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What changed in Mind Medicine (MindMed) Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Mind Medicine (MindMed) Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+674 added−762 removedSource: 10-K (2024-02-28) vs 10-K (2023-03-09)

Top changes in Mind Medicine (MindMed) Inc.'s 2023 10-K

674 paragraphs added · 762 removed · 525 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

144 edited+66 added−52 removed236 unchanged
Biggest changeThe process required by the FDA before a drug may be marketed in the U.S. requires substantial time, effort and financial resources and generally involves the following: • Completion of extensive nonclinical studies and testing, in accordance with applicable regulations, including the FDA’s Good Laboratory Practice (“GLP”), regulations; • Submission to the FDA of an IND application, which must become effective before human clinical trials may begin; • Approval by an independent institutional review board (“IRB”), or ethics committee representing each clinical trial site before each trial may be initiated; • Performance of adequate and well-controlled human clinical trials in accordance with applicable IND and other clinical trial-related regulations, collectively referred to as good clinical practice (“GCP”), to establish the safety and efficacy of the proposed drug for each proposed indication; • Submission to the FDA of an NDA for marketing approval of a new drug; • A determination by the FDA within 60 days of its receipt of an NDA to accept and file the NDA for review; • Satisfactory completion of a potential FDA pre-approval inspection of the manufacturing facility or facilities where the drug is produced to assess compliance with cGMP requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; 14 • Potential FDA audit of the non-clinical and/or clinical trial sites that generated the data in support of the NDA; and • Payment of applicable user fees and FDA review and approval of the NDA, including consideration of the views of any FDA advisory committee, prior to any commercial marketing or sale of the drug in the U.S.
Biggest changeThe process required by the FDA before a drug may be marketed in the U.S. requires substantial time, effort and financial resources and generally involves the following: • Completion of extensive nonclinical studies and testing, in accordance with applicable regulations, including the FDA’s Good Laboratory Practice (“GLP”) regulations and applicable requirements for the human use of laboratory animals or other applicable regulations; • Submission to the FDA of an Investigational New Drug Application (“IND”) application, which must become effective before human clinical trials may begin; • Approval by an independent institutional review board (“IRB”), or ethics committee representing each clinical trial site before each trial may be initiated; • Performance of adequate and well-controlled human clinical trials in accordance with applicable IND and other clinical trial-related regulations, collectively referred to as good clinical practices (“GCP”), which establish standards for conducting, recording data from, and reporting the results of clinical trials, with the goals of assuring that the data and results are credible and accurate and that study participants’ rights, safety and well-being are protected, to establish the safety and efficacy of the proposed drug for each proposed indication; 15 • Submission to the FDA of an NDA for marketing approval of a new drug; • A determination by the FDA within 60 days of its receipt of an NDA to accept and file the NDA for review; • Satisfactory completion of a potential FDA pre-approval inspection of the manufacturing facility or facilities where the drug is produced to assess compliance with cGMP requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; • Potential FDA audit of the nonclinical and/or clinical trial sites that generated the data in support of the NDA; • Payment of applicable user fees; and • Payment of applicable user fees and FDA review and approval of the NDA, including consideration of the views of any FDA advisory committee, prior to any commercial marketing or sale of the drug in the U.S.
While we seek to enhance our market protection strategy by identifying unique and/or proprietary methods of manufacturing and/or dosage forms and entering into exclusive long-term or commercial supply agreements, we do not currently have arrangements in place for either long-term supply or redundant supply of drug substance or drug product for our research compounds and product candidates.
While we seek to enhance our market protection strategy by identifying unique and/or proprietary methods of manufacturing and/or dosage forms and entering into exclusive long-term or commercial supply agreements, we do not currently have arrangements in place for either commercial supply or redundant supply of drug substance or drug product for our research compounds and product candidates.
Subject to certain terms and conditions, we provide research funding and certain milestone payments in return for the exclusive license to existing and future data and intellectual property generated from clinical trials. Subject to terms and conditions, UHB Liechti Lab may receive royalties and development revenue on any commercially marketed products developed through the collaboration.
Subject to certain terms and conditions, we provide research funding and certain milestone payments in return for the exclusive license to existing and future data and intellectual property generated from clinical trials. Subject to terms and conditions, the UHB Liechti Lab may receive royalties and development revenue on any commercially marketed products developed through the collaboration.
There are many public and private companies, universities, governmental agencies and other research organizations actively engaged in the research and development of products that may be similar to our product candidates or address similar markets. It is probable that the number of companies seeking to develop products and therapies similar to our products will increase.
There are many public and private companies, universities, governmental agencies and other research organizations actively engaged in the research and development of products that may be similar to our product candidates or address similar markets. It is probable that the number of companies seeking to develop products and therapies similar to our product candidates will increase.
Violations of this law may be punishable by up to ten years in prison, criminal fines, damages, administrative civil money penalties, and the potential for exclusion from participation in federal healthcare programs. • The federal civil False Claims Act, which prohibits anyone from, among other things, knowingly presenting, or causing to be presented claims for payment of government funds that are false or fraudulent, or knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim or knowingly and improperly avoiding, decreasing or concealing an obligation to pay money to the federal government.
Violations of this law may be punishable by up to ten years in prison, criminal fines, damages, administrative civil money penalties, and the potential for exclusion from participation in federal healthcare programs. • The federal civil False Claims Act, which prohibits anyone from, among other things, knowingly presenting, or causing to be presented claims for payment of government funds that are false or fraudulent; knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim; or knowingly and improperly avoiding, decreasing or concealing an obligation to pay money to the federal government.
For example, the EU General Data Protection Regulation (“EU GDPR”), which 25 became operative on May 25, 2018, replacing the EU Data Protection Directive, imposes strict obligations and restrictions on the ability to collect, analyze and transfer personal data, including health data from clinical trials and adverse event reporting.
For example, the EU General Data Protection Regulation (“EU GDPR”), which became operative on May 25, 2018, replacing the EU Data Protection Directive, imposes strict obligations and restrictions on the ability to collect, analyze and transfer personal data, including health data from clinical trials and adverse event reporting.
In addition, HIPAA does not replace federal, state, or other laws that may grant individuals even greater privacy protection. • The HIPAA fraud provisions, which impose criminal and civil liability for knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private third-party payors, and prohibit knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false fictitious or fraudulent statement or entry, in connection with the delivery of or payment for healthcare benefits, items or services. • The federal Physician Payment Sunshine Act, being implemented as the Open Payments Program, which requires manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare and Medicaid Services (the “CMS”), the agency that administers the Medicare and Medicaid programs, information related to direct or indirect payments and other transfers of value to physicians, teaching hospitals and certain other HCPs (such as physicians assistants and nurse practitioners), as well as ownership and investment interests held in the company by physicians and their immediate family members. 20 • Analogous state and local laws and regulations, such as state anti-kickback and false claims laws, which may apply to items or services reimbursed under Medicaid and other state programs or, in several states, regardless of the payor.
In addition, HIPAA does not replace federal, state, or other laws that may grant individuals even greater privacy protection. • The HIPAA fraud provisions, which impose criminal and civil liability for knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private third-party payors, and prohibit knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false fictitious or fraudulent statement or entry, in connection with the delivery of or payment for healthcare benefits, items or services. • The federal Physician Payment Sunshine Act, being implemented as the Open Payments Program, which requires manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare and Medicaid Services (the “CMS”), the agency that administers the Medicare and Medicaid programs, information related to direct or indirect payments and other transfers of value to physicians, teaching hospitals and certain other HCPs (such as physicians assistants and nurse practitioners), as well as ownership and investment interests held in the company by physicians and their immediate family members. • Analogous state and local laws and regulations, such as state anti-kickback and false claims laws, which may apply to items or services reimbursed under Medicaid and other state programs or, in several states, regardless of the payor.
