Eli Lilly to buy psychedelics maker AtaiBeckley for $2.8 billion

Eli Lilly It will buy psychedelic drugmaker AtaiBeckley for $2.8 billion upfront, the company said Thursday, as momentum grows for its versions of the drug to be used as mental health treatments.

The transaction gives Lilly access to AtaiBeckley’s experimental DMT-based drug, which is being studied in Phase 3 clinical trials for treatment-resistant depression. AtaiBeckley is developing several other psychedelics for mental health problems, including one related to MDMA, also known as ecstasy.

AtaiBeckley’s leading drug, BPL-003, is related to dimethyltryptamine, or DMT. The nasal spray is administered in a clinic where patients are monitored for approximately two hours. Initial Phase 3 trial results are expected in 2029.

“The idea was to find a different type of drug that could help them recover from disease by not only changing the neurotransmitters in their brains, but also changing the connections of the neurons in their brains,” Dan Skovronsky, Lilly’s chief scientific officer, said in an interview with CNBC on Thursday.

He said the team at AtaiBeckley found that the drug could very quickly have a profound effect that could last for months, making BPL-003 “a very different type of drug in the treatment of depression.” It’s possible for people to receive treatment several times a year, Skovronsky said.

The purchase price of $6.75 in cash per share, or about $2.8 billion, is 26% higher than AtaiBeckley’s close of $5.36 per share on Wednesday. Lilly could pay up to $2.50 per share, or up to $1 billion in additional payments, if the company’s drugs meet certain development and regulatory milestones.

This acquisition marks the latest sign of momentum behind psychedelics. The Trump administration has prioritized the development of psychedelic-based treatments for mental health problems, including depression and post-traumatic stress disorder.

Lilly has a long history with mental health. The blockbuster antidepressant Prozac transformed the treatment of depression and sparked Lilly’s last major sales boom before the GLP-1 boom. Skovronsky said the stigma around treating depression existed when Lilly started working in the area. He compared this to some of the current resistance to psychedelics and said it actually drew him to the space.

While Prozac and similar drugs slowly change chemicals in the brain, psychedelics can encourage neurons to quickly form new connections. Emerging research suggests that people with treatment-resistant depression may not have enough plasticity in their brains, and these experimental drugs are trying to change that.

“We now understand the different receptors in the brain that these types of drugs bind to, and we understand that these receptors have a set of signals inside the neurons that tell them to be more plastic,” Skovronsky said. “Now, is this related to the hallucinogenic experience, or are these two things separate? I think the field is debating that right now, but for now we have a drug that causes both, and as a result I think it has a really significant treatment effect.”

This is also the latest deal for Lilly, which has been on a spending spree. Before Lilly announced its intention to acquire AtaiBeckley, it said it would spend more than $10 billion upfront and potentially up to $25 billion on eight acquisitions this year.

As it established itself as the world’s most valuable healthcare company, the drugmaker has consciously targeted later-stage, and therefore more expensive, deals than it has pursued in the past.

“If we see great ideas that we think we can use to help people in need, of course we will make deals,” Skovronsky said.

AtaiBeckley shares rose more than 30% in pre-market trading following the announcement.