Toronto-based Mindset Pharma is set to be acquired by the U.S. arm of Otsuka Pharmaceutical in an all-cash transaction valued at around CAD $80m (around USD $60m).
Each Mindset shareholder will receive $0.75 in cash per share, c.15% premium to yesterday’s closing price.
It’s not an unsurprising pairing: Otsuka and Mindset have been collaborating for quite some time. We explained the pair’s collaboration agreement in our 2022 Year in Review:
In January [2022], Mindset Pharma announced that it had entered into a collaboration with The McQuade Center for Strategic Research and Development (MSRD), part of the Otsuka family. Under the terms of the deal, Otsuka made a “strategic investment” to support the development of two families of Mindset’s candidates through Phase 1 trials. Otsuka also provided Mindset with a $5m upfront cash payment, and it’s likely that MSRD’s operational support will reduce in-house overheads for Mindset.
The families that MSRD will fund the Phase 1 development of both revolve around shorter-acting drugs. Mindset’s CEO, James Lanthier, told us that the collaboration on these two families was, “the result of extensive diligence on Mindset’s programs and intellectual property.”
In return for this funding, which was provided on a non-dilutive basis, MSRD received a right of first refusal regarding any asset sale, exclusive licensing or collaboration opportunities arising from the candidates.
Bloomberg’s Lisa Du described the deal as, “a rare endorsement by big pharma of the new and mostly illegal field of drugs.” Lanthier told us that his team, “couldn’t be happier with the collaboration or with its results to date.”
Besides this significant deal with Otsuka’s MSRD, Mindset has struck agreements with a number of other organisations, including CAMH, Clerkenwell Health, and Cybin. This was core to the company’s strategy from day one, Lanthier explained. The company believed its competitive advantage would be “drug discovery and preclinical development, rather than expanding the organization massively into clinical development.” Of course, partnering is central to this strategy.
As such, this acquisition suggests that Otsuka is ready to take the reigns itself.
Makoto Inoue, president and representative director of Otsuka, commented, “Otsuka Pharmaceutical has designated psychiatry and neurology as one of its top priority therapeutic areas and has been developing antipsychotic agents with clinical significance on a global basis. With the addition of Mindset’s novel compounds and synthesis processes, we expect this acquisition will further contribute to the treatment of patients suffering from psychiatric disorders.”
Mindset’s CEO, James Lanthier, said, “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.”
The transaction is expected to close on or around October 19, 2023.
