Eli Lilly Changed Depression Care With Prozac. Now It’s Betting on Psychedelics with AtaiBeckley Acquisition

Eli Lilly is making its biggest move yet into the rapidly evolving field of psychedelic medicine, acquiring clinical-stage biotechnology company AtaiBeckley in a deal valued at up to $3.8 billion.

In the statement announcing the acquisition, the Indianapolis-based drugmaker said it will pay $6.75 per share in cash, valuing the transaction at approximately $2.8 billion upfront. Lilly could also pay up to an additional $2.50 per share, or roughly $1 billion, if AtaiBeckley's experimental therapies achieve specified development and regulatory milestones.

The acquisition gives Lilly access to AtaiBeckley's most advanced experimental treatment, BPL-003, a nasal spray based on dimethyltryptamine (DMT) that is currently being evaluated in Phase 3 clinical trials for treatment-resistant depression. The company is also developing additional psychedelic-based therapies, including a compound related to MDMA, commonly known as ecstasy, for other psychiatric conditions.

"The goal here was to find a different type of medicine that could help them, not just changing the neurotransmitters in their brain, but actually changing the connections of neurons in their brain to try and help them from the disease," Lilly Chief Scientific Officer Dan Skovronsky told CNBC.

Unlike conventional antidepressants, which typically require weeks to begin working and are taken daily, BPL-003 is administered as a nasal spray in a supervised clinical setting where patients are monitored for approximately two hours.

According to the company, "In a Phase 2b study, BPL-003 demonstrated rapid and durable reductions in depressive symptoms following an in-clinic visit lasting approximately two hours on average, with beneficial effects persisting for months."

Skovronsky said AtaiBeckley's research indicates patients may only need the therapy once or twice a year if future studies confirm its long-lasting effects. Initial Phase 3 trial results for BPL-003 are expected in 2029, meaning the therapy remains several years away from potential regulatory approval.

The science behind psychedelic therapies differs significantly from traditional antidepressants. While medications such as Lilly's blockbuster Prozac primarily work by gradually altering neurotransmitter levels, psychedelics are believed to temporarily increase the brain's ability to form new neural connections, a process known as neuroplasticity.

Researchers increasingly believe reduced neuroplasticity may contribute to treatment-resistant depression, opening the door to therapies designed to restore those connections. "We understand now the different receptors in the brain that drugs like this bind to, and we understand that those receptors have a signaling cascade inside of neurons that then tells them to become more plastic," Skovronsky said.

He acknowledged scientists continue debating whether the drugs' therapeutic benefits are directly tied to their hallucinogenic effects, but said current evidence suggests the medicines can produce meaningful clinical improvements.

Carole Ho, executive vice president and president of Lilly Neuroscience, said in the statement that "Treatment-resistant depression persists even after multiple treatments have failed. Millions of people are still searching for relief and desperately need a therapy that works. Advancing AtaiBeckley's investigational therapies gives us a real chance to change that."

The Trump administration has also made the development of psychedelic-based mental health therapies a priority, helping increase investment and research across the sector. The pharmaceutical giant revolutionized depression treatment in the late 1980s with Prozac, one of the world's first blockbuster antidepressants.

Skovronsky noted that mental health treatment itself once carried significant social stigma, comparing that skepticism to today's debate surrounding psychedelic medicines. Rather than avoiding controversial areas of research, he suggested the remaining uncertainty makes the field particularly attractive for innovation. The deal is also part of Lilly's aggressive acquisition strategy in 2026.

Before announcing the AtaiBeckley purchase, the company had already committed more than $10 billion in upfront payments across eight acquisitions this year, with potential deal values reaching $25 billion if milestone payments are included.

Lilly has increasingly focused on acquiring later-stage biotechnology companies with promising clinical programs, even if doing so requires paying higher premiums. "If we see great ideas that we think we can use to help people that need them, of course we'll do deals," Skovronsky told CNBC. Investors welcomed the announcement, with shares of AtaiBeckley surging more than 30% in morning trading Thursday.