While the UK remains a big European hub for psychedelics research, two initial public offerings this week from atai Life Sciences and GH Research suggest the rest of Europe is catching on fast.
This week has seen two major initial public offerings (IPOs) in the European psychedelics niche. First came the Nasdaq debut by the Berlin-based atai Life Sciences last week, bagging a gross €188M ($225M). And today, the Irish firm GH Research priced its own Nasdaq IPO at around €133M ($160M).
Atai operates a decentralized model by acquiring stakes in companies that develop drugs to boost mental health. For example, the UK-based Compass Pathways and the US firm Perception Neuroscience under atai’s umbrella aim to treat clinical depression using forms of the psychedelic drugs psilocybin and ketamine respectively. In addition to proceeds from a €105M ($125M) Series C and €131M ($157M) Series D round, part of atai’s IPO financing will fund the clinical development of these programs.
Meanwhile, GH Research’s IPO follows on from a $104.5M ($125M) Series B in March. Cash from these rounds will be used to fuel the clinical development of treatments for clinical depression based on 5-MeO-DMT, a psychedelic compound found in some plants and a species of toad.
GH Research and atai have joined the growing club of psychedelic drug developers that have gone public in the last year, including Compass Pathways in the UK, the UK-Canadian biotech Small Pharma, and MindMed in the US.
“Accumulating evidence around the efficacy of psychedelics to treat depressive disorders has fuelled investor demand,” said Carol Routledge, Chief Medical and Scientific Officer at Small Pharma.
“Promising signs from clinical trials have helped here, and the pandemic has played a role in evolving investor understanding of how drugs can be developed quickly to respond to a medical need that is yet to be fully addressed.”
Other European biotechs are also building up their muscle in the psychedelic scene. In December, the Oxford-based startup Beckley Psytech raised €16.3M (£14M) to bankroll clinical trials of its lead candidate for neuropsychiatric disorders. The Swiss startup MindShift Compounds was recruited by MindMed earlier this year to co-develop psychedelic compounds. And last month, the London company Clarify Pharma listed on the Aquis Stock Exchange Growth Market with the aim of investing in psychedelics developers.
Along with the US and Canada, the UK is one of the main hubs of the psychedelics field. Part of this prominence stems from the leading role of UK institutions in psychedelic research over the decades. For instance, a small study run by Imperial College London in 2016 found that supervised dosing with psilocybin, the main ingredient of magic mushrooms, achieved long-lasting therapeutic effects in people with treatment-resistant depression.
“The media has become increasingly interested and next to follow were regulators and investors,” said Cosmo Feilding Mellen, the CEO of Beckley Psytech. “Psychedelic medicines are no longer a taboo, they are something that mainstream media, business, and healthcare can support.”
Although the recreational use of psychedelic drugs is tightly controlled in many countries, the potential of these compounds for the treatment of mental health disorders such as depression is tantalizing the biotech and pharma industry.
In the case of clinical depression, current antidepressants such as fluoxetine can only treat the symptoms, don’t always work, and can cause side effects such as anxiety and low sex drive.
Meanwhile, psychedelic drugs like psilocybin could have long-lasting effects, help patients that fail to respond to current medications, and have fewer side effects. According to phase I results recently released by Compass Pathways and researchers at King’s College, there was no evidence for ‘clinically relevant’ cognitive problems resulting from supervised psilocybin dosing.
The growing excitement over psychedelics biotechs also coincides with the gradual easing of a stigma against psychedelics research that originated when these drugs became widely banned in the 1960s. Furthermore, the growing interest in mental health comes at a time when the Covid-19 pandemic is disrupting mental health services across the world, leading to fears of a mounting crisis.
“With Covid-19 only accentuating the failures of existing standards of care, we are at an inflection point when it comes to seriously addressing this global mental health crisis,” said Christian Angermayer, founder of atai, in a public statement.
Going forward, Feilding Mellen is confident that legal red tape isn’t a serious barrier to getting these drugs to market.
“If we are able to prove in large, regulatory-standard clinical trials that psychedelic medicines are safe and effective, then regulators will grant licenses for these drugs to be prescribed,” he told me.
“This is the same path that other well-known controlled drugs such as Ritalin (amphetamine) and Epidiolex (cannabidiol) have gone through in the past and there is no need for drug policy reform to make this happen.”
As psychedelics players start releasing clinical results in the coming months, more companies and investors across Europe could soon be encouraged to tap into the emerging psychedelics market. The field could also undergo a similar expansion to that of medical cannabis, which is recovering from its own decades-long stigma.
“There are a lot of amazing researchers all over Europe and I’m sure we will see more psychedelic research projects cropping up across the continent,” concluded Feilding Mellen.
This is an updated version of an article published on the 22nd September 2020
Image from Elena Resko