All amounts are expressed in Canadian dollars or New Israeli Shekels (NIS), unless otherwise noted. Read more here.

Neptune Wellness Solutions Inc.

Neptune Wellness Solutions Inc., (NASDAQ: NEPT) (TSX: NEPT), a diversified and fully integrated health and wellness company focused on plant-based, sustainable and purpose-driven lifestyle brands, today announced its financial and operating results for the three-month period ending June 30, 2022. Read more here.

SpringBig Holdings, Inc.

SpringBig Holdings, Inc. (NASDAQ: SBIG), a provider of SaaS-based marketing solutions, consumer mobile app experiences and omnichannel loyalty programs to the cannabis industry, today announced its financial results for the second quarter ended June 30, 2022. Read more here.

TILT Holdings Inc.

TILT Holdings Inc. (NEO:TILT) (OTCQX: TLLTF), a global provider of cannabis business solutions that include inhalation technologies, cultivation, manufacturing, processing, brand development and retail, is reporting its financial and operating results for the three months and six months ended June 30, 2022. Read more here.

LiveWire Ergogenics Inc.

LiveWire Ergogenics Inc. (OTC: LVVV), a company focused on acquiring, leasing, licensing, and managing special purpose real estate properties conducive to producing sun-grown cannabis products for medical and recreational adult-use in California, reported financial results for the second quarter 2022. Read more here.

urban-gro, Inc.

urban-gro, Inc. (Nasdaq: UGRO), an integrated professional services and design-build firm offering solutions to the controlled environment agriculture (CEA) and commercial sectors, today reported second quarter financial results. Read more here.

Field Trip Health & Wellness Ltd.

Field Trip Health & Wellness Ltd. announced that it has filed a listing application in connection with the previously announced intention to list its common shares on the TSX Venture Exchange (TSXV). It is anticipated that the shares will commence trading on the TSXV under the ticker symbol “FTHW” at the opening of the market on August 17, 2021. Read more here.

Small Pharma Inc.

Small Pharma Inc. (TSXV: DMT) (OTCQB: DMTTF), a biotechnology company focused on short-acting psychedelic-assisted therapies for mental health conditions, today announced that it has received approval from the U.K. Medicines and Healthcare products Regulatory Authority (MHRA) and the Regional Ethics Committee to initiate a drug interaction clinical trial in the U.K. The study will assess the interaction between serotonin reuptake inhibitors (SSRIs) and SPL026, the company’s lead N, N-dimethyltryptamine (DMT) candidate, in patients with major depressive disorder. Read more here.


Dave HodesAugust 15, 2022

6min1620

Atai Life Sciences (NASDAQ: ATAI) announced fiscal second-quarter results today for the quarter ending June 30, 2022 with no revenue, but an update on expenses and cash levels.

Atai completed a company-wide cost optimization initiative and an extensive pipeline review to both reduce its expected operating expenses and prioritize its capital resources on R&D programs. “We continue to execute on our pipeline – having achieved multiple Phase 1 milestones over the last months,” said Srinivas Rao, chief scientific officer and co-founder of Atai. “Going forward, we are focusing on R&D programs that we anticipate generating meaningful clinical data readouts over the next two years.”

Research and development expenses were $17.9 million and $33.4 million for the three and six months ended June 30, 2022, as compared to $16.0 million and $21.6 million for the same prior year periods. The increase of $1.9 million and $11.8 million, respectively, was primarily attributable to an increase in personnel costs, which included a decrease in stock-based compensation expense and increased contract research organization expenses related to the advancement of R&D programs.

General and administrative expenses for the three and six months ended June 30, 2022, were $17.2 million and $35.2 million, respectively, as compared to $37.3 million and $46.6 million in the same prior year periods. The decrease of $20.1 million and $11.4 million, respectively, was primarily attributable to a decrease in stock-based compensation expenses and professional fees, partially offset by an increase in insurance costs, and personnel and facilities costs.

Cash Levels

Cash, cash equivalents and short-term investments totaled $312.5 million as of June 30, 2022, compared to $362.3 million as of December 31, 2021. The six-month net decrease of cash of $49.8 million was primarily attributable to net cash used in operating activities of $45.9 million, $3.0 million of additional investments in the platform companies, offset by $1.9 million received from the conversion of promissory notes and equity issuances.

On August 9th, Atai entered into a term loan facility agreement for up to $175 million with Hercules Capital, Inc. (NYSE:HTGC).

