FSD Pharma Inc. (NASDAQ: HUGE) (CSE: HUGE) (FRA: 0K9A)
(“
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, announces 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.
For further information:
Zeeshan Saeed, President, Founder and Director, FSD Pharma
Inc.Email: zeeshan@fsdpharma.com, Telephone: (416) 854-8884Investor
Relations: Email: ir@fsdpharma.com, Website:
www.fsdpharma.com
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