Atai Life Sciences N.V.: A First Take (NASDAQ:ATAI)

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule.”― Friedrich Nietzsche

Today, we take an in-depth look at a small biotech concern that is based overseas. Its unique business model, pipeline, and recent insider buying merited further investigation. An analysis follows below.

Company Overview:

Atai Life Sciences N.V. (NASDAQ:ATAI) is a Berlin, Germany-headquartered clinical-stage biopharmaceutical concern focused on developing therapies for the treatment of mental health disorders. The company operates under a decentralized model that either acquires a controlling (or significant) interest in treatment programs or creates wholly-owned subsidiaries de novo. Atai was founded in 2018 and went public in June 2021, raising net proceeds of $231.6 million at $15 per share. Its stock trades around $3.75 a share, translating to a market cap of approximately $650 million.

Through its variable interest entities and wholly-owned subsidiaries in the U.S., Australia, UK, Canada, and Germany, the company has constructed a pipeline of 11 programs and six enabling technologies. Each are led by focused teams with Atai providing investment, as well as the developmental and operational infrastructure. The company’s criteria for evaluating potential program candidates include prior evidence of efficacy in humans, rapid proof-of-concept (i.e., modestly sized, short duration clinical trials), blockbuster peak-sales potential, and synergies with its existing pipeline. By altering the administration route or half-life of a compound with previous human trials backing its potential effectiveness, Atai seeks to move metal health assets quickly through the clinic. Through its investments, Atai currently has an interest in six clinical programs.

One of the company’s key areas of concentration is psychedelics, which despite previous stigmas surrounding their usage recreationally, have potentially significant therapeutic benefit for the treatment of depression, substance use disorders, and other mental health conditions.

Clinical Assets

PCN-101. One of the Atai’s more advanced programs is PCN-101, a parenteral (in this instance intravenous and ultimately subcutaneous) formulation of R-ketamine (arketamine), a glutamatergic modulator that is a component of racemic ketamine, which is being investigated as a rapid-acting remedy for treatment resistant depression (TRD). At therapeutic doses, it is thought to be non-psychedelic and has the potential to be an alternative to Johnson & Johnson’s (JNJ) psychedelic S-ketamine (esketamine) nasal spray marketed as Spravato, which is burdened with dissociative side effects. Another formulation of R-ketamine produced rapid and durable responses with a four-fold lower affinity for the NMDA receptor – thought to be connected to the dissociative…