Post-marketing Requirements Following approval of a new product, a pharmaceutical company and the approved product are subject to continuing regulation by the FDA, including, among other things, monitoring and recordkeeping activities, reporting to the applicable regulatory authorities of adverse experiences with the product, providing the regulatory authorities with updated safety and efficacy information, product sampling and distribution requirements, and complying with promotion and advertising requirements, which include, among others, standards for direct-to-consumer advertising, restrictions on promoting drugs for uses or in patient populations that are not described in the drug’s approved labeling (known as “off-label use”), limitations on industry-sponsored scientific and educational activities, and requirements for promotional activities involving the Internet.
Post-Marketing Requirements Following approval of a new product, a pharmaceutical company and the approved product are subject to continuing regulation by the FDA, including, among other things, monitoring and recordkeeping activities, reporting to the applicable regulatory authorities of adverse experiences with the product, providing the regulatory authorities with updated safety and efficacy information, product sampling and distribution requirements, and complying with promotion and advertising requirements, which include, among others, standards for direct-to-consumer advertising, promotion to HCPs, restrictions on promoting drugs for uses or in patient populations that are not described in the drug’s approved labeling (known as “off-label use”), limitations on industry-sponsored scientific and educational activities, and requirements for promotional activities involving the Internet.
Apart from low-risk medical devices (Class I with no measuring function and which are not sterile), in relation to which the manufacturer may issue an EC Declaration of Conformity based on a self-assessment of the conformity of its products with the GSPRs, a conformity assessment procedure requires the intervention of a Notified Body, which is an organization designated by a Competent Authority of an EEA country to conduct conformity assessments.
Apart from low-risk medical devices (Class I with no measuring function, not reusable and which are not sterile), in relation to which the manufacturer may issue an EC Declaration of Conformity based on a self-assessment of the conformity of its products with the GSPRs, a conformity assessment procedure requires the intervention of a Notified Body, which is an organization designated by a Competent Authority of an EEA country to conduct conformity assessments.
GAD is a chronic, often debilitating mental health disorder that affects approximately 6-10% of U.S. adults in their lifetimes. Symptoms of GAD include excessive anxiety and worry that persists for over six months, which can lead to significant impairments in social, occupational and other functioning, according to the National Institute of Mental Health.
GAD is a chronic, often debilitating mental health disorder that affects approximately 10% of U.S. adults in their lifetimes. Symptoms of GAD include excessive anxiety and worry that persists for over six months, which can lead to significant impairments in social, occupational and other functioning, according to the National Institute of Mental Health.
However, the quality, safety and usefulness of the medicinal 24 product must also be verified as part of the device and a scientific opinion from a national competent authority of an EU Member State or from the EMA, depending on its nature and therapeutic intention, must be sought regarding the quality and safety of the medicinal product, including the benefit or risk of its incorporation into the medical device.
However, the quality, safety and usefulness of the medicinal product must also be verified as part of the device and a scientific opinion from a national competent authority of an EU Member State or from the EMA, depending on its nature and therapeutic intention, must be sought regarding the quality and safety of the medicinal product, including the benefit or risk of its incorporation into the medical device.
FDA and the sponsor must reach agreement on the PSP. A sponsor can submit amendments to an agreed-upon initial PSP at any time if changes to the pediatric plan need to be considered based on data collected from non-clinical studies, early phase clinical trials, and/or other clinical development programs.
FDA and the sponsor must reach agreement on the PSP. A sponsor can submit amendments to an agreed-upon initial PSP at any time if changes to the pediatric plan need to be considered based 19 on data collected from non-clinical studies, early phase clinical trials, and/or other clinical development programs.
In addition, we or our collaborators may obtain health information from third parties, such as hospitals, healthcare professionals, and research institutions, that are subject to privacy and security requirements under the federal Health Insurance Portability and Accountability Act of 1996, and its implementing regulations (collectively, “HIPAA”).
In addition, we or our collaborators may obtain health information from third parties, such as hospitals, healthcare professionals, and research institutions, that are subject to privacy 21 and security requirements under the federal Health Insurance Portability and Accountability Act of 1996, and its implementing regulations (collectively, “HIPAA”).
These laws may further limit or restrict the advertising and promotion of medicinal products to healthcare professionals. Advertising of medicinal products that contain psychotropic and narcotic substances is in any case prohibited. 23 European Union Regulatory Data Exclusivity The EU legislation governing grant of marketing authorization for medicinal products provides opportunities for market exclusivity.
These laws may further limit or restrict the advertising and promotion of medicinal products to healthcare professionals. Advertising of medicinal products that contain psychotropic and narcotic substances is in any case prohibited. European Union Regulatory Data Exclusivity The EU legislation governing grant of marketing authorization for medicinal products provides opportunities for market exclusivity.
Item 1. Business. Overview We are a clinical stage biopharmaceutical company developing novel product candidates to treat brain health disorders. Our mission is to be the global leader in the development and delivery of treatments that unlock new opportunities to improve patient outcomes.
Item 1. Business. Overview We are a clinical stage biopharmaceutical company developing novel product candidates to treat brain health disorders. Our mission is to be the global leader in the development and delivery of treatments for brain health disorders that unlock new opportunities to improve patient outcomes.
Our ongoing research collaboration with the UHB Liechti Lab has generated a number of patent applications based on preclinical and clinical data. We support ongoing and planned research programs, as well as certain clinical trials under the direction of Dr. Liechti. Dr. Liechti, as principal investigator, has primary responsibility for the research studies of the selected compounds.
Our ongoing research collaboration with the UHB Liechti Lab has generated a number of patent applications based on preclinical and clinical data. We support ongoing and planned research programs, as well as certain clinical trials under the direction of Dr. Liechti. Dr. Liechti, as principal investigator, has primary responsibility for the research trials of the selected compounds.
To protect our rights to our proprietary know-how and technology, we require all employees, as well as our consultants and CROs, when feasible, to enter into agreements that generally require disclosure and assignment to us of ideas, developments, discoveries and inventions made by these employees, consultants, and CROs in the course of their service to us.
To protect our rights to our proprietary know-how and technology, we require all employees, as well as our consultants and CROs, when 12 feasible, to enter into agreements that generally require disclosure and assignment to us of ideas, developments, discoveries and inventions made by these employees, consultants, and CROs in the course of their service to us.
A determination of non-compliance could lead 21 to adverse judicial or administrative action against us, civil or criminal penalties, receipt of cease-and-desist orders from state regulators, loss of professional licenses, or a restructuring of our business arrangements with affiliated providers and our Centers of Excellence. U.S.
A determination of non-compliance could lead to adverse judicial or administrative action against us, civil or criminal penalties, receipt of cease-and-desist orders from state regulators, loss of professional licenses, or a restructuring of our business arrangements with affiliated providers and our Centers of Excellence. U.S.
The UK’s departure from the EU has also impacted customs regulations and impacted timing and easy of shipments into the EU from the UK. European Union Data Protection EU Member States and other jurisdictions where we may in the future operate have adopted data protection laws and regulations, which impose significant compliance obligations.
The UK’s departure from the EU has also impacted customs regulations and impacted timing and easy of shipments into the EU from the UK. 27 European Union Data Protection EU Member States and other jurisdictions where we may in the future operate have adopted data protection laws and regulations, which impose significant compliance obligations.
For drugs manufactured in the United States, the DEA establishes annually an aggregate quota for the amount of substances within Schedules I and II that may be manufactured or produced in the United States based on the DEA’s estimate of the quantity needed to meet legitimate medical, scientific, research and industrial needs.
The DEA establishes annually an aggregate quota for the amount of substances within Schedules I and II that may be manufactured or produced in the United States based on the DEA’s estimate of the quantity needed to meet legitimate medical, scientific, research and industrial needs.
In the third quarter of 2022, our collaborator, University Hospital Basel (“UHB”) in Switzerland, began conducting a Phase 1 investigator-initiated trial of R(-)-MDMA, S(+)-MDMA and R/S-MDMA in healthy volunteers to compare the tolerability, pharmacokinetics and acute subjective, physiological and endocrine effects of the three molecules.
