The newly listed Nasdaq stock opened up 40% before pulling back some.
The German biotech’s initial public offering was priced Thursday night at $15 per share, the high end of the expected range. The company, which aims to make psychedelic drugs to treat mental health disorders, raised $225 million at a valuation of $2.3 billion.
Atai is the third psychedelic biotech to go public in the U.S., following in the footsteps of MindMed, which went public on the Nasdaq in April, and Founders Fund-backed Compass Pathways, which listed in September. As of Thursday’s close, Compass Pathways was up 26% since its debut, and MindMed, which just announced its CEO’s resignation, was down about 19% since its IPO.
Each biotech is developing therapies using the psychedelic mushroom compound psilocybin, LSD, and MDMA derivatives to treat addiction and mental illnesses such as depression, anxiety, schizophrenia and traumatic brain injury. Three years after its founding, Atai Life Sciences has 10 therapeutic programs in its pipeline, each at various stages of clinical trials.
Atai founder and Chairman Christian Angermayer said on CNBC’s “Squawk Box” on Friday, “The world we’re building is a bad place for our brain, so mental health issues will go up. But I do think we have some real shots in our portfolio to end the mental health crisis.”
Investor interest in psychedelic treatments has grown alongside burgeoning interest in these therapies from the medical community.
Johns Hopkins University, Yale University, the University of California, Berkeley, and the Icahn School of Medicine are among the centers studying psychedelics and psychology. Recent studies establishing MDMA’s promise in treating post-traumatic stress disorder and the efficacy of psilocybin, a hallucinogenic chemical found in psychedelic mushrooms, in treating drug-resistant depression have only heightened interest in the space.
Angermayer was an early investor in Compass Pathways, and his own company Atai serves as a holding company for various psychedelic start-ups pursuing alternative treatments for mental illness. He told CNBC on Friday that new-age biotechs are building on centuries of practice in shamanistic cultures and religions.
There are currently federal restrictions for psychedelic mushrooms, MDMA — commonly known as molly or ecstasy — and LSD around the world. However, Oregon last year became the first U.S. state to legalize psychedelics for therapeutic use. Residents in Washington, D.C., also recently voted in support of decriminalizing the use of psychedelics for medicinal purposes.
Angermayer is betting that federal approval of these drugs for therapeutic use could make a huge difference for those suffering from mental illness. “They are very, very powerful medications, but they have to be taken under supervision. … You will be tripping while you are sitting with your therapist.”
Atai Life Sciences is backed by the billionaire investor Thiel, as well as Mike Novogratz’s Galaxy Investments and Angermayer’s own Apeiron Investment Group, among others.
According to venture capital tracker CB Insights, VC deals in psychedelics have risen substantially in the last three years: 2018 and 2019 saw less than $100 million of venture capital invested in psychedelic start-ups, but 2020 saw $346 million. By April 2021, VCs had already invested $329 million in the industry.
It’s no wonder that Atai’s was more than 12 times oversubscribed, according to one market source who asked to remain anonymous due to the nature of the discussion. “A good portion was taken up by existing investors,” the person said, adding that Thiel is the largest existing investor and that he’s “doubled down” in the IPO.
Investment fund Palo Santo said it had taken a notable stake in Atai’s IPO. “There is an urgent need to address our broken mental healthcare system,” Daniel Goldberg, co-founder of Palo Santo, said in a statement. “We believe psychedelics will expand treatment options and transform the outdated system.”
Atai submitted an S-1 filing to the Securities and Exchange Commission in April that showed it raised an aggregate of $362.3 million from private investors at that point.
The company, which describes itself as a drug development platform, was set up to acquire, incubate and develop psychedelics and other drugs that can be used to treat depression, anxiety, addiction and other mental health conditions.
Atai, which has roughly 50 staff members in offices across Berlin, New York and San Diego, is currently partnered with 14 companies focusing on drug development and other technologies.
In exchange for a majority stake in the drugs and technologies they’re developing, Atai helps the scientists raise money, work with regulators and conduct clinical trials. None of Atai’s drugs have been formally approved by regulators to date.
Thiel made an $11.9 million investment in Atai through his venture firm, Thiel Capital, in November.
“Atai’s great virtue is to take mental illness as seriously as we should have been taking all illness all along,” Thiel, who co-founded Palantir and PayPal, said in a statement shared with CNBC at the time. “The company’s most valuable asset is its sense of urgency.”
