Mindset Pharma is part of an exciting crop of psychedelics firms that are pushing next-generation opportunities

Initially, psychedelics like psilocybin, MDMA, LSD, and DMT were the focus of much of the hard work by non-for-profit groups and academic researchers over the last 30 years, who helped prove that the drugs have potential benefit while being safe and non-addictive. Today, psilocybin is in Phase 2b clinical trials, MDMA is in Phase 3, and the US Food & Drug Administration (FDA) has given both those trials breakthrough therapy status. There is tremendous momentum behind getting psychedelic drugs approved against this backdrop of two frustrating trends in North America: the opioid crisis and the negative effect of coronvirus (COVID-19) on mental health. Canadian firm Mindset Pharma Inc (CSE:MSET, OTCQB:MSSTF, FRA:9DF) saw early on that there would be a big wave of interest in using psychedelic drugs as medication, but that ultimately, there would be an even bigger wave of interest in next-generation drugs that aim to deliver superior benefits as medications for big population groups, and would have full patent protection. CEO James Lanthier joined the company in early 2020 and was sold not only on the caliber of the scientists involved, but the specific strategy that the team had developed, which was to improve existing drugs rather than new drugs. Here, Lanthier tells Proactive exclusively how the company plans to tackle the next generation of psychedelic opportunities. PROACTIVE: Can you expand on your strategy of optimizing existing psychedelic products? It seems to be a key differentiator for Mindset. James Lanthier: To us, the big piece that was missing is that work wasn't really being done on understanding whether there was a way to take the chemical structures that underlie first-generation drugs and then use drug design to alter them in order to make better drugs. People don’t eat the bark of the willow tree when they have a headache, they take aspirin, which is based on a chemical that is derived through a number of different steps from naturally occurring compounds. We think same analogy applies to psychedelics. Ultimately, people are not going to take magic mushrooms, they’re going to take a drug that delivers the same benefits but that has been re-engineered a couple of different steps in order to create a drug that's safer, less toxic, more predictable, and potentially has a more convenient duration. The big commercial opportunity really is in the second and third-generation drugs that are not in the public domain, where it's really hard to get intellectual property rights. Groups working with psilocybin are going to have a really hard time defending from generic psilocybin competition because it is in the public domain, whereas if you have a drug that can offer some improvements over psilocybin and also has full IP rights, that's going to be much more valuable. Also, traditional pharma is probably going to be much more interested in entering the psychedelic market through a drug product that is novel and has IP rights. Let’s talk about your lead drug candidate MSP-1014. What's the potential that you see with this particular compound? MSP-1014 comes from what we call Family Number One of novel drugs. These are drugs that structurally are closer to psilocybin than some of our other families, but different enough that they stand on their own as new drugs. We’ve seen evidence so far through our testing processes that MSP-1014 has the potential to deliver a more pronounced psychedelic experience than psilocybin does at similar doses. This is a drug that is stronger, which means there's potential for this to be safer because you hypothetically could take less of it in order to achieve the same effect. There's potential safety risks with psilocybin, like negative interactions with other drugs that you might be taking, such as antidepressants. Drug interaction is important to consider when taking a new drug. Take me through the development path for MSP 1014. What does the timeline look like, and how smooth will the path be? We still have some additional preclinical testing that we're doing right now. Once that's complete, we're also developing our IND plan. Our high-level plan is to initiate that in the latter part of 2021. We're hoping to move into clinical trials later in 2022. For Mindset, our focus is on preclinical discovery and development. We think we’re one of the leaders in new drug discovery and development, but we're very much in the early stages of the medical psychedelic market. We can take our drugs through the first few phases of clinical development if need be, but I'm anticipating that we may look to partner with other groups that have that clinical trial, infrastructure, and expertise, which is a pretty common pathway for biotechnology companies. I'm trying to understand how similar this path is to more traditional pharma products. Can you clarify? It's quite similar. The opportunity for psychedelics is absolutely enormous, just as big if not much larger than the cannabis opportunity. But ultimately, psychedelics will look a lot like biotechnology or pharma segments. Take oncology, when you have hundreds of different companies developing oncology drugs and they typically end up partnering with or being acquired by larger, later-stage pharma companies that are good at clinical development. Ultimately, I think psychedelics will look very similar. Because of the regulatory issues that gave a real head start to firms like Mindset, which were early doing discovery work and filing IP and developing this library of new drugs. We’re in an excellent position to be a very valuable partner to groups that have that kind of downstream drug commercialization. You brought up cannabis companies there. We haven't really seen the types of deals in the psychedelics sector as we have in the medical cannabis space despite the clear size of the market. What's the reaction like from Big Pharma? It’s going to come. Most traditional licensing deals happen around stage two clinical trials. There's very few new drugs. I can tell you that the interest is definitely there from pharma companies actively looking at the space. There were a lot of mergers early on in cannabis, because different things were important, like gaining scale, or licenses – these things really are not important in psychedelics. What's important in psychedelics is qualified, differentiated new drugs and intellectual property. I think you'll definitely start to see more M&A happen in the near future. It's very exciting. Intellectual property is an important piece of the puzzle, as we’ve discussed. Mindset has a robust pipeline of multiple different potential candidates. What is looking promising to you? There’s a ton that's coming up for Mindset. We started with our first new drug families in February of last year, and we've just kept adding to the portfolio to get ourselves in a position where we have as many shots on goal for successful new drugs. We’ve moved from psilocybin-inspired drugs now to DMT, and 5-MeO-DMT analogs. That's a class of drugs that is really exciting, because 5-MeO-DMT is a drug that has short durations. It could solve one of the shortcomings of psilocybin, that being its six to eight-hour duration. The duration of psilocybin may be a bit of an impediment to widespread adoption, because that's a long time for people to spend in a therapist’s office. The short duration is a lot easier, more convenient for people. MSB 1014 is a stronger and safer psilocybin based on the data. We have multiple families coming up: Family Two and Family Four that include drugs with a considerably shorter duration with psilocybin. I think the industry will start to see patents be published and granted in the next few months. Mindset has also developed what we think is a new platform technology that can really be used at a chemical level to amplify the effects of psychedelic drugs. Contact Angela at angela@proactiveinvestors.com Follow her on Twitter @AHarmantas