COMPASS Pathways, a London-based, Nasdaq-listed company working in the field of mental health treatment via psilocybin therapy, is poised to raise up to $285 million in a private placement financing round.
The transaction is split into two tranches; the first sees a series of just over 16 million shares (American Depositary Shares) issued at a purchase price of $7.73, accounting for just over $125 million. Alongside the purchase of each ADS, the company is granting the right to purchase an additional ADS at a 30 percent premium, $9.93, accounting for approximately $159 million. Holders of the first tranche ADS will have the right to purchase additional shares for a three-year period.
The transaction is being conducted by a consortium of healthcare specialist investors and the net proceeds of the sale are expected to extend COMPASS Pathway's runway well into 2025.
TCGX and Aisling Capital are leading the purchase, with participation from new and existing institutional investors, including Vivo Capital, RA Capital, Surveyor Capital (a Citadel company), Paradigm BioCapital Advisors LP, Soleus Capital, Armistice Capital, Logos Capital, PFM Health Sciences and Laurion Capital Management, among others.
In the realm of mental health treatment, psilocybin therapy is a hot topic. The controversial approach merges the pharmacological potential of psilocybin with integrated psychological support.
Psilocybin is the psychoactive substance found in select mushrooms perhaps, better known as 'magic mushrooms', and has shown early indications of providing a safe and effective medicine for patients with depression, anxiety, addiction and other mental illnesses, when administered with psychological support from specially-trained therapists.
COMPASS Pathway's COMP360 offering is a synthesised formulation of psilocybin, and the company is working to further the research and application of psilocybin therapy, beginning with patients suffering from depression that have exhausted traditional avenues of treatment.
On the investment, the company's CEO Kabir Nath commented:
"We thank these investors for their confidence in our rigorous approach to building a strong base of evidence for the potential of COMP360 psilocybin treatment to help people with treatment-resistant depression, post-traumatic stress disorder and anorexia nervosa. These funds will allow us to advance our pivotal phase 3 program in TRD and achieve important milestones in the development of COMP360. We view this investment as a validation of the potential of psychedelic medicine and the importance of a rigorous and evidence-based approach.”
Tech.eu has previously covered COMPASS Pathways as part of our "These investor-backed mental health startups are healing our brains" feature in February of 2023.
Lead image: Mathew Schwartz