Atai Life Sciences (ATAI 16.97%), a biotech focused on developing psychedelic-based medicines to treat mental health disorders, was a standout stock over the past few days in its rather limited peer group.
That's because news of a top regulator's move on one of its developmental drugs was pushing the company's stock up by nearly 8% week to date as of early Friday morning, according to data compiled by S&P Global Market Intelligence.
Reporting a breakthrough
On Thursday, Atai announced that it and its clinical partner Beckley Psytech had received Breakthrough Therapy designation from the U.S. Food and Drug Administration (FDA) for their investigational treatment BPL-003. This is a nasal spray that targets treatment-resistant depression (TRD) in adult patients.
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The Breakthrough Therapy designation is granted to drugs being developed to treat serious or life-threatening conditions. They must show significant progress over other treatments in the development stage to be considered for the tag, which fast-tracks the FDA's review and approval process.
BPL-003 is entering the final stages of its clinical life; Atai said it expects to launch phase 3 testing of the drug in the second quarter of 2026.
Time for some capital raising
Atai is wasting almost no time gearing up for that stage. Also on Thursday, the company priced a secondary issue of its common stock. Just over 23.7 million shares are to be sold in a public offering, at a price of $5.48 apiece. The underwriters of the flotation have been granted a 30-day option to collectively purchase up to nearly 3.6 million shares at the same price.
The gross proceeds of the issue should amount to roughly $130 million. Atai will use the capital raise to, sensibly enough, advance its clinical programs. It will also channel some of the funds to "working capital and general corporate purposes."
The issue is expected to close next Monday, Oct. 20.
