ATAI Life Sciences Stock – A Psychedelic IP Powerhouse
While the idea sounds good on paper, publicly traded venture capital firms haven’t impressed Wall Street over the years. The original nano VC stock, Harris & Harris Group (now 180 Degree Capital Corp), hasn’t done much and still languishes to this day. There are plenty of names across the pond like IP Group and Trendlines Group, neither of which we found overly compelling. While there are several appealing VC fund hybrids in the UK like Scottish Mortgage and Draper Esprit, we believe Alumni Group is the best bet for retail investors who want exposure to startups as an alternative asset class. Accredited investors can invest in startups alongside some of the world’s greatest VCs.
There are publicly traded VCs, hybrid funds that combine stocks and startups, and companies that hold equity in other companies as part of their business model. A good example of the latter would be Intrexon (now Precigen) which had equity stakes in probably a dozen different companies. Many of Intrexon’s equity investments were in over-the-counter (OTC) stocks, a big red flag in itself. The extent to which a firm gets involved in the companies it invests in is what differentiates a VC from a company like Intrexon. Today, we’re going to talk about a company called ATAI Life Sciences that’s a collection of psychedelic medicine holdings. And now they’re having an initial public offering (IPO), which is thankfully not a SPAC, so we have a delicious S-1 filing to munch on. Unfortunately, it tastes like a mouthful of dried cubensis.
About ATAI Life Sciences Stock
If Buffet is right to say we should avoid investments we can’t easily understand, then ATAI Life Sciences belongs in the circular filing cabinet. We first tried to understand what the company does in last year’s piece on The Psychedelic Therapy Company Treating Mental Health. At the time, our sources said an IPO was imminent, and those chickens have come home to roost. ATAI is planning to offer their shares to the public in an IPO that expects to raise $100 million.
Founded in 2018, ATAI Life Sciences is a German biotech startup that has raised $304 million in disclosed funding to build a holding company that creates, invests in, or acquires businesses developing psychedelic therapies. The relatively young startup has a handful of founders, one of whom is Christian Angermayer whose family office houses around $750 million of his own money made from building and selling pharma business. (Sifted calls him “one of Europe’s most powerful and influential tech investors.”) War chest in hand, and with other prominent investors like Peter Thiel at his side, he’s now looking to establish a dominant portfolio of intellectual property surrounding psychedelic therapeutics with majority ownership in the following entities.
|Company Name||Drug Under Development|
|Recognify Life Sciences||GABA/nicotinic modulator|
|Viridia Life Sciences||DMT (ayahuasca)|
|Revixia Life Sciences||Salvinorin|
ATAI has a total of 10 development programs with a trial roadmap that looks something like this:
One of our atai companies, Recognify Life Sciences, has initiated a Phase 2a trial in the United States. We expect to initiate a Phase 2 trial for another program in 2021 and an additional three Phase 2 trials for other programs in 2022. We also expect to initiate Phase 1 trials for three of our programs in 2021 and an additional four in 2022.ATAI Life Sciences S-1 Filing
They’re then encapsulating the whole thing with “enabling technologies” that all their portfolio companies can benefit from which are comprised of these six companies they’ve either acquired or have majority ownership in:
- EntheogeniX Biosciences – an AI-enabled computational biophysics platform designed to optimize and accelerate drug discovery.
- Introspect Digital Therapeutics – a digital therapeutics platform dedicated to improving patient outcomes through personalized care.
- InnarisBio – a formulation technology company developing a sol-gel based, intranasal excipient technology.
- PsyProtix – developing metabolomics-based biomarkers that stratify patients with treatment-resistant depression.
- Psyber, which is developing an electroencephalography, or EEG, -based brain-computer interface technology for psychiatric use.
- IntelGenx Technologies – an oral thin film, or OTF, drug delivery system manufacturer.
Keep in mind that this eclectic group of entities are in various stages of development. When ATAI says, “Since January 1, 2021, we spent $1.4 million on asset acquisitions for the following entities: InnarisBio, PsyProtix, Psyber and IntelGenx,” it gives us some clue that these “acquisitions” didn’t result in much being acquired aside from intellectual property.
Finally, ATAI lists four equity investments, one of which looks awfully familiar.
- Innoplexus AG (35%) – operates as an AI platform transforming drug discovery and development.
- Compass Pathways (22.1%) – Trying to commercialize psylocybin. See our previous article on Compass for more info.
- Neuronasal (9.8%) – working on a treatment that can be given after a patient suffers brain trauma.
- GABA Therapeutics (7.5%) – an anxiety medication as effective as benzodiazepines like Xanax.
It’s not going to be easy for investors to monitor ATAI’s progress when it takes us an entire caffeine-fueled afternoon just to figure out the absolute basics of what’s under the hood.