DOJ asks for independent probe into FTX bankruptcy, a likely tactic to gather evidence on alleged fraud
John Ray, chief executive officer of FTX Cryptocurrency Derivatives Exchange, arrives at bankruptcy court in Wilmington, Delaware, US, on Tuesday, Nov. 22, 2022.
Eric Lee | Bloomberg | Getty Images
The Department of Justice has requested that an independent examiner be appointed to review “substantial and serious allegations of fraud, dishonesty” and “incompetence” after the implosion of Sam Bankman-Fried’s crypto empire. It could be one way for the DOJ to gather evidence of alleged fraud.
In a filing in Delaware federal bankruptcy court, Andrew Vara, a U.S. bankruptcy trustee, told the court that the allegations of corporate misconduct and complete failure merited an immediate and speedy examination of the events leading up to FTX’s stunning collapse three weeks ago.
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Vara said there’s a substantial basis to believe that Bankman-Fried and other managers mismanaged FTX or engaged in fraudulent conduct.
“It seems to me that the DOJ is trying to use the bankruptcy process as a way of getting evidence,” former federal prosecutor Renato Mariotti told CNBC.
“Many times, the Department of Justice and bankruptcy estates in fraud cases work together in compiling potential restitution or other types of actions to make victims whole,” he said. The DOJ “will likely be part of the asset recovery and potentially having a Victims Fund with money going to those that lost money and what the Department of Justice potentially will view as a fraud.”
“It just shows a level of interest and attention that they’re paying to this that should be troubling to Mr. Bankman-Fried.”
Vara said an examination is preferable to an internal investigation because of the wider implications the company’s collapse may have on the crypto industry.
Another legal expert said that there could be other factors at play too, including the extensive political donations that FTX executives were involved in on both sides of the aisle.
There have been “campaign donations on both sides of the aisle from FTX and there have been political overtones and undertones in this case,” said Braden Perry, former senior trial attorney at the Commodities Futures Trading Commission and Kennyhertz Perry partner.
“I think that this is just out of prudence and out of caution to make sure that whatever is happening is done at an independent level,” Perry continued.
It’s not unusual to appoint a bankruptcy examiner. There was one to oversee the crypto bankruptcy process of Celsius Network, for example.
Bankruptcies above a certain size require an examiner. In this case, the U.S. Trustee said that an examiner is mandatory because FTX’s fixed, liquidated and unsecured debts to customers exceed the $5 million threshold.
FTX’s November collapse left creditors reeling over the loss of hundreds of millions of dollars, in some cases, and has rocked the wider crypto world. BlockFi, a crypto lender, filed for bankruptcy protection in New Jersey last week.
Tech layoffs send visa holders on frantic search for employment to avoid deportation
After years of seemingly boundless expansion, the U.S. tech industry has hit a wall. Companies are in cash preservation mode, leading to thousands of job cuts a month and a surge of layoffs in November.
While the sudden loss of a paycheck can be devastating for anyone, especially during the holiday season, the recent wave of reductions is having an outsized impact on skilled workers who are living in the U.S. on temporary visas and are at risk of being sent home if they can’t secure a new job in short order.
Tech companies are among the employers with the most approvals for H-1B visas, which are granted to people in specialty occupations that often require a college degree and extra training. Silicon Valley has for years leaned on temporary visas issued by the government to employ thousands of foreign workers in technical fields such as engineering, biotech and computer science. That’s a big reason tech companies have been outspoken in their defense of immigrants’ rights.
Workers on temporary visas often have 60 to 90 days to find a new gig so they can avoid being deported.
“It’s this amazing talent pool that the U.S. is fortunate to attract, and they’re always living on the edge,” said Sophie Alcorn, an immigration lawyer based in Mountain View, California, who specializes in securing visas for tech workers. “Many of them up are up against this 60-day grace period deadline. They have a chance to find a new job to sponsor them, and if they can’t do that, they have to leave the U.S. So it’s a stressful time for everybody.”
The already grim situation worsened in November, when Meta, Amazon, Twitter, Lyft, Salesforce, HP and DoorDash announced significant cuts to their workforces. More than 50,000 tech workers were let go from their jobs in November, according to data collected by the website Layoffs.fyi.
Amazon gave staffers who were laid off 60 days to search for a new role inside the company, after which they’d be offered severance, according to a former Amazon Web Services employee who lost his job. The person spoke to CNBC on the condition of anonymity.
