$1.5 trillion Eli Lilly moves into psychedelics - what does it mean for EMD?

$1.5 trillion Eli Lilly moves into psychedelics - what does it mean for EMD?

The world's most valuable pharmaceutical company has bought its way into psychedelics.

$1.5 trillion Eli Lilly is acquiring psychedelic drug developer AtaiBeckley for up to US$3.8BN:

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Eli Lilly is the company behind weight loss drugs - Zepbound, Mounjaro and more recently Foundayo (with Retatrutide set to be filed for FDA approval this year).

Now Lilly is deploying the billions of dollars they have made there into the psychedelic medicine space.

Following Otsuka which is paying up to ~US$1.25BN for another psychedelics developer Transcend Therapeutics in March.

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And the Trump Executive Order fast-tracking psychedelic treatments in the US:

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What does all of this mean for EMD?

We think it brings industry validation into the psychedelics medicine space.

Which could in the long run mean more approved psychedelic drugs…

All of which will need to be delivered to patients.

That’s where Emyria (ASX: EMD) comes into play.

Psychedelic therapies need trained psychiatrists, therapists delivering treatment to patients in purpose-built clinics .

EMD is one of (if not the only) companies in the world with years of experience running legally authorised psychedelic therapy clinics at a commercial scale.

EMD runs "Empax" clinics all over Australia delivering psychedelic-assisted therapy - MDMA for PTSD and psilocybin for treatment-resistant depression. (source)

EMD is treating patients across four clinics, with a fifth due to open in NSW this quarter.

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EMD as market leader has also signed up payer deals with ~$14BN Medibank (private health insurer) and indirectly through the Department Of Veteran Affairs (the world's first government payer).

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Remember that Trump executive order we mentioned earlier - it put real-world evidence (precisely what EMD delivers at its clinics) at the centre of the approvals pathway.

Specifically directing regulators to "increase clinical trial participation and evidence generation". (source)

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Real-world evidence means real patients, in real clinics, receiving real treatment.

(Not carefully managed trial participants.)

Real world evidence is exactly what EMD delivers RIGHT NOW in Australia.

(and have been doing in private clinics since 2024)

We think EMD has quietly positioned itself as a potential delivery partner for anyone developing drugs/therapy protocols…

Companies like $1.5 trillion Eli Lily when it closes that acquisition we mentioned earlier.

We listened to the following webinar from three weeks ago where Executive Chair Greg Hutchinson talked about how ~A$2.4BN NASDAQ listed Compass Pathways was finding it difficult to deliver their drug.

The AFR article Greg references mentions its hard to take because of the professionals needed to administer it (which is exactly what EMD specialises in).

Greg hammered that point home saying how EMD is “uniquely positioned to be able to assist” with the delivery of psychedelics to patients.

(skip to 4:30 - also, here is the AFR article he references)

What we want to see next from EMD

EMD execute its national rollout in Australia

We want to see EMD open more clinics around Australia.

Here are the milestones we are tracking:

• ✅ WA, QLD and VIC clinics - operational
• ✅ NSW recruitment completed
• 🔄 NSW clinic opened (expected this quarter, source)

🔲 Revenue growth from existing clinics

With clinics now running in three states and NSW on the way, we want to see patient throughput and revenue building.

🔲 New payer deals

EMD has both Medibank Private (~$12BN market cap) and DVA (government program) as current “payers” for its treatment protocol.

A big win for EMD would be to get new payers into its network.

We note EMD is already working with Workcover Australia (including the Australian Federal Police's cohort, one of the highest PTSD-burden groups in the country).

The BIG new one would ofcourse be out of the US.

🔲 Expansion into new indications

We also want to see EMD expand its therapy programs to new indications and drug therapies over time to broaden its addressable market beyond PTSD and treatment-resistant depression.

Here is the image we shared in a recent note which helps visualise the impact this would have on EMD’s business:

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What we want to see over the coming months is that more of those circles move from the “scoping” stage into the “active” stage, this is where EMD gets the revenue…