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.”
A ‘thirsty’ generative AI boom poses a growing problem for Big Tech
Dubai, UNITED ARAB EMIRATES — A global rush for the next wave of generative artificial intelligence is increasing public scrutiny on an often-overlooked but critically important environmental issue: Big Tech’s expanding water footprint.
Tech giants, including the likes of Microsoft and Alphabet-owned Google, have recently reported a substantial upswing in their water consumption and researchers say one of the main culprits is the race to capitalize on the next wave of AI.
Ren and his colleagues found that ChatGPT gulps 500 milliliters of water (roughly the amount of water in a standard 16-ounce bottle) for every 10 to 50 prompts, depending on when and where the AI model is deployed.
The study’s authors warned that if the growing water footprint of AI models is not sufficiently addressed, the issue could become a major roadblock to the socially responsible and sustainable use of AI in the future.
People take part in a protest called by Uruguay’s Central Union (PIT-CNT) in “defense of water” against the handling of the national authorities with respect to the management of the shortage of drinking water reserves in Montevideo on May 31, 2023.
Eitan Abramovich | Afp | Getty Images
ChatGPT creator OpenAI, part owned by Microsoft, did not respond to a request to comment on the study’s findings.
“In general, the public is getting more knowledgeable and aware of the water issue and if they learn that the Big Tech’s are taking away their water resources and they are not getting enough water, nobody will like it,” Ren told CNBC via videoconference.
“I think we are going to see more clashes over the water usage in the coming years as well, so this type of risk will have to be taken care of by the companies,” he added.
Data centers are part of the lifeblood of Big Tech — and a lot of water is required to keep the power-hungry servers cool and running smoothly.
For Meta, its these warehouse-scale data centers that generate not only the highest percentage of its water use but also the lion’s share of its energy use and greenhouse gas emissions.
In July, protesters took to the streets of Uruguay’s capital to push back against Google’s plan to build a data center. The proposal sought to use vast quantities of water at a time when the South American country was suffering its worst drought in 74 years.
Google reportedly said at the time the project was still at an exploratory phase and stressed that sustainability remained at the heart of its mission.
With AI, we’re seeing the classic problem with technology in that you have efficiency gains but then you have rebound effects with more energy and more resources being used.
Head of division: global agendas, climate and systems at SEI
In Microsoft’s latest environmental sustainability report, the U.S. tech company disclosed that its global water consumption rose by more than a third from 2021 to 2022, climbing to nearly 1.7 billion gallons.
It means that Microsoft’s annual water use would be enough to fill more than 2,500 Olympic-sized swimming pools.
For Google, meanwhile, total water consumption at its data centers and offices came in at 5.6 billion gallons in 2022, a 21% increase on the year before.
Both companies are working to reduce their water footprint and become “water positive” by the end of the decade, meaning that they aim to replenish more water than they use.
It’s notable, however, that their latest water consumption figures were disclosed before the launch of their own respective ChatGPT competitors. The computing power needed to run Microsoft’s Bing Chat and Google Bard could mean significantly higher levels of water use over the coming months.
“With AI, we’re seeing the classic problem with technology in that you have efficiency gains but then you have rebound effects with more energy and more resources being used,” said Somya Joshi, head of division: global agendas, climate and systems at the Stockholm Environment Institute.
“And when it comes to water, we’re seeing an exponential rise in water use just for supplying cooling to some of the machines that are needed, like heavy computation servers, and large-language models using larger and larger amounts of data,” Joshi told CNBC during the COP28 climate summit in the United Arab Emirates.
“So, on one hand, companies are promising to their customers more efficient models … but this comes with a hidden cost when it comes to energy, carbon and water,” she added.
A spokesperson for Microsoft told CNBC that the company is investing in research to measure the energy and water use and carbon impact of AI, while working on ways to make large systems more efficient.
“AI will be a powerful tool for advancing sustainability solutions, but we need a plentiful clean energy supply globally to power this new technology, which has increased consumption demands,” a spokesperson for Microsoft told CNBC via email.
“We will continue to monitor our emissions, accelerate progress while increasing our use of clean energy to power datacenters, purchasing renewable energy, and other efforts to meet our sustainability goals of being carbon negative, water positive and zero waste by 2030,” they added.
Aerial view of the proposed site of the Meta Platforms Inc. data center outside Talavera de la Reina, Spain, on Monday, July 17, 2023. Meta is planning to build a 1 billion ($1.1 billion) data center which it expects to use about 665 million liters (176 million gallons) of water a year, and up to 195 liters per second during “peak water flow,” according to a technical report.
