Variable Interest Entities and a Voting Interest Entity

6 Months Ended

Jun. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Variable Interest Entities and a Voting Interest Entity

4. Variable Interest Entities

Consolidated VIEs

At each reporting period, the Company reassesses whether it remains the primary beneficiary for Variable Interest Entities (“VIEs”) consolidated under the VIE model.

The entities consolidated by the Company are comprised of wholly and partially owned entities for which the Company is the primary beneficiary under the VIE model as the Company has (i) the power to direct the activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses that could potentially be significant to the VIE, or the right to receive benefits from the VIE that could potentially be significant to the VIE. The results of operations of the consolidated entities are included within the Company’s condensed consolidated financial statements from the date of acquisition to June 30, 2022.

As of June 30, 2022 and December 31, 2021, the Company has accounted for the following consolidated investments as VIEs, excluding the wholly owned subsidiaries:

Consolidated Entities	Relationship as of June 30, 2022	Relationship as of December 31, 2021	Date Control Obtained	Ownership % June 30, 2022	Ownership % December 31, 2021
Perception Neuroscience Holdings, Inc.	Controlled VIE	Controlled VIE	November 2018	58.9%	58.9%
Kures, Inc.	Controlled VIE	Controlled VIE	August 2019	64.5%	54.1%
EntheogeniX Biosciences, Inc.	Controlled VIE	Controlled VIE	November 2019	80.0%	80.0%
DemeRx IB, Inc.	Controlled VIE	Controlled VIE	December 2019	59.5%	59.5%
Recognify Life Sciences, Inc.	Controlled VIE	Controlled VIE	November 2020	51.9%	51.9%
PsyProtix, Inc.	Controlled VIE	Controlled VIE	February 2021	75.0%	75.0%
Psyber, Inc.	Controlled VIE	Controlled VIE	February 2021	75.0%	75.0%
InnarisBio, Inc.	Controlled VIE	Controlled VIE	March 2021	82.0%	82.0%
Neuronasal, Inc.	Controlled VIE	Controlled VIE	May 2021	56.5%	56.5%
TryptageniX Inc.	Controlled VIE	Controlled VIE	December 2021	65.0%	65.0%

As of June 30, 2022 and December 31, 2021, the assets of the consolidated VIEs can only be used to settle the obligations of the respective VIEs. The liabilities of the consolidated VIEs are obligations of the respective VIEs and their creditors have no recourse to the general credit or assets of atai.

EntheogeniX Biosciences, Inc.

In November 2019, the Company entered into a series of agreements with Cyclica Inc. ("Cyclica") to form EntheogeniX Biosciences, Inc. ("EntheogeniX"), a company dedicated to developing the next generation of innovative mental health drugs employing an AI-enabled computational biophysics platform designed to optimize and accelerate drug discovery. Based on the Company's assessment of the transaction at the time of acquisition, the Company concluded that EntheogeniX was not a business and accounted for the Company's investment as an initial consolidation of a VIE that is not a business under ASC 810.

In February 2022, pursuant to the business plan as contemplated in the Stockholders Agreement and Subscription for Shares pursuant to the Contribution and Subscription Agreement, atai purchased additional shares of Class A common stock for an aggregate purchase price of $1.0 million. As a result of anti-dilution protection available to Cyclica, the Company's ownership percentage in EntheogeniX did not

change due to the Class A common stock purchase. As of June 30, 2022 and December 31, 2021, the Company owned 80% of the outstanding common stock of EntheogeniX.

The purchase of additional Class A common stock was deemed to be a reconsideration event. The Company determined that EntheogeniX is still considered a VIE subsequent to the additional Class A common stock purchase as EntheogeniX does not have sufficient equity at risk to carry out its principal activities without additional subordinated financial support.

