Earlier this month, Atai Life Sciences N.V. (Nasdaq: ATAI) commenced trading on the Nasdaq and we have been closely following the trend since listing. The company is a high-profile psychedelic therapy business and has received investments from several big money investors.
Although Atai is considered to be one of the best ways to play the psychedelic therapy sector, the recent trend has been to the downside. Atai has come well off its mid-June highs but is still valued at more than $2.5 billion (based on the market capitalization on June 24, 2021).
In 2020, Atai reported a net loss of $169.8 million on no revenue. Although this amount is significantly higher than the $24.1 million net loss that was reported in 2019, biotech companies tend to not generate revenue for years. Once a biotech company brings a therapy to market, the business starts to generate revenue and we expect ATAI to follow a similar path.
Atai describes itself as a drug development platform that was formed to acquire, incubate and develop psychedelics and other drugs that can be used to treat depression, anxiety, addiction and other mental health conditions. Atai has partnered with 14 companies that are focused on drug development and other technologies. As part of the operating structure, the company receives a majority ownership stake from the therapies and technologies that it partners with. In return, the company helps its partners with raising capital, working with the regulators, and conducting clinical trials.
Atai bounced higher after it commenced trading and found resistance below the $23 level. This comes after the IPO was priced between $15 to $17 and we continue to closely follow price movements. As of June 24th, Atai was trading above this range and we will monitor the trend from here.
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