Psychedelic M&A is on a trip

Psychedelic M&A is on a trip

Developers of psychedelic drugs have been struggling to raise venture capital, but recent M&A deals have boosted valuations.

Why it matters: Big-ticket buys are giving the development of psychedelic drugs some mainstream validation — and making the path to an exit look clearer.

Driving the news: Eli Lilly's agreement last week to buy psychedelic drug-developer AtaiBeckley for up to $3.8 billion single-handedly eclipsed the sector's total M&A value in both 2025 and 2024, per PitchBook.

By the numbers: Psychedelic M&A value reached $1.64 billion across five deals in 2025, driven primarily by AbbVie's acquisition of Gilgamesh Pharmaceuticals' lead drug candidate for up to $1.2 billion.

  • That's up considerably from $66 million across five deals in 2024, per PitchBook.
  • Meanwhile, VC investment totaled $76.5 million across eight deals through July 23 this year. That's down 83% from its 2023 peak of $457 million across 39 deals.

    • Zoom out: This year's biotech M&A value has already surpassed last year, per PitchBook, as well as 2023—the sector's last peak—as Big Pharma looks to offset patent losses.

  • Lilly's M&A spree includes 12 completed or in-progress acquisitions just this year.

    • What they're saying: Ropes & Gray partner Emily J. Oldshue — who was on the team that advised Lilly on the AtaiBeckley deal — says wars, supply chain risk, pricing risk and China uncertainty have done little to slow dealmaking.

  • All "the things that you would ordinarily see interfere with M&A deal activity have ultimately turned out empirically to be a bit of a shoulder shrug for an industry that just needs to make progress."

    • Between the lines: These companies are making headway to be evaluated more like other clinical-stage drug assets.

  • The FDA this month finalized guidance for the developers of psychedelic drugs and granted expedited review vouchers to three companies studying treatments for depression and PTSD.

    • What we're watching: Whether the acquired programs can clear clinical and regulatory hurdles, with initial Phase 3 results for AtaiBeckley's BPL-003 nasal spray in 2029.