The following table presents the assets and liabilities (excluding intercompany balances that were eliminated in consolidation) for all VIEs as of June 30, 2022 (in thousands):

	Perception		Kures		EntheogeniX		DemeRx IB		Recognify		PsyProtix		Psyber		InnarisBio		Neuronasal			TryptageniX
Assets:
Current assets:
Cash	$	16,288	$	3,044	$	760	$	7,374	$	2,023	$	143	$	1,021	$	862	$	(61	)	$	1,814
Accounts receivable		170		—		—		—		—		—		—		—		—			—
Prepaid expenses and other current assets		1,497		45		46		106		—		66		—		411		64			3,000
Total current assets		17,955		3,089		806		7,480		2,023		209		1,021		1,273		3			4,814
Long term notes receivable		—		—		—		1,075		—		107		—		—		—			—
Other assets		—		—		—		—		—		—		198		—		—			—
Total assets	$	17,955	$	3,089	$	806	$	8,555	$	2,023	$	316	$	1,219	$	1,273	$	3		$	4,814
Liabilities:
Current liabilities:
Accounts payable	$	824	$	442	$	261	$	456	$	130	$	223	$	29	$	37	$	353		$	145
Accrued liabilities		624		418		184		612		165		71		36		128		661			378
Other current liabilities		505		1		—		228		1		—		—		1		41			—
Total current liabilities		1,953		861		445		1,296		296		294		65		166		1,055			523
Contingent consideration liability		1,420		—		—		—		—		—		—		88		—			830
Other non-current liabilities		—		—		—		—		—		—		—		—		283			10
Total liabilities	$	3,373	$	861	$	445	$	1,296	$	296	$	294	$	65	$	254	$	1,338		$	1,363

The following table presents the assets and liabilities (excluding intercompany balances that were eliminated in consolidation) for all consolidated VIEs as of December 31, 2021 (in thousands):

	Perception		Kures		EntheogeniX		DemeRx IB		Recognify		PsyProtix		Psyber		InnarisBio		Neuronasal		TryptageniX
Assets:
Current assets:
Cash	$	23,099	$	1,048	$	198	$	8,511	$	2,519	$	512	$	542	$	1,487	$	95	$	2,000
Unbilled receivable		64		—		—		—		—		—		—		—		—		—
Prepaid expenses and other current assets		1,138		104		—		70		4		1		—		62		207		—
Total current assets		24,301		1,152		198		8,581		2,523		513		542		1,549		302		2,000
Property and equipment, net		1		—		—		—		—		—		—		—		—		—
Long term notes receivable		—		—		—		1,075		—		104		—		—		—		—
Other assets		—		—		—		—		—		—		99		—		—		—
Total assets	$	24,302	$	1,152	$	198	$	9,656	$	2,523	$	617	$	641	$	1,549	$	302	$	2,000
Liabilities:
Current liabilities:
Accounts payable	$	598	$	235	$	53	$	439	$	29	$	51	$	15	$	—	$	326	$	—
Accrued liabilities		887		120		9		180		44		50		63		10		749		—
Current portion of contingent consideration liability - related parties		51		—		—		—		—		—		—		—		—		—
Deferred revenue		12		—		—		—		—		—		—		—		—		—
Short-term notes payable		—		—		—		—		—		—		—		—		38		—
Total current liabilities		1,548		355		62		619		73		101		78		10		1,113		—
Contingent consideration liability		1,489		—		—		—		—		—		—		93		—		850
Other non-current liabilities		—		—		—		—		—		—		—		—		336		820
Total liabilities	$	3,037	$	355	$	62	$	619	$	73	$	101	$	78	$	103	$	1,449	$	1,670

Noncontrolling Interests

The Company recognizes noncontrolling interests related to its consolidated VIEs and provides a rollforward of the noncontrolling interests balance, as follows (in thousands):

	Perception			Kures		Recognify			Psyber		InnarisBio		Total
Balance as of December 31, 2021	$	5,232		$	—	$	3,819		$	—	$	—	$	9,051
Net loss attributable to noncontrolling interests - preferred		(571	)		—		(118	)		—		—		(689	)
Comprehensive loss attributable to noncontrolling interests		(11	)		—		—			—		—		(11	)
Balance as of March 31, 2022	$	4,650		$	—	$	3,701		$	—	$	—	$	8,351
Issuance of noncontrolling interests		—			957		—			—		—		957
Net loss attributable to noncontrolling interests - preferred		(800	)		—		(91	)		—		—		(891	)
Comprehensive income attributable to noncontrolling interests		30			—		—			—		—		30
Balance as of June 30, 2022	$	3,880		$	957	$	3,610		$	—	$	—	$	8,447

