Atai Archives - Green Market Report

Dave HodesAugust 23, 2022


To talk about company resilience in the psychedelics industry is a bit premature. After all, most of the more prominent companies didn’t open their doors until 2016 or later.

But it’s the perfect time to build a foundation for resilience while they look to a future of opportunity. Established life science businesses can help show the way.

Challenges to Survival

The COVID-19 pandemic was one of those unplanned disruptors that forced many life sciences businesses to adapt quickly to a different business landscape and demonstrate not only their resilience but their ability to answer the call of duty during a health crisis.

Big, established pharmaceutical companies such Pfizer and Merck take disruptive events in stride, even when called on to put everything else on hold to address the outbreak of a deadly virus. But other life science companies emerging in the same space, such as psychedelics, are not so inclined.

As Pfizer’s billion-dollar revenues pile up year after year, it can adjust relatively easily to even unplanned change. For example, even with the pandemic disruption, Pfizer reported full-year 2021 revenue of $81.3 billion, reflecting a 92% growth in operations.

But nearly every one of the prominent psychedelic companiesAtai Life Sciences NV (Nasdaq: ATAI), Compass Pathways (Nasdaq: CMPS), Cybin (NYSE: CYBN), Mind Medicine (NEO: MMED, Nasdaq: MNMD), Seelos Therapeutics (Nasdaq: SEEL) – still have not shown any significant revenue. They are on the edge of failure already, and any disruption could swiftly kill the business.

One example of psychedelics’ tenuous grip on survival comes from Compass Pathways, founded in 2016. “Even if the company’s therapeutic development efforts are successful, it is uncertain when, if ever, the company will realize revenue from sales,” the company noted on page 13 of its quarterly financial filing with the SEC.

Most of these psychedelic companies look to be in serious financial trouble. Atai included these risk factors in its Form S-1 filed with the SEC:

  • Our limited operating history may make it difficult to evaluate the success of our business and to assess our future viability; we have never generated revenue and may never be profitable.
  • We are a clinical-stage biopharmaceutical company and have incurred significant losses since our inception. We anticipate that we will continue to incur significant losses for the foreseeable future.
  • We expect our financial condition and operating results to continue to fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control.

The unexpected can and will happen for clinical-stage development bioscience businesses, like psychedelics, working on novel drugs expected to have a multibillion-dollar earnings future.

Take Mind Medicine’s roller coaster ride this year. The company, founded in 2019, is a clinical stage neuro-pharmaceutical drug development company developing product candidates based on psychedelic substances. Its shares fell far and fast, from $2.86 a share in November 2021 to 58 cents on Aug. 9. It then surged an incredible 52% on Aug. 18 after news came out of a rich investor, Jake Freeman, jumping in.

According to the Financial Times (FT), Freeman and his uncle Dr. Scott Freeman, a former pharmaceutical executive, recently amassed an activist stake in the company. FT reported that Freeman is planning to have a “constructive” dialogue with the board alongside his study of complex analysis and mathematical statistics at the University of Southern California.

That’s not resilience for MindMed; that’s a lucky break that should begin an earnest discussion about resilience since there is so much more at stake.

Strategies for Resilience

There are signs of some psychedelics businesses maturing and adjustments being made, which could indicate more attention to resilience as a higher priority item.

For example, management at Atai Life Sciences reported in their recent quarterly financial report that it had enough money to operate into 2025 ($487 million).

To sustain that goal, the company “streamlined its pipeline by decelerating programs and discontinuing funding beyond our obligations to several programs.” The company said it will further review its pipeline and prioritize capital expenditures of research and development programs with the most potential – financially and for patients.

MindMed, on the other hand, appointed two new directors to its board, a move that is seen by industry observers as a sort of “special sauce” that makes the company more attractive as an investment. Specifically, the new directors add depth of business insight and life sciences value to MindMed’s management objectives.

This strategy of clearing the pipeline and beefing up expertise is probably the best way for any psychedelics company to continue to not just grow but lead the industry as a resilient operator.

Seelos Therapeutics, a company founded in 2016 advancing multiple late-stage therapeutic candidates for central nervous system disorders using ketamine and gene therapy, reported on page 7 of its quarterly report that it generated “limited revenues,” and that management believes that the company’s existing cash and cash equivalents as of June 30, 2022, “are not sufficient to satisfy its operating cash needs for the year.”

One of the 10 ways that Seelos management listed in which it could stay resilient against this somewhat dark and foreboding outlook was its ability to “maintain, expand and defend the scope of its intellectual property portfolio, including the amount and timing of any payments the company may be required to make, or that it may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights.”

A strategy centered around intellectual property could be just the thing to keep a company resilient in the face of any economic or competitive challenge.

Cybin, founded in 2019, continues to build its intellectual property portfolio, with one patent issued and 19 patents pending across six patent families, almost guaranteeing resilience against anything but cataclysmic economic collapse.

The company has completed more than 200 preclinical studies to date, supporting its growing portfolio of proprietary psychedelic molecules and has developed more than 50 novel compounds.