Atai ended the second quarter of 2022 with a cash position of $312 million, which combined with the loan funding from Hercules is anticipated to provide cash runway into 2025.

During the earnings call, outgoing CFO Greg Weaver said that they have a very strong cash runway approaching half a billion dollars now. “In combination with a pipeline prioritization and some thoughtful cost tightening, we now forecast a runway extending into 2025,” he said. “That’s a full year beyond the earlier guidance and an important takeaway here as we continue to exercise the disciplined use of cash in this challenging macro environment.”

Florian Brand,  Atai co-founder, CEO, and managing director added to Weaver’s comment: “We have taken very strong and thoughtful measures to extend our runway by one year into 2025. We believe it has been the right strategic decision by adding a nondilutive debt financing of up to $175 million and a very intentional and thoughtful reprioritization of our pipeline. Because in our perspective, this puts us in a position to really focus on the key value inflection points in our programs.”

Other Atai company highlights include:

– Launched Phase 2 clinical trial of COMP360 in anorexia nervosa in July 2022.

– Data from the Perception Neuroscience PCN-101 Phase 2 Proof-of-Concept (PoC) study in treatment resistant depression expected by end of FY 2022.

– Recognify Life Sciences’ RL-007 Phase 2b proof of concept study to treat cognitive impairment associated with schizophrenia is expected to commence in 2022.

Company stock took a bit of a dip on May 11 to $3.13, but has been moving up nicely since August 1 to its current price of $4.58. Stock price started off this year at $7.66. 

Earnings per share is estimated at -0.23 and is expected to get significantly worse by 2023, to -1.11.The company had hit the expected EPS in the first quarter of this year—-$0.24.

Of the 13 analysts rating Atai, 12 put it at a buy or strong buy in both June and July. Strong buy analysts include Citigroup, Maxim, and Roth, among others.

According to Wallstreetzen, a stock research platform, Atai’s forecast annual revenue growth rate of 41.32 percent will beat the U.S. biotechnology industry’s average forecast revenue growth rate of 24.94 percent. It is also forecast to beat the U.S. market’s average forecast revenue growth rate of 8.7 percent.

Atai will host an R&D Day for investors on October 25th, 2022 to provide further updates and details on its innovative pipeline.


Dave HodesJune 14, 2022
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8min940

Editors Note: This story was originally published on June 13, but due to some technical problems we had to reset the website and as a result, the story got erased. This is the same story but republished.

 

Biotechnology is always a dicey business to create, run, and make profitable. Psychedelics add a difficulty factor of 10 to that equation.

Currently, there are many psychedelic companies still working their compound through clinical trials—with no actual product to market and sell for years.

Much of the real success of any psychedelic business hinges on the completion of clinical trials and Food and Drug Administration (FDA) approval, which takes serious time and money and is never guaranteed. 

And with any startup business, there is always risk: internal threats, external threats, workforce issues such as illness or theft, fraud, market changes, facility damage, rent increase—it’s a fairly exhaustive list.

An SBA financial education course presents a sort of Business Risks 101: Good risk management will help a business continue in operation. Mitigated risk leads to better cash flow and greater stability. Creditors will see this stability and good cash flow reflected in a company’s financial reports. Greater stability will mean the company will last into the future. 

The rewards of risk management are all linked together: good cash flow leads to stability, which leads to good credit, which leads to longevity.

Even before the startup business really gets off the ground, an investor should have done their due diligence on the risk they could be exposed to by the business, and do an analysis of an investment’s returns compared to its risk, with the expectation that a greater degree of risk is supposed to be compensated by a higher expected return.

There are computations and equations for determining risk using statistical methods that are historical predictors of investment risk and volatility, such as standard deviation, Sharpe ratio, value at risk, conditional value at risk, and others.

But all that cool analysis may or may not work in the hot, complicated world of the psychedelics industry, even with the news that nearly 50 psychedelic companies have gone public. Going public can offer a more secure investment because it helps a company raise capital to invest in future operations, expansion and acquisition.

Due diligence for a public company in the U.S. also means checking the U.S. Securities and Exchange Commission (SEC) filing of any company they are considering. 

The SEC filing can show how some psychedelics companies are still scrambling to organize their operations—even as investor money pours in seemingly oblivious to the danger at hand.

