UPDATE 3-Lilly enters psychedelic drug race with up to $3.8 billion AtaiBeckley deal
COMPASS Pathways Plc Sponsored ADR CMPS | 0.00 | |
GH Research Plc GHRS | 0.00 | |
AtaiBeckley Inc. ATAI | 0.00 | |
Enveric Biosciences, Inc. ENVB | 0.00 | |
Eli Lilly and Company LLY | 0.00 |
Updates with analyst comments throughout, adds graphic
By Puyaan Singh and Kunal Das
July 16 (Reuters) - Eli Lilly LLY.N will buy AtaiBeckley ATAI.O for up to $3.8 billion, the company said on Thursday, joining a race among pharma majors to develop psychedelic treatments for depression and other mental health conditions.
The deal taps into rising interest in psychedelics following easing regulations under the Trump administration and reinforces Lilly's push to use windfall weight-loss drug profits to diversify its product portfolio.
Lilly will gain access to AtaiBeckley's lead candidate BPL-003, a psychedelic-based nasal spray in late-stage development for treatment-resistant depression, a severe form of the illness that does not improve after standard treatments.
Jefferies' Andrew Tsai estimates BPL-003 could generate sales of more than $1 billion to $2 billion if it succeeds in late-stage trials. AtaiBeckley expects initial results from the trials in early 2029.
Lilly will pay $6.75 per AtaiBeckley share in cash, a premium of about 26% to the stock's closing price on Wednesday. AtaiBeckley's shares rose more than 30% in morning trading.
The offer consists of $2.8 billion upfront and up to $1 billion in milestone-based payments. The companies expect the deal to close in the third quarter.
"The acquisition aligns with Eli Lilly's expanding neuroscience portfolio and offers upside potential in large markets like depression," said Barclays analyst Emily Field.
Shares of psychedelic drug developers Enveric Biosciences ENVB.O and GH Research GHRS.O were up 6% and 11%, respectively.
The psychedelics industry could reach $12 billion in revenue by 2034, rivaling the size of branded antidepressants currently at about $8 billion, said RBC Capital Markets analyst Trung Huynh.
SURGING INTEREST IN PSYCHEDELIC-BASED THERAPIES
Drugmakers have shown growing interest in psychedelic-based treatments for depression and other mental health disorders.
President Donald Trump's executive order in April directed U.S. health regulators to speed up reviews of certain psychedelic treatments and increased federal funding for research in the field.
AbbVie ABBV.N last year bought an experimental psychedelic-based depression drug from Gilgamesh Pharmaceuticals for up to $1.2 billion.
New York-based AtaiBeckley was formed through a merger between Germany-based Atai Life Sciences and privately held Beckley Psytech in 2025. Billionaire venture capitalist Peter Thiel was an early backer of Atai.
Current medicines for treatment-resistant depression include Johnson & Johnson's JNJ.N ketamine-derived nasal spray Spravato — which requires twice-weekly clinic visits — or other invasive interventions.