Key Targets for ATAI: $175M Secured Term Loan Facility, Plus Q2 Earnings Report

Clinical-Stage Psychedelics Company ATAI Life Sciences SA ATAI announced its financial results for quarter ended June 30, 2022 and business updates, including term loan facility agreement up to $175 million provided by Hercules Capital Inc. HTGC.

The Company expects the new non-dilutive funding facility, together with the total existing cash, to provide cash track until 2025as the flexible availability of drawdowns provides options to optimize liquidity and capital structure in future ATAI developments.

Financial results

  • Total cash of $312.5 million for the period ended June 30, 2022, compared to $362.3 million as of December 31, 2021. The net decrease of nearly $50 million is attributable to operating activities and additional investments in platform companies, while receiving $1.9 million from the conversion of promissory notes and equity issuances.

  • R&D expenses totaled $17.9 million and $33.4 million for the three and six months ended June 30, 2022, respectively, compared to $16.0 million and $21.6 million for the same periods in 2021. These increases are due to an increase in personnel costs, including a decrease in compensation expenses and an increase in contract research organization expenses for the advancement of R&D programs.

  • Acquisition of ongoing R&D costs for the six months ended June 30, 2022 of $0.4 million relates to IPR&D acquired from Kures. Acquisition of in-process R&D expenses for the same period in 2021 amounted to $8.9 million and related to IPR&D acquired from InnarisBio and Neuronasal.

  • Net loss due to shareholders for the three months ended June 30, 2022 totaled $36.6 million (including a non-cash stock-based compensation expense of $9.5 million), compared to $48.5 million (including including a non-cash stock-based compensation expense of $37.5 million) for the same period of 2021.

  • Net loss due to shareholders for the six months ended June 30, 2022 totaled $73.5 million (including non-cash stock-based compensation expense of $19.7 million), compared to $47.8 million (including including a non-cash stock-based compensation expense of $37.7 million) for the same period of 2021.

The details of the new loan

Under the $175 million facility, $15 million was drawn at closing, with an additional $20 million available to be drawn by March 15, 2023, while an additional $25 million would become available for the withdrawal by December 15, 2023.

The the remaining $115 million would therefore become available through March 31, 2025. Interest on the loan facility is fixed at a variable rate based on the prime rate currently 10.05% and matures 48 months after closing, but can be extended to 54 months if certain stages of performance are achieved.

Pipeline Highlights

R&D milestones achieved by ATAI include the completion of the clinical phase of the Drug Interaction Study (DDI) of PCN-101, the database lock for the Phase 1 clinical trial of GRX- 917, completion of the SAD portion of the KUR-101 Phase 1 clinical trial and commencement of the VLS-01 Phase 1 clinical trial.

The Company has also streamlined its pipeline by slowing programs and halting funding for a slate of programs as well as some discovery efforts, therefore the refocused pipeline includes eight compounds (psilocybin COMP360, R-ketamine PCN-101, RL-007, GRX-917, KUR-101, ibogaine DMX-1002, VLS-01 and MDMA derivative EMP-01) and three enabling technologies (Introspect, InnarisBio, IntelGenx and EntheogeniX).

COMP360the psilocybin-based compound for treatment-resistant depression (TRD), is being used in a Phase 2 clinical trial for anorexia nervosa starting in July 2022. The Phase 3 program for TRD has been submitted to the FDA and expected to begin by the end of fiscal year 2022.

R-ketamine PCN-101 for the treatment of treatment-resistant depression (TRD) has completed the Phase 1 DDI study, and data from the Phase 2 study is expected by the end of fiscal year 2022.

RL-007 for Cognitive Impairment Associated with Schizophrenia (CIAS) would begin a Phase 2b study in H2 2022.

Database lock for the Phase 1 trial of GRX-917 (deuterated etifoxine) for the treatment of generalized anxiety disorder (GAD) has been achieved and results are expected to be published in the second half of 2022.

KUR-101 (mitragynine deuterated) for opioid use disorder (OUD) are expected in the second half of 2022.

Phase 1 results of ibogaine-based DMX-1002 for opioid use disorder (OUD) are expected in the second half of 2022.

VLS-01 (dimethyltryptamine) for Treatment Resistant Depression (TRD) Phase 1 Trial (May 2022) is the first application of Introspect’s DTx to a product in the atai pipeline, and there are plans to use this technology to help participants before and after dosing. This phase 1 trial aims to compare the safety, tolerability and pharmacokinetics of intravenous versus oral administration of DMT.

Derived from MDMA EMP-01 for the Phase 1 clinical trial in PTSD recently received ethics committee approval and expects to obtain central regulatory approval in the second half of 2022. The trial will include Introspect’s DTx to help participants before and after administration.

ATAI expects all listed compounds to be in clinical development by the end of 2022.

Comments from ATAI executives

Co-founder and CEO Florian Brand believes that the Company’s agreement with Hercules Capital as well as specific business and financial decisions regarding cost optimizations by prioritizing ATAI development programs with significant clinical value inflections expected in the short term will add an additional year, until 2025.

“We have taken aggressive steps to extend our planned one-year track to 2025. We further strengthened our already strong cash position of $312 million at the end of the second quarter by securing a term loan facility non-dilutive up to $175 million, and we expect to realize significant savings through enterprise-wide cost optimization,” Brand said. “This additional lead provides us with the ability to perform many reads of proof-of-concept data without additional dilutive funding.”

Regarding the new agreement, Hercules Capital Managing Director Michael Dutra expressed, “Hercules’ significant commitment is intended to help atai execute its important mission and reflects our commitment to funding innovative life science companies.”

Srinivas Rao is scientific director and co-founder of ATAI. His take: “We continue to execute our pipeline, having completed several Phase 1 milestones over the past few months. Going forward, we are focusing on R&D programs that we believe will generate meaningful clinical data readouts over the next two years.

Rao added, “We are excited about our refocused pipeline with 8 potential value-generating events over the next 6-12 months, starting with the PCN-101 Phase 2a readout in Treatment Resistant Depression (TRD ) by the end of the year.

Photo courtesy of Louis Reed on Unsplash.

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