What happened

Shares of Atai Life Sciences (ATAI), a clinical-stage biopharmaceutical company that is developing therapies from psychedelics to treat mental health conditions, saw its shares rise 12.41% by Friday afternoon. The stock had already been climbing after its fourth-quarter and full-year report was released on March 24, but a spate of inside buying on Wednesday by Atai co-founder and chairman Christian Angermayer through one of his other companies gave the stock another boost. A day later, co-founder and CEO Florian Brand increased his position in the company by 70,000 shares.

So what

Angermayer, through a Linkedin post, explained the reasons he purchased 1.2 million shares of Atai through Apeiron Investment Group, citing the company's $258 million in net cash, its pipeline of five programs, the large potential market size for its therapies, and its 22.4% share in another developer of psychedelic therapies, Compass Pathways, among other things.

Now what

Biotech growth stocks have been struggling for two years. The SPDR S&P Biotech ETF is down 8% so far this year and Atai is down 31% to start the year.

In its last earnings report, Atai said it had $273 million, enough cash, in addition to its access to an additional $160 million in capital from its loan agreement with Hercules Capital, to run operations into the first half of 2026.

The concern is with no marketed therapies, the company remains a risk, but one with a huge upside. The company has two therapies in phase 2 trials, though. RL-007 is in a phase 2b study to treat cognitive impairment associated with schizophrenia, and the company said it expects results from the trial in the first half of 2024. GRX-917 is in a phase 2 trial to treat generalized anxiety disorder.