Mindset Pharma’s Deal With Pharma Giant Otsuka – Better Than Meets The Eye
Mindset Pharma (CNSX: MSET)(OTCMKTS: MSSTF) was in the news last week after it became one of the first companies in the psychedelics sector to announce a collaboration with a pharmaceutical company.
The Dales Report sat down with Mindset Pharma CEO James Lanthier earlier this week to dive into the details of its deal with the McQuade Center for Strategic Research and Development, a division of the global Otsuka family of pharmaceutical companies, which made an upfront cash payment of $5 million to help kick off Mindset’s Phase 1A and 1B clinical trials.
Cash Payment Will Help Fund Phase 1 Studies
“It’s really a culmination of a long rigorous process that we went through with Otsuka,” said Lanthier. “The work that they did to land on Mindset as a partner they wanted to go forward with actually started a year ago… they looked at everything we did, every piece of data that we generated, and came to Mindset with an incredibly high level of sophistication, not only in mental health, but in the psychedelic space.”
Otsuka is a neuroscience company with global operations with several successful drug franchises in anti-psychotics and the mental health area, and, according to Lanthier, has considerable interest in psychedelics. It also has partnership with a division of Atai Life Sciences (NASDAQ: ATAI) and was a financial investor in Compass Pathways (NASDAQ: CMPS).
While Mindset is the third company Otsuka has collaborated with in psychedelics, its deal with Mindset is its first partnership focusing on new drugs—and the first partnership of its kind among psychedelic companies.
‘Even Better Than It Reads’
Lanthier called the collaboration “huge validation” for his company and clarified that the deal is “even better than it reads:” the $5 million payment to Mindset highlighted in last week’s announcement is a smaller component of bigger funding that will cover the development expenses of two of Mindset’s shorter-acting drug families, which could be closer to the range of $15 to $20 million per family.
“This is a much larger deal financially than the $5 million, and it’s not actually an investment. It’s a payment, so all of that funding is non-dilutive,” said Lanthier. In return, Otsuka will have the right of first refusal to negotiate with Mindset on its drug families following the completion of its Phase 1 studies.
“All that does is set us up to do a much larger deal at the end of Phase 1. Mindset hasn’t had to give up any economics at all in these families. It’s gotten financing at the lowest possible cost of capital, and it’s gotten it from a strategic,” said Lanthier.
One factor that has the team at Mindset particularly excited about working with Otsuka is the opportunity to leverage the pharmaceutical company’s expertise in bringing drugs to market.
“There’s an incredible array of different specialized skills and people that you need to take a drug and run it through the regulatory process… and Otsuka has people at every step of the pharma value chain,” he said. “That represents a huge bottom-line savings to Mindset to not have to go out and hire consultants for every step of the way.”
To hear more from Lanthier about the Otsuka deal and on recent insider buying at Mindset, watch the rest of the interview above.