Key Points

• Eli Lilly is purchasing a psychedelic drug developer biotech, AtaiBeckley.

• That'll build out its mental health portfolio substantially.

• It'll also dovetail with the company's other ongoing diversification efforts.

Eli Lilly (NYSE: LLY) brought in $19.8 billion in revenue in the first quarter of 2026, and most of it can be traced back to the medicines everyone has heard of by now: tirzepatide, sold as Mounjaro for type 2 diabetes and Zepbound for obesity. Its weight loss medicines, and the ones behind them in the pipeline, will likely carry the top line for years, though leadership in that market is never guaranteed.

But that didn't stop it from taking steps to expand its pipeline into other areas. On July 16, Lilly agreed to buy AtaiBeckley (NASDAQ: ATAI) for $2.8 billion, plus up to $1 billion more in potential milestone payments. This and other recent acquisitions are another reason to buy the stock, so let's examine it in more detail.

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Lilly's mental health portfolio is getting deeper

Buying Atai isn't Lilly's only recent step into the mental health space.

Lilly was already running a phase 3 psychiatry program built on similar biology as its weight-loss drugs. Brenipatide, a dual GLP-1 (glucagon-like peptide-1) and GIP (glucose-dependent insulinotropic polypeptide) receptor agonist, is in late-stage testing for major depressive disorder (MDD), and it's additionally in development for alcohol use disorder.

So even as the company diversifies its pipeline with bolt-on acquisitions and new investment in research and development (R&D), it's also repurposing assets with the goal of building out its portfolio.

AtaiBeckley's lead asset, BPL-003, is an intranasal formulation of the fast-acting psychedelic 5-MeO-DMT, and it's now in phase 3 trials for treatment-resistant depression (TRD), meaning depression that hasn't responded favorably to at least two prior antidepressants. It holds a Breakthrough Therapy designation from the U.S. Food and Drug Administration, but the phase 3 data won't be available until early 2029.

Another of the biotech's programs approaching maturity is VLS-01, a dissolving film applied inside the cheek that delivers the psychedelic DMT. Its phase 2b trial in treatment-resistant depression is scheduled to release data in the fourth quarter of this year, and management plans to advance it into a phase 3 trial in major depressive disorder.

These new programs are an insurance policy

One thing to appreciate about the Atai acquisition is that it probably won't be a big earner for Lilly in comparison to the rest of its portfolio, even if it's a bullish factor over the long term.

The markets that Atai's candidates are targeting are simply not that big. For instance, Johnson & Johnson's esketamine nasal spray, Spravato, which is approved for treating treatment-resistant depression, brought in $584 million in sales globally in the second quarter of 2026, with peak sales that Jefferies puts at as much as $5 billion a year. So even a category-leading depression drug at full stride would be a small slice of a company guiding for $82 billion to $85 billion in revenue this year. That constraint could ultimately change if whatever Lilly launches with Atai can be developed into a relevant treatment for a larger market than it's currently targeting, but it'd take years at best.

Nonetheless, AtaiBeckley is Lilly's 12th acquisition of this year, and when the purchase closes, it'll become the first leading late-clinical-stage psychedelic stock to be acquired by a leading pharma company.

No single drug that is commercialized as a result of that list of purchases is going to significantly push Lilly's massive top line on its own overnight, but together, and perhaps with some additional R&D investment into expanding the indications they're approved for, they could, if execution goes Lilly's way. And, like Lilly's rapidly expanding pipeline and its blockbuster weight loss medicines, the acquisition is a reason to buy the stock.

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Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Eli Lilly. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.