In this Wonderland Miami Trade To Black Podcast, TDR Founder Shadd Dales interviews the founder of Apeiron Investment Group, Christian Angermayer. Aperion is best known for deep involvement in psychedelic industry, particularly through its approximately 23% stake in atai Life Sciences N.V. (NASDAQ: ATAI) and COMPASS Pathways plc (NASDAQ: CMPS). Christian goes in depth on a variety of industry topics, including commentary on atai’s low market cap, trading for roughly cash on balance and present net value of the company’s COMPASS investment.
Regarding the latter, Christian is confident the market is mispricing biotech stocks such as atai Life Sciences and other promising peers. The reason is due to rising interest rates, which tend to disproportionately hurt emerging sector companies with far-out future cash flows. This has much to do with the way future cash flows are discounted in different interest rate environments, which disproportionately effect companies at the long end of the growth curve.
Since stocks compete with bonds for investor capital, higher rates lower the present value of future expected cash flow, and investors will generally pay less for emerging securities. Companies relying on future cash flow growth experience greater risk from rising rates rise as a result. This frequently occurs not only in biotech stocks, but on tech-heavy exchanges like the Nasdaq 100, which host securities with long-dated growth cycles.
Indeed, the broad market declines since the beginning of the year have hit NASDAQ much harder than exchanges hosting stocks with more temperate growth profiles. Year to date, the NASDAQ has declined 28.25% compared to a gentler 16.74% decline for the S&P 500.
Once interest rates come down and the discounting of future cash flows eases, emerging growth stocks should find themselves in a better environment.
Notably, Christian Angermayer predicts that atai Life Sciences will be generating cash inside of a 5-year window.
To view our previous atai Life Sciences focused interview with Christian Angermayer, click here.