Major Goals For ATAI: $175M Secured In Term Loan Facility, Plus Q2 Earnings Report

Clinical-stage psychedelics company ATAI Life Sciences N.V. ATAI announced its financial results for the quarter ended June 30, 2022 and business updates, including a term loan facility agreement for up to $175 million provided by Hercules Capital Inc. HTGC.

The company expects the new non-dilutive financing facility, together with the total existing cash in hand, will provide cash runway until 2025, as the flexible draw availability provides options to optimize liquidity and capital structure moving forward in ATAI’s developments.

The Financial Results

  • Total cash of $312.5 million for the period ended June 30, 2022, compared to $362.3 million as of December 31, 2021. The net decrease of almost $50 million was due to operating activities and additional investments in the platform companies, while receiving $1.9 million from the conversion of promissory notes and equity issuances.

  • R&D expenses totaled $17.9 million and $33.4 million for the three and six months ended June 30, 2022 respectively, compared to $16.0 million and $21.6 million for the same periods in 2021. The increases owe to an increase in personnel costs, including a decrease in stock-based compensation expense and an increase of contract research organization expenses for R&D programs advancements.

  • Acquisition of in-process R&D expense for the six months ended June 30, 2022 of $0.4 million involves the IPR&D acquired from Kures. Acquisition of in-process R&D expense for the same period in 2021 totaled $8.9 million and involved IPR&D acquired from InnarisBio and Neuronasal.

  • Net loss owed to shareholders for the three months ended June 30, 2022 totaled $36.6 million (including non-cash share-based compensation expense of $9.5 million), compared to $48.5 million (including non-cash share-based compensation expense of $37.5 million) for the same period of 2021.

  • Net loss owed to shareholders for the six-months ended June 30, 2022 totaled $73.5 million (including non-cash share-based compensation expense of $19.7 million), compared to $47.8 million (including non-cash share-based compensation expense of $37.7 million) for the same period of 2021.

The New Loan’s Details 

Under the terms of the $175 million facility, $15 million was drawn at closing, with an additional $20 million available to be drawn by March 15, 2023, while additional $25 million would become available for withdrawal by December 15, 2023. 

The remaining $115 million would become consequently available through March 31, 2025. The loan facility’s interest is set at a prime-based variable rate currently at 10.05% and matures 48 months from closing, yet may be extended to 54 months if certain performance milestones are achieved. 

Pipeline Highlights

ATAI’s achieved R&D milestones include the completion of the clinical phase of the Drug-Drug-Interaction (DDI) study of PCN-101, the database lock for the GRX-917 Phase 1 clinical trial, the completion of SAD portion of the ongoing KUR-101 Phase 1 clinical trial, and the start of VLS-01 Phase 1 clinical trial.

The Company has also streamlined its pipeline by decelerating programs and discontinuing funding to a list of programs as well as to certain discovery efforts, so the refocused pipeline includes eight compounds (psilocybin COMP360, R-ketamine PCN-101, RL-007, GRX-917, KUR-101, ibogaine DMX-1002, VLS-01 and MDMA-derivative EMP-01) and three enabling technologies (Introspect, InnarisBio, IntelGenx and EntheogeniX). 

COMP360, the psilocybin-based compound for Treatment-Resistant Depression (TRD), is being used in a Phase 2 clinical trial for anorexia nervosa as of July 2022. The Phase 3 program for TRD was submitted to the FDA and is expected to begin by the end of FY 2022.

R-ketamine PCN-101 for Treatment-Resistant Depression (TRD) treatment has completed the Phase 1 DDI study, and data from the Phase 2 study is expected by the end of FY 2022.

RL-007 for Cognitive Impairment Associated with Schizophrenia (CIAS) would begin a Phase 2b study in H2 2022.

Database lock for the Phase 1 trial of GRX-917 (deuterated etifoxine) for Generalized Anxiety Disorder (GAD) treatment was achieved and the results are set to be reported in H2 2022.

KUR-101 (deuterated mitragynine) for Opioid Use Disorder (OUD)’s Phase 1 results are expected in H2 2022.

Ibogaine-based DMX-1002 for Opioid Use Disorder (OUD)’s Phase 1 results are expected in H2 2022.

VLS-01 (dimethyltryptamine) for Treatment-Resistant Depression (TRD)’s Phase 1 trial (May 2022) is the first application of Introspect’s DTx to an atai pipeline product, and the plans are to use this technology to support participants before and after dosing. This phase 1 trial aims to compare the safety, tolerability, and PK of IV versus oral administration of DMT.

MDMA-derivative EMP-01 for PTSD’s Phase 1 clinical trial recently received ethics committee approval and expects to get central regulatory approval in H2 2022. The trial will include Introspect’s DTx to support participants before and after dosing.

ATAI anticipates all the listed compounds will be in clinical development stages by the end of 2022. 

ATAI’s Leaders Comments

Cofounder and CEO Florian Brand believes the company’s agreement with Hercules Capital together with accurate business and financial decisions regarding cost optimizations by prioritizing ATAI’s development programs with expected meaningful near-term clinical value inflections will add an additional year, up ‘til 2025.

“We have taken strong actions to extend our anticipated runway by one year into 2025. We further strengthened our already strong cash position of $312M at end of Q2 by securing a non-dilutive term loan facility of up to $175M, and we anticipate realizing significant cost savings from a company-wide cost optimization,” said Brand. “This additional runway provides us with the ability to achieve numerous proof-of-concept data readouts without additional dilutive financing.”

Regarding the new agreement, Hercules Capital managing director Michael Dutra expressed: “The significant commitment from Hercules is intended to help atai execute on its important mission and reflects our dedication to financing innovative life science companies.”

Srinivas Rao is ATAI’s chief scientific officer and cofounder. His view: “We continue to execute on our pipeline – having achieved multiple Phase 1 milestones over the last months. Going forward, we are focusing on R&D programs that we anticipate generating meaningful clinical data readouts over the next two years.” 

Rao further added: “We are excited about our refocused pipeline with 8 potential value generation events over the next 6-12 months starting with the PCN-101 Phase 2a read out in treatment-resistant depression (TRD) by end of year.”

Photo courtesy of Louis Reed on Unsplash. 

Posted In: CannabisMid CapNewsPenny StocksPsychedelicsFinancingSmall CapManagementMarketsFlorian BrandMichael DutraSrinivas RaoTreatment Resistant Depression

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