Bullish on Biotech
When you invest in a company, you give the leadership team carte blanche to spend your money on what they see fit. Bloomberg talked about how Mr. Angermayer’s been dabbling in bitcoin and SPACs, and who can blame him, but that paints a picture of someone with a very high tolerance for risk.
In an interview with Psychedelic Invest, Mr. Angermayer talks about how “50% of my entire portfolio is in biotech” which he breaks down into two main focuses: longevity and mental health. (Turns out he’s closely involved with AbCellera, a company we’re planning to do a deep dive on.) Taking a big concentrated bet on a single industry is risky enough, but that risk increases when you’re first to the table. We’ve seen far too many tech themes burn through massive amounts of cash trying to reach traction and fail. Retail investors know this well, with themes like solar and synthetic biology punishing the early birds who were left holding the bag of worms. Stocks like Intrexon that promised a pure play on synthetic biology failed miserably. (We sold our shares when they started selling apple slices.) Eventually, others filled their shoes, and there are now some very promising pure-play synbio stocks. Point is, ATAI investors are putting their money alongside the company’s biggest shareholder, Mr. Angermayer, a man with high tolerance for risk who is spending money hand over fist acquiring assets. And he’s not the only one trying to land grab psychedelic intellectual property.
Vice magazine used to be an edgy rag with writers who had some cojones. These days, it’s a publication of pandering politically correct pansies which occasionally throw their readers a bone. Last month, Vice published a great piece on how The Race to Patent Psychedelics Is Just Getting Started which talks about how “Psychedelic compounds appear in patent applications for Philip Morris e-cigarettes, periodontal disease, hair loss, weight loss, and the treatment of food allergies.” MindMed’s LSD neutralizer compound is mentioned among the plethora of psychedelic use cases being patented by various companies, everything from periodontal disease to allergies. It’s a spray-and-pray approach that seems to resemble ATAI Life Sciences’ mad scramble to acquire assets.
To Buy or Not to Buy
Mr. Angermayer’s inspiration for psychedelic therapeutics was his own experience tripping on shrooms. If you’ve ever taken acid, you know the scoop. It’s pointless trying to explain how powerful hallucinogens are to anyone who has never dabbled. Even without personally experiencing the incredulousness of hallucinogenic substances, the bull thesis is still easy to imagine.
The Bull Story
The Fourth Industrial Revolution is ushering in an era where people below a certain intelligence level won’t have gainful employment. That minimum required intelligence threshold will only increase over time. That’s a huge problem because jobs aren’t just about income, they provide self-actualization. While income can be replaced, the mental health effects of joblessness will be a much harder problem to solve. People are going to be bored out of their minds and largely depressed with no real sense of purpose. And we’re not convinced “the passion economy” will solve the problem.
Psychedelics offer mankind a way to expand the notion of reality beyond what we know today. Mental health problems will become a thing of the past as everyone is able to alter their consciousness to achieve something – if not happiness, at least the absence of pain and suffering. Psychedelic medicines could transform the pharmaceutical industry such that they’re the predominantly prescribed therapeutics for mental health. That’s the bull story.
The Bear Story
The bear story can take any number of directions. With $750 million of his own money to play with, Mr. Angermayer can take a lot more risk than your average investor looking to find “the next Microsoft.” Like all biotech stocks, expect a great deal of volatility from ATAI as they try and commercialize numerous compounds in an attempt to bring psychedelic therapeutics mainstream.
Have they bitten off more than they can chew? Trying to manage a dozen companies you’ve rapidly acquired is no easy task, and it’s easy to lose focus on what really matters here – getting a drug to market that proves the concept. The good news is that Mr. Angermayer has plenty of experience having been involved in more than 40 successful IPO-and-M&A transactions either as an entrepreneur, investor, or banker/advisor.
Cannabis is an attractive thesis because it involves recreational use alongside therapeutic use. The psychedelic thesis is only about therapeutics, and some are concerned that an attempt at laxing regulations around recreational psychedelics will actually have a detrimental effect on the development of therapeutics. While reader interest remains strong around the psychedelics thesis, we’re staying on the sidelines for this one. Now that the taboo is being lifted, maybe the best thing you can do is figure out what all the fuss is about for yourself. It’ll blow your mind man.
If the IPO goes through as planned, shares of ATAI Life Sciences will trade under the ticker ATAI.
While we pass out the occasional spliff to increase creativity among our writers and researchers, investing in cannabis isn’t our cup of tea. It’s too risky. Instead, we’ve invested in more than 30 tech stocks, the names of which can be found in The Nanalyze Disruptive Tech Portfolio Report.