While the psychedelics industry gets its proverbial ducks in a row, there is a growing interest in sharing business opportunities to help companies jostle for market leadership in an ever-burgeoning marketplace.
In the developing merger and acquisitions scenario, psychedelics company leaders are hoping that mergers will help accelerate mainstream adoption and innovation, eventually leading to faster approval of psychedelics that are accessible and affordable. But sometimes, market conditions are not ideal.
Does the psychedelics sector even need mergers and acquisitions? That was a question asked of “Shark Tank’s” Kevin O’Leary at the inaugural Benzinga Psychedelics Conference in April. “The minute one of them gets to Stage 3 [trials], you’re going to lift all the tides,” he said. “I think Big Pharma’s starting to look at it,” O’Leary said, then predicted Atai Life Science, Compass Pathways and MindMed will have to merge. “They each need another $200 million by the time they get this to medicine.”
Here are 7 of the more interesting mergers and acquisitions that the psychedelics movers and shakers are watching.
- Eleusis and Silver Spike Acquisition Corporation. In January, Eleusis, a clinical-stage life science company and Silver Spike Acquisition Corp. II (“SPKB”) (NASDAQ: SPKB/SPKBU/SPKBW), a publicly traded special purpose acquisition company, announced they signed a definitive business combination agreement expected to make Eleusis a public company. But the deal was terminated on June 9 due to “unfavorable market conditions.”
The combined enterprise value of the merged company was estimated at approximately $446 million. The transaction was expected to be completed in the second or third quarter of 2022, with the current owners of Eleusis retaining approximately 49 percent ownership of the combined company.
It was expected that, upon the close of the transaction, the combined company would be operated through Eleusis Inc., a new holding company, and would apply to have its common stock listed on NASDAQ under the symbol “ELEU.” After the termination, Silver Spike II intends to continue its efforts to identify new prospective target businesses focused on the cannabis and alternative health and wellness industries.
- Mycotopia Therapies and Emotional Intelligence Ventures (Ei.Ventures). Mycotopia Therapies Inc. (OTC Pink: TPIA), a biopharma company focused on research, technology, and the development of medical psychedelics, announced in May an update on the previously announced merger with Ei.Ventures Inc. (“Ei”). Mycotopia is a subsidiary of Ehave, which owns approximately 9,793,754 shares of Mycotopia Therapies valued at more than $24 million. The transaction between Mycotopia Therapies and Ei.Ventures will be structured as a triangular merger. The two companies will form a new holding company, PSLY.COM, and operate as subsidiaries after the merger. PSLY.COM will apply for a NASDAQ listing. The companies anticipate closing the transaction on or about July 30, 2022.
- Numinus and Novamind. Numinus (TSX: NUMI) (OTCQX: NUMIF) announced in April that they are acquiring Novamind Inc. (CSE: NM) (OTCQB: NVMDF).
The acquisition will be done in stock, and shareholders of Novamind will receive 0.84 of a common share of Numinus (called an exchange ratio) per Novamind share held, implying an offer price of $0.44 per Novamind share. When the transaction is completed, Novamind shareholders will own around 18 percent of Numinus.
The combined company will operate 13 wellness clinics in focused geographies across the U.S. and Canada and will continue developing and scaling innovative psychedelic therapy protocols and procedures for screening, preparation, dosing, and integration targeting difficult-to-treat mental health conditions, including post-traumatic stress disorder (PTSD), pandemic burnout, depression, addiction, and eating disorders.
Novamind had completed a previous deal on November 12, 2020, when Hinterland Metals and Novamind, in a reverse takeover, entered into a consolidation agreement that was completed on December 22, 2020. This followed another move by Novamind on July 22, 2020, when the company completed the acquisition of 100 percent of the shares of Cedar Psychiatry and Cedar Clinical Research in Utah.
- Optimi Health, Numinus, and a genetic bank of mushrooms. In a different sort of business acquisition, Optimi Health (CSE: OPTI) (OTCQX: OPTHF) (FRA: 8BN), a company producing natural, scalable, and accessible mushroom formulations, acquired a diverse catalog of psilocybin and functional mushroom strains intended for cultivation in its 20,000 square foot, EU-GMP compliant facility in Princeton, British Columbia. The acquisition includes 24 psychedelic and nine functional strains, giving it one of the largest genetic banks in the sector. Formulated psychedelic strains will be made available to licensed researchers, Canada’s Special Access Program (SAP), as well as being utilized for on-site research in Optimi’s recently expanded analytical laboratory. The functional strains will be optimized for the company’s growing whole body, natural supplement brand, Optimi Life.
Optimi Health also entered into an agreement with Numinus to provide certain psychedelic research, development, and testing services. Numinus holds a Health Canada dealer’s license and all activities proposed under the company’s arrangement with Numinus will be carried out by Numinus personnel at its facility in compliance with its dealer’s license requirements. All resulting intellectual property will be owned 100 percent by Optimi.
In July, Optimi Health submitted a request with Health Canada for an amendment to its Controlled Substances Dealer’s License. The amendment would enable Optimi to synthesize, process, and distribute pharmaceutical-grade MDMA, among other substances, at its Princeton facility.
- Atai Life Sciences and Compass Pathways. Although not truly a merger or acquisition (so far), Atai increased its ownership interest in Compass Pathways from 19.7 percent to 20.8 percent in November 2021. The increased equity stake position is seen by analysts as a demonstration of confidence in Compass Pathways following the announcement of data results of the Compass Pathways randomized, controlled, double-blind phase IIb clinical trial to study the effects of psilocybin on treatment-resistant depression. It was the largest psilocybin therapy clinical trial ever conducted, with 233 patients from 10 countries in North America and Europe. The objective of the trial was to find the appropriate dose for a larger, pivotal phase III clinical trial which Compass expects to begin in 2022.
- Awakn Life Sciences and Axon Klinikken AS. Awakn Life Sciences (NEO: AWKN) (OTCQB: AWKNF) (FSE: 954), a biotechnology company developing and delivering psychedelic therapeutics (medicines and therapies) to treat addiction, announced in October the closing of its acquisition of Axon Klinikken AS, a leading ketamine-assisted psychotherapy clinic in Norway. Axon will be renamed “Awakn Clinics Oslo AS.”
Awakn Clinics Oslo AS Clinic will serve as the hub from which Awakn plans to expand its clinical network across the region. The acquisition is part of Awakn’s larger strategy to open several addiction and mental health clinics across Europe, including clinics in Bristol and London, that Awakn anticipates being operational this year, according to the press release announcing the deal.
- Cybin and Entheon Biomedical Corporation. Cybin (NEO: CYBN) (NYSE American: CYBN) is a biotechnology company focused on advancing pharmaceutical therapies, delivery mechanisms, novel compounds, and protocols as potential therapies for various psychiatric and neurological conditions. On June 7, 2022, Cybin announced that, through its wholly-owned subsidiary, Cybin Ireland, it entered into an agreement to acquire a Phase I N. N dimethyltryptamine (DMT) study from Entheon Biomedical Corp. (CSE: ENBI) (OTCQB: ENTBF) (FSE: 1XU1) to accelerate the clinical development path for CYB004, Cybin’s proprietary DMT molecule for the potential treatment of anxiety disorders. The deal closed July 11, with Cybin paying a reported $780,000. Entheon will continue to support Cybin’s CYB004 study and act as external consultants for up to 12 months. Cybin will pay Entheon $373,000 for their consultancy services.