Eli Lilly will buy AtaiBeckley for up to $3.8 billion, the company said on Thursday, joining a race among pharma majors to develop psychedelic treatments for depression and other mental health disorders.
Interest in the sector received a boost after U.S. President Donald Trump in April directed health regulators to speed up reviews of certain psychedelic treatments and increased federal funding for research in the field.
Lilly will pay $6.75 per AtaiBeckley share in cash, a premium of about 26% to the stock's closing price on Wednesday. AtaiBeckley's shares rose more than 30% in premarket trading.
The offer consists of $2.8 billion upfront and additional up to $1 billion milestone-based payments.
The deal gives Lilly access to AtaiBeckley's lead candidate BPL-003, a psychedelic-based nasal spray in late-stage development for treatment-resistant depression, a severe form of the illness that does not improve after standard treatments.
"Millions of people are still searching for relief and desperately need a therapy that works," said Carole Ho, president, Lilly Neuroscience.
The companies expect the deal to close in the third quarter.
Drugmakers have shown growing interest in psychedelic-based treatments for depression and other mental health disorders.
AbbVie bought an experimental psychedelic-based depression drug from Gilgamesh Pharmaceuticals for up to $1.2 billion last year.
AtaiBeckley, which is also developing a social anxiety treatment, "would provide differentiated exposure in psychiatry and reinforce the company's broader effort to diversify beyond its cornerstone cardiometabolic franchise," said BMO analyst Evan Seigerman.
The acquisition is Lilly's latest investment in neuroscience. In June, it completed its up to $7.8 billion purchase of Centessa Pharmaceuticals, adding experimental drugs targeting the brain system that regulates sleep and wakefulness.
Lilly has channeled cash generated from the booming demand for its obesity drugs to strengthen its pipeline across immunology, oncology and neuroscience.
