AbbVie has bought a psychedelic compound from a little known drug company, in a deal that could be worth north of $1 billion.
The acquisition, announced Monday, makes AbbVie one of the few large pharmaceutical firms to significantly invest in an area of drug development that many on Wall Street expect to become quite lucrative. Analysts at RBC Capital Markets recently wrote the psychedelic space is “approaching a tipping point” as larger studies near completion. Just last week, the small biotechnology company Reunion Neuroscience announced plans to push its main drug, which boosts certain brain proteins that interact with psychedelics like LSD and psilocybin, into late-stage testing.
That news came less than two months after U.K.-based Compass Pathways disclosed data from a relatively large study wherein patients with hard-to-treat depression were given a version of a psychedelic compound found in many mushroom species. Gilgamesh Pharmaceuticals also unveiled positive results this year, from a mid-stage clinical trial focused on a drug that works similarly to Reunion’s.
That drug, called bretisilocin or GM-2505, is now heading over to AbbVie, which has agreed to hand Gilgamesh as much as $1.2 billion for the program. The total includes an upfront fee and potential milestone payments tied to specific development goals.
“The field of psychiatry represents one of the most challenging areas in medicine, with a significant need for innovative solutions,” said Roopal Thakkar, AbbVie’s chief scientific officer, in a statement. "This acquisition underscores our commitment to broadening and enhancing psychiatric care by investing in novel treatment approaches with the potential to reach patients for whom other treatments have been ineffective.”
Monday’s deal isn’t the first between AbbVie and Gilgamesh. Last year, the companies began working together to create “next-generation therapies” for psychiatric disorders. For an upfront payment of $65 million, AbbVie secured an option to license the therapies. The pharmaceutical giant also offered up to $1.95 billion in aggregate option fees and milestones, as well as tiered royalties on net sales of any resulting products.
Per terms of the acquisition, that option-to-license agreement will transfer to a newly created spinoff, Gilgamesh Pharma Inc., which will also retain the original company’s employees and other research programs. Those programs include an analog to the psychoactive substance found in iboga plants, a depression drug designed to be fast-acting and an experimental schizophrenia medication that goes after the same molecular targets as Bristol Myers Squibb’s Cobenfy.
AbbVie is the “ideal partner to advance bretisilocin rapidly forward while enabling Gilgamesh to continue pursuing our broader mission of developing novel, transformative therapies for complex mental health and neurological conditions,” said Gilgamesh’s CEO Jonathan Sporn.
Bloomberg News last month reported that AbbVie was in talks to buy Gilgamesh outright for roughly $1 billion. Following the report, shares of psychedelics developers like Cybin, Mind Medicine and GH Research rose about 3% to 5%. Another, Atai Life Sciences, gained more than 10%.
The Gilgamesh asset purchase is “notable,” according to Cantor Fitzgerald analyst Carter Gould, as it both “bolsters AbbVie's neurology portfolio” and “continues its relative torrid pace of deal-making.” So far this year, the company has inked eight deals, seven of which had “potential economics” of at least $1 billion.
