Part of our Year in Review series
Of the 65 deals in Fierce Biotech’s 2023 Biotech M&A Tracker, psychedelics companies represented 3 (Cybin, Mindset, and Reunion). While that’s around 5% of the tracker’s sample size, the average deal value for psychedelics M&A was significantly lower than those seen in the broader biotech market, where many deals were measured in billions.
As a reminder, 2022 saw around half a dozen notable partnerships and M&A events in the psychedelics space. Perhaps most memorable was Mindset Pharma’s collaboration with Otsuka Pharmaceuticals’ McQuade Center for Strategic Research and Development, which included a “strategic investment” in the company alongside a $5m upfront cash payment. Others included Beckley Psytech’s acquisition of Eleusis Therapeutics, Cybin’s acquisition of Entheon Biomedical’s Phase I DMT program (for around $1m), and Numinus’ acquisition of Novamind.
Similarly, 2023 only saw around a half dozen partnerships and M&A events. And, the most significant ones included many of the same characters…
Otsuka Scoops Up Mindset for $60m
Mindset, for example, ended up being wholly acquired by its collaborator, the U.S. arm of Otsuka. The all-cash transaction was valued at around CAD $80m (USD $60m).
When the arrangement was announced in late August, some Mindset shareholders told Psychedelic Alpha that they were disappointed at having their chips cashed in relatively early on in the drug development (and thus valuation) process; but most had a sense of perspective given the state of the broader market at the time.
Many also hoped this could be a signal of appetite from larger pharmaceutical companies to dabble in the space, though that hasn’t rang true just yet.
Cybin Acquires Small Pharma, Consolidating Deuterated DMT Drug Development
Just a couple of days prior to the Mindset deal becoming public, Cybin announced that it would acquire British DMT developer Small Pharma.
As we noted at the time, both companies were advancing similar deuterated DMT (or analogs thereof) candidates for neuropsychiatric indications: generalised anxiety disorder (GAD) in the case of Cybin, and major depressive disorder (MDD) for Small Pharma. We imagined that the pair were tip-toeing around the related intellectual property landscape.
Indeed, on a conference call following the merger announcement, Cybin CEO Doug Drysdale explained that both companies had been working ‘on the same, or a similar, project’ for some time. Small Pharma and Cybin had been working on different analogs and routes of administration, he explained, which had led to a “patchwork” of IP.
By combining, Drysdale presumably hoped, this careful tiptoeing might give way to strength in partnership.
There were some hints that Small Pharma was recasting its MDD candidate as having anxiolytic potential. In reporting topline results from its Phase IIa trial of SPL026, the company noted that the candidate also demonstrated “statistically significant improvement in anxiety symptoms”, and added that this, “offers potential in new indications beyond depression”.
The company’s CMO, Dr. Carol Routledge, mentioned that this data provides “an encouraging basis from which to further explore its potential as a treatment for anxiety-related disorders”, and that the data would “help inform our future clinical strategy as we think about the expansion of the SPL026 clinical program and broader pipeline.”
“Might this have piqued the interest of Cybin”, whose lead indication for its own dDMT candidate is GAD, we wondered at the time. (Or, perhaps the deal was already in the works and Small Pharma was seeding the ground for the announcement of the merger-occassioned indication addition.)
In many ways, it wasn’t surprising that Small Pharma was an acquisition target. The company had fewer than three quarters of cash runway remaining at the time of the announcement, according to our analysis. It had announced an operational restructuring to reduce cash burn, but the walls were closing in.
Given that fiscal situation, it was hard to imagine how the company could initiate and sustain an ambitious Phase IIb program without a significant injection of new capital—a tall ask in 2023’s market.
After the deal, Small Pharma shareholders owned around a quarter of Cybin.
Field Trip Spinout Reunion Neuroscience Taken Private for $13m
At the beginning of June, Field Trip’s drug development spinout Reunion Neuroscience announced that it would be acquired by MPM BioImpact in a $13.1m take-private transaction. For context: at the end of the 2022 calendar year, the company had recorded around $32m in cash and equivalents.
Still, MPM’s offer was welcomed by Reunion’s CEO Greg Mayes, who said Reunion was “thrilled that MPM recognizes the value and differentiation” of the company’s pipeline.
That differentiation was called into question last year, as it emerged that Reunion’s lead candidate had been claimed in a Mindset Pharma patent application that boasted an earlier priority date. Seemingly backed into a corner, Reunion responded by suing Mindset, alleging that it “knowingly copied” its lead candidate (read our analysis).
Then, in April, NASDAQ informed Reunion that it was heading towards being delisted as it was failing to meet a minimum price of $1 per share.
The company’s fate was slightly better than its other half, however. Field Trip Health & Wellness—the ketamine clinic company that was the other half of Field Trip’s August 2022 corporate reorganisation—went bust last year.
Other M&A and Partnerships
Psylo Strikes Agreement with Japanese Pharma Co. Daiichi Sankyo
Later in June, psychedelic drug discovery company Psylo announced a sponsored research agreement with Daiichi Sankyo to develop non-hallucinogenic psychiatric drugs.
Daiichi Sankyo is firmly in the realm of big pharma, with a market cap of around $60bn. While its key products are in the cardiovascular and oncology realms, the company has identified psychiatric diseases including major depressive disorder (MDD) and anxiety disorder among its areas of interest.
This isn’t the first time a Japanese pharmaceutical company has partnered with a psychedelic drug developer. Readers might remember that, as part of our 2022 Year in Review, we reviewed Otsuka’s interest in psychedelics (see also Mindset’s acquisition, above).
Filament Health Abandons SPAC
“SPACs are Back?”, we asked in a late July Bulletin, as Filament Health announced plans to list on NASDAQ through a business combination with Jupiter Acquisition Corp. The proposed business combination would have ascribed an equity value of $176m to Filament.
By December, however, the SPAC was called off. In a year-end letter, CEO Benjamin Lightburn explained that much of 2023’s effort in the public markets and financing effort had been spent on completing the SPAC merger.
“We ultimately decided that the significant changes necessary in the late stages to complete the deal were such that it was not in the best interests of shareholders”, Lightburn wrote.
Tryp Therapeutics Set to be Acquired by Exopharm Limited
In December, Tryp Therapeutics—which claims to be developing oral psilocybin and IV psilocin for several indications including binge eating disorder and fibromyalgia—announced it would be acquired by Exopharm Limited.
The transaction (ongoing) is valued at around US $10m. If closed, the combined entity would be expected to relist on the Australian Securities Exchange (ASX), where Exopharm had formerly traded with a very modest market cap of around US $3m (which is comparable to Tryp’s). Exopharm—which describes itself as “a leader in exosome technology”—would need to raise at least AUD $6m (US $4m) via a public offering in order to relist.
Pα: 2023 was another relatively muted year for M&A and partnerships in the psychedelics industry: both between psychedelics companies and with companies outside of the niche. Those deals that did close weren’t always on the most favourable terms, either, with relatively better-capitalised companies appearing to take advantage of depressed valuations and dwindling cash runways. ∎
Stay Informed in 2024 with Pα+
Subscribe to Pα+ to receive all of our Bulletins, deep dives and analysis, as well as access to the Pα+ Library and other subscriber-only content.
Your subscription goes directly toward supporting our coverage, not glossy graphic design or marketing budgets. Learn more and subscribe here, or get in touch to discuss team plans.