	Perception			Recognify			Psyber			InnarisBio			Neuronasal			Total
Balance as of December 31, 2020	$	—		$	4,546		$	—		$	—		$	—		$	4,546
Issuance of noncontrolling interests		—			—			8			877			—			885
Net income (loss) attributable to noncontrolling    interests - common		1,755			—			(8	)		(877	)		—			870
Net income (loss) attributable to noncontrolling    interests - preferred		2,608			(122	)		—			—			—			2,486
Comprehensive loss attributable to noncontrolling    interests		(184	)		—			—			—			—			(184	)
Balance as of March 31, 2021	$	4,179		$	4,424		$	—		$	—		$	—		$	8,603
Issuance of noncontrolling interests		3,257			—									392			3,649
Net income (loss) attributable to noncontrolling    interests - common		(1,755	)		(217	)								(392	)		(2,364	)
Net income (loss) attributable to noncontrolling    interests - preferred		7			—			—			—			—			7
Comprehensive loss attributable to noncontrolling    interests		150			—			—			—			—			150
Balance as of June 30, 2021	$	5,838		$	4,207		$	—		$	—		$	—		$	10,045

Redeemable Noncontrolling Interests

In connection with the consolidation of Kures, Inc. (“Kures”) the Company recognized the shares of Kures common stock and Series A-1 preferred stock held by the founders of Kures as redeemable noncontrolling interests as they contain embedded put options that are exercisable by the founders following a successful completion of a future event, which is not solely within the control of the Company.

In connection with the consolidation of DemeRx IB, the Company recognized common stock held by DemeRx as redeemable noncontrolling interests as they are redeemable upon the occurrence of events that are not solely within the control of the Company.

In connection with the consolidation of Neuronasal, the Company recognized the shares of Neuronasal common stock held by the founders of Neuronasal as redeemable noncontrolling interests as they contain embedded put options that are exercisable by the founders following a successful completion of a future event, which is not solely within the control of the Company.

The redeemable noncontrolling interests were initially measured at fair value upon issuance and are redeemable at fair value at the holder’s option upon the successful completion or occurrence of future events. As of June 30, 2022 and December 31, 2021, the Company did not adjust the carrying value of the redeemable noncontrolling interests based on their estimated redemption values since it was not probable

that the events that would allow the shares to become redeemable would occur. Subsequent adjustments to increase or decrease the carrying values of the redeemable noncontrolling interests to their estimated redemption values will be made if and when it becomes probable that such events will occur.

As of June 30, 2022 and December 31, 2021, the balance of redeemable noncontrolling interests in temporary equity on the consolidated balance sheets was zero. The amount of net loss attributable to redeemable noncontrolling interests of $0 million and $0 million are included in consolidated net loss on the face of the condensed consolidated statements of operations for the three months ended June 30, 2022 and 2021, respectively.

	Kures		Neuronasal			Total
Balance as of December 31, 2020	$	—	$	—		$	—
Issuance of redeemable noncontrolling interests		—		—			—
Net loss attributable to redeemable noncontrolling interests - common		—		—			—
Balance as of March 31, 2021	$	—	$	—		$	—
Issuance of redeemable noncontrolling interests		—		2,555			2,555
Net loss attributable to redeemable noncontrolling interests - common		—		(2,555	)		(2,555	)
Balance as of June 30, 2021	$	—	$	—		$	—

Non-consolidated VIEs

The Company evaluated the nature of its investments in Innoplexus AG (“Innoplexus”), DemeRx NB, Inc. (“DemeRx NB”) and IntelGenx and determined that the investments are VIEs as of the date of the Company’s initial investment through June 30, 2022. The Company is not the primary beneficiary as it did not have the power to direct the activities that most significantly impact the investments’ economic performance and therefore concluded that it did not have a controlling financial interest that would require consolidation as of June 30, 2022 and December 31, 2021.

The Company will reevaluate if the investments meet the definition of a VIE upon the occurrence of specific reconsideration events. The Company accounted for these investments under either the equity method, fair value option, or the measurement alternative included within ASC 321 (See Note 5). As of June 30, 2022, the Company’s maximum exposure for its non-consolidated VIEs was $9.2 million relating to the carrying values in other investments and other investments held at fair value and $7.0 million relating to the carrying value in long term notes receivable – related party. As of December 31, 2021, the Company’s maximum exposure for its non-consolidated VIEs was $11.6 million relating to the carrying values in its other investments and $3.8 million relating to the carrying value in short term notes receivable—related party.