Tempering Excitement Around Recent Raises

Already this month we have seen two financing or dealmaking events among psychedelics companies that have rallied investors and company execs alike.

In the first week of May, a weary Reunion Neuroscience surprised many by announcing a $103M Series A round to progress its 4-HO-DiPT prodrug candidate through a suite of Phase 2 studies (see Reunion Neuroscience Gets a New Lease of Life with $103M Series A to Fund Phase 2 Studies of 4-HO-DiPT Prodrug).

Then, earlier this week, one of the largest pharmaceutical companies in the world—AbbVie—announced a collaboration and option-to-license agreement with Gilgamesh Pharmaceuticals. The financial terms of the deal see Gilgamesh receive a $65M payment along with up to $1.95 billion in aggregate option fees and milestones up for grabs (with ‘mid-single to low-double digit royalties on net sales). (See Breaking: AbbVie Inks Deal with Gilgamesh Pharmaceuticals.)

As one might expect, both news stories were met with broad excitement by psychedelic industry bods; many of whom touted the events as a sign that mainstream healthcare investors and big pharma firms were increasingly interested in psychedelics.

But a more sober appraisal might be warranted.