While the UK remains the main European hub for psychedelics research, a recent €105M Series C round from the German player ATAI Life Sciences suggests the rest of Europe may start to catch up.
With this week’s huge Series C round, the Berlin-based ATAI Life Sciences has attracted big attention to the potential of psychedelic drugs for treating psychiatric disorders.
The money will chiefly fund drug development in ATAI’s subsidiaries, which are developing a range of psychedelic and non-psychedelic compounds to boost mental health. For example, the US firm Perception Neuroscience was acquired by ATAI in 2019, and is developing a modified form of ketamine in phase II to treat clinical depression.
Although recreational psychedelic drugs are tightly controlled in many countries, their potential for the treatment of mental health disorders such as depression is tantalizing the biotech and pharma industry.
For example, current antidepressants such as fluoxetine can only treat the symptoms of depression, and can bring side effects such as anxiety and low sex drive. Supervised dosing with psilocybin, the main ingredient of magic mushrooms, achieved long-lasting therapeutic effects in a small study run by the UK’s Imperial College London in 2016. The drug is thought to do this by rewiring the brain, and has fewer side effects than traditional medication.
ATAI Life Sciences in Germany seems to be the lone psychedelics player in Europe outside of the UK. After the US and Canada, the UK is one of the big hubs of the field. A large part of this influence comes from the UK firm Compass Pathways, which is partly owned by ATAI. Compass gave a huge jolt to the field in September with a €108M Nasdaq IPO and its stock price was swiftly driven up by 70%.
“The media has become increasingly interested and next to follow were regulators and investors,” said Cosmo Feilding-Mellen, the CEO of UK psychedelics startup Beckley Psytech. He added that Compass’ IPO “reflects the fact that psychedelic medicines are no longer a taboo, they are something that mainstream media, business, and healthcare can support.”
Compass Pathways is developing psilocybin as a treatment of different types of clinical depression, including a form that is resistant to current medications. It’s one of the most advanced companies in the field, pushing three programs through phase II clinical trials and fueled by its IPO and a €68M Series B round in March.
So why is the UK so prominent of all European countries in this field? Feilding-Mellen believes the UK’s leadership is backed up by decades of psychedelic research. This led to the first-ever clinical trial using psilocybin in treatment-resistant depression, which took place at Imperial College London in 2016.
ATAI’s Series C and Compass’ big splash on the Nasdaq form only a part of the surge of activity in the psychedelics field this year. In the UK, Beckley Psytech raised €3.3M in a Series A in July. Meanwhile, across the Atlantic, two psychedelic drug developers went public in March: the Canadian Champignon Brands listed on the Canadian Securities Exchange with a modest €2.6M IPO, and US firm Mind Medicine (MindMed) jumped onto the Canadian NEO Exchange for over €17M. In September, MindMed also announced plans to list on the Nasdaq.
This flurry of fundraising also coincides with a gradual easing of the stigma against psychedelics research after these drugs became widely banned in the 1960s. This attitude shift is happening faster in the US than in Europe.
Furthermore, the growing interest in mental health comes at a time when the Covid-19 pandemic is disrupting mental health services across the world, and 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.”
With the psychedelics field starting to mature this year, companies in the rest of Europe could soon be encouraged to follow ATAI into the psychedelics field.
“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