Shares of the Peter Thiel-backed psychedelic start-up Atai Life Sciences jumped Friday on its first day of trading on Wall Street.
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.
Atai Life Sciences at the Nasdaq for its IPO, June 18, 2021.
Source: Nasdaq
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.”
Bluesky has surged in popularity since the presidential election earlier this month, suddenly becoming a competitor to Elon Musk’s X and Meta’s Threads. But CEO Jay Graber has some cautionary words for potential acquirers: Bluesky is “billionaire proof.”
In an interview on Thursday with CNBC’s “Money Movers,” Graber said Bluesky’s open design is intended to give users the option of leaving the service with all of their followers, which could thwart potential acquisition efforts.
“The billionaire proof is in the way everything is designed, and so if someone bought or if the Bluesky company went down, everything is open source,” Graber said. “What happened to Twitter couldn’t happen to us in the same ways, because you would always have the option to immediately move without having to start over.”
Graber was referring to the way millions of users left Twitter, now X, after Musk purchased the company in 2022. Bluesky now has over 21 million users, still dwarfed by X and Threads, which Facebook’s parent debuted in July 2023.
X and Meta didn’t immediately respond to requests for comment.
Threads has roughly 275 million monthly users, Meta CEO Mark Zuckerberg said in October. Although Musk said in May that X has 600 million monthly users, market intelligence firm Sensor Tower estimates 318 million monthly users as of October.
Bluesky was created in 2019 as an internal Twitter project during Jack Dorsey’s second stint as CEO, and became an independent public benefit corporation in 2022. In May of this year, Dorsey said he is no longer a member of Bluesky’s board.
“In 2019, Jack had a vision for something better for social media, and so that’s why he chose me to build this, and we’re really thankful for him for setting this up, and we’ve continued to carry this out,” said Graber, who previously founded Happening, a social network focused on events. “We’re building an open-source social network that anyone can take into their own hands and build on, and it’s something that is radically different from anything that’s been done in social media before. Nobody’s been this open, this transparent and put this much control in the users hands.”
Part of Bluesky’s business plan involves offering subscriptions that would let users access special features, Graber noted. She also said that Bluesky will add more services for third-party coders as part of the startup’s “developer ecosystem.”
Graber said Bluesky has ruled out the possibility of letting advertisers send algorithmically recommended ads to users.
“There’s a lot on the road map, and I’ll tell you what we’re not going to do for monetization,” Graber said. “We’re not going to build an algorithm that just shoves ads at you, locking users in. That’s not our model.”
Bluesky has previously experienced major growth spurts. In September, it added 2 million users following X’s suspension in Brazil over content moderation policy violations in the country and related legal matters.
In October, Bluesky announced that it raised $15 million in a funding round led by Blockchain Capital. The company has raised a total of $36 million, according to Pitchbook.
Alphabet shares slid 6% Thursday, following news that the Department of Justice is calling for Google to divest its Chrome browser to put an end to its search monopoly.
The proposed break-up would, according to the DOJ in its Wednesday filing, “permanently stop Google’s control of this critical search access point and allow rival search engines the ability to access the browser that for many users is a gateway to the internet.”
This development is the latest in a years-long, bipartisan antitrust case that found in an August ruling that the search giant held an illegal monopoly in both search and text advertising, violating Section 2 of the Sherman Act.
The potential break-up would include preventing Google from entering into exclusionary agreements with competitors like Apple and Samsung, part of a set of remedies that would last 10 years.
POLAND – 2024/11/13: In this photo illustration, the NVIDIA company logo is seen displayed on a smartphone screen. (Photo Illustration by Piotr Swat/SOPA Images/LightRocket via Getty Images)
Sopa Images | Lightrocket | Getty Images
Nvidia shares dropped in U.S. premarket trading Thursday after the tech giant’s third-quarter earnings failed to impress investors.
Shares of the chipmaker slumped 3.21% at around 5:03 a.m. ET, following the Wednesday release of Nvidia’s quarterly results, which beat on both the top and bottom lines.
Revenue came in at $35.08 billion, up 94% year-on-year and exceeding the $33.16 billion forecast by LSEG analysts. Earnings per share was 81 cents adjusted, also above analyst expectations.
Other chipmakers fell on the back of the market reaction to Nvidia’s third-quarter results. Shares of Intel, Qualcomm and Micron Technology all lost 1% or more in value, while AMD declined 0.6%.
The slump in Nvidia also had a knock-on effect on European semiconductor firms. ASML, a key chip equipment supplier, dropped 0.9%, while compatriot Dutch chip firm ASMI fell 0.5%. Chipmakers BE Semiconductor, STMicroelectronics and Infineon slipped 0.8%, 0.7 and 0.6%, respectively.
Several notable chip names were also in negative territory in Asia. TSMC, which makes Nvidia’s high-performance graphics processing units, eased as much as 1.5%. Contract electronics manufacturer Foxconn dropped 1.9%.
Why are Nvidia shares falling?
Nvidia has largely cornered the market for the high-powered chips powering the world’s most advanced artificial intelligence models, such as OpenAI’s ChatGPT.
Despite nearly doubling sales year-on-year, Nvidia’s third-quarter results showed a slowdown from previous quarters. Nvidia previously reported growth of 122% in the second quarter, 262% in the first quarter, and 265% in the fourth quarter of 2023.
Derren Nathan, head of equity research at Hargreaves Lansdown, said in emailed comments Wednesday that the dip in Nvidia’s share price “suggests even outstanding isn’t enough for some investors,” adding that he expects the stock to bounce back once markets open.
“NVIDIA’s generated stellar gains for shareholders over many years now, and right now it’s pretty hard to see any major holes in the investment case,” Nathan added.
Analysts are looking ahead to the much-anticipated launch of Nvidia’s next-generation chip called Blackwell. On the firm’s earnings call, CEO Jensen Huang said that demand for the chip is exceeding supply.