In the third quarter of 2022, our collaborator, University Hospital Basel (“UHB”) in Switzerland, began conducting a Phase 1 investigator-initiated trial (“IIT”) of R(-)-MDMA, S(+)-MDMA and R/S-MDMA in healthy volunteers to compare the tolerability, pharmacokinetics and acute subjective, physiological and endocrine effects of the three molecules.
As with new NDAs, the review process is often significantly extended by FDA requests for additional information or clarification. Any 18 distribution of prescription drug products and pharmaceutical samples must comply with the U.S. Prescription Drug Marketing Act and the Drug Supply Chain Security Act.
As with new NDAs, the review process is often significantly extended by FDA requests for additional information or clarification. Any distribution of prescription drug products and pharmaceutical samples must comply with the U.S. Prescription Drug Marketing Act and the Drug Supply Chain Security Act.
The primary purpose of these clinical trials is to assess the metabolism, pharmacologic action, side effect tolerability and safety of the drug. 15 • Phase 2 clinical trials typically involve studies in patients afflicted with the target disease to determine the dose required to produce the desired benefits.
The primary purpose of these clinical trials is to assess the metabolism, pharmacologic action, side effect tolerability and safety of the drug. • Phase 2 clinical trials typically involve studies in patients afflicted with the target disease to determine the dose required to produce the desired benefits.
However, an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement to one of the patents listed with the FDA Orange Book by the innovator NDA holder.
However, an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement to one of the patents listed with the FDA 23 Orange Book by the innovator NDA holder.
We cannot predict whether the patent applications we are currently pursuing, or may in the future pursue, will issue as patents 11 in any particular jurisdiction or whether the claims of any issued patents will be enforceable or provide sufficient protection from competitors.
We cannot predict whether the patent applications we are currently pursuing, or may in the future pursue, will issue as patents in any particular jurisdiction or whether the claims of any issued patents will be enforceable or provide sufficient protection from competitors.
Although there are a number of statutory exemptions and regulatory 19 safe harbors to the federal Anti-Kickback Statute protecting certain common business arrangements and activities from prosecution or regulatory sanctions, the exemptions and safe harbors are drawn narrowly.
Although there are a number of statutory exemptions and regulatory safe harbors to the federal Anti-Kickback Statute protecting certain common business arrangements and activities from prosecution or regulatory sanctions, the exemptions and safe harbors are drawn narrowly.
The FDA may also place other conditions on approvals including the requirement for a REMS to assure the safe use of the drug. If the FDA concludes a REMS is needed, the sponsor of the NDA must submit a proposed REMS.
The FDA may also place other conditions on approvals including the requirement for a REMS to assure the safe use of the drug. If the FDA 18 concludes a REMS is needed, the sponsor of the NDA must submit a proposed REMS.
During the additional two-year period of market exclusivity, a generic or biosimilar marketing authorization can be submitted, and the innovator's data may be referenced, but no generic or biosimilar product can be marketed until the expiration of the market exclusivity period.
During the additional two-year period of market exclusivity, a generic or biosimilar marketing authorization can be submitted, and the innovator's data may be referenced, but no generic or biosimilar product can be marketed until the expiration of the market 25 exclusivity period.
Moreover, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs.
Moreover, regional healthcare authorities and individual hospitals 28 are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs.
In certain circumstances, violations could lead to criminal prosecution. 28 Legislation adopted at EU level in relation to establishment of different classes of substances is limited to the EU Regulations that define classes of precursors.
In certain circumstances, violations could lead to criminal prosecution. Legislation adopted at EU level in relation to establishment of different classes of substances is limited to the EU Regulations that define classes of precursors.
In some cases, the term of a U.S. patent is shortened by terminal disclaimer that reduces its term to that of an earlier-expiring patent. 12 The term of a U.S. patent may also be eligible for patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Act, to account for at least some of the time the drug is under development and regulatory review after the patent is granted.
In some cases, the term of a U.S. patent is shortened by terminal disclaimer that reduces its term to that of an earlier-expiring patent. 13 The term of a U.S. patent may also be eligible for patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Act, to account for at least some of the time the drug is under development and regulatory review after the patent is granted.
The proposed regulation is intended to boost cooperation among EU Member States in assessing health technologies, including new medicinal products, and providing the basis for cooperation at EU level for joint clinical assessments in these areas. In December 2021 the HTA Regulation was adopted and entered into force on January 11, 2022. It will apply from 2025.
The HTA Regulation is intended to boost cooperation among EU Member States in assessing health technologies, including new medicinal products, and providing the basis for cooperation at EU level for joint clinical assessments in these areas. In December 2021 the HTA Regulation was adopted and entered into force on January 11, 2022. It will apply from January 12, 2025.
We plan to mitigate potential commercial supply risks for any products that are approved in the future through inventory management and through exploring additional manufacturers to provide drug substance or drug product. 9 Through our third-party manufacturers, we intend to refine and scale up the manufacturing process for our product candidates and manufacture clinical supplies as our development program progresses.
We plan to mitigate potential commercial supply 10 risks for any products that are approved in the future through inventory management and through exploring additional manufacturers to provide drug substance or drug product. Through our third-party manufacturers, we intend to refine and scale up the manufacturing process for our product candidates and manufacture clinical supplies as our development program progresses.
We are a remote-first company, meaning that substantially all of our employees and consultants work remotely. We have never had a work stoppage, and none of our employees are represented by a labor organization or under any collective-bargaining arrangements. As of December 31, 2022, we consider our personnel relations to be good.
We are a remote-first company, meaning that substantially all of our employees and consultants work remotely. We have never had a work stoppage, and none of our employees are represented by a labor organization or under any collective-bargaining arrangements. As of December 31, 2023, we consider our personnel relations to be good.
The FDA reviews an NDA to determine, among other things, whether a drug is safe and effective for its intended use and whether the product is being manufactured in accordance with cGMP to assure and preserve the product’s identity, strength, quality and purity.
The FDA reviews the NDA to determine, among other things, whether a drug is safe and effective for its intended use and whether the product is being manufactured in accordance with cGMP to assure the product’s identity, strength, quality and purity.
In the U.S., federal and state health care laws and regulations that may affect our operations include: • The federal Anti-Kickback Statute, which makes it illegal for any person, including a company marketing a prescription drug (or a party acting on its behalf) to knowingly and willfully solicit, receive, offer, or pay any remuneration (including any kickback, bribe or rebate), directly or indirectly, in cash or in kind, that is intended to induce or reward the referral of an individual or purchase, lease or order, or the arranging for or recommending the purchase or order, of a particular item or service, for which payment may be made in whole or in part under a federal healthcare program, such as Medicare or Medicaid.
In the U.S., federal and state health care laws and regulations that may affect our operations include: • The federal Anti-Kickback Statute, which prohibits any person, including a company marketing a prescription drug (or a party acting on its behalf) to knowingly and willfully solicit, receive, offer, or pay any remuneration (including any kickback, bribe or rebate), directly or indirectly, in cash or in kind, that is intended to induce or reward the referral of an individual or purchase, lease or order, or the arranging for or recommending the purchase, lease, or order, of any item or service, for which payment may be made in whole or in part under a federal healthcare program, such as Medicare or Medicaid.
This includes a Phase 1 randomized, double blind, placebo-controlled, five-period crossover trial in 30 healthy volunteers assessing various intravenous dosing regimens of DMT that was completed in late 2022.
This included a Phase 1 randomized, double blind, placebo-controlled, five-period crossover trial in 30 healthy volunteers assessing various intravenous dosing regimens of DMT that was completed in late 2022.
For all product candidates, we intend to proceed through research and development, and with marketing of the product candidates that may ultimately be approved, if any, pursuant to the regulations of the FDA and the legislation in other jurisdictions.