The good news is that the life science industry, which includes psychedelics, represents a steady economic growth driver, bolstering state, regional and national economies even during economic recessions, according to the June 2021 report by the Coalition of State Bioscience Institutes (CSBI). While this has held true during the last two recessions, 2020 was perhaps the ultimate test of the industry’s resilience.

“Despite the challenges of a global pandemic and the resulting economic shutdowns that led to a recession, and facing a corresponding seismic shift to remote operations, in 2020, the industry managed to grow its employment base by 1.4% while the overall private sector saw a 5.1% decline.”

Interviews with life sciences executives point to several emerging technology areas that are expected to take on increasing importance and have implications for talent needs both immediately and into the near future, according to the report. The technology and innovation areas most cited include data analytics and data sciences, automation of production and other processes and related robotics, and artificial intelligence.

Psychedelics businesses are beginning to settle into a more of a bioscience/life sciences business development routine, building on the quality of their clinical trial operations for now and guarding their intellectual property. Following a business plan to grow their workforce and stay resilient against the threats both internally and externally is really a higher priority agenda item today.

Results will play out over the next five years or so as clinical trials lead to final FDA drug approval. Then sales will begin, and they will realize some of their first revenue figures.

The promise of better human health and wellness using unique and novel drug therapies will, hopefully, keep the top psychedelics business today resilient and humming along, with only the usual bump in the road to deal with while fulfilling their destinies.

Dave HodesMay 9, 2022


The financial players in the disruptive psychedelics industry have become part of a jigsaw hodge-podge of new and strategic investors each taking a risky shot in an industry that is slowly attracting more millionaires. 

They want to get their piece of the action. But with an emerging industry like psychedelics and all the unknowns involved in it, they are essentially banking on the financing moves of other big-money movers and shakers in the psychedelics space for guidance.

Some are sensing a big-time, long-term winner in the making if they can just manage to wait out a company’s startup financial pain management. Others are content to just watch the ups and downs play out—for now. 

There are signs that the industry is about to make the kind of real progress that even conservative investors like to hear. The clinical work of psychedelic companies is getting tantalizingly closer to creating an FDA-approved psychedelic drug that would be a truly original treatment for mental health, currently led by developments in psilocybin and MDMA.

And some of the bigger investors have a personal reason for taking their own leap of faith with their fortunes, adding an interesting wrinkle to their investing motivation.

Psychedelic Billionaires

Over the last couple of years, the psychedelics industry has seen a few billionaires take the plunge, including German billionaire Peter Thiel, co-founder of PayPal and an early investor in Facebook, currently enjoying a net worth of $7.9 billion, down from a 2021 high of over $9 billion. He has also done venture stage investments in both SpaceX and LinkedIn. 

Peter Theil

Thiel invested $11.9 million in Atai Life Sciences (NASDAQ: ATAI), which was founded by billionaire Christian Angermayer in 2018, who himself got into psychedelics after an illuminating personal experience with psilocybin

Thiel and Angermayer watched their Atai Life Sciences stock surge 40 percent in its NASDAQ debut in June 2021, just the third psychedelics company to go public in the U.S., raising $225 million from selling 15 million shares. Angermayer also owns about a quarter of Compass Pathways (NASDAQ: CMPS), one of the earliest stars of the psychedelics industry that is gaining even more momentum after completing a phase IIb clinical trial of psilocybin therapy for treatment-resistant depression in 22 sites across Europe and North America. 

It was the largest randomized, controlled, double-blind psilocybin therapy clinical trial ever conducted.

Angermayer has become a sort of investor guru for psychedelics. He appears to ostensibly be on more of a personal mission to cure the ills of mankind than just a billionaire playboy looking for cool investments. He always discusses the huge market for any psychedelic drug that can successfully treat depression, often citing the statistic from the World Health Organization that there are 300 million people suffering from depression worldwide.

That’s just the sort of help-for-all-mankind bandwagon that attracts other big-money players who are checking out the market. Just two years ago, a group of Silicon Valley and Wall Street executives reportedly raised $30 million to speed the development of MDMA to treat trauma patients, including Genevieve Jurvetson and her husband Steven, who co-founded the automation startup Fetcher. They donated $2.6 million. 

Joby Pritzker

Joby Pritzker, the Silicon Valley investor whose private equity company has holdings in Tesla, Uber, and SpaceX, donated over $1 million and is on the board of the Multidisciplinary Association for Psychedelic Studies (MAPS). 

Another Silicon Valley superstar, billionaire Bob Parsons, founder of the web-hosting company GoDaddy, gave $2 million.

Parsons also has a personal connection to psychedelics. He is a Vietnam vet suffering from PTSD who began exploring psychedelic therapy as an option to manage his trauma.

Parsons later went even further with his psychedelics investments. He gave $5 million to the Mount Sinai Health System in September to build and support training and education for therapists using MDMA-assisted psychotherapy and other psychedelic medicine approaches. The multiyear grant will support the Center for Psychedelic Psychotherapy and Trauma Research in the Department of Psychiatry at the Icahn School of Medicine at Mount Sinai.

