Otsuka makes psychedelics play, buying Mindset

Japanese pharma group Otsuka has signed an agreement to acquire Canada's Mindset Pharma, a specialist in psychedelic medicines for neuropsychiatric disorders.

The all-cash deal – worth around C$80 million ($60 million) – comes around 18 months after the two companies first announced they were partnering on bringing forward Mindset's early-stage pipeline, with Otsuka committing a $5 million upfront payment.

Toronto-based Mindset is working on a range of preclinical candidates based on psilocybin, the psychedelic ingredient found in magic mushrooms, as well as DMT and 5-MeO-DMT, two psychoactive compounds found in plants and the venom of the Colorado River toad.

Lead candidate MSP-1014, a psilocybin prodrug that Mindset reckons has improved safety, efficacy, and tolerability, is due to start human trials in treatment-resistant depression in the coming months.

Otsuka said it will acquire all of the outstanding shares of Mindset for $0.75 per share, a premium of around 50% on the shares' 90-day trading value, and expects the deal to close next month, subject to the usual approvals by financial regulators.

The Japanese drugmaker is one of the first larger companies in the industry to make a play for a slice of the psychedelics category, which to date has been pursued mainly by small start-ups.

It seems to have been attracted by Mindset's pharma-like approach to the category, with a firm basis in medicinal chemistry to generate patentable, improved analogues of psychoactive compounds.

For example, MSP-1014 is rapidly metabolised to psilocin, the main active metabolite of psilocybin and, according to Mindset, should offer similar efficacy and better tolerability to the parent compound.

Neuropsychiatry, meanwhile, is one of Otsuka's core R&D priorities, along with oncology and cardiovascular/renal disease, and it has a long history of bringing new therapies to market in areas like depression and schizophrenia.

Having the resources of a pharma group could give Mindset's programmes a leg up over other companies developing psychedelics, accelerating clinical development and regulatory filings from promising candidates.

To date, Otsuka has been working with Mindset on the company's second family of psilocybin-based drug candidates led by MSP-2020 and back-up compound MSP-2003, which offer "greater potency than LSD combined with a shorter psychedelic effect than psilocybin."

Meanwhile, Mindset has also started to work on compounds that may work without the hallucinogenic effects of current drugs, which could extend their uses and do away with the need for them to be delivered in a closely controlled clinical setting.