Otsuka acquires Mindset Pharma, a leader in psychedelic medicines for mental health

Otsuka, psychedelics, Mindset Pharma, M&A, Acquisition, MSP-1014

Japanese pharmaceutical giant Otsuka is embarking on a groundbreaking acquisition, setting its sights on Canada’s Mindset Pharma, a specialist in the field of psychedelic medicines tailored for neuropsychiatric disorders.

This all-cash agreement, valued at approximately C$80 million ($60 million), materializes roughly 18 months after the initial partnership announcement between the two companies. Back then, Otsuka had committed an upfront payment of $5 million as a show of commitment to ushering forward Mindset’s early-stage pipeline.

Headquartered in Toronto, Mindset Pharma is actively engaged in the development of several preclinical candidates rooted in psychedelic components such as psilocybin (the active ingredient in magic mushrooms), DMT, and 5-MeO-DMT (psychoactive compounds present in plants and the venom of the Colorado River toad).

“We are thrilled to announce this all-cash transaction with Otsuka as we believe it maximizes value and is a great outcome for all Mindset stakeholders. We believe Otsuka is ideally positioned to maximize the value of the Mindset assets and IP portfolio to the future benefit of patients.”

– James Lanthier, CEO of Mindset

The lead contender in Mindset’s arsenal is MSP-1014, a psilocybin prodrug anticipated to enter human trials in the coming months for the treatment of depression that resists conventional therapeutic approaches. Mindset believes that MSP-1014 offers enhanced safety, efficacy, and tolerability, making it a promising candidate for the challenging landscape of treatment-resistant depression.

Otsuka has committed to acquiring all outstanding shares of Mindset at $0.75 per share, representing a premium of roughly 50% compared to the shares’ 90-day trading value. The deal is expected to receive the customary approvals from financial regulators and close next month.

This move by the Japanese pharmaceutical behemoth is noteworthy because it signifies one of the first significant forays by a major player into the realm of psychedelic medicines. Until now, the field has been primarily explored by startups and smaller enterprises.

What seems to have caught Otsuka’s attention is Mindset’s distinctly pharmaceutical approach to psychedelics—a foundation rooted in medicinal chemistry, aimed at generating patentable, improved analogs of psychoactive compounds. For instance, MSP-1014 undergoes rapid metabolism to psilocin, the primary active metabolite of psilocybin, potentially offering similar effectiveness and improved tolerability compared to the parent compound.

Neuropsychiatry stands as one of Otsuka’s central R&D priorities, alongside oncology and cardiovascular/renal disease. The company boasts a rich history of introducing innovative therapies to the market, particularly in areas like depression and schizophrenia.

The acquisition places Mindset under the wing of a pharmaceutical juggernaut, potentially providing its programs with a competitive edge. This could lead to accelerated clinical development and regulatory submissions for promising candidates.

Otsuka’s collaboration with Mindset has thus far focused on the company’s second family of psilocybin-based drug candidates, led by MSP-2020 and backed by MSP-2003. These compounds offer “greater potency than LSD combined with a shorter psychedelic effect than psilocybin.”

Mindset has also ventured into the development of compounds that might work without inducing hallucinogenic effects—a move that could broaden their applications and reduce the need for administration in closely monitored clinical settings. This strategic partnership signifies a significant milestone in the evolution of psychedelic medicine.

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