R&D Investment

But it’s not always the big money guys playing, because the industry is seeing record-setting benchmarks in the industry coming from other investor sources. For example, in 2021, investments in psychedelics companies grew to $595 million across 45 deals, setting a new annual record, accelerated by such drivers as the overall declines in return on investment for drug research and development pushing pharmaceutical companies to explore alternative product types like psychedelics. 

But it’s all a bit of a sticky wicket. While all this good news is playing out, the leading psychedelics companies are still experiencing financial loses. For example, one of the top five psychedelics companies, MindMed, listed a net loss of $93 million in 2021in their annual report, adding that “considerable effort was directed towards employing a successful financing strategy.”

But still: The millionaire—and billionaire—drumbeat for psychedelics gets louder every year. In fact, the world’s richest person, super billionaire Elon Musk (current net worth is $268 billion) appears to be hovering around the psychedelics industry, tweeting in April that he “talked to many more people who were helped by psychedelics & ketamine than SSRIs & amphetamines.” Is he next to jump in? Or is this psychedelics bonanza slowing down for the time being? As with many things in the disruptive psychedelics industry, all that can be done is to wait and see.

Dave HodesApril 5, 2022


Most people in the psychedelics industry believe that the growing superstar of psychedelic medicines is psilocybin—the “psychedelic du jour” as one scientist put it to Psychedelia.

But ketamine is quickly changing that perception.

Ketamine was introduced to the market in 1970 as a U.S. Food and Drug Administration (FDA) approved anesthetic after clinical trials that began following its formulation in 1962. More than 20,000 research papers have been published on ketamine since 1965, mostly about its use as an anesthetic, according to a study

From the 1970s through the 1990s, ketamine usage increased both medically and recreationally.

In the late ‘90s and early 2000s, ketamine began to show evidence as an effective antidepressant. Since 2006, 225 random controlled trials, 51 meta-analyses, and more than 565 reviews have reported on ketamine’s effectiveness at alleviating refractory depression and anxiety, and more recently, suicidality and pain management.

Ketamine is also being investigated for use with eating disorders (though researchers say that more empirical research is needed).

The biggest advantage of ketamine is that it is generally believed to be an FDA-approved drug for psychedelic therapy. But an FDA alert issued in February stated that ketamine is not FDA-approved for the treatment of any psychiatric disorder, blurring the understanding of exactly how it should be used. 

However, the “S” form of ketamine, which is derived from ketamine and known as Johnson and Johnson’s Spravato (esketamine), is a Schedule III controlled substance that was approved by FDA in 2019 as a nasal spray for treatment-resistant depression in adults, and depressive symptoms in adults with major depressive disorder with acute suicidal ideation or behavior.

What’s more, questions about the efficacy of ketamine have arisen from research that suggests ketamine use can create psychiatric, cardiovascular, neurological, and other side effects. 

But those issues haven’t stopped its growing popularity as a treatment for depression and other neurological disorders. It makes ketamine a target for more research. And that is happening.

For example, in November 2021, Yale Department of Psychiatry researchers were awarded a $2 million grant from the Michael J. Fox Foundation for Parkinson’s Research to conduct a clinical trial of ketamine to treat depression in people with Parkinson’s disease. It is the first investigation of ketamine as an antidepressant in a neurological disorder.

Research and development activities for ketamine companies is on the rise as well.

PharmaTher (OTCQB: PHRRF) (CSE: PHRM), created to develop and commercialize specialty ketamine pharmaceuticals for mental health, is planning a Phase 3 clinical study to allow for FDA approval of Ketarx, their ketamine treatment for Parkinson’s disease.

Seelos Therapeutics (US:SEEL) is currently pursuing a two-part Phase 2 clinical trial for intranasal delivery of ketamine, with results expected in December 2022.

Atai Life Sciences N.V. (Nasdaq: ATAI), a clinical-stage biopharmaceutical company, announced in January that the FDA has given 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.

Field Trip Health, (NASDAQ: FTRP) the largest provider of psychedelic-assisted therapies in Canada, continues to open ketamine clinics for therapeutic use across the U.S. and Canada, with the goal of opening up to 75 ketamine clinics by 2023 to join Field Trip clinics that are already operating in such locations as downtown New York and Los Angeles (both cities also have multiple private ketamine therapy businesses not associated with Field Trip). 

Field Trip began operations in March 2020. They recently applied to the Canadian government to legally use psilocybin and MDMA-assisted therapies under Canada’s Special Access Program.

The use of ketamine as a fast-acting antidepressant in treatment-resistant patients has boosted the interest in the mechanism of action both in psychiatry and in the wider area of neuroscience. “Ketamine can make a genuine leap forward in the therapy of depression,” a study concluded. “Its clear effectiveness in reducing symptoms of depression and suicidal ideation, either after a single administration, or especially when administered repeatedly in addition to another antidepressant, is an extremely promising factor in the treatment of depression. Furthermore, research on new molecules designed to reproduce the rapid and sustained antidepressant effects of ketamine, without its adverse effects, allows us to assume that a new era in the pharmacology of antidepressants has already begun.”

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