For all product candidates, we intend to proceed through research and development, and with marketing of the product candidates that may ultimately be approved pursuant to the regulations of the FDA and the legislation in other jurisdictions.
Results from this investigator-initiated study were published in November 2022 in the International Journal of Neuropsychopharmacology and demonstrated the potential of ketanserin to shorten and attenuate the perceptual effects of lysergide Lysergide Research Through our broad research collaboration with the UHB Liechti Lab, we have acquired exclusive rights to a body of historical and ongoing clinical trials assessing the clinical activity of lysergide in several brain health disorders including anxiety, depression and cluster headaches.
Results from this IIT were published in November 2022 in the International Journal of Neuropsychopharmacology and demonstrated the potential of ketanserin to shorten and attenuate the perceptual effects of lysergide Lysergide Research Through our broad research collaboration with the UHB Liechti Lab, we have acquired exclusive rights to a body of historical and ongoing clinical trials assessing the clinical activity of lysergide in several brain health disorders including anxiety, depression and cluster headaches.
The outcome of the HTA Regulation regarding specific medicinal products will often influence the pricing and reimbursement status granted 27 to these medicinal products by the competent authorities of individual EU Member States. On January 31, 2018, the European Commission adopted a proposal for a regulation on health technologies assessment.
The outcome of the HTA regarding specific medicinal products will often influence the pricing and reimbursement status granted to these medicinal products by the competent authorities of individual EU Member States. On January 31, 2018, the European Commission adopted a proposal for a regulation on health technologies assessment (“HTA Regulation”).
Ketanserin Research We also funded a Phase 1 double-blind, placebo-controlled, random-order, two-period crossover clinical trial evaluating the effects of ketanserin on the acute response to lysergide in healthy subjects. This study intended to provide insights into the pharmacological activity of lysergide and the potential interaction between lysergide and co-administration with serotonin receptor antagonists.
Ketanserin Research We also funded a Phase 1 double-blind, placebo-controlled, random-order, two-period crossover clinical trial evaluating the effects of ketanserin on the acute response to lysergide in healthy volunteers. This trial was intended to provide insights into the pharmacological activity of lysergide and the potential interaction between lysergide and co-administration with serotonin receptor antagonists.
The Health Technology Assessment (“HTA Regulation”), which is currently governed by the national laws of the individual EU Member States, is the procedure according to which the assessment of the public health impact, therapeutic impact and the economic and societal impact of use of a given medicinal product in the national healthcare systems of the individual country is conducted.
The Health Technology Assessment (“HTA”), which is currently governed by the national laws of the individual EU Member States, is the procedure according to which the assessment of the public health impact, therapeutic impact and the economic and societal impact of use of a given medicinal product in the national healthcare systems of the individual country is conducted.
Decreases in third-party reimbursement for our products or a decision by a third-party payor not to cover a product could reduce healthcare practitioner usage of our products and have a material adverse effect on our sales, results of operations and financial condition.
Decreases in third-party reimbursement for our products or a decision by a third-party payor not to cover a product could reduce HCP usage of our products and have a material adverse effect on our sales, results of operations and financial condition.
Healthcare Reform The containment of healthcare costs has become a priority of federal and state governments, and the prices of drugs have been a focus in this effort. In July 2021, the Biden administration released an executive order, “Promoting Competition in the American Economy,” with multiple provisions aimed at prescription drugs.
Coverage and Reimbursement U.S. Healthcare Reform The containment of healthcare costs has become a priority of federal and state governments, and the prices of drugs have been a focus in this effort. In July 2021, the Biden administration released an executive order, “Promoting Competition in the American Economy,” with multiple provisions aimed at prescription drugs.
For a three year period from January 1, 2021, MHRA may rely on a decision taken by the European Commission on the approval of a new centralized procedure marketing authorization when determining an application for a Great Britain marketing authorization; or use the MHRA’s decentralized or mutual recognition procedures which enable marketing authorizations approved in EU Member States to be granted in Great Britain.
For a three year period from January 1, 2021, MHRA may rely on a decision taken by the European Commission on the approval of a new centralized procedure marketing authorization when determining an application for a Great Britain marketing authorization; or use the MHRA’s decentralized or mutual recognition procedures which enable marketing authorizations approved in EU Member States to be granted in Great Britain (EC Decision Reliance Procedure (“ECDRP”) or Mutual Recognition/Decentralised Reliance Procedure (“MRDCRP”)).
The extended patent term cannot exceed the shorter of five years beyond the non-extended expiration of the patent or 14 years from the date of the FDA approval of the drug.
The extended patent term cannot exceed the shorter of five years beyond the non-extended expiration of the patent and 14 years from the date of the FDA approval of the drug.
The EU-UK Agreement also encourages, although it does not oblige, the parties to consult one another on proposals to introduce significant changes to technical regulations or inspection procedures. Among the areas of absence of mutual recognition are batch testing and batch release.
The EU-UK Agreement also encourages, although it does not oblige, the parties to consult one another on proposals to introduce significant changes to technical regulations or inspection procedures. Among the areas of absence of mutual recognition are batch testing and batch release. The UK has unilaterally agreed to accept EU batch testing and batch release.
University Hospital Basel - Liechti Lab Initiatives - Research Collaboration & Exclusive License On April 1, 2020, we entered into a multi-year, exclusive collaboration with Dr. Matthias Liechti’s lab at UHB, a leading pharmacology and clinical research group studying psychedelic substances based in Basel, Switzerland.
University Hospital Basel - Liechti Lab Initiatives On April 1, 2020, we entered into a multi-year, exclusive collaboration with Dr. Matthias Liechti’s lab at UHB (the “UHB Liechti Lab”), a leading pharmacology and clinical research group studying psychedelic substances based in Basel, Switzerland.
If we fail to comply with applicable foreign regulatory requirements applicable to a given country, we may not be able to obtain regulatory approval for our product candidates in such country if we choose to seek such approval, or we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution. 26 Coverage and Reimbursement U.S.
If we fail to comply with applicable foreign regulatory requirements applicable to a given country, we may not be able to obtain regulatory approval for our product candidates in such country if we choose to seek such approval, or we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.
Key elements of our strategy are to: • advance our clinical pipeline and submit new drug applications (“NDAs”), to the FDA, and conduct pre-launch activities with respect to any of our product candidates that have been successfully developed; • commercialize any product candidates for which we obtain regulatory approval, including the manufacture of commercial supplies; • continue our research and development efforts to evaluate the potential for our existing product candidates to treat additional indications, including by exploring new formulations or new delivery methods; • identify new targets, and generate and test new compounds and product candidates, with a focus on indications where we believe we can make well-informed, rapid go/no-go decisions, with the goal of developing a diversified portfolio of product candidates with differentiated features; • evaluate the market potential and regulatory pathways for our product candidates in the United Kingdom (the “UK”), European Union (the “EU”), and other countries outside the United States, and determine the best strategic and business opportunities to advance our product candidates in these markets; • continue to advance digital medicine programs, including conducting ongoing and planned clinical trials of our Session Monitoring System and other clinical and regulatory activities; • continue to build, maintain, defend, leverage and expand our intellectual property portfolio, including by utilizing the strengths of our proprietary chemistry platform and scientific know-how to expand our portfolio of new chemical entities to lessen our long-term reliance on the success of any one program and to facilitate long-term growth; and • continue to explore opportunities to establish agreements or alliances with other pharmaceutical companies, at the appropriate time, where we believe a collaboration will add significant value to our efforts, including through capabilities, infrastructure, speed or financial contributions, or to acquire new compounds, product candidates or products if we believe such opportunities will help us achieve our goals or meet other strategic objectives. 6 Our Product Candidate Pipeline The following table summarizes the status of our portfolio of product candidates: MM-120 (Lysergide D-tartrate) MM-120, or lysergide D-tartrate, is our proprietary product candidate, a pharmaceutically optimized form of lysergide D-tartrate being developed for GAD and other brain health disorders.
