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The Peter Thiel-backed psychedelic start-up has shares popping on Wall Avenue debut

Peter Thiel-backed psychedelic start-up Atai Life Sciences soared on Friday on its first day of trading on Wall Street.

The newly listed Nasdaq stock opened 40% before falling a little. The shares closed nearly 30% to $ 19.45 each.

The German biotech company’s IPO was $ 15 per share on Thursday evening, the high end of the expected range. The company, which aims to make psychedelic drugs for the treatment of mental disorders, raised $ 225 million on a valuation of $ 2.3 billion.

Atai is the third psychedelic biotech company to go public in the US, following in the footsteps of MindMed, which went public on Nasdaq in April, and Founder Fund-funded Compass Pathways, which listed in September were. As of Thursday’s close of trading, Compass Pathways is up 26% since its debut, and MindMed, which has just announced the resignation of its CEO, has been down about 19% since it went public.

Each biotech develops therapies with the psychedelic mushroom compound psilocybin, LSD and MDMA derivatives for the treatment of addiction and mental illnesses such as depression, anxiety, schizophrenia and traumatic brain injuries. Three years after its inception, Atai Life Sciences has 10 therapeutic programs in its pipeline, each in different phases of clinical trials.

Atai founder and chairman Christian Angermayer said Friday on CNBC’s “Squawk Box”: “The world we are building is a bad place for our brains, so mental health problems will increase. Portfolio to end the mental health crisis . “

Investor interest in psychedelic treatments has grown as the medical community’s interest in these therapies has grown.

Centers for psychedelics and psychology include Johns Hopkins University, Yale University, University of California, Berkeley, and the Icahn School of Medicine. Recent studies showing MDMA’s promise in treating post-traumatic stress disorder and the effectiveness of psilocybin, a hallucinogenic chemical found in psychedelic mushrooms, in treating drug-resistant depression have only increased interest in the area.

Angermayer was an early investor in Compass Pathways, and his own company, Atai, serves as the holding company for various psychedelic startups pursuing alternative treatments for mental illness. He told CNBC on Friday that new age biotechs are building on centuries of practice in shamanic cultures and religions.

There are currently restrictions worldwide on psychedelic mushrooms, MDMA – commonly known as molly or ecstasy – and LSD. However, Oregon became the first US state to legalize psychedelics for therapeutic use last year. Washington, DC residents also recently voted to decriminalize the use of psychedelics for medical purposes.

Atai Life Sciences listed on Nasdaq for its IPO on June 18, 2021.

Source: Nasdaq

Angermayer insists that government approval of these drugs for therapeutic use for people with mental illness could make a big difference. “They are very, very strong drugs, but they must be taken under supervision. … You will trip while sitting with your therapist.”

Behind Atai Life Sciences are, among others, the billionaire investor Thiel as well as Mike Novogratz’s Galaxy Investments and Angermayer’s own Apeiron Investment Group.

According to venture capital tracker CB Insights, psychedelic VC deals have grown significantly over the past three years: less than $ 100 million in venture capital was invested in psychedelic startups in 2018 and 2019, but $ 346 million in 2020. By April 2021, VCs had already invested $ 329 million in the industry.

It’s no wonder Atai’s IPO was oversubscribed more than 12 times, according to a market source wanting to remain anonymous due to the nature of the discussion. “A good part was taken over by existing investors,” said the person, adding that Thiel was the largest existing investor and that he “doubled” when he went public.

Mutual fund Palo Santo said it made a notable stake in Atai’s initial public offering. “There is an urgent need to address our broken mental health system,” said Daniel Goldberg, co-founder of Palo Santo, in a statement. “We believe psychedelics will expand treatment options and transform the outdated system.”

Atai filed an S-1 filing with the Securities and Exchange Commission in April, which found it had raised a total of $ 362.3 million from private investors at the time.

The company, which describes itself as a drug development platform, was founded to acquire, incubate, and develop psychedelics and other drugs used to treat depression, anxiety, addiction, and other mental illnesses.

Atai has approximately 50 employees in offices in Berlin, New York and San Diego and currently works with 14 companies focused on drug development and other technologies.

In exchange for a controlling interest in the drugs and technologies they develop, Atai helps scientists raise money, work with regulators, and conduct clinical trials. None of Atai’s drugs have yet been officially approved by regulatory agencies.

Thiel invested $ 11.9 million in Atai in November through his venture firm Thiel Capital.

“Atai’s great virtue is taking mental illness as seriously as we should have taken all illnesses all along,” said Thiel, the co-founder of Palantir and PayPal, in a statement shared with CNBC at the time. “The company’s most valuable asset is its sense of urgency.”

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