Psychedelics M&A and Partnerships in 2023

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.



Source link