Eleusis, a health-care company focused on using psychedelic drugs as medicines, is going public through a merger with a blank-check firm.
The U.K.-based company will combine with Silver Spike Acquisition in a deal with an enterprise value of $446 million, according to a statement Thursday that confirmed an earlier Bloomberg News report. It will provide Eleusis with gross proceeds of as much as $288 million, the amount raised by the special purpose acquisition company, or SPAC, in its initial public offering in March.
The fresh capital is expected to support development of Eleusis's lead drug candidate, an IV formulation that delivers the active ingredient in psilocybin. The drug, ELE-Psilo, is being developed to treat depression and is expected to enter early-stage human trials in the first half of this year.
Unlike many SPAC transactions, the deal doesn't come with additional funding in the form of a PIPE, or private investment in public equity. That means the combination will rely on investors not exercising their redemption rights, something that has recently been on the rise for SPACs.
The deal pairs Eleusis with Silver Spike Capital, an investment manager focused on the cannabis and alternative health and wellness industries. The SPAC deal is the second for Silver Spike, which took WM Technology, a provider of software for the cannabis sector, public in June.
"This is an ideal moment for Eleusis to go public with a partner like Silver Spike," Shlomi Raz, CEO and founder of Eleusis, said in a statement. "We believe access to public capital markets will accelerate our efforts to transform psychedelics into modern medicines."
Eleusis believes ELE-Psilo can allow for personalized treatment while cutting the time patients need to be monitored compared with those getting oral psilocybin, according to Raz, previously a managing director at Goldman Sachs.
Shares of companies working on experimental therapies based on psilocybin, the drug found in so-called magic mushrooms, have slumped over the past year alongside most of the biotechnology industry. Compass Pathways has fallen about 60% since a mid-stage study of its therapy showed it didn't help some patients with treatment-resistant depression. Atai Life Sciences, which is developing psychedelic drugs and is the largest holder in Compass Pathways, is down 63% since going public in June.
Eleusis plans to unveil initial safety and tolerability results from its early-stage study in the second half of the year, along with data from ELE-Psilo in patients with major depressive disorder.
Eleusis's care delivery management subsidiary, Andala, is focused on managing clinics that give access to psychiatric drug therapies. Andala provides access to Johnson & Johnson's Spravato, the branded name for the antidepressant esketamine. The company aims to establish a national platform to treat patients with psychedelic therapies once they are approved by U.S. regulators.
While the blank-check frenzy has cooled and investors are broadly skeptical of biotech stocks and growth-oriented technology companies, Scott Gordon, CEO of the Silver Spike SPAC, said he expects Eleusis's story and valuation to resonate with investors.
"Our expectation is that the market will receive it enthusiastically and we can plow through all of the challenges," he said.
The Silver Spike SPAC's shares, which sold for $10 in the IPO, closed at $9.70 on Wednesday.