The psychedelic start-up ATAI, supported by Peter Thiel, targets schizophrenia

LONDON – ATAI Life Science, a Peter Thiel-backed start-up, has acquired a majority stake in Recognify, a company that develops drugs to treat schizophrenia.

ATAI is headquartered in Berlin and aims to manufacture psychedelics that can be used to treat mental disorders. Recognify, meanwhile, is specifically aiming to create a drug that can be used to treat the cognitive impairment associated with schizophrenia, or CIAS.

The latter company was co-founded by German-American biochemist Thomas Sudhof, who received a Nobel Prize in Physiology or Medicine in 2013.

The terms of the deal were not disclosed, but ATAI said it was in the “tens of millions”.

ATAI, calling itself a drug development platform, was formed to acquire, incubate, and develop psychedelics and other drugs that can be used to treat depression, anxiety, addiction, and other mental illnesses. In return for a controlling stake in the drugs they develop, ATAI helps scientists raise money, work with regulators, and conduct clinical trials.

Treatment of schizophrenia

Recognify’s lead drug, RL-007, has been tested in nine clinical studies on 508 people, including rats, according to ATAI. Clinical trial results were not published.

Srinivas Rao, co-founder and chief scientist of ATAI, told CNBC through Zoom that Recognify has developed a “very interesting” compound that has been shown to have benefits.

“Things like verbal memory and things like that were actually greatly enhanced with this connection,” Rao said. “And that’s something that is deficient in patients with schizophrenia. So that’s really the requirement here. We want to extend the results that exist now to the schizophrenic population.”

Schizophrenia affects around 20 million people, according to the World Health Organization, which results in people hearing voices and seeing things that are not real through hallucinations, and can also cause disorganized and confused thinking.

IPO plans

The news of the Recognify deal comes after ATAI raised $ 125 million from investors like Thiel in November before a public listing this year. The total investment in the company is now over $ 210 million.

“The great virtue of ATAI is taking mental illness as seriously as we should have,” said Thiel, co-founder of Palantir and PayPal, in a statement shared with CNBC at the time. “The company’s most valuable asset is its urgency.”

The two-year company, which has offices in Berlin, New York and San Diego, currently works with around 10 drug development companies.

According to an industry source who wanted to remain anonymous due to the nature of the discussions, there are plans to release ATAI to the public at between $ 1 billion and $ 2 billion in value in the next few months.

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