Eli Lilly strikes $2.8 billion deal for AtaiBeckley

Eli Lilly said Thursday it will buy AtaiBeckley for $2.8 billion in cash, giving the drug giant a bigger foothold in experimental psychedelic medicines. For investors, the deal shows Lilly using its financial strength to expand beyond its blockbuster businesses and add later-stage mental health drugs to its pipeline.

The companies agreed to a cash price of $6.75 per AtaiBeckley share, Lilly said. That is 26% above AtaiBeckley’s Wednesday closing price of $5.36. The agreement could rise by as much as another $2.50 per share, or $1 billion, if AtaiBeckley’s drugs hit certain development and regulatory targets.

AtaiBeckley shares rose more than 30% in premarket trading after the announcement, according to CNBC.

What Lilly is buying

The main asset in the deal is BPL-003, AtaiBeckley’s lead drug candidate. Lilly said the treatment is based on dimethyltryptamine, better known as DMT, a psychedelic compound being tested for treatment resistant depression.

Treatment resistant depression generally refers to depression that has not improved enough after standard therapies. Psychedelic-based drugs are being studied because they may affect brain pathways involved in mood, although the medicines still need to clear clinical trials and regulatory review before they can be sold.

BPL-003 is given as a nasal spray in a clinical setting, with patients monitored for about two hours, according to the company. The drug is already in Phase 3 testing, the late-stage trial phase typically used to evaluate whether a medicine works well enough and is safe enough for regulators to consider approval. Initial Phase 3 results are expected in 2029.

AtaiBeckley is also working on other psychedelic-based treatments for mental health conditions. Its pipeline includes a drug related to MDMA, the compound also known as ecstasy.

Why the deal fits Lilly’s playbook

The purchase adds to a busy year of dealmaking for Lilly. Before announcing the AtaiBeckley acquisition, the company had already said it planned to spend more than $10 billion upfront across eight acquisitions this year, with total potential payments reaching as much as $25 billion if milestones are met.

Lilly has been pursuing more advanced drug candidates than it has often targeted in the past. Later-stage programs can cost more to buy because they have more clinical data behind them, but they may also be closer to a potential regulatory decision than early research projects.

The move comes as psychedelic therapies receive more attention in mental health research. CNBC reported that the Trump administration has made development of psychedelic-based treatments for conditions including depression and post-traumatic stress disorder a priority.

For Lilly, the acquisition adds a new area of clinical risk and potential reward. AtaiBeckley’s drugs remain experimental, and milestone payments depend on future progress with development and regulators. The confirmed part of the deal is the $2.8 billion cash purchase price and Lilly’s move to bring psychedelic mental health programs into one of the largest drug portfolios in the market.

This story draws on original reporting from CNBC.