raised by psychedelics companies in 2023
Annual Fundraising Activity in Psychedelics
The chill on fundraising activity that began in 2022 was sub-zero in 2023, with aggregate capital inflows to the psychedelics space (both public and private companies) a substantial 49% lower than in 2022 and over 84% down from 2021’s high.
In terms of deal count, there were 50 financing events in 2023 versus more than 100 in 2021. And the average investment per deal is down from a monster $18m in 2021 to just $6m in 2023.
What’s more, over 40% of the year’s aggregate financing dollars can be attributed to a private placement by Compass Pathways, which brought in $125m3.
Quarterly Fundraising Activity in Psychedelics
When viewed at a more granular level, quarter-by-quarter in this case, the drop in funding is just as striking.
Q1 2023 was punctuated by Transcend Therapeutics’ $30m Series A, the largest raise for a private company last year. Journey Clinical’s $8.5m Series A (Q1) was the most significant round for a company outside of the drug discovery and development segment.
As aforementioned, offerings by public companies dramatically outweighed raises by their private peers. As well as Compass Pathways’ $125m offering (which was supplemented by additional at-the-market offerings), Cybin raised over $45m via equity offerings in 2023.
Private Psychedelics Company Investment Rounds
Looking only at investments in private companies and disaggregating this data by round, we see a total lack of Series B or C financings in 2023, at least in terms of announced financing events.
Sankey Chart: 2023
Using a Sankey chart we can visualise, broadly4, the sources and uses of capital inflows.
The vast majority of capital inflows to psychedelics companies in 2023 came via public financings, with almost all of that capital accruing to drug discovery and development companies. This should be unsurprising, given the fact that drug development is very capital intensive, the nascent nature of the medical psychedelics industry, and the fact that it’s what we have seen in previous years.
Sankey Chart: 2017 - 2023
If we visualise all of the above fundraising data in a Sankey chart (i.e., 2017-2023), we see a relatively even split between VC and public financing, in aggregate. We also see that very pronounced trend of drug discovery and development companies taking the lion’s share of capital.
Publicly-listed clinics and care delivery companies fell out of favour in 2023, with notable failures including Field Trip’s demise. As such, despite the fact that psychedelic therapies are closer than ever to potential regulatory approvals, we saw substantially lower levels of funding assigned to care delivery in 2023 than in prior years.
Psychedelics in the Public Markets
It was another challenging year for publicly-listed psychedelics companies. Both the Horizons Psychedelic Stock ETF (PSYK) and AdvisorShares Psychedelics ETF (PSIL) performed significantly worse than a commonly-used indicator of the broader (listed) biotech industry’s health: the SPDR S&P Biotech ETF (XBI).
While the psychedelics ETFs appeared to be somewhat correlated with XBI for the first three quarters, they failed to appreciate towards the end of the calendar year while the broader listed biotech basket did so rather substantially.
Looking at the basket of 40 or so publicly-traded psychedelics companies by marketcap, Compass Pathways, atai Life Sciences, and GH Research remain the largest.
Public Psychedelics Companies by Marketcap
Cybin’s marketcap has grown substantially since year-end 2022, especially when compared to others in the space.
It’s worth noting that this basket of stocks contains around ten fewer than last year’s, owing to a number of insolvencies and acquisitions.
While many listed psychedelics companies struggled to maintain their market value last year, some became ceased to exist altogether.
Companies that are effectively insolvent or inactive, according to filings, include Delic Holdings, Field Trip, Levitee Labs, and PsyBio Therapeutics. Neonmind Biosciences, meanwhile, entered into a reverse merger transaction with a lithium mining company, which assumed its listing and ticker.
When we place public psychedelic stocks in a basket we gain a sense of perspective by comparing the aggregate marketcap to that of mid-cap, large-cap and mega-cap pharmaceutical companies like Sage5, Otsuka and Pfizer, respectively.
Let’s hone in on a few examples of listed companies and their share price movements in 2023, or a portion thereof.
Cybin's Acquisition of Small Pharma
In the case of Cybin, we can see a challenging H1’23, followed by some positive price movement in H2. The company’s acquisition of Small Pharma appears to have been met with a vote of confidence from investors.
GH's Clinical Hold
In late September, GH Research announced that its FDA Investigational New Drug (IND) application for GH001 had been placed on clinical hold. GH’s share price dropped by more than a quarter in the following month.
atai's R-ketamine Candidate Fails
At the beginning of the year, on the 6th of January, atai announced that its Phase IIa study of PCN-101 (R-ketamine) for treatment-resistant depression (TRD) had failed to meet its primary endpoint. Shares in the company immediately dropped substantially.
MindMed's Choppy Chart
MindMed’s share price movement in 2023, meanwhile, is a reminder that press releases and corporate updates often belie underlying company developments… and dramas.
Since mid-2022, the company has been the subject of a shareholder activist effort to force a leadership change and reprioritise the company’s pipeline.
In June 2023, the company appeared successful in its attempts to head off the challenge as all six of MindMed’s nominees were elected to the Board. (The original meeting was adjourned due to lack of quorum. The company announced that it believed representatives of FCM Holdings, the activist group, “deliberately acted to prevent the voices of all shareholders from being heard.”)
Investors appeared to let out a sigh of relief, with the company’s share price increasing substantially in the following weeks.
The company also appeared to benefit from a slight bump in investor confidence following the April 2023 announcement that its collaborators at University Hospital Basel (UHB) had generated positive data from a trial of LSD in the treatment of major depressive disorder (MDD).
Pα: It was undoubtedly a challenging year for psychedelics companies, across both the public and private markets. With reports of a more optimistic mood among biotech investors in this new year, many will hope that capital returns to the space in order to support the progression of drug development pipelines and commercialisation efforts. ∎
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- From VC rounds (seed, A, B, etc.) through to IPOs, private placements, etc. We exclude loans and credit facilities. We also exclude new rounds from companies that have moved away from psychedelics as a core focus, such as Octarine Bio, which raised €4.35M but is now focused on sustainable dyeing technology (as opposed to its former focus, which saw psychedelics occupy a large portion of its synthetic biology platform). We also didn’t include Tactogen’s crowdfunding which raised just under $100k, as it was (deliberately) a non-traditional fundraise and thus doesn’t fit neatly into our tracker.
- Only rounds that have been announced publicly, however, are included here.
- An additional $160m is tied to the exercise of warrants and as such is not recorded in our tracker until such warrants are exercised.
- We classify each investment or round as either VC (i.e., investment into a private company) or investment into a public company. We assign each recipient company a position on the psychedelics value chain. Where companies straddle multiple value chain segments, we assign the segment that the company is most substantially engaged in.
- Since we set these comps last year, Sage has technically fallen out of mid-cap territory after its marketcap dropped below $2bn in 2023. We include it here for comparison’s sake (we included it in last year’s visualisation).