Late March of 2019, a collection of European technology investors made waves in the psychedelic medicine industry, amassing the largest-ever private financing round for biotech company, ATAI Life Sciences (“ATAI”). According to ATAI’s press release, the German-based company’s Series B financing round accumulated $43 million (EUR 38 million) in new funding.1 The group’s support comes from an array of international sources; New York-based Subversive Capital, German Apeiron Investment Group, Bail Capital, and Pura Vida Investments founder, Efrem Kamen’s contributions bring ATAI to an estimated value of $240 million.2
Founded in 2018, ATAI works to develop systems for previously stigmatized substances in the management of treatment-resistant conditions. With a focus in finding treatment options for depression, ATAI is the largest investor in COMPASS Pathways, which is currently researching the effects of psilocybin mushrooms on depression and received “Breakthrough Therapy” designation from the U.S. Food and Drug Administration (“FDA”) last fall.3 According to the company’s press release, the newly received funding will be dedicated to the development of ATAI’s platform technology while also maintaining and creating new substance pipelines.
“Mental illnesses such as depression are debilitating for so many people. And 100 million patients have treatment-resistant depression and don’t respond to existing medicines,” Florian Brand, CEO and Co-Founder of ATAI explained. “The companies on our platform are developing extremely promising candidates to treat mental health disorders and bring a much-needed paradigm shift.”4
ATAI’s announcement comes just weeks after the FDA granted approval for Johnson & Johnson’s esketamine nasal spray, Spravato. A derivative of anesthetic ketamine, Spravato will be made available to certified treatment centers that will then distribute the drug to patients suffering from previously untreatable depression under medical supervision.5 Speaking to CNBC, biotech investor Brad Loncar iterated the industry importance of the regulatory decision, “A decision (like that) by FDA is the ultimate signal for investors. It shows that there’s a regulatory path forward for this class of drugs, which typically causes a flood of investment in the area.”6
While ATAI’s milestone may bring significant attention to the industry, the topic of psychedelics has been steadily on the rise. Nonprofits, such as California’s Multidisciplinary Association for Psychedelic Studies (“MAPS”), have already raised the issue of furthering the study of psychedelic medicine for conditions such as post-traumatic stress disorder (“PTSD”), clinical depression, and social anxiety in autistic adults. Earlier this year, MAPS made progress in the continuation of clinical trials on treating PTSD with MDMA and psychotherapy sessions and has increased research operations in Israel.
Psychedelic drug policy reform has even reached some politicians and grassroots organizations in 2019. In February, Iowa’s Rep. Jeff Shipley (R) proposed two bills to legalize the medical use of psychedelic substances psilocybin, MDMA, and ibogaine in an attempt to explore treatment alternatives. State advocacy groups have also started to campaign for broader drug policy reform for psychedelic substances like psilocybin mushrooms. Groups in Colorado and Oregon both look to vote on the decimalization of psilocybin mushrooms in upcoming elections within the next two years.
The Rodman Law Group is a huge proponent of companies like ATAI. Mr. Rodman, the Firm’s founder and Managing Partner serves on the legal advisory committee for MAPS. We believe that the prohibition on research – among other restrictions – imposed by the Schedule I classification as promulgated by the Controlled Substances Act (”CSA”) makes the CSA the single most anti-science legislation ever passed, and has caused immeasurable moral and scientific harm to the citizens of this Country and by extension the world.
While the Rodman Law Group fights the legal battles to change these immoral and ignorant (not to mention unsuccessful) laws, Mr. Rodman’s investment fund, the aptly named Schedule One Ventures in a not-so-subtle wink to the powers that be, has allocated twenty percent (20%) of its capital to what it is calling “Beyond Cannabis,” or companies that are focused on changing the status quo in the same way that the early cannabis companies did, in an attempt to fight this battle from the capital markets front. Mr. Rodman believes that this dual front strategy, fighting in both the legal and financial theaters against the travesty of the CSA is the best way to effect change for the better.
- ATAI Life Sciences. “ATAI Life Sciences Successfully Closes $43 Million Series B Financing Round.” News release, March 27, 2019. Business Wire. Accessed April 1, 2019. https://www.businesswire.com/news/home/20190327005765/en/ATAI-Life-Sciences-Successfully-Closes-43-Million.
- Farr, Christina. “Investors Are Starting to Bet Big on Psychedelic Medicine.” CNBC. March 29, 2019. Accessed April 01, 2019. https://www.cnbc.com/2019/03/27/psychedelic-medicine-start-ups-vet-ketamine-psilocybin-for-depression.html?fbclid=IwAR35scYB_rfdzMASYGNr4BBRLDyhPpbiarrlm_W2mFTkizLbBm7-cKwA3kU.
- COMPASS Pathways. “COMPASS Pathways Receives FDA Breakthrough Therapy Designation for Psilocybin Therapy for Treatment-resistant Depression.” News release, October 23, 2018. PR Newswire. Accessed April 1, 2019. https://www.prnewswire.com/news-releases/compass-pathways-receives-fda-breakthrough-therapy-designation-for-psilocybin-therapy-for-treatment-resistant-depression-834088100.html.
- ATAI Life Sciences. “ATAI Life Sciences Successfully Closes $43 Million Series B Financing Round.”
- Hamilton, Jon. “FDA Approves Esketamine Nasal Spray For Hard-To-Treat Depression.” NPR. March 06, 2019. Accessed April 01, 2019. https://www.npr.org/sections/health-shots/2019/03/05/700509903/fda-clears-esketamine-nasal-spray-for-hard-to-treat-depression.
- Farr, Christina. “Investors Are Starting to Bet Big on Psychedelic Medicine.”