Paul Hanna | Bloomberg | Getty Images
Separately, a Google spokesperson told CNBC that research shows that while AI computing demand has dramatically increased, the energy needed to power this technology is rising “at a much slower rate than many forecasts have predicted.”
“We are using tested practices to reduce the carbon footprint of workloads by large margins; together these principles can reduce the energy of training a model by up to 100x and emissions by up to 1000x,” the spokesperson said.
“Google data centers are designed, built and operated to maximize efficiency – compared with five years ago, Google now delivers around 5X as much computing power with the same amount of electrical power,” they continued.
“To support the next generation of fundamental advances in AI, our latest TPU v4 [supercomputer] is proven to be one of the fastest, most efficient, and most sustainable ML [machine leanring] infrastructure hubs in the world.”
Governments spying on Apple and Google users through phone notifications, U.S. senator says
Google CEO Sundar Pichai (L) and Apple CEO Tim Cook (R) listen as U.S. President Joe Biden speaks during a roundtable with American and Indian business leaders in the East Room of the White House in Washington, D.C., on June 23, 2023.
Anna Moneymaker | Getty Images
U.S. Senator Ron Wyden warned that foreign governments are spying on smartphone users by compelling Apple and Google to turn over push notification records, according to a letter he sent to Attorney General Merrick Garland Wednesday.
Wyden, D-Ore., said his office investigated a tip from last year alleging that government agencies have been “demanding” these records from both companies. Since push notifications like news alerts, emails, and social media alerts travel through Apple and Google’s servers, they can reveal unique insights about how individual people use particular apps, Wyden explained in the letter.
Governments can force Apple and Google to hand over these records, just like they can be compelled to share any other information they have regarding their users, according to the letter. In the U.S., however, Wyden said information about push notification records cannot be released to the public.
“Apple and Google should be permitted to be transparent about the legal demands they receive, particularly from foreign governments, just as the companies regularly notify users about other types of government demands for data,” Wyden wrote. “I would ask that the DOJ repeal or modify any policies that impede this transparency.”
Push notification records can reveal which app received a notification, when it was received, the phone and Apple or Google account that the notification was delivered to, and in some cases, the unencrypted text displayed in the notification, according to the letter.
Wyden did not specify which governments have asked Apple and Google for push notification records. The senator’s office did not immediately respond to CNBC’s request for comment.
A source confirmed to Reuters that foreign government agencies, as well as U.S. government agencies, have asked both Google and Apple for information from push notifications. For instance, the agencies have asked for metadata that can help connect anonymous users on messaging apps to specific Apple and Google accounts, according to the report.
“In this case, the federal government prohibited us from sharing any information,” an Apple spokesperson said. “Now that this method has become public we are updating our transparency reporting to detail these kinds of requests.”
A Google spokesperson said the company shares Wyden’s commitment to keeping people informed about requests for push notification records.
“We were the first major company to publish a public transparency report sharing the number and types of government requests for user data we receive, including the requests referred to by Senator Wyden,” the spokesperson said in a statement. The company did not clarify where it publishes requests for information about push notification records, or if it is restricted.
The Department of Justice did not immediately respond to requests for comment.
TikTok parent ByteDance offers share buyback valuing the Chinese giant at $268 billion
Sheldon Cooper | LightRocket | Getty Images
TikTok parent ByteDance plans to spend up to $5 billion buying back stock, a person familiar with the matter told CNBC, as one of the world’s most valuable startups seeks to give shareholders a chance to cash out of their holdings.
ByteDance is offering shareholders $160 per share, which values the firm at around $268 billion, the person said.
There is no timeline for the completion of the share repurchases, but ByteDance has asked shareholders if they’d like to sign up to the program, the person said.
ByteDance declined to comment.
Buybacks by private companies are often a way for shareholders to make a return on their early investments, especially when there is no liquidity event like an initial public offering or acquisition.
The latest round of buybacks for shareholders comes just under a month after ByteDance offered to repurchase restricted stock units (RSU) or options from employees for the same price of $160 per share.
ByteDance, which was founded in 2012, has been tipped to go public for the last few years, but has faced an increasing number of headwinds.
The Chinese giant’s most popular overseas app TikTok has faced scrutiny from lawmakers across the world, in particular in the U.S., where critics have questioned the safety of American data on the platform.
ByteDance is also cutting hundreds of jobs from its gaming division, where the company has aggressively expanded without success.
The firm has been hit by a slowing Chinese economy and by stricter domestic regulation in the internet sector.
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