Biopharma exec says Bitcoin could help industry through ‘biotech winter’
Atai Life Sciences, a biopharmaceutical firm listed on NASDAQ, is embracing cryptocurrencies like Bitcoin as a potential lifeline for biotechnology startups grappling with the arduous and financially draining process of regulatory approvals. As the company ventures further into the realm of psychedelic treatments for mental health issues—utilizing compounds such as DMT and MDMA—it has declared its intention to invest $5 million in Bitcoin. Founder and chairman Christian Angermayer discussed this strategy in a recent Substack post, emphasizing the financial demands of drug development, which often spans over a decade before any products can hit the market.
Angermayer has pointed out that the challenges of navigating the approval process introduce significant financial risks, exacerbated by the current economic climate characterized by persistent inflation and elevated interest rates, contributing to what he and others labels as a “biotech winter.” A report from TechCrunch corroborated the dire situation for startups, revealing an increase in closures from 2023 to 2024 as funding sources dwindle.
Atai’s decision to consider unconventional treasury strategies, such as holding Bitcoin, stems from the need to counteract the impending threats presented by inflation and yield-less cash reserves. As Angermayer noted, many companies in the biotechnology sector are prioritizing capital preservation over return on cash balances, rendering traditional treasury management insufficient in the current economic landscape.
This ongoing shift towards cryptocurrencies among public medical corporations isn’t isolated to Atai; at least five other firms have recently added Bitcoin to their balance sheets, aiming to enhance shareholder value. Notably, Quantum BioPharma revealed it had allocated $3.5 million towards cryptocurrencies following an initial $1 million investment in December.
Further highlighting this trend, medical device manufacturer Semler Scientific announced an impressive $280.4 million expenditure over the past year, acquiring 3,192 BTC as part of their asset strategy. Other firms, including Hoth Therapeutics, Acurx Pharmaceuticals, and Enlivex Therapeutics, have committed to purchasing $1 million in Bitcoin each, reflecting a growing acceptance of digital currencies as viable treasury assets.
Angermayer discusses the dual role of Bitcoin in Atai’s financial strategy: primarily as a long-term hedge against inflation and also for short-term diversification. He recognizes the inherent volatility of Bitcoin, hence the firm is maintaining a portfolio primarily composed of US dollars, short-term securities, and stocks to support its operations through 2027.
If Atai successfully executes its $5 million Bitcoin purchase, it would acquire just over 59 BTC at the current market price of approximately $84,300, positioning the firm as the 52nd largest Bitcoin holder among public entities, according to Bitbo data. Despite recent market turbulence associated with geopolitical tensions and economic uncertainty, Atai’s share price appears to have stabilized, reflecting a slight uptick year-to-date, even though it remains substantially below its peak from mid-2021.
In summary, Atai Life Sciences’ foray into Bitcoin investments illustrates a broader trend among biotech firms recognizing digital currencies as both a hedge against inflation and an innovative financial strategy to mitigate risks associated with regulatory hurdles and economic uncertainty. As the landscape continues to evolve, it will be interesting to observe how these investments influence the future of biotech startups navigating through complex approval processes.