Key elements of our strategy are to: • advance our clinical pipeline and submit new drug applications (“NDAs”) to the FDA, and conduct pre-launch activities with respect to any of our product candidates that have been successfully developed; • commercialize any product candidates for which we obtain regulatory approval, including securing the manufacture of commercial supplies; • continue our research and development efforts to evaluate the potential for our product candidates to treat additional indications, including by exploring new formulations or new delivery methods; • identify new targets, and generate and test new compounds and product candidates, with a focus on indications where we believe we can make well-informed, rapid go/no-go decisions, with the goal of developing a diversified portfolio of product candidates with differentiated features; • evaluate the market potential and regulatory pathways for our product candidates in the United Kingdom (the “UK”), European Union (the “EU”), and other countries or regions outside the United States, and determine the best strategic and business opportunities to advance our product candidates in these markets; • develop digital medicine programs to complement our product candidates; • continue to build, maintain, defend, leverage and expand our intellectual property portfolio, including by utilizing the strengths of our scientific know-how to expand our portfolio of new chemical entities to lessen our long-term reliance on the success of any one program and to facilitate long-term growth; and • continue to explore opportunities to establish agreements or alliances with other pharmaceutical companies, at the appropriate time, where we believe a collaboration or other commercial agreement will add significant value to our efforts, including through capabilities, infrastructure, speed or financial contributions, or to acquire new compounds, product candidates or products if we believe such opportunities will help us achieve our goals or meet other strategic objectives. 7 Our Product Candidate Pipeline The following table summarizes the status of our portfolio of product candidates: MM120 (Lysergide D-tartrate) MM120, or lysergide D-tartrate, is our proprietary product candidate, a pharmaceutically optimized form of lysergide D-tartrate being developed for GAD and other brain health disorders.
All such filings are available through our website free of charge. In addition, the SEC makes available at its website (www.sec.gov), free of charge, reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Any filings made to the Canadian securities regulators are available on SEDAR (www.sedar.com). 30 RISK FACTORS
All such filings are available through our website free of charge. In addition, the SEC makes available at its website (www.sec.gov), free of charge, reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Any filings made to the Canadian securities regulators are available on SEDAR+ (www.sedarplus.ca). 32 RISK FACTORS
We are developing a pipeline of innovative product candidates, with and without acute perceptual effects, targeting neurotransmitter pathways that play key roles in brain health disorders. This specifically includes pharmaceutically optimized product candidates derived from the psychedelic and empathogen drug classes including MM-120 and MM-402, our lead product candidates.
We are developing a pipeline of innovative product candidates, with and without acute perceptual effects, targeting neurotransmitter pathways that play key roles in brain health disorders. This specifically includes pharmaceutically optimized product candidates derived from the psychedelic and empathogen drug classes including MM120 and MM402, our lead product candidates.
Animal studies have demonstrated that MM-110 can significantly reduce drug self-administration of morphine, cocaine, methamphetamine, nicotine and alcohol, and ameliorate five of seven signs of opioid withdrawal.
Animal studies have demonstrated that MM110 can significantly reduce drug self-administration of morphine, cocaine, methamphetamine, nicotine and alcohol, and ameliorate five of seven signs of opioid withdrawal.
These research programs include non-clinical, pre-clinical and human clinical trials, and IITs of novel biopharmaceuticals, both with and without perceptual effects, with our collaborators. Our partnered research programs include a broad multi-year exclusive research partnership with UHB and a partnership with Maastricht University in the Netherlands.
These research programs include non-clinical, pre-clinical and human clinical trials, and IITs of novel biopharmaceuticals with our collaborators. Our partnered research programs include a broad multi-year exclusive research partnership with UHB and a partnership with Maastricht University in the Netherlands.
These research and development programs include non-clinical, pre-clinical and human clinical trials and investigator-initiated trials (“IITs”) of additional product candidates and research compounds with our collaborators. Our external research programs include a broad multi-year exclusive research partnership with UHB in Switzerland.
These research and development programs include non-clinical, pre-clinical and human clinical trials and IITs of additional product candidates and research compounds with our collaborators. Our external research programs include a broad multi-year exclusive research partnership with UHB in Switzerland.
Corporate Information In February 27, 2020, we completed a reverse takeover transaction (the “RTO Transaction”) by way of a plan of arrangement under the Business Corporations Act (British Columbia) (the “BCBCA”) between Broadway, Madison Metals Inc., Broadway Delaware Subco Inc. and Mind Medicine, Inc. (“MindMed US”).
Corporate Information In February 27, 2020, we completed a reverse takeover transaction (the “RTO Transaction”) by way of a plan of arrangement under the Business Corporations Act (British Columbia) (the “BCBCA”) among Broadway Gold Mining Ltd. (“Broadway”), Madison Metals Inc., Broadway Delaware Subco Inc. and Mind Medicine, Inc. (“MindMed US”).
In December 2021, the UHB Liechti Lab completed an investigator-initiated trial assessing the efficacy of 200 micrograms lysergide (two doses) versus a placebo on anxiety and depression symptoms in 46 patients with clinically significant anxiety. The UHB Licheti 10 Lab published the results from the study in the peer-reviewed scientific journal Biological Psychiatry in September 2022.
In December 2021, the UHB Liechti Lab completed an IIT assessing the efficacy of 200 µg lysergide (two doses) versus a placebo on anxiety and depression symptoms in 46 patients with clinically significant anxiety. The UHB Licheti Lab published the results from the trial in the peer-reviewed scientific journal Biological Psychiatry in September 2022.
In order to potentially induce a stable DMT experience lasting one to two hours, various intravenous dosing regimens, including a starting dose and then a maintenance dose, were evaluated in this Phase 1 IIT. Results from this investigator-initiated study are anticipated to be published in 2023.
In order to potentially induce a stable DMT experience lasting one to two hours, various intravenous dosing regimens, including a starting dose and then a maintenance dose, were evaluated in this Phase 1 IIT. Results from this IIT were published in 2023.
Our lead product candidate, MM-120, is a proprietary, pharmaceutically optimized form of lysergide D-tartrate that we are developing for the treatment of generalized anxiety disorder (“GAD”). MM-120 is also being studied in a subperceptual repeat administration dosing regimen for the treatment of attention deficit hyperactivity disorder (“ADHD”).
Our lead product candidate, MM120, is a proprietary, pharmaceutically optimized form of lysergide D-tartrate that we are developing for the treatment of generalized anxiety disorder (“GAD”). We have also evaluated MM120 in a subperceptual repeat administration dosing regimen for the treatment of attention deficit hyperactivity disorder (“ADHD”).
If granted, patents based on these applications have a projected expiry date in 2041. • U.S. and PCT applications relating to MDMA covering methods of dosing MDMA in treating patients, methods of reducing adverse effects, and compositions of matter.
If granted, patents based on these applications have projected expiry dates from 2041 to 2043. • U.S. and PCT applications relating to R(-)-MDMA covering methods of dosing R(-)-MDMA in treating patients, methods of reducing adverse effects, and compositions of matter.
For example, the advisory committee may recommend or the FDA may determine that a REMS program is necessary to ensure safe use of the product. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.
For example, the advisory committee may recommend or the FDA may determine that a Risk Evaluation and Mitigation Strategy (“REMS”) program is necessary to ensure safe use of the product. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.
We also continue to fund the UHB Liechti Lab's early-stage research activities aimed at exploring next-generation product candidates based on MDMA. DMT Research We are also funding the UHB Liechti Lab's research on DMT, a short-acting serotonergic tryptamine of the psychedelic drug class.
We also continue to fund the UHB Liechti Lab's early-stage research activities aimed at exploring next-generation product candidates based on MDMA. DMT Research We have funded the UHB Liechti Lab's research on N,N-Dimethyltryptamine (“DMT”), a short-acting serotonergic tryptamine of the psychedelic drug class.
