Atai prunes pipeline, drops out of partnerships as it takes on $175M loan and focuses on looming data readouts
Planning for the long haul, mental health-focused biotech atai Life Sciences has taken a hard look at its sizable portfolio — and decided to cut off parts of it.
The decision to stop funding certain programs and discovery efforts, described as a “company-wide cost optimization,” should lead to “significant cost savings,” noted CEO Florian Brand. At the same time, he’s pulling in $175 million through a term loan facility from Hercules Capital, a move that should extend the cash runway to 2025.
“This additional runway provides us with the ability to achieve numerous proof-of-concept data readouts without additional dilutive financing,” he said.
Atai ended Q2 with $312 million in cash and cash equivalents. But much like the rest of the industry, it’s living through a biotech winter that’s depressed its stock, which currently sits at $4.62.
The biotech, which is backed by billionaire Peter Thiel, was founded in 2018 to take a platform approach to developing drugs for mental health disorders such as depression and schizophrenia, backing a variety of approaches — including, notably, psychedelics — through acquisition, incubation and partnerships.
As atai explains in its Q2 update, it began the pipeline review with the goal of trimming operating expenses and finding the most valuable programs to prioritize.
Execs have now decided to discontinue funding, beyond existing obligations, to programs at subsidiary Revixia as well as Neuronasal and DemeRx NB, with whom atai had partnerships. The three companies have each been tied to a drug candidate, including RLS-01 for treatment-resistant depression, NN-101 for mild traumatic brain injury and DMX-1001 for opioid use disorder.
That leaves eight programs in the streamlined pipeline that are expected to generate readouts over the next two years, said CSO and co-founder Srinivas Rao, “starting with the PCN-101 Phase 2a read out in treatment-resistant depression (TRD) by end of year.”
Under atai’s deal with Hercules, it’s drawing $15 million at closing of the loan and has the option to draw another $20 million by March. The rest becomes available in tranches through 2025, with a variable interest rate.
Overseeing the finances from now on will be Stephen Bardin, who’s succeeding Greg Weaver as CFO.
