Mindset Pharma (CSE: MSET) (FSE: 9DF) (OTCQB: MSSTF) kicked off the new year with their biggest announcement yet: Otsuka Pharmaceutical is funding two families of novel medical psychedelic compounds through Phase 1a and Phase 1b clinical trials, in addition to a $5 million (USD) payment.

It’s a landmark deal in the emerging psychedelics industry. Not only is the young, Toronto-based drug discovery company fully funded to develop two potential next-generation psychedelic medicines, it marks the first time any Big Pharma company has actually partnered with a company in the psychedelics space to collaborate on new drugs.

As Psychedelic Spotlight previously reported while announcing the deal, it’s a major sign that the pharmaceutical industry at large is taking the potential of psychedelics very seriously. According to Mindset Pharma CEO James Lanthier, “Of all of the Big Pharma companies, they’re probably the most involved in the psychedelic space.”

Previously, Otsuka has partnered with a division of Atai Life Sciences to develop and commercialize ketamine in Japan to treat mood disorders, and invested in Compass Pathways, an industry leader focused on psilocybin-assisted therapy. Mindset is the third company in the psychedelics space to catch Otsuka’s eye, and the global pharmaceutical company must have really liked what they saw in the company’s intellectual property portfolio.

In a conversation with The Dales Report earlier this month, Lanthier explains: “It’s the first collaboration agreement by any Big Pharma and any psychedelic company on new drugs. So, it’s a huge validation for us, and a huge boost for us in a lot of ways.”

“The deal is even better than it reads,” Lanthier adds. “They did make a $5 million payment to Mindset, but that’s actually the smaller component of the funding. The much bigger funding is they’re funding all of the development expenses of Family 2 and Family 4, which are Mindset’s short-acting drug families. And that could be up to $15-20 million per family.”

And the partnership isn’t just giving Mindset financial fuel to bring these next-generation psychedelics across the finish line, it opens doors to expertise and resources that increase the odds of actually bringing a new drug to the market.

“There is an incredible array of different specialized skills that you need and highly specialized people to take a drug, run it through the regulatory process, oversee clinical trials, figure out how you’re going to manufacture and formulate it,” Lanthier explains. “And Otsuka has people at every step of the pharma value chain, and that represents a huge bottom-line savings to Mindset. To not have to go out and hire consultants every step of the way to help us take out drugs through clinical trials is huge.”

A representative from Mindset tells Psychedelic Spotlight that “the company now has a clear path of value creation over the next 24 months, at which point we will in all likelihood own two Phase-2 ready drugs.”

Ever since the psychedelic renaissance took shape in the last decade, there has been plenty of speculation about the future of psychedelic medicine and involvement from major pharmaceutical companies. But Otsuka’s move signals a shift from “it’s just a matter of time” conjecture to it’s happening.

Our resident psychedelic investor James Halifax is certainly keeping a close eye on Mindset Pharma in wake of the deal.

“In many ways, the ‘psychedelic arms race’ that publicly traded companies are engaged in will be decided by those who create the most effective next-generation psychedelic medicines,” he says. “While current psychedelics, such as psilocybin, have been shown to be effective in treating mental health conditions such as depression, there are major drawbacks such as the long duration and variability of effect between individuals. Whichever companies can create the best compounds that keep the benefits of current psychedelics while solving their issues, will ultimately be the winners.”

“As Mindset is 100% focused on next-gen compounds, they are well situated to be a contender,” he continues. “Their four families of drugs, based on psilocybin and 5-MeO-DMT, are promising, and I can’t wait to see how they perform in clinical trials.”

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