In a play for psychedelics, Otsuka buys Mindset

Sept. 1, 2023

Otsuka Pharmaceutical will acquire psychedelic inspired medicine maker Mindset Pharma for approximately $59 million in an all-cash transaction. 

Through the agreement, Mindset will become a wholly owned subsidiary of Otsuka America.

Toronto-based Mindset is focused on creating novel and patentable psychedelic compounds for the treatment of neurological and psychiatric disorders. The company has a patent-pending synthesis process that it says can yield GMP–grade psilocybin at a significant discount to the market price. 

The seed for the deal was planted last year when Mindset and Otsuka's R&D investment arm, the McQuade Center for Strategic Research and Development, entered into a $5 million joint development agreement to support Mindset's research and develop a new class of agonists that activate the serotonin 5-HT2A receptor. 

Now, upon completion of the acquisition, Otsuka will further develop several new 5-HT2A agonists in North America and Europe.

The deeper foray into psychedelics is a notable play for Otsuka. While more than 80 organizations have publicly embarked on psychedelic drug development efforts recently, on the pharma side, most are smaller players. Regulatory and funding agencies have shown more willingness to support psychedelic research, but most psychedelic pharmaceuticals (with a few notable exceptions, such a J&J's Spravato approved in March 2019) are still in the early stages of clinical exploration.