Breaking: World’s Largest Pharmaceutical Company, Eli Lilly, Acquires 5-MeO-DMT Developer AtaiBeckley for Up to $3.8 billion

This morning, Eli Lilly confirmed that it will acquire AtaiBeckley, following rumours circulated in Bloomberg yesterday, as well as our reporting last week that a deal was nearing completion.

AtaiBeckley’s lead candidate is intranasal 5-MeO-DMT (BPL-003) for treatment-resistant depression, which is now entering Phase 3. It has been competing fiercely with GH Research, which is developing an inhaled formulation of the drug for the same condition.

The terms of the agreement see Lilly acquire all outstanding shares of the psychedelic drug developer for $6.75 apiece, with up to $2.50 per share in milestone-based payments covering both BPL-003 and VLS-01, its DMT-based candidate.

Those three milestone-based payments are:

1. $1.00 per share once VLS-01 reaches Phase 3, within four years of the deal closing
2. $0.50 per share upon FDA approval and DEA rescheduling of BPL-003, within five years of the deal closing
3. $1.00 per share upon FDA approval and DEA rescheduling of VLS-01, within seven years of the deal closing.

That gets us to an equity value of around $2.8 billion in cash upfront, with potential for an additional $1 billion in biobucks.

In terms of pricing, it’s the largest psychedelic buyout yet, by quite some margin.

Earlier this year, Otsuka acquired Transcend Therapeutics, which has a methylone (TSND-201) for PTSD candidate entering Phase 3, for up to $1.225 billion with $700 million up front. Late last year, meanwhile, AbbVie scooped up Gilgamesh Pharmaceuticals’ lead candidate, bretisilocin (GM-2505) for major depressive disorder (MDD), in a deal valued at up to $1.2 billion, $900 million of which was paid upfront.

The cash price per share represents a premium of just over 25% compared to ATAI’s closing price on Wednesday and around 40% when looking at the last month’s average trading price.

But some investors in the company that Psychedelic Alpha spoke with were disappointed by the terms, and would have preferred to remain invested in AtaiBeckley as its 5-MeO-DMT candidate heads into Phase 3.

Voices within the psychedelics field are mixed, too. Some have welcomed the acquisition as a sign of the field’s maturity, while others are skeptical of the pharmaceutical juggernaut’s fit for stewarding the development and potential roll-out of a potent psychedelic like 5-MeO-DMT.

Notably, Lilly avoided using the term ‘psychedelic’ in its press release, and did not discuss 5-MeO-DMT’s effects other than the “rapid and durable reductions in depressive symptoms” reported in AtaiBeckley’s Phase 2b program.

The news of today’s deal comes just over four months after it was rumoured that AtaiBeckley was seeking a partner or royalty investor. Then, sources close to the matter told us that the company had hoped to partner on BPL-003, rather than sell the candidate, let alone the company, outright.

The transaction is expected to close this quarter.