How to raise $100M+ by going private

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In 2023, Reunion Neuroscience faced a big issue.

They were a public company that the markets didn’t appreciate because of its core business: developing new drugs from psychedelics.

As a result, their stock price plummeted, making it hard for them to raise much-needed funds for their clinical trials.

So, instead of trying to appease public investors, the company went the other way: going private again.

Then, in early 2024, they raised $103M in a Series A funding round.

Here’s how:

1. Go After “Specialists Investors” That Are Experts in Your Industry

As Greg Mayes, Reunion’s CEO, told Carta, going private helped them focus. They could then prepare for a big, focused fundraising effort with investors who truly understood their mission.

Not all investors are the same. Some get scared by "risky" industries like psychedelics. Others see the science and the potential.

Reunion knew they needed investors who understood biotech. They needed backers who were okay with long timelines. Drug development takes years.

So, they targeted specialist investors. Big names like Novo Holdings and MPM BioImpact led their $103 million Series A. These firms have deep experience in healthcare and science. They weren’t scared off by the "psychedelic" label. They saw a serious drug company trying to solve real health problems.

2. Share The Results of Your Work to Build Trust

Investors want to see that you’re making headway. For drug companies, this means showing good results from clinical trials.

Reunion had good news to share. They had promising results from their Phase 1 trial for RE104.

They were also making progress with their Phase 2 trial. This trial is looking at how RE104 can help with postpartum depression. Postpartum depression is a serious condition that affects many new mothers.

By showing this progress, Reunion made it easier for investors to believe in their drug. It showed their lead compound was moving forward. This helped "de-risk" the investment.

3. Change the Conversation: It's Medicine, Not a Party Drug

Psychedelics have a complicated image. Some people still connect them with illegal party drugs.

Reunion worked hard to change this conversation. They focused on the medical science. They talked about their drug, RE104, as a serious treatment for serious conditions. They highlighted its potential for treating things like PTSD and depression, not just postpartum depression.

This careful messaging helped build trust. It showed they were a professional company. They were focused on developing approved medicines, not just "trips." This serious approach appealed to the serious biotech investors they were targeting.

Reunion Neuroscience’s journey shows that sometimes, you need to take a step back to leap forward. By going private, finding the right partners, showing their progress, and controlling their message, they secured the funds to keep pushing the boundaries of medicine.

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