A NASDAQ-listed biopharmaceutical company, Atai Life Sciences, believes that cryptocurrencies such as Bitcoin could play a crucial role in the survival of biotech startups as they navigate lengthy regulatory approval processes.
Atai, which focuses on developing mental health treatments utilizing psychedelics like DMT and MDMA, is the most recent public enterprise to reveal intentions to invest in Bitcoin. The firm plans to purchase $5 million worth of Bitcoin, as noted by its founder and chair, Christian Angermayer, in a post earlier this year.
Angermayer remarked, “Drug development is a capital-intensive, long-term endeavor,” explaining that the journey to secure regulatory approval can stretch well beyond a decade.
Recent reports indicate that the number of startups shutting down has surged in 2024 compared to the previous year, as many companies struggle to secure the necessary funding to continue operations.
He emphasized that while the approval process is vital for drug development, it exposes companies to significant financial risks, particularly in the current climate of persistent inflation and elevated interest rates, which have contributed to a challenging environment for biotech firms.
Angermayer pointed out that the prevailing strategy in the industry has been to stash cash reserves in almost zero-yield accounts, prioritizing capital preservation over generating returns on cash holdings.
“This scenario paves the way for innovative treasury strategies, such as incorporating Bitcoin into the treasury, to counteract the dual challenges of inflation and low-yielding reserves while aiming to enhance shareholder value,” he stated.
Atai will join at least five other publicly traded medical firms that have recently acquired Bitcoin with the goal of improving shareholder returns.
Quantum BioPharma disclosed on March 20 that its total investment in Bitcoin and other cryptocurrencies has reached $3.5 million, following an initial $1 million investment last December.
Furthermore, Semler Scientific announced last month that it has invested a cumulative total of $280.4 million in Bitcoin, acquiring 3,192 BTC since starting in May.
Hoth Therapeutics, Acurx Pharmaceuticals, and Enlivex Therapeutics have also each committed to buying $1 million in Bitcoin in separate statements made in November.
Angermayer explained that Atai’s Bitcoin acquisition is primarily aimed at serving as a long-term hedge against inflation while also acting as a short-term diversification strategy. He noted that Bitcoin’s price is subject to short-term fluctuations, prompting the Berlin-based company to maintain a portfolio consisting predominantly of US dollars, short-term securities, and stocks to sustain its operations through 2027.
The $5 million investment would allow Atai to procure just over 59 BTC at the current valuation of around $84,300, positioning it as the 52nd largest Bitcoin holder among public companies, according to available data.
Bitcoin has faced challenges in remaining stable amid a broader market downturn influenced by various economic factors, including tariff threats and recession fears.
On March 20, Atai’s stock price saw an initial rise to $1.47 but ultimately closed down 1.44% at $1.37. Compared to its peak in mid-2021 following its public debut, its stock has experienced a decline of nearly 93%, although it has gained 3% so far in this year.