Ecstasy-for-Medicine Advocate MAPS Looks for Cash Lifeline

MAPS is working on an $85 million private share sale to keep itself afloat until mid-2024, when it hopes to start selling MDMA, also known as Ecstasy, in the U.S., people familiar with the deal said. MDMA remains illegal, but is one of the most-promising treatments for intractable post-traumatic stress disorder.

The legalization advocate is planning a private stock offering for its public-benefit corporation, or PBC, the people said. The Series A financing would value the business at about $200 million, they said.

A spokesman for MAPS declined to comment.

The deal would set MAPS roughly on par with Atai Life Sciences, a publicly listed psychedelic drug developer backed by Christian Angermayer and Peter Thiel. Atai has a market capitalization of about $240 million, down from $3 billion two years ago, before the onset of a steep decline in investor appetite for biotech stocks.

The Food and Drug Administration is expected to approve within 12 months MAPS’s proposal for MDMA-assisted therapy for PTSD, potentially boosting valuations across the industry, investors and analysts said.

But MAPS needs a financial bridge to make it that far. The nonprofit was forced to stop clinical trials in Europe this spring and currently has enough cash for two months of operations, the people familiar with the matter said.

The FDA granted research into the drug breakthrough status in 2017, but if the approval process drags on it could put a severe cash drain on MAPS.

“Ultimately the MAPS launch of MDMA for PTSD is, to us, the most important next step,” Patrick Trucchio, a biotech analyst at investment bank H.C. Wainwright, said at a conference held by MAPS in Denver last week. “I think everyone needs to be looking towards this as something the whole space can benefit from.”

MAPS PBC was founded in 2014 to help fund and conduct clinical trials of MDMA treatment of PTSD, which affects about 12 million Americans, according to data from the National Institutes of Health. Profits from the subsidiary are meant to funnel back to MAPS to further its mission of legalizing MDMA and other psychedelics such as LSD and psilocybin.

Nonmedicinal use of psychedelics is already on the rise in some parts of the U.S., especially Silicon Valley.

Rick Doblin, a guru in the psychedelic legalization movement, founded MAPS in 1986 and funded the organization primarily through philanthropy. MAPS eventually raised $130 million in grants as Wall Street elites opened their checkbooks. Steven Cohen, the hedge-fund manager who owns the New York Mets, donated $5 million in recent weeks.

As the FDA application process entered its final stages, MAPS’s research and administrative expenses soared and in late 2021 it used an unorthodox mechanism to cover its cost. MAPS raised $70 million with venture-capital firm Vine Ventures by pledging 6.1% of revenue from the first eight years of North American MDMA sales.

Doblin had hoped to rely on philanthropy and revenue sharing until sales started. He feared that becoming beholden to outside investors might compromise MAPS’s mission to make psychedelics accessible to as many patients as possible.

Earlier this year, the organization considered, then rejected the idea of an initial public offering, in part to ensure new shareholders’ interests will be aligned with those of the nonprofit, the people familiar with the matter said. Most of the investors that have committed to the private share sale have previously donated to MAPS and the deal comes with unusual restrictions.

The Series A financing would put a cap on returns for shareholders and prohibit them from selling their shares, people familiar with the matter said.

Despite the restrictions, the opportunity to buy in when prices for psychedelic drug developer stocks are near record lows is attractive, said one investor in the deal. Should the FDA approve MDMA, MAPS will likely expand to international markets and seek approval for use of the drug to treat a wider range of illnesses. That would make the company worth over $1 billion, the investor said.

One investor put in an order for $15 million of the shares, encouraging others to participate, the people familiar with the matter said.

Even if MAPS gains FDA approval for MDMA next year, it will need to raise hundreds of millions more dollars to educate insurers and patients about the treatment, and to train therapists to administer it. Commercialization of most mass-market pharmaceuticals typically costs $500 million to $1 billion, analysts and biotech investors said. The process should be less costly for MAPS because PTSD is a relatively well known illness and a network of clinics already exists to treat it.