With MDMA on track to gain United States Food and Drug Administration (FDA) approval for the treatment of post-traumatic stress disorder (PTSD) in 2024, Big Pharma and biotechnology startups alike are looking to cement their positions in the burgeoning psychedelics sector through mergers and acquisitions (M&A) and upping their fundraising efforts.
North American psychedelic M&A activity peaked in 2021 with 14 transactions valued at a combined US$798 million carried out, according to data by MarketMerger, but a dealmaking drought followed amid the broader market downturn.
However, late August into early September 2023 saw three significant acquisitions announced.
On August 28, Toronto biopharmaceutical firm Cybin Inc. (NYSE-A:CYBN, NEO:CYBN) revealed it would be acquiring United Kingdom-based drug developer Small Pharma Inc (TSX-V:DMT, OTCQB:DMTTF) in an all-share transaction.
Cybin said Small Pharma’s DMT program would complement its deuterated DMT research, creating the largest dataset of systematic research on these short-duration psychedelic molecules.
The next day, Silo Wellness (CSE:SILO) announced it had entered into a letter of intent to acquire NUGL/Kaya in a transaction valued at C$43.3 million.
Silo, which operates wellness retreats in Jamaica’s legal psilocybin market, intends to incorporate Kaya's three Kaya Herb House retail locations and Gap Café wellness center into its offering.
Then on September 1, Otsuka Holdings, a pharma giant valued at about $20 billion, announced it would be acquiring Mindset Pharma Inc (CSE:MSET, OTCQB:MSSTF) for C$80 million in cash.
Mindset will operate as a wholly-owned subsidiary of Otsuka and will continue to develop new 5-HT2A agonists as potential therapies for treatment-resistant depression and PTSD.
And coming up is the merger of Filament Health Corp (OTCQB:FLHLF, NEO:FH) and Jupiter Acquisition Corp., expected to close in the fourth quarter of 2023, which would value the pro forma enterprise at US$210 million.
On the fundraising side, institutional investors are pouring funds into psychedelics companies as they continue to deliver promising results from their clinical research programs.
London-based Compass Pathways (NASDAQ:CMPS) in August said it had secured up to $285 million in private funding to advance its proprietary synthetic psilocybin therapy COMP360, giving it a cash runway into 2025.
Then in September, New York Mets owner Steve Cohen’s hedge fund Point72 snapped up an 8.1% stake in Cybin with the purchase of almost 19 million shares in the company.
And this week Filament Health secured up to C$2 million from a private placement offering led by Nevev Capital.
“We are experiencing the early signs of a bit of a rebound [for the psychedelics sector], and if that’s the case it could be a very exciting time to get into the industry and try to pick some winners,” Filament Health's CEO Ben Lightburn told Proactive in a recent interview.
With the FDA's likely approval of MDMA for PTSD nearing, this resurgence in mergers, acquisitions, and fundraising within the psychedelics sector marks a pivotal moment for industry players positioning themselves for growth and innovation.
Contact the author at emily.jarvie@proactiveinvestors.com
Follow her on Twitter @emilyjjarvie