As mental health treatment developers seek funding to advance clinical programs through late-stage trials, psychedelic medicine companies face particular scrutiny over their path to commercialization. Cybin Inc., a Toronto-based neuropsychiatry company, recently closed a $175 million registered direct offering to fund its ongoing Phase 3 depression study and repay existing debt.
Key Points
- Cybin sold 22.3 million common shares and 4.6 million pre-funded warrants at $6.51 per unit, with each unit including 0.35 of a warrant exercisable at $8.14 per share. The warrants expire by June 30, 2027, or potentially earlier based on clinical trial results or stock price performance.
- The company’s lead program, CYB003, is a deuterated psilocin analog in Phase 3 trials for major depressive disorder that has received Breakthrough Therapy Designation from the FDA. A second compound, CYB004, is in Phase 2 development for generalized anxiety disorder.
- Part of the proceeds will repay outstanding unsecured convertible debentures held by High Trail Special Situations LLC. The company did not disclose the amount of this debt or the terms of the original financing.
- New and existing institutional investors participated in the offering, including Venrock Healthcare Capital Partners, OrbiMed, Point72, and Adage Capital Partners LP. The company used Jefferies, TD Cowen, and Cantor as joint lead placement agents.
- The company states it will use remaining funds to progress its CYB003, CYB004, and CYB005 programs, though specific allocation amounts and timelines for each program were not provided.
If successful in clinical trials, Cybin’s compounds could provide additional treatment options for patients with depression and anxiety disorders, conditions that affect millions of people and often respond inadequately to existing therapies.
The Data
- The offering generated $175 million in gross proceeds at $6.51 per common share or pre-funded warrant, with each unit accompanied by 0.35 of one warrant.
- Warrants can be exercised at $8.14 per share until June 30, 2027, or potentially earlier—30 days after the company publishes topline data from its APPROACH trial, or 30 days after announcing an acceleration right if the stock trades at or above $19.53 for five consecutive trading days.
- Cybin’s CYB003 is a proprietary deuterated psilocin analog currently in Phase 3 studies, while CYB004 is a deuterated N, N-dimethyltryptamine molecule in Phase 2 testing. The company also maintains a research pipeline of compounds targeting 5-HT receptors.
- Founded in 2019, Cybin operates in Canada, the United States, the United Kingdom, and Ireland. The announcement did not include current cash runway or expected timing for key clinical readouts.
Industry Context
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Cybin’s website
Cybin positions itself in the emerging field of psychedelic-based therapies for mental health conditions. The company is developing proprietary psychedelic compounds through a process called deuteration, which replaces certain atoms in the molecule to change how the body processes the drug, potentially altering the compound’s duration of action and side effect profile.
The company’s lead candidate targets major depressive disorder, a condition affecting an estimated 21 million American adults based on 2021 data from the National Institute of Mental Health. The company notes there remains an unmet need for patients who suffer from mental health conditions.
The company acknowledged in its forward-looking statement disclaimers that the FDA has not evaluated claims regarding psilocin or psychedelic tryptamine compounds, and that “rigorous scientific research and clinical trials are needed” to confirm efficacy. The announcement emphasized that if Cybin cannot obtain necessary approvals to commercialize its products, it may have a material adverse effect on the company’s performance and operations. Whether Cybin’s specific compounds will receive regulatory approval and demonstrate clinical benefits remains to be determined through its ongoing trials.
