Acquisition Advances Company’s Strategic Plan
Toward a Diversified Novel Drug Development Pipeline in
Psychedelics and Medical Cannabis
FSD Pharma Inc. (NASDAQ: HUGE) (CSE: HUGE) (FRA: 0K9) (“FSD
Pharma” or the “Company”), a life sciences holding
company dedicated to building a portfolio of assets and biotech
solutions in legal psychedelics and medical cannabis, announced
today it has entered a definitive agreement to acquire 100% of the
issued and outstanding shares Lucid Psycheceuticals Inc.
(“Lucid”), a Canadian-based specialty psychedelic
pharmaceutical company focused on the development of therapies to
treat critical neurodegenerative diseases, for approximately US$9
million (CAD$11.3 million) in FSD Pharma stock (the “Transaction”),
as further described below.
“The acquisition of a distinctive company like Lucid illustrates
FSD Pharma’s vision to build a portfolio of biotechnology assets on
a new frontier of medicine that hold the potential to treat mental
health disorders and neurodegenerative diseases in a new way,” said
Anthony Durkacz, Interim CEO of FSD Pharma. “Lucid has successfully
developed a strong pipeline of novel therapeutic compounds —
supported by IP in order to advance to future clinical trials — and
we are confident that the experience the Lucid leadership team
brings will allow us to immediately start the process towards
clinical trials to further advance these promising therapies. This
is an exciting venture for FSD Pharma that we believe represents a
paradigm shift in the development and outlook of our company.”
Strategic Highlights
Founded in 2020, Lucid is developing novel molecules and
combinations with the goal of addressing Total Brain Health and
targeting some of the most challenging neurodegenerative diseases,
such as Multiple sclerosis, and other Brain conditions. Lucid has
exclusive worldwide licensing rights from the University Health
Network, North America’s largest health research organization, to a
patent-protected family of new chemical entities (NCEs), on which
Lucid’s development platform is based and from which its lead
neurodegenerative disorders therapeutic candidate, Lucid-21-302,
has been derived. In addition, Lucid’s pipeline includes Lucid-201,
a psychedelic drug candidate targeting mental health disorders, and
it is also investigating certain cannabinoids.
In addition, upon closing of the transaction Lucid’s co-founder
and CEO, Dr. Lakshmi Kotra will be transitioning to the FSD Pharma
team with Prof. Kotra taking on the role of leading the development
of FSD Pharma’s drug development pipeline in Psychedelics and
Medical Cannabis. Dr. Kotra is a Professor of Medicinal Chemistry
at the University of Toronto, and senior scientist at Krembil Brain
Institute at the University Health Network.
Prof. Lakshmi Kotra, co-founder and CEO of Lucid, commented, “We
started with a vision to accelerate therapies for Total Brain
Health. Since inception, we have made significant progress and
built a strong scientific and execution team. We are excited to
enter a new phase of growth with FSD Pharma. I am personally
delighted with FSD Pharma leadership’s shared commitment to bring
forward advanced therapeutics addressing challenging health issues.
We believe our combined resources and experienced teams will
position us to enter clinical development programs to deliver
highly effective therapeutic products in neurodegenerative
disorders and mental health areas.”
Transaction Details
The Transaction will be effected by way of a three-cornered
amalgamation between Lucid, FSD Pharma and a wholly-owned
subsidiary of FSD Pharma. The Transaction will involve the issuance
of approximately 4.5 million Class B subordinate voting shares in
the capital of FSD Pharma (each, an “FSD Share”) as the
acquisition consideration (the “Consideration Shares”), with a
deemed aggregate purchase price of approximately US$9 million
(CAD$11.3 million based on an exchange rate of US$1 to CAD$1.255)
at a deemed price of US$2.00 (CAD$2.51) per FSD Share. The
Consideration Shares may be adjusted slightly in the event the
market price of the FSD Shares changes significantly prior to
closing of the Transaction. Additionally, all of the outstanding
Lucid stock options and warrants will become exercisable into FSD
Shares, with the number and exercise price of such securities to be
adjusted in accordance with the Transaction’s exchange ratio.
The closing of the Transaction is subject to customary closing
conditions for a transaction of this nature including, among other
things, Lucid obtaining the requisite shareholder approval at a
special meeting of Lucid shareholders to be called to consider the
Transaction (the “Lucid Meeting”). The closing of the
Transaction is expected to occur in September 2021.