Take the sure thing as one example: Atai Life Sciences (NASDAQ: ATAI) . The company has eight lead investors, and has gone through 10 funding rounds since mid-2018, raising a total of $347.1 million. 

It’s one of the most closely watched psychedelics companies by investors. But the stock has been experiencing a steady decline since November, 2021, from just over $17/share to less than $4/share.

And company executives admitted in the company’s SEC filing that the company did not design and maintain formal accounting policies, processes and controls related to complex transactions necessary for an effective financial reporting process. “These deficiencies constitute material weaknesses in the design of our internal controls over financial reporting,” they said in their filing (pg. 60). “As a result of the material weaknesses, we have relied, in part, on the assistance of outside advisors with expertise in these matters to assist us in the preparation of our consolidated financial statements and in our compliance with SEC reporting obligations and expect to continue to do so while we remediate these material weaknesses.” 

As of March 31, 2022, those weaknesses had still not been remediated… but the company reported it had $335 million in cash as of that same day, the day of its first quarter reporting.

All that cash, all those funding rounds, and a crashing stock price.. under a management structure the company admitted had “material weaknesses.” 

Still too risky? Most investors would agree. 

But then there’s the 400 pound gorilla in the room: Predictions of a global psychedelic drugs market are very encouraging to say the least. Data Bridge Market Research says that the global market is expected to reach $6.4 billion by 2029, up from $2.4 billion in 2021.

Positive signs one day, red flags the next, all coming amidst projections of a wildly profitable industry just gaining its footing and attracting more startups. What’s the end game here?

There’s always risk in any business. But as the saying goes: Let the buyer beware.


Dave HodesMay 16, 2022
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6min1950

An earnings and business update video call today for Atai Life Sciences (NASDAQ-ATAI), a clinical-stage biopharmaceutical company that acquires, incubates and develops innovative therapeutics to treat depression, anxiety, addiction, and other mental health disorders, featured Atai Life Sciences CEO and Co-Founder Florian Brand; CSO and Co-Founder Srinivas Rao; and CFO Greg Weaver, as well as two analysts doing questions and answers during the call. Details and milestones of various clinical trials were the main topics of discussion during the call.

Atai’s stock rose over 8% in trading following the news and was lately selling at $3.96. One interesting development was when Atai stock prices hit a few bumps during the day of May 11th, up as high as $3.40 a share before settling back down to $3.12, during which time the company was making presentations about their current and future work at the closely watched 2022 Psych Symposium in London, billed as one of the important conferences where the leaders of Atai, Compass Pathway and Multidisciplinary Association for Psychedelic Studies (MAPS) talked about historic benchmarks in their clinical work. 

Volume peaked on May 11th at 362.92, the third-highest volume in the last 30 days, indicating that the company is riding another wave of momentum as it did six weeks ago. 

Analysts put earnings at -$.24 per share now in the first quarter, trending downwards since the beginning of the year, with a steady decline expected through the remainder of 2022 to a reduction of -$1.06 per share. 

Cash, cash equivalents, and short-term investments totaled $335 million as of March 31, 2022, compared to $362 million as of December 31, 2021. The three-month net use of cash of $27 million was primarily attributable to net cash used in operating activities of $24.0 million and $3 million of additional investments in the platform companies.

Business highlights for Atai as of the end of March 2022 include:

– Positive Phase 2b data with COMP360 from a ground-breaking treatment-resistant depression (TRD) trial, highly encouraging Phase 2a proof-of-mechanism data with RL-007 in cognitive impairment associated with schizophrenia (CIAS), clinical trial initiations with PCN-101, GRX-917 and DMX-1002, and successful completion of 2 cohorts in the Introspect Digital Therapeutics ketamine trials

– Eight new programs added to the platform since January 2021, bringing the total to 13 discovery and drug development programs and four enabling technologies

– The company also ended 2021 very well capitalized with $362.27 million in total cash and ended the first quarter of 2022 with $335 million in cash.

“The first quarter of 2022 continues with strong execution of our clinical pipeline,” said Rao. “We anticipate several clinical milestones in 2022 and beyond.”

Atai met its earnings target in Q3 2021, missed it in Q1, and significantly missed it in Q4.

Research and development expenses nearly tripled—they were $15.5 million for the three months ended March 31, 2022, as compared to $5.6 million for the same prior year period. General and administrative expenses for the three months ended March 31, 2022, were $18 million, as compared to $9.3 million in the same prior year period. 

