Eli Lilly has struck a deal to buy AtaiBeckley for $2.8 billion upfront, continuing its takeover spree to move into a psychedelic mental health sector targeted by companies including Johnson & Johnson.
AtaiBeckley’s lead candidate is BPL-003, a fast-acting intranasal formulation of the psychedelic substance 5-MeO-DMT. The substance, which is found in some plants and animals, stimulates the serotonin system that regulates mood. A phase 2b trial linked BPL-003 to statistically significant improvements in patients with treatment-resistant depression (TRD) starting Day 2. The effects were maintained through Day 57.
Lilly has agreed to pay $6.75 per share in cash to buy AtaiBeckley, representing a 40% premium over the biotech’s 30-day volume-weighted average trading price. AtaiBeckley’s share price closed Wednesday at $5.36.
AtaiBeckley investors could receive a further $2.50 per share if BPL-003 and another candidate, the DMT buccal film asset VLS-01, hit certain milestones. Lilly has tied $1 per share to the start of phase 3 trials of VLS-01, plus another $1 per share to U.S. regulatory approval and rescheduling of the asset. A further 50 cents per share is tied to the approval and rescheduling of BPL-003.
Milestones covered by the contingent value right, which Lilly will give AtaiBeckley shareholders, could add $1 billion to the value of the deal. If the programs achieve the milestones, Lilly will become a rival to J&J for the TRD market.
J&J’s Spravato is one of two FDA-approved TRD drugs, the other being a fixed-dose combination of two medicines—olanzapine and fluoxetine hydrochloride—that are available individually as generics. The J&J product, an isomer of ketamine, can elicit dissociative effects and requires patients to be monitored for two hours. Most patients taking BPL-003 in the phase 2b trial were ready for discharge after 90 minutes.
The discharge timeline positions BPL-003 to fit into the treatment infrastructure established for Spravato. At an investor day in March, AtaiBeckley CEO Srinivas Rao said the company had “essentially taken the lessons from earlier interventional approaches, including Spravato, and designed treatments that retain or possibly even improve upon efficacy while dramatically reducing complexity.”
BMO Capital Markets analysts praised the deal in a note to investors. Writing after Bloomberg reported Lilly was in takeover talks, the analysts said the deal “would provide differentiated exposure in psychiatry and reinforce the company’s broader effort to diversify beyond its cornerstone cardiometabolic franchise.”
The analysts also noted increasing regulatory support for psychedelic-based mental health treatments.