Eli Lilly’s scope in neuroscience is broadening to psychedelics through a deal to buy AtaiBeckley, a clinical-stage company whose lead program might offer advantages over a blockbuster Johnson & Johnson drug for treatment-resistant depression.
According to deal terms announced Thursday, Lilly will pay about $2.8 billion in cash to acquire AtaiBeckley. Lilly could pay shareholders of the New York-based company up to $1 billion more if the mental health medicines achieve milestones.
AtaiBeckley’s most advanced drug candidate, BPL-003, is based on 5-MeO-DMT, a psychedelic compound that works work by binding to and activating serotonin receptors in the brain. This mechanism is thought to restore synaptic connections and promote the growth of new neural connections, offering a different approach than traditional antidepressants. But 5-MeO-DMT can’t be dosed orally because enzymes in the gut quickly break it down before it can offer an effect. AtaiBeckley developed BPL-003 for intranasal dosing.
Psychedelics must be administered in a clinical setting so patients can be monitored for adverse effects. In April, AtaiBeckley reported Phase 2b results showing rapid reductions in depression symptoms and an average discharge time of 100 minutes following dosing. The study drug was also durable with the effect from a single intranasal dose continuing through three months. BPL-003 was well tolerated with no serious adverse effects reported. AtaiBeckley has since advanced this drug to Phase 3 testing in treatment-resistant depression, which is defined as inadequate symptom improvement after at least two different antidepressants.
“Treatment-resistant depression persists even after multiple treatments have failed,” Carole Ho, executive vice president and president, Lilly Neuroscience, said in a prepared statement. “Millions of people are still searching for relief and desperately need a therapy that works. Advancing AtaiBeckley’s investigational therapies gives us a real chance to change that.”
BPL-003 could provide Lilly with a direct competitor to J&J’s Spravato, an intranasally administered depression drug that accounted for nearly $1.7 billion in revenue last year. Spravato is a form of ketamine, an anesthetic that works by blocking NMDA receptors in the brain. While it’s technically not a psychedelic, Spravato can lead to dissociative states and must be administered in a clinical setting.
In a Thursday research note, UBS analyst Michael Yee said the roughly two-hour monitoring for Spravato and BPL-003 is manageable for patients. But the AtaiBeckley drug stands out with durability that could require just four to six clinic visits a year compared to the 50 or more dosing sessions a year needed for Spravato. Lilly is the latest big pharma company to enter psychedelic drug development. Last year, AbbVie acquired bretisilocin, a Gilgamesh Pharmaceuticals drug in mid-stage development for major depressive disorder.
AtaiBeckley formed last year through the all-stock merger of Atai Life Sciences and Beckley Psytech. BPL-003 came from Beckley. Atai brought VLS-01, a buccal film formulation of DMT in development for treatment-resistant depression, and EMP-01, an oral formulation of R-MDMA in development for social anxiety disorder. The programs from Atai are currently in mid-stage clinical development.
The AtaiBeckley drugs will join a Lilly pipeline that includes brenipatide, a dual GLP-1 and GIP receptor agonist that has reached late-stage testing for major depressive disorder and alcohol use disorder. Flush with cash from its approved GLP-1/GIP drugs for metabolic disorders, Lilly’s active M&A streak — AtaiBeckley marks 12 this year — includes neuroscience deals. In March, Lilly agreed to pay $6.3 billion to acquire Centessa Pharmaceuticals, whose lead drug has potential applications in narcolepsy and other sleep disorders.
Lilly’s upfront payment for AtaiBeckley breaks down to $6.75 in cash for each share of AtaiBeckley, representing a 40% premium to the stock’s average trading price in the 30 days preceding the acquisition announcement. Lilly could pay up to $2.50 more per share if BPL-003 and VLS-01 achieve development and regulatory milestones. The acquisition still needs the approval of regulators and AtaiBeckley shareholders. Lilly expects to complete the transaction in the current quarter.
Photo: Richard Drury, Getty Images