There are 161 million shares outstanding. Insiders own 9.41 percent of the shares; institutions own 29.23 percent. Atai’s stock price hit a high $3.64 today, from a low of $3.27 the day after the May 11th conference. The stock price is up 12 percent today. A dozen analysts rate it a buy or strong buy.

“This exciting momentum continues in 2022, and our cash runway of approximately 2 years enables us to work towards our goal of achieving clinically meaningful and sustained behavioral change in mental health patients,” Brand said in a press release.

Weaver wrapped up the 30-minute presentation: “From my perspective, these are very turbulent times,” he said. “These financial markets are very rough as we sit here and in the middle of Q2 2022. This company is in a good position. We’ve got the resources to weather this storm, we’ve got a strong treasury, and we’re going to fund these programs with discipline to move them forward to reach the milestones that you’ve heard about today. We are very focused on our sweet spot in clinical development, focused on the patients in need, and very optimistic about the future both near term, and, despite the markets, both near term and long term.”

 


Dave HodesApril 19, 2022
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8min2790

The year 2021 has not been kind to the psychedelics industry. The stock performances of the 60 publicly traded psychedelics companies on the Psychedelic Stock Index have been trending steadily downward since February 22, 2021, to their lowest point since the index began on June 1, 2020.

The pandemic has definitely affected psychedelic business development. Nevertheless, a few companies are getting closer to offering products and expanding therapy services. So a looming perfect storm of more psychedelic companies laying the groundwork for further development may encourage a business rebound in 2022.

Here are our picks for the five psychedelic companies to watch in 2022:

Atai Life Sciences, Berlin, Germany – listed on NASDAQ (ATAI) since July, 2021 – Market cap $999 million

Atai Life Sciences, a clinical-stage biopharmaceutical company aiming to transform the treatment of mental health disorders, is also one of the largest shareholders in Compass Pathways. In December, 2021, Atai Impact, launched in October, 2021 as the philanthropic program of Atai Life Sciences, announced its first major initiative, the establishment of the Atai $2 million Fellowship Fund in Psychedelic Neuroscience in collaboration with Massachusetts General Hospital’s Center for the Neuroscience of Psychedelics. The company also entered into a series of joint ventures and acquisitions in 2021, including with Psyber, a globally based startup focused on the development of brain-computer interface-enabled digital therapeutics for treating mental health issues. What’s coming in 2022: In January, 2022, the U.S. Food and Drug Administration (FDA) gave Atai Investigational New Drug (IND) clearance to conduct a clinical study of ketamine. Atai plans to initiate the study early this year through its platform company Perception Neuroscience.

Compass Pathways, London, England – listed on NASDAQ (CMPS) since September 2020 – Market cap $751 million

Compass Pathways is a mental health care company dedicated to accelerating patient access to evidence-based innovation in mental health. Compass has completed a phase IIb clinical trial of psilocybin therapy for treatment resistant depression in 22 sites across Europe and North America, one of the largest randomized, controlled, double-blind psilocybin therapy clinical trial ever conducted. Compass is also running a phase II clinical trial of COMP360 psilocybin therapy for post-traumatic stress disorder (PTSD).  What’s coming in 2022: The company is preparing for a meeting with the FDA in early 2022 to finalize a program using their psilocybin therapy, and anticipates commencing that program late in 2022.

 

Cybin, Toronto, Ontario, CNlisted on NYSE (CYBN) since August 2021 – Market cap $192 million

Cybin is a leading biotechnology company focused on progressing psychedelic therapeutics by utilizing proprietary drug discovery platforms, innovative drug delivery systems, novel formulation approaches and treatment regimens for psychiatric disorders. It was the first psychedelics company to trade on the NYSE in August, 2021. The company has raised just over $96 million to date to fund clinical trials, M&A and IP strategies. What’s coming in 2022: In October 26, 2021, the FDA authorized an IND application to proceed with the company’s sponsored feasibility study using Kernel’s Flow technology to measure ketamine’s psychedelic effect on cerebral cortex hemodynamics (brain flow blood). Kernel Flow uses pulsed light instead of continuous wave light to increase measured brain information. Kernel Flow is a wearable device the size and look of a bicycle helmet. In the future, it could be more broadly used for neuroscientific or physiological studies of brain activity during psychedelic use.

