(Bloomberg) -- Eleusis, a health-care company focused on using psychedelic drugs as medicines, is going public through a merger with a blank-check firm, according to people with knowledge of the matter.
The U.K.-based company will combine with Silver Spike Acquisition Corp. II in a deal that values Eleusis at about $450 million, the people said, asking not to be identified discussing private information. They said the deal 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, the people said. That means the combination will rely on investors not exercising their redemption rights, something that has recently been on the rise for SPACs.
Representatives for Eleusis and Silver Spike declined to comment on the agreement.
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 Inc., a provider of software for the cannabis sector, public in June.
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 Plc 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 NV, which is developing psychedelic drugs and is the largest holder in Compass Pathways, is down 63% since going public in June.
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.
The Silver Spike SPAC’s shares, which sold for $10 in the IPO, closed at $9.70 on Wednesday.
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