ATAI - Atai Life Cuts Expenses Extends Cash Runway
Atai Life Sciences (NASDAQ: ATAI) announced fiscal second-quarter results today for the quarter ending June 30, 2022 with no revenue, but an update on expenses and cash levels.
Atai completed a company-wide cost optimization initiative and an extensive pipeline review to both reduce its expected operating expenses and prioritize its capital resources on R&D programs. “We continue to execute on our pipeline – having achieved multiple Phase 1 milestones over the last months,” said Srinivas Rao, chief scientific officer and co-founder of Atai. “Going forward, we are focusing on R&D programs that we anticipate generating meaningful clinical data readouts over the next two years.”
Research and development expenses were $17.9 million and $33.4 million for the three and six months ended June 30, 2022, as compared to $16.0 million and $21.6 million for the same prior year periods. The increase of $1.9 million and $11.8 million, respectively, was primarily attributable to an increase in personnel costs, which included a decrease in stock-based compensation expense and increased contract research organization expenses related to the advancement of R&D programs.
General and administrative expenses for the three and six months ended June 30, 2022, were $17.2 million and $35.2 million, respectively, as compared to $37.3 million and $46.6 million in the same prior year periods. The decrease of $20.1 million and $11.4 million, respectively, was primarily attributable to a decrease in stock-based compensation expenses and professional fees, partially offset by an increase in insurance costs, and personnel and facilities costs.
Cash Levels
Cash, cash equivalents and short-term investments totaled $312.5 million as of June 30, 2022, compared to $362.3 million as of December 31, 2021. The six-month net decrease of cash of $49.8 million was primarily attributable to net cash used in operating activities of $45.9 million, $3.0 million of additional investments in the platform companies, offset by $1.9 million received from the conversion of promissory notes and equity issuances.
On August 9th, Atai entered into a term loan facility agreement for up to $175 million with Hercules Capital, Inc. (NYSE:HTGC).
Atai ended the second quarter of 2022 with a cash position of $312 million, which combined with the loan funding from Hercules is anticipated to provide cash runway into 2025.
During the earnings call, outgoing CFO Greg Weaver said that they have a very strong cash runway approaching half a billion dollars now. “In combination with a pipeline prioritization and some thoughtful cost tightening, we now forecast a runway extending into 2025,” he said. “That’s a full year beyond the earlier guidance and an important takeaway here as we continue to exercise the disciplined use of cash in this challenging macro environment.”
Florian Brand, Atai co-founder, CEO, and managing director added to Weaver’s comment: “We have taken very strong and thoughtful measures to extend our runway by one year into 2025. We believe it has been the right strategic decision by adding a nondilutive debt financing of up to $175 million and a very intentional and thoughtful reprioritization of our pipeline. Because in our perspective, this puts us in a position to really focus on the key value inflection points in our programs.”
Other Atai company highlights include:
– Launched Phase 2 clinical trial of COMP360 in anorexia nervosa in July 2022.
– Data from the Perception Neuroscience PCN-101 Phase 2 Proof-of-Concept (PoC) study in treatment resistant depression expected by end of FY 2022.
– Recognify Life Sciences’ RL-007 Phase 2b proof of concept study to treat cognitive impairment associated with schizophrenia is expected to commence in 2022.
Company stock took a bit of a dip on May 11 to $3.13, but has been moving up nicely since August 1 to its current price of $4.58. Stock price started off this year at $7.66.
Earnings per share is estimated at -0.23 and is expected to get significantly worse by 2023, to -1.11.The company had hit the expected EPS in the first quarter of this year—-$0.24.
Of the 13 analysts rating Atai, 12 put it at a buy or strong buy in both June and July. Strong buy analysts include Citigroup, Maxim, and Roth, among others.
According to Wallstreetzen , a stock research platform, Atai’s forecast annual revenue growth rate of 41.32 percent will beat the U.S. biotechnology industry’s average forecast revenue growth rate of 24.94 percent. It is also forecast to beat the U.S. market’s average forecast revenue growth rate of 8.7 percent.
Atai will host an R&D Day for investors on October 25th, 2022 to provide further updates and details on its innovative pipeline.