 

Field Trip Health, Toronto, CN – listed on NASDAQ (FTRP) since July 2021 – Market cap $149 million

Field Trip does research and development on novel, psychedelic-inspired regulated medicines, and operates clinics that deliver ketamine-assisted psychotherapy in Canada and the United States. Field Trip currently operates and/or owns nine clinics in Toronto, Ontario; Fredericton, 

New Brunswick; New York, New York; Santa Monica, California; Chicago, Illinois; Atlanta, Georgia; Seattle, Washington; Houston, Texas; and Amsterdam, The Netherlands. What’s coming in 2022: The company is planning to build an additional nine Field Trip Health Centers in Vancouver, British Columbia; San Diego, California; Washington, DC; Stamford, Connecticut; San Carlos, California; Austin, Texas; Scottsdale, Arizona; Dallas, Texas; and Miami, Florida. On January, 2022, Field Trip announced that the U.S. Patent and Trademark Office (USPTO) issued a Notice of Allowance for Field Trip’s patent application for their first novel psychedelic molecule in development. Field Trip expects the patent to be issued in February, 2022.

 

MindMed, New York, NY – listed on NASDAQ (MNMD) since April 2021. Market cap $357 million.

MindMed is a clinical-stage biotech company that seeks to discover, develop and deploy psychedelic-inspired medicines and therapies to address mental health and addiction. What’s coming in 2022: On January 4, 2022, the company announced the completion of its Phase 1 clinical trial of 18-MC, the company’s non-hallucinogenic proprietary derivative of ibogaine, being developed for the treatment of indications linked to opioid use disorder. This phase 1 single and multiple ascending dose trial conducted at a single clinical research site in Perth, Australia, evaluated the safety, tolerability, pharmacokinetics, and effects on the cognitive activity of 18-MC in healthy volunteers. The trial was completed in December 2021 with results expected in early 2022.

Sources: Company SEC filings; Yahoo! Finance; Psychedelic Stock Index; company websites and press releases


Dave HodesMarch 9, 2022
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12min770

When you take a big picture look at the psychedelics industry, you can easily get starry-eyed: Predictions of $6.85 billion industry by 2027. Mental health and wellness demands firing up a ready-made market. Support from more and more mainstream educational and institutional organizations creates credibility and access. Big money investors all in.

Yet most of these psychedelic companies are startups, still in the product research and development stage, working on novel compounds, with no product, no revenue, as they spend more and more on research and development just to stay in the game.

Perhaps there can be some comfort gleaned about the future of a young psychedelic company from the established non-psychedelic life science product companies, who have actual products ready to sell, and who continue adding products to their pipeline. 

They face the same issues as the psychedelics companies—regulatory hurdles, patent protection, and months or even years of product development. They have a tried-and-true track record for success—a pathway from expensive research and development to (sometimes) wild profit.

Established non-psychedelic life science drug development companies spend up to 25% percent of their revenues on R&D. Those costs go up all the time, increasing by about 8.5 percent per year over roughly the past decade, according to an April 2021 report from the Congressional Budget Office. 

Adjustments to manage R&D costs have to be made to this engine of innovation, which is also the genie of profitability. In response to higher R&D costs, non-psychedelic life science companies are focusing on specialized R&D models that require enhanced capabilities to promote greater R&D efficiency.

The critical importance of the burden of R&D expenses to the success of these non-psychedelic life sciences operations is a lesson learned by psychedelic startups, who know that R&D costs are pivotal because they fuel the future pipeline. 

As they operate with no revenue, psychedelics companies tell potential investors from the outset that R&D, where they spend most of any money they can get, is the key to the kingdom of future revenue riches right now. Otherwise, they’re sunk.

Take a look at what one of the fastest-growing and more successful psychedelic companies, Compass Pathways (NASDAQ: CMPS), says about itself. 

Compass raised $146 million in its their September 2020 IPO, and an additional $144 million in a secondary offering in April 2021.

Fair enough..and wow. Sounds like a winner.

But what Compass management reported in their Securities and Exchange filing for the fiscal year ending on December 31, 2021, was rife with warnings and negative scenarios about their future success, just so no one misunderstood or diminished the obstacles they are up against in trying to be a profitable, R&D-driven psychedelics company. 

In fact, most of the warnings seem to be part of a reporting boilerplate for other psychedelic companies (such as Atai Life Science). 

First the good R&D news from the SEC filing. On November 3, 2021, the company announced that they are conducting a Phase II clinical trial to assess the safety and tolerability of COMP360 psilocybin therapy in post-traumatic stress disorder (PTSD). The study expands COMPASS’s research pipeline in COMP360 psilocybin therapy. 