The Transaction will require approval by 66 2/3% of the votes
cast by Lucid shareholders at the Lucid Meeting. Lucid shareholders
holding at least 66 2/3% of the shares of Lucid, have entered into
support agreements with FSD Pharma (the “Support
Agreements”) pursuant to which, among other things, they have
agreed to vote all of the shares held by them in favor of the
Transaction at the Lucid Meeting, on the terms and subject to the
conditions set forth in the Support Agreements.
Additionally, it is a condition to closing of the Transaction
that Lucid shareholders holding approximately 44% of the shares of
Lucid, shall have entered into lock-up agreements with FSD Pharma
pursuant to which: (a) 20% of the Consideration Shares received by
each such locked-up shareholder will be exempt from any contractual
transfer restrictions imposed by FSD Pharma; and (b) 80% of the
Consideration Shares received by each such locked-up shareholder
will be subject to contractual transfer restrictions, with such
Consideration Shares to be released from such transfer restrictions
over an 18 month period from the date of closing the
Transaction.
Completion of the Transaction is subject to various closing
conditions, including: the approval of the Nasdaq and CSE, the
approval of the boards of directors of FSD Pharma and Lucid, the
approval of the security holders of Lucid, and completion of due
diligence by the parties.
Anthony Durkacz, a director and control person of the Company,
is also a shareholder and warrant holder of Lucid, through a
company he beneficially owns, and consequently the Transaction
constitutes a "related party transaction" within the meaning of
Multilateral Instrument 61-101 - Protection of Minority Security
Holders in Special Transactions ("MI 61-101"). In its
consideration and approval of the Transaction, the board of
directors of the Company, with Mr. Durkacz recusing himself,
determined that the Transaction will be exempt from the formal
valuation and minority approval requirements of MI 61-101 on the
basis of the exemptions in Sections 5.5(a) and 5.7(1)(a) of MI
61-101.
About FSD Pharma
FSD Pharma is a life sciences holding company dedicated to
building a portfolio of diversified therapeutic assets and
innovative healthcare and biotech services. Currently, FSD is
actively pursuing potential acquisition targets in the healthcare
and biotech space to bring innovative treatments to market to treat
various mental health disorders and neurodegenerative diseases.
www.fsdpharma.com
About Lucid Psycheceuticals
The brain is the ultimate frontier in health research.
Depression, anxiety, dementia and similar conditions often are
prodromes to more serious neurodegenerative diseases, such as
Multiple sclerosis, Alzheimer's disease and Parkinson's disease.
Inspired by the mechanisms of action of psychedelics, and the need
for therapeutics to prevent, and possibly reverse,
neurodegeneration, Lucid is exploring novel therapies to address
total brain health, i.e. mind and biology behind it! For more
information, please visit www.lucidpsycheceuticals.com.
Forward Looking Information
Certain statement contained herein are “forward-looking
statements”. Often, but not always, forward-looking statement can
be identified by the use of words such as “plans”, “expects”,
“expected”, “scheduled”, “estimates”, “intends”, “anticipates” or
“believes”, or variations of such words and phrases, or states that
certain actions, events or results “may”, “could”, “would”, “might”
or “will” be taken, occur or be achieved. Forward-looking
statements contained in this press release include the comments
made with respect to the Company’s clinical trial, the evaluation
of the commercial viability of its principal drug compound, and the
statements made by Zeeshan Saeed regarding the commercial
opportunities the Company’s principal drug compound and other
commercial opportunities and fulfilling strategic and operational
goals outlined in prior communications to shareholders. FSD cannot
give any assurance that such forward-looking statements will prove
to have been correct. The reader is cautioned not to place undue
reliance on these forward-looking statements, which speak only as
of the date of this document.
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version on businesswire.com: https://www.businesswire.com/news/home/20210825005243/en/
Zeeshan Saeed, President, Founder and Director, FSD Pharma Inc.
Email: zeeshan@fsdpharma.com, Telephone: (416) 854-8884 Investor
Relations: Email: ir@fsdpharma.com, Website: www.fsdpharma.com KCSA
Strategic Communications Fsdpharma@kcsa.com
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