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On Tuesday, H.C. Wainwright adjusted its outlook on shares of Atai Life Sciences N.V (NASDAQ: ATAI), reducing the price target to $10.00 from the previous $15.00 while maintaining a Buy rating on the stock. This revision follows atai’s third-quarter financial report on November 13, which detailed progress in its neurology-focused pipeline. The report highlighted several key developments, including the anticipated release of top-line data from various clinical trials.
BPL-003, atai's intranasal mebufotenin, is on track to deliver top-line data from a Phase 2b trial for treatment-resistant depression (TRD) in the second quarter of 2025. VLS-01, an oral transmucosal film formulation of N,N-dimethyltryptamine (DMT) and a wholly-owned short-duration psychedelic, is expected to progress to Phase 2 by the end of 2024. Similarly, EMP-01, which targets social anxiety disorder (SAD), is slated to move into Phase 2 around the same time.
Additionally, ELE-101, an intravenous psilocin benzoate, began dosing in a Phase 2a open-label trial for major depressive disorder (MDD) in June, with results expected in the fourth quarter of 2024. RL-007, a compound aimed at cognitive impairment associated with schizophrenia (CIAS), is anticipated to have Phase 2b data available by mid-2025.
The reduction in Atai's price target to $10 is primarily due to a lowered valuation of $60 (from $120) for COMPASS Pathways (CMPS), where atai’s equity ownership has decreased to 10.1% from 15.5% as of the second quarter of 2024. Furthermore, the removal of GRX-917, deuterated etifoxine, from the H.C. Wainwright model contributed to the adjusted price target.
The firm has stated it will reassess GRX-917 once its clinical development path is clearer. Despite the lowered price target, the robust potential upside has led H.C. Wainwright to reiterate its Buy rating on atai Life Sciences.
In other recent news, ATAI Life Sciences has completed the acquisition of IntelGenx Corp., adding to its capabilities in the pharmaceutical market. This transaction involved ATAI Life Sciences discharging its senior secured debt in IntelGenx in exchange for the latter's shares, without the exchange of any ATAI equity or cash. The acquisition contributes to ATAI's portfolio with IntelGenx's development candidate VLS-01, furthering ATAI's commitment to expanding its product offerings.
In addition, ATAI Life Sciences reported positive Phase 1b results for its depression treatment, VLS-01, and plans to initiate a Phase 2 study by the end of 2024. The company also secured an additional $5 million in financing through an amendment to its current loan agreement.
Analysts from TD Cowen, and Jefferies have maintained their Buy ratings on ATAI Life Sciences. There have also been changes to ATAI's supervisory board, with Jason Camm stepping down and Dr. Scott Braunstein and Dr. Laurent Fischer joining.
These are among the recent developments at ATAI Life Sciences, which continues to make significant advancements in its clinical trials and financial strategy. The company's ongoing efforts and strategic moves are being closely watched by investors and stakeholders in the biotechnology and mental health sectors.
InvestingPro Insights
To complement the analysis provided by H.C. Wainwright, recent data from InvestingPro offers additional context on atai Life Sciences N.V's financial position and market performance. Despite the reduced price target, InvestingPro Tips highlight that ATAI has seen a "Significant return over the last week" and a "Strong return over the last month," with a 14.38% and 30.47% price total return respectively. This recent positive momentum aligns with the maintained Buy rating from H.C. Wainwright.
However, investors should note that ATAI is "Quickly burning through cash" and "Not profitable over the last twelve months," which underscores the importance of the company's clinical trial progress and potential future revenue streams. The company's market cap stands at $280.22 million, reflecting the market's current valuation of its pipeline and assets.
InvestingPro Tips also indicate that ATAI "Holds more cash than debt on its balance sheet" and "Liquid assets exceed short term obligations," suggesting a relatively stable financial position to support ongoing research and development efforts. These factors may provide some reassurance to investors as the company progresses through its clinical trials.
For those interested in a deeper dive into ATAI's financial health and market prospects, InvestingPro offers 11 additional tips, providing a comprehensive view of the company's position in the biotechnology sector.
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