Then Compass pounded away on itself, admitting to serious business survival issues that resonate with other psychedelic companies—no revenue, more R&D expenses expected—especially in their list of 24 bulleted statements in the “risks associated with their business” section of the SEC (pages 5 and 6). 

Here’s a selection of those statements: 

Page 5: “We are a clinical-stage mental health care company and have incurred significant losses since our inception. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability.”

Page 5: “Research and development of drugs targeting the central nervous system are particularly difficult, which makes it difficult to predict and understand why the drug has a positive effect on some patients but not others.”

Page 5:We have never commercialized a therapeutic candidate before and may lack the necessary expertise, personnel, and resources to successfully commercialize our therapies on our own or with suitable collaborators.”

Page 6:We face substantial competition and our competitors may discover, develop or commercialize therapies before or more successfully than us, which may result in the reduction or elimination of our commercial opportunities.”

The SEC document noted that R&D expenses doubled for Compass to $44 million for the year ended December 31, 2021, over the previous year. But those expenses are nowhere near slowing down.

Page 136: “Research and development activities are central to our business model. Product or therapeutic candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials and related product manufacturing expenses. As a result, we expect that our research and development expenses will continue to increase over the next several years.”

Investors seem to like psychedelics companies today, wary about the riskiness of them but banking on the hope of a psychedelics therapy development that could make them millions nearly overnight. It’s happened repeatedly in the non-psychedelics life science world. And it continues today. For example, Aduhelm, a treatment for Alzheimer’s disease from life science giant, Biogen, could make upwards of $15 billion in the U.S

Public opinion could calm investor jitters, too. A recent survey from the United Kingdom think tank found that 59 percent of respondents would consider psilocybin-assisted therapy for themselves if they had a condition where there was strong evidence it could be effective—something only ongoing research and development could confirm.

But for now, investors in psychedelics—and psychedelics company executives—have to live with the burdensome truth of emerging growth companies: a ton of R&D expenses on the rise, no revenue insight, and many, many health and mental wellness promises to keep.

 

 

Sidebar #1

Research and development activities for a psychedelics company:

– Laboratory research aimed at discovery of new knowledge. 

– Searching for applications of new research findings or other knowledge. 

– Conceptual formulation and design of possible product or process alternatives. 

– Testing in search for or evaluation of product or process alternatives.

– Modification of the formulation or design of a product or process.

– Design, construction, and testing of preproduction prototypes and models. 

– Design of tools, jigs, molds, and dies involving new technology.

– Design and development of tools used to facilitate research and development or components of a product or process that are undergoing research and development activities.

Source: SEC filing, Compass Pathways, Chapter 3: Research and Development

 

Sidebar #2

Definitions of R&D in the psychedelics industry:

– Research is planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service (referred to as product) or a new process or technique (referred to as process) or in bringing about a significant improvement to an existing product or process. 

– Development is the translation of research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or use. It includes the conceptual formulation, design, and testing of product alternatives, construction of prototypes, and operation of pilot plants.

Source: SEC filing, Compass Pathways, Chapter 3: Research and Development


Dave HodesMarch 7, 2022
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7min880

On April 7, 2021, Atai Life Sciences , (NASDAQ: ATAI) a clinical-stage biopharmaceutical company developing psychedelics and non-psychedelic compounds for mental health wellness, acquired a majority stake in Delaware-based Psyber, a company working on a brain-to-computer (BCI) interface device. 

It is hoped that the Psyber brain-to-computer device, still in development, can enable various digital therapeutics to improve mental health disorders through inducing behavioral changes. But the device also represents an evolutionary step toward an even greater understanding of the human mind—and perhaps a better way to understand and treat mental health.

“Brain-computer interfaces (BCIs) are poised to transform the nature of human consciousness in the 21st century,” according to a research article published by Frontiers in Computer Science.

As described in the press release about the Atai Life Sciences deal, Psyber’s EEG-based BCI device records electrical activity in the brain for real-time interpretation of emotional, behavioral, and mental states. Traditionally, the main goal of BCI has been to replace or restore useful functions to people disabled by neuromuscular disorders. But recent studies have shown that the technology may have useful applications for mental health disorders as it allows for direct decoding of emotional experience from neural activity.

