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Field Trip Health Ltd., a psychedelics company experimenting with ketamine in the treatment of depression, has raised $95-million from a bevy of biotech and health care-focused hedge funds – the largest round of financing of such a business in Canada to date.

The deal will see investors purchasing 14.6 million shares of Field Trip at $6.50 a share, a 21-per-cent discount from its peak stock price of $8.25 in mid-February.

The Toronto-based company has seen its shares rise more than 120 per cent since it went public through a reverse takeover on the Canadian Securities Exchange last October. This dramatic run-up has been fuelled in part by general market frothiness, but also by the decriminalization of magic mushrooms across a number of U.S. states in November, which was seen by investors as a major turning point for the psychedelics industry.

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Field Trip generates most of its revenue by administering ketamine-enhanced psychotherapy to patients across five clinics in several North American cities, including Toronto. Although ketamine is most commonly used as an anesthetic in surgical procedures, it is a controlled substance in Canada and its limited use is permitted on a prescription-only basis for patients struggling with anxiety and depression.

Before this latest round of financing, Field Trip had roughly $10-million in cash. It generated just $316,329 in revenue from patient services for the three months ended Dec. 31, 2020.

Co-founder and executive chairman Ronan Levy said the company plans to use some of the new financing to open another 70 clinics across North America and Europe by 2025. The money will also go into further developing FT-104, a patent-pending synthetic psychedelic molecule that it believes could have novel properties in mental-health treatment.

Soleus Capital, a Connecticut-based private-equity firm that invests in the health care sector, was the lead investor in the financing. Others included biotech-focused funds such as Dallas-based Avidity Partners, Israel’s Sphera Funds and New York-based Pura Vida Investments and Jennison Associates. Notably, none of the major investors in Field Trip were Canadian.

Canadian investment bank Bloom Burton Securities Inc. was the lead underwriter on the deal, with Stifel GMP and Canaccord Genuity Corp. rounding out the syndicate.

According to Mr. Levy, the deal came together primarily because of the involvement of Bloom Burton, which brought many of the biotech investors to the table.

The financing is just the latest in a series of major investments by U.S. funds in the psychedelics space. In November, billionaire Peter Thiel poured US$125-million into Berlin-based startup ATAI Life Sciences to fund preclinical trials of arketamine for depression. This January, Toronto-based MindMed Inc. raised $92-million from investors for research into the use of LSD and MDMA, also known as ecstasy, to treat mood disorders.

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