In fiscal 2021, Amazon had the most approved petitions for H-1B visas, with 6,182, according to a National Foundation for American Policy review of U.S. immigration data. Google, IBM and Microsoft also ranked near the top of the list.
The former AWS employee has been in the country for two years on student and employment visas. He said he was unexpectedly laid off at the beginning of November, just months after joining the company as an engineer. Despite Amazon informing him that he had 60 days to find another position internally, the person said his manager advised him to apply for jobs elsewhere due the company’s pullback in hiring. Amazon said in November it’s pausing hiring for its corporate workforce.
An Amazon spokesperson didn’t provide a comment beyond what CEO Andy Jassy said last month, when he told those affected by the layoffs that the company would help them find new roles.
Companies generally aren’t specifying what percentage of the people being laid off are on visas. A search for “layoffs H1B” on LinkedIn surfaces a stream of posts from workers who recently lost their jobs and are expressing concern about the 60-day unemployment window. Visa holders have been sharing resources on Discord servers, the anonymous professional network Blind and in WhatsApp groups, the former AWS employee said.
It had already been a frenetic few years for foreign workers in the U.S. well before surging inflation and concerns of a recession sparked the latest round of job cuts.
The Trump administration’s hostile posture toward immigration put the H-1B program at risk. As president in 2020, Donald Trump signed an executive order suspending work visas, including those with H-1B status, claiming they hurt employment prospects for Americans. The move drew a strong rebuke from tech executives, who said the program serves as a pipeline for talented individuals and strengthens American companies. President Joe Biden allowed the Trump-era ban to expire last year.
Whatever relief the Biden presidency provided is of limited value to those who are now jobless. An engineer who was recently laid off by gene-sequencing technology company Illumina said he hoped his employer would sponsor his transfer to an H-1B visa. He’s here on a different visa, known as Optional Practical Training (OPT), which allows graduates in science, technology, engineering and mathematics (STEM) to work in the U.S. for up to three years after graduation.
The former Illumina employee, who spoke on condition that he not be named, not only has to find a new job within 90 days from the layoff date, but his OPT visa expires in August. Any company that hires him must be willing to sponsor his visa transfer and pay the related fees. He’s considering going back to school in order to extend his stay in the U.S., but he’s anxious about taking on student loans.
Illumina said in November it was cutting about 5% of its global workforce. A company spokesperson told CNBC that less than 10% of impacted employees were here on H-1B or related visas.
“We are engaging with each employee individually so that they understand the impact to their employment eligibility and options to remain in the U.S.,” the spokesperson said by email. “We are working to review each and every situation to ensure great care for those impacted, and to ensure compliance with immigration law.”
The ex-employee said he had dreams of working for Illumina, planting roots in the U.S. and buying a house. Now, he said, he’s just trying to find a way to stay in the country without going deep into debt. In just a matter of months, it’s “like a night and day difference,” he said.
Elon Musk suspends Ye’s Twitter account after swastika post
Ye’s Twitter account was suspended again Friday for violating the social media platform’s rules on “incitement to violence,” CEO Elon Musk said.
The rapper, formerly known as Kanye West, appeared to post an image of a swastika, a symbol synonymous with the Nazis, inside a Star of David, a prominent symbol of Judaism.
Musk said he “tried his best” in response to Ye’s tweet, which can no longer be viewed. “Despite that, he again violated our rule against incitement to violence. Account will be suspended.”
Ye’s tweet came after he made antisemetic comments in an interview with the controversial radio host Alex Jones on Thursday. Ye referred to “the Jewish media” and said he saw “good things about Hitler” in an hourlong conversation with the conspiracy theorist.
In October, Twitter locked Ye’s account for an unspecified amount of time following a string of antisemitic remarks which escalated into threatening and hateful comments about Jewish people. He returned to Twitter in November.
The billionaire Tesla CEO, who has called himself a “free speech absolutist,” is finding the limits of that tested in his early days of owning Twitter.
Musk has attempted to make sweeping changes in his first few days in charge, including gutting a huge swathe of Twitter’s workforce and launching an $8 per month “Verified” service that allows users to buy the coveted blue check mark.
Twitter was forced to pause its subscription service however after users abused it by paying the fee to get a blue check then impersonating celebrities.
Musk said last week that the “Verified” service would be relaunched on Friday with different colored check marks, but there has been no update on whether this is still the case.
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