The goal is to empower patients prescribed medication to achieve better mental health outcomes by offering personalized and novel digitally enhanced, behavior-changing experiences that complement their medication-assisted therapy. 

Prahlad Krishnan, CEO of Psyber, said that BCI has the potential to “change the world” as we know it. “In the context of mental health, this is no exception as every patient enrolled in BCI-assisted therapy will have greater autonomy, ever more empowered to change their feelings and behaviors to improve their quality of life,” Krishnan was quoted on the Psyber website.

This new deal between Atai and Psyber, and the development work of other companies looking into BCI such as Neuralink, co-founded by Elon Musk, continue to drive interest in a future in which BCIs are likely to become increasingly integrated into our everyday lives, as noted in the research article. “It is believed that BCI will be important to involve more voices from across traditional disciplinary divides contributing to the conversation about what our future should look like and how BCI devices and data should contribute to our lives.”

The explosion of consumer electronics during the ’80s and ’90s resulted in substantial moves in the BCI space in the late 2000s and early 2010s. NeuroSky, Emotiv, and Zeo Sleep Coach among others developed consumer EEG devices, and BodyMedia, Polar, Fitbit, and other devices measured signals from the autonomic nervous system. Psychedelics substances combined with BCI is envisioned as an extension of those early developments.

The first human trials of BCI technology were conducted in May 2021, by a team at the Carney Institute for Brain Science at Brown University doing a full human trial of a high-bandwidth wireless neural interface capable of detecting neural signals for 24 hours at a time in a patient’s everyday life. 

The system worked with an interface called BrainGate, which works using micro-electrode arrays implanted into the brain, and has shown that neural signals associated with intent to move can be “decoded” and used to operate external devices. The device works by digitizing the collected signals and transmitting them to a series of antennas located around the space in which the user moves.

The BrainGate system enabled people with spinal cord injury, brainstem stroke, and ALS to control computer cursors simply by thinking about moving their own paralyzed hand and arm. In early clinical research, people with paralysis have controlled advanced prosthetics, assistive movement, communication devices, and their own paralyzed limbs.

Pilot clinical trials of the BrainGate2 system at Brown are going ever further in understanding how the human brain works. Researchers using that system are investigating how neuronal activities are modulated with general neural states (such as attention and sleep). 

Their research also focuses on the development of new statistical methodologies and algorithms to find meaningful spatiotemporal patterns of neural activity, especially their relationship to intended action, behavioral/cognitive states, and disease conditions.


Debra BorchardtJune 18, 2021
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4min1160

Psychedelic industry leader Atai Life Sciences B.V. (Nasdaq: ATAI)  announced the pricing of its upsized initial public offering in the United States of 15,000,000 common shares at a price to the public of $15.00 per share. atai’s common shares are expected to begin trading on the Nasdaq Global Market on June 18, 2021 under the ticker symbol “ATAI.” In April, the company had initially planned on a $100 million offering, but that has ballooned to $225 million.

Atai is a clinical-stage biopharmaceutical company aiming to transform the treatment of mental health disorders. atai was founded in 2018 as a response to the significant unmet need and lack of innovation in the mental health treatment landscape, as well as the emergence of therapies that previously may have been overlooked or underused, including psychedelic compounds and digital therapeutics. The company has created a pipeline of 10 therapeutics and six enabling technologies. So far none of the Atai-supported drugs have received regulatory approval. One of its companies, Recognify Life Sciences, has initiated a Phase 2a trial in the US. ATAI expects to initiate a Phase 2 trial for another program in 2021 and an additional three Phase 2 trials for other programs in 2022.

Atai has raised more than $362 million in private funding from a group of VCs and other investors. Its most famous investor is Peter Thiel. Besides Thiel and his firm, Thiel Capital, the company’s other notable backers include Steve Jurvetson‘s Future Ventures. Atai is headquartered in Berlin, with offices in New York and London.

In addition, atai has granted the underwriters a 30-day option to purchase up to an additional 2,250,000 common shares at the initial public offering price, less underwriting discounts, and commissions. The offering is expected to close on June 22, 2021, subject to customary closing conditions.

Compass Pathways, a biopharmaceutical company that patented the psychedelic compound psilocybin for use in treatment-resistant depression, went public on the Nasdaq last September and currently has a market capitalization of $1.2 billion. Thiel and Atai, through its founder Christian Angermayer, were major private investors in Compass Pathways before its IPO.

 


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