Department of Health and Human Services (“HHS”) released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform and sets out a variety of potential legislative policies that Congress could pursue as well as potential administrative actions HHS can take to advance these principles.
In response to President Biden’s executive order, the U.S. Department of Health and Human Services (“HHS”) released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform and sets out a variety of potential legislative policies that Congress could pursue as well as potential administrative actions HHS can take to advance these principles.
Drug Enforcement Administration (the “DEA”); the Consumer Product Safety Commission; the Federal Trade Commission; the Occupational Safety and Health Administration; the Environmental Protection Agency; and state and local governments.
Department of Justice; the U.S. Drug Enforcement Administration (the “DEA”); the Consumer Product Safety Commission; the Federal Trade Commission; the Occupational Safety and Health Administration; the Environmental Protection Agency; and state and local governments.
The information contained on, or that can be accessed through, our website is not part of, and is not incorporated by reference into this Annual Report.
In addition to the information about us contained in this Annual Report, information about us can be found on our website. The information contained on, or that can be accessed through, our website is not part of, and is not incorporated by reference into this Annual Report.
Any action against us for violation of these laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. Numerous other laws may apply to our products. Pricing and rebate programs must comply with the Medicaid rebate requirements of the U.S.
Any action against us for violation of these laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. Numerous other laws may apply to our products.
We completed a Phase 1 trial of MM-110 in late 2021; however, in the third quarter of 2022, we determined that any further clinical development of our MM-110 program will be subject to the pursuit of non-dilutive sources of capital and collaborations with third parties.
We completed a Phase 1 trial of MM110 in late 2021; however, in the third quarter of 2022, we suspended our MM110 program and determined that any further clinical development of MM110 will be subject to the receipt of additional non-dilutive capital and/or collaborations with third parties.
Our Strategy Our mission is to be the global leader in the development and delivery of treatments that unlock new opportunities to improve patient outcomes for brain health disorders. We intend to accomplish our mission by leading the field in (1) research, (2) development, (3) digital medicine, and (4) commercialization, scalability and patient access.
Our Strategy Our mission is to be the global leader in the development and delivery of treatments for brain health disorders that unlock new opportunities to improve patient outcomes. We intend to accomplish our mission by leading in psychedelic research and development, commercialization and patient access.
Marketing authorization for medicinal products can be obtained through several different procedures. These are through a centralized, mutual recognition procedure, decentralized procedure, or national procedure (if marketing authorization is sought for a single EU Member State). The centralized procedure allows a company to submit a single application to the EMA.
These are through a centralized, mutual recognition procedure, decentralized procedure, or national procedure (if marketing authorization is sought for a single EU Member State). The centralized procedure allows a company to submit a single application to the EMA.
The acquisition enabled us to build our digital medicine division. 29 Our global headquarters are located at One World Trade Center, Suite 8500, New York, New York 10007. Our registered office in Canada is located at 1055 West Hastings Street, Suite 1700, Vancouver, British Columbia V6E 2E9. We also maintain offices in Durham, North Carolina.
The acquisition enabled us to build our digital medicine programs. Our global headquarters are located at One World Trade Center, Suite 8500, New York, New York 10007. Our registered office in Canada is located at 1055 Dunsmuir Street, Suite 3000, Vancouver, British Columbia V7X 1K8. We also maintain offices in Durham, North Carolina.
Some countries provide that products may be marketed only after a reimbursement price has been agreed. Some countries may require the completion of additional studies that compare the cost-effectiveness of a particular product candidate to currently available therapies (so called health technology assessments) in order to obtain reimbursement or pricing approval.
Some countries may require the completion of additional studies that compare the cost-effectiveness of a particular product candidate to currently available therapies (so called health technology assessments) in order to obtain reimbursement or pricing approval.
Under the Fast Track or Breakthrough Therapy expedited programs, the FDA may review sections of the marketing application on a rolling basis before the complete NDA is submitted if the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application. 17 Any product submitted to the FDA for marketing, including under a Fast Track or Breakthrough Therapy program, may be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval.
Under the Fast Track or Breakthrough Therapy expedited programs, the FDA may review sections of the marketing application on a rolling basis before the complete NDA is submitted if the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application.
In the third quarter of 2022, our collaborator, UHB, began conducting a Phase 1 investigator-initiated trial of R(-)-MDMA, S(+)-MDMA and R/S-MDMA in healthy volunteers to compare the tolerability, pharmacokinetics and acute subjective, physiological and endocrine effects of the three molecules.
In the third quarter of 2022, our collaborator, UHB, began conducting a Phase 1 investigator-initiated trial of R(-)-MDMA, S(+)-MDMA and R/S-MDMA in healthy volunteers to compare the tolerability, pharmacokinetics and acute subjective, physiological and endocrine effects of the three molecules. We anticipate topline results from UHB’s trial to be 9 presented in the first half of 2024.
Since this date, companies established in the UK cannot use the centralized procedure and instead must follow one of the UK national authorization procedures to obtain a marketing authorization to market products in the UK.
Since January 1, 2021, an applicant for a centralized procedure marketing authorization can no longer be established in the UK. Since this date, companies established in the UK cannot use the centralized procedure and instead must follow one of the UK national authorization procedures to obtain a marketing authorization to market products in the UK.
Other companies are also developing serotonergic therapies for the treatment of ASD or related indications; For example, Nova Mentis Life Science Corp and Mycrodose Therapeutics Inc. are collaborating on a transdermal psilocybin product candidate for the treatment of Fragile X syndrome. 13 More broadly, numerous pharmaceutical companies are developing or partnering to develop pharmaceutical products targeting the treatment of brain health disorders.
Other companies are also developing serotonergic therapies for the treatment of ASD or related indications; For example, Nova Mentis Life Science Corp and Mycrodose Therapeutics Inc. are collaborating on a transdermal psilocybin product candidate for the treatment of Fragile X syndrome.
Our most advanced development candidate, MM-120, is in Phase 2b development for GAD and in Phase 2a development for ADHD. Patients with GAD are typically treated with a variety of anxiolytic and antidepressant medications, including selective serotonin reuptake inhibitors, serotonin–norepinephrine reuptake inhibitors and benzodiazepines.
Our most advanced product candidate, MM120, is in Phase 2b development for GAD with additional psychiatric indications under assessment and planning. Patients with GAD are typically treated with a variety of anxiolytic and antidepressant medications, including selective serotonin reuptake inhibitors, serotonin–norepinephrine reuptake inhibitors and benzodiazepines.
These research collaborations include IITs, drug discovery activities, advanced drug delivery activities and the advancement of other research activities that seek to support the growth and advancement of our product development programs. In addition to the above, our product candidate MM-110 (zolunicant or 18-methoxycoronaridine (“18-MC”)) is being developed for the treatment of opioid withdrawal.
These research collaborations include IITs, drug discovery activities, advanced drug delivery activities and the advancement of other research activities that seek to support the growth and advancement of our product development programs. In addition to the above, we have evaluated MM110 (zolunicant or 18-MC) for the treatment of opioid withdrawal.
The Complete Response Letter may require additional clinical data and/or one or more additional pivotal Phase 3 clinical trials, and/or other significant and time-consuming requirements related to clinical trials, non-clinical studies or manufacturing. If a Complete Response Letter is issued, the applicant may either resubmit the NDA, addressing all of the deficiencies identified in the letter, or withdraw the application.
A Complete Response Letter usually describes all of the specific deficiencies in the NDA identified by the FDA. The Complete Response Letter may require additional clinical data and/or one or more additional pivotal Phase 3 clinical trials, and/or other significant and time-consuming requirements related to clinical trials, non-clinical studies or manufacturing.
In the EU, products that are a combination of a medicinal product and a medical device are regulated as either a medicinal product or a medical device, depending on which component has the primary mode of action.
Certain of our product candidates are designed to be delivered to patients by dedicated medical devices. In the EU, products that are a combination of a medicinal product and a medical device are regulated as either a medicinal product or a medical device, depending on which component has the primary mode of action.
A number of companies are developing product candidates intended for the treatment of GAD, including CYB004 (a serotonin receptor agonist) being developed by Cybin Inc. and zuranolone (a positive allosteric modulator of the GABA A receptor) which is being developed by Sage Therapeutics, Inc.
A number of companies are developing product candidates intended for the treatment of GAD, including CYB004 (a serotonin receptor agonist) being developed by Cybin Inc.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe may also experience numerous unforeseen events during preclinical and clinical development that could delay or prevent our ability to receive marketing approval or commercialize our product candidates or any future product candidates, including: • delays in or failure to obtain regulatory approval to commence or modify a trial, including the imposition of a temporary or permanent clinical hold by regulatory authorities for a number of reasons, including after review of an Investigational New Drug Application (“IND”), or amendment, clinical trial application (“CTA”), or amendment, or equivalent application or amendment, as a result of a finding that the trial presents unreasonable risk to clinical trial participants or a negative finding from an inspection of our clinical trial operations or study sites, or the occurrence of a suspected, unexpected serious adverse reaction (“SUSAR”), or serious adverse reaction (“SAE”), during our clinical trials or IITs, using our product candidates; • delays in or failure to reach agreement on acceptable terms with prospective CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • delays in or inability to raise sufficient capital to fund research and development of our current and future product candidates; • delays in or failure to obtain IRB, or ethics committee approval at each site; • delays in or failure to recruit a sufficient number of suitable patients to participate in a trial; • failure to have patients complete a trial or return for post-treatment follow-up; • clinical sites deviating from trial protocol or dropping out of a trial; • challenges related to conducting adequate and well-controlled clinical trials, including designing an appropriate comparator arm in studies given the potential difficulties related to maintaining the blinding during the trial or placebo or nocebo effects; • adding new clinical trial sites; • availability of adequately trained healthcare practitioners and appropriate third-party clinical trial sites for our product candidates; • sufficiency of any supporting digital services that may form part of the preparation, integration or long-term follow-up relating to any product candidate we develop; • failure to contract for the manufacture of sufficient quantities of our product candidates for use in clinical trials in a timely manner; • third-party actions claiming infringement by our investigational product candidates and other candidates or any future product candidates in clinical trials and obtaining injunctions interfering with our progress; • safety or tolerability concerns which could cause us or our collaborators, as applicable, to suspend or terminate a trial if we or our collaborators find that the participants are being exposed to unacceptable health risks; 42 • methodological challenges associated with clinical research of psychotropic compounds that could hinder the interpretability or regulatory acceptability of clinical trial results, such as the effects of functional unblinding, expectation biases and protocols for patient support and monitoring during dosing sessions; • changes in regulatory requirements, policies and guidelines; • lower than anticipated retention rates of patients in clinical trials; • our third-party research contractors failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • delays in establishing the appropriate dosage levels in clinical trials; • delays in our clinical trials related to public health crises like the COVID-19 pandemic, due to factors such as a decrease in the willingness or availability of patients to enroll in our clinical trials and challenges in procuring sufficient supplies of the underlying therapeutic substance; • the quality or stability of the underlying therapeutic substance falling below acceptable standards; • regulatory requirements to change the formulation of a product candidate, which can require expensive, risky and time-consuming bioequivalence studies; and • business interruptions resulting from macroeconomic conditions, including inflation and rising interest rates, geo-political actions, including war and terrorism, natural disasters including earthquakes, typhoons, floods and fires, pandemics, or failures or significant downtime of our information technology systems resulting from cyber-attacks on such systems or otherwise.
Biggest changeWe may also experience numerous unforeseen events during preclinical and clinical development that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including: • delays in or failure to obtain regulatory approval to commence or modify a trial, including the imposition of a temporary or permanent clinical hold by regulatory authorities for a number of reasons, including after review of an Investigational New Drug Application (“IND”), or amendment, clinical trial application (“CTA”), or amendment, or equivalent application or amendment, as a result of a finding that the trial presents unreasonable risk to clinical trial participants or a negative finding from an inspection of our clinical trial operations or study sites, or the occurrence of a suspected, unexpected serious adverse reaction (“SUSAR”), or serious adverse reaction (“SAE”), during our clinical trials or IITs, using our product candidates; • delays or denial of a researcher registration to one or more research sites that will allow those sites to handle and dispense our product candidates and to obtain our product candidates from our importer; • delays in or failure to reach agreement on acceptable terms with prospective CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • delays in or inability to raise sufficient capital to fund research and development of our product candidates; • delays in or failure to obtain IRB, or ethics committee approval at each site; • delays in or failure to recruit a sufficient number of suitable patients to participate in a trial; • failure to have patients complete a trial or return for post-treatment follow-up; • clinical sites deviating from trial protocol or dropping out of a trial; • inability to identify or maintain a sufficient number of trial sites, many of which may be already engaged in other clinical trials, including some that may be for competing product candidates with the same indication; • challenges related to conducting adequate and well-controlled clinical trials, including designing an appropriate comparator arm in studies given the potential difficulties related to maintaining the blinding during the trial or placebo or nocebo effects; • delay or failure in adding new clinical trial sites; • ambiguous or negative interim results that are inconsistent with earlier results; • availability of adequately trained HCPs and appropriate third-party clinical trial sites for our product candidates; • sufficiency of any supporting digital services that may form part of the preparation, integration or long-term follow-up relating to any product candidate we develop; • failure to contract for the manufacture of sufficient quantities of our product candidates for use in clinical trials in a timely manner; • third-party actions claiming infringement by our investigational product candidates and other candidates or product candidates in clinical trials and obtaining injunctions interfering with our progress; 43 • safety or tolerability concerns which could cause us or our collaborators, as applicable, to suspend or terminate a trial if we or our collaborators find that the participants are being exposed to unacceptable health risks; • unacceptable risk-benefit profile, unforeseen safety issues or adverse side effects or adverse events associated with a product candidate; • failure of a product candidate to demonstrate any or enough of a benefit; • methodological challenges associated with clinical research of psychotropic compounds that could hinder the interpretability or regulatory acceptability of clinical trial results, such as the effects of functional unblinding, expectation biases and protocols for patient support and monitoring during dosing sessions; • changes in regulatory requirements, policies and guidelines; • lower than anticipated retention rates of patients in clinical trials; • our third-party research contractors failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • delays in establishing the appropriate dosage levels in clinical trials; • delays in our clinical trials related to public health crises like the COVID-19 pandemic, due to factors such as a decrease in the willingness or availability of patients to enroll in our clinical trials and challenges in procuring sufficient supplies of the underlying therapeutic substance; • the quality or stability of the underlying therapeutic substance falling below acceptable standards; • regulatory requirements to change the formulation of a product candidate, which can require expensive, risky and time-consuming bioequivalence studies; • business interruptions resulting from macroeconomic conditions, including inflation and rising interest rates, geo-political actions, including war and terrorism, natural disasters including earthquakes, typhoons, floods and fires, pandemics, or failures or significant downtime of our information technology systems resulting from cyber-attacks on such systems or otherwise; and • changes in governmental regulations or administrative actions.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a shareholder.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a shareholder.
In addition, the government may assert that a claim that includes items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act (the “FCA”). The definition of the “remuneration” under the federal Anti-Kickback Statute has been interpreted to include anything of value.
In addition, the government may assert that a claim that includes items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act (the “FCA”). The definition of “remuneration” under the federal Anti-Kickback Statute has been interpreted to include anything of value.
Because lysergide is a controlled substance and subject to increased regulation resulting from that classification, if we are unable to reply on our current supplier for lysergide, we may experience delays or increased costs in obtaining an alternative provider or we may be unable to find an alternative provider on acceptable terms.
Because lysergide is a controlled substance and subject to increased regulation resulting from that classification, if we are unable to reply on our current supplier for lysergide, we may experience delays or increased costs in obtaining an alternative provider or we may be unable to find an alternative supplier on acceptable terms.
In addition, under Sections 382 and 383 of the Code, if a corporation undergoes an “ownership change” (generally defined as a cumulative change in the corporation’s ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period), the corporation’s ability to use its pre-change NOLs and certain other pre-change tax attributes to offset its post-change taxable income and taxes may be limited.
In addition, under Sections 382 and 383 of the Code, if a corporation undergoes an “ownership change” (generally defined as a cumulative change in the corporation’s ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period), the corporation’s ability to use its pre-ownership change NOLs and certain other pre-ownership change tax attributes to offset its post-ownership change taxable income and taxes may be limited.
Holder” is a beneficial holder of common shares who or that, for U.S. federal income tax purposes, is: • an individual who is a United States citizen or resident of the United States; • a corporation or other entity treated as a corporation for United States federal income tax purposes created in, or organized under the laws of, the United States, any state thereof or the District of Columbia; • an estate the income of which is includible in gross income for United States federal income tax purposes regardless of its source; or • a trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons (within the meaning of the Code) who have the authority to control all substantial decisions of the trust or (B) that has in effect a valid election under applicable U.S.
Holder” is a beneficial holder of common shares who or that, for U.S. federal income tax purposes, is: • an individual who is a United States citizen or resident of the United States; • a corporation or other entity treated as a corporation for U.S. federal income tax purposes created in, or organized under the laws of, the United States, any state thereof or the District of Columbia; • an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or • a trust (A) the administration of which is subject to the primary supervision of a U.S. court and which has one or more United States persons (within the meaning of the Code) who have the authority to control all substantial decisions of the trust or (B) that has in effect a valid election under applicable U.S.
HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions; • the FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices; • the U.S. federal legislation commonly referred to as Physician Payments Sunshine Act, and its implementing regulations, which requires certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to the CMS, information related to certain payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), other healthcare professionals (such as physician assistant and nurse practitioners), and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; • analogous state laws and regulations, including the following: state anti-kickback and false claims laws, which may be broader in scope than their federal equivalents, and which may apply to our business practices, including research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by any third-party payor, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. federal government, or otherwise restrict payments that may be made to HCPs and other potential referral sources; state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information, which requires tracking gifts and other remuneration and items of value provided to healthcare professionals and entities; state and local laws that require the registration of pharmaceutical sales representatives and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts; and • the European and other foreign law equivalents of each of these laws, including reporting requirements detailing interactions with and payments to HCPs, and privacy-related requirements in Europe and other jurisdictions.
HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions; • the FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices; 58 • the U.S. federal legislation commonly referred to as Physician Payments Sunshine Act, and its implementing regulations, which requires certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to the CMS, information related to certain payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), other healthcare professionals (such as physician assistant and nurse practitioners), and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; • analogous state laws and regulations, including the following: state anti-kickback and false claims laws, which may be broader in scope than their federal equivalents, and which may apply to our business practices, including research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by any third-party payor, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. federal government, or otherwise restrict payments that may be made to HCPs and other potential referral sources; state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information, which requires tracking gifts and other remuneration and items of value provided to healthcare professionals and entities; state and local laws that require the registration of pharmaceutical sales representatives and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts; and • the European and other foreign law equivalents of each of these laws, including reporting requirements detailing interactions with and payments to HCPs, and privacy-related requirements in Europe and other jurisdictions.
In addition to the factors discussed in this “Risk factors” section and elsewhere in this periodic report, these factors include: • the timing and results of preclinical studies and clinical trials of our product candidates, those conducted by third parties or those of our competitors; • any adverse development or perceived adverse development with respect to product candidates; • any safety concerns related to the use of our product candidates; • our ability to obtain sufficient resources for our clinical trials and preclinical studies; • the success of competitive products or announcements by potential competitors of their product development efforts; • regulatory actions with respect to our products or our competitors’ products; • actual or anticipated changes in our growth rate relative to our competitors; • regulatory or legal developments in the United States, Canada and other countries; • developments or disputes concerning patent applications, issued patents or other proprietary rights; • the recruitment or departure of key personnel; 82 • announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures, collaborations or capital commitments; • actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • market conditions in the pharmaceutical and biotechnology sector; • inability to obtain adequate commercial supply for any approved product or inability to do so at acceptable prices; • changes in the structure of healthcare payment systems; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; • announcement or expectation of additional financing efforts; • sales of our common shares by us, our insiders or our other shareholders; • expiration of market stand-off or lock-up agreements; • the impact of any natural disasters or public health emergencies, such as the COVID-19 pandemic; and • general economic, political, industry and market conditions.
In addition to the factors discussed in this “Risk factors” section and elsewhere in this periodic report, these factors include: • the timing and results of preclinical studies and clinical trials of our product candidates, those conducted by third parties or those of our competitors; • any adverse development or perceived adverse development with respect to product candidates; • any safety concerns related to the use of our product candidates; • our ability to obtain sufficient resources for our clinical trials and preclinical studies; • the success of competitive products or announcements by potential competitors of their product development efforts; • regulatory actions with respect to our products or our competitors’ products; • actual or anticipated changes in our growth rate relative to our competitors; • regulatory or legal developments in the United States, Canada and other countries; • developments or disputes concerning patent applications, issued patents or other proprietary rights; • the recruitment or departure of key personnel; • announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures, collaborations or capital commitments; • actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • market conditions in the pharmaceutical and biotechnology sector; • inability to obtain adequate commercial supply for any approved product or inability to do so at acceptable prices; • changes in the structure of healthcare payment systems; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; • announcement or expectation of additional financing efforts; • sales of our common shares by us, our insiders or our other shareholders; • expiration of market stand-off or lock-up agreements; • the impact of any natural disasters or public health emergencies, such as the COVID-19 pandemic; and • general economic, political, industry and market conditions.
We may seek regulatory approval of our product candidates outside of the United States and Canada and, accordingly, we expect that we will be subject to additional risks related to operating in foreign countries if we obtain the necessary approvals, including: • differing regulatory requirements and reimbursement regimes in foreign countries; • unexpected changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements; • economic weakness, including inflation, or political instability in particular foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign taxes, including withholding of payroll taxes; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country; • difficulties staffing and managing foreign operations; • workforce uncertainty in countries where labor unrest is more common than in the United States; • potential liability under the FCPA, CFPOA or comparable foreign regulations; • challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States or Canada; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and • business interruptions resulting from geo-political actions, including war and terrorism.
We may seek regulatory approval of our product candidates outside of the United States and, accordingly, we expect that we will be subject to additional risks related to operating in foreign countries if we obtain the necessary approvals, including: • differing regulatory requirements and reimbursement regimes in foreign countries; • unexpected changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements; • economic weakness, including inflation, or political instability in particular foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign taxes, including withholding of payroll taxes; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country; • difficulties staffing and managing foreign operations; • workforce uncertainty in countries where labor unrest is more common than in the United States; • potential liability under the FCPA, CFPOA or comparable foreign regulations; • challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and • business interruptions resulting from geo-political actions, including war and terrorism.
When an entity is determined to have violated the FCA, the government may impose civil fines and penalties for each false claim, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs; • the federal civil monetary penalties laws, which impose civil fines for, among other things, the offering or transfer or remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies; • the U.S. federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any 57 healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (i.e., public or private), and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements, in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters.
When an entity is determined to have violated the FCA, the government may impose civil fines and penalties for each false claim, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs; • the federal civil monetary penalties laws, which impose civil fines for, among other things, the offering or transfer or remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies; • the U.S. federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (i.e., public or private), and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements, in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters.
For as long as we continue to be an emerging growth company, we intend to take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including: • being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure in this Annual Report; • not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (Sarbanes-Oxley Act); • not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements; • reduced disclosure obligations regarding executive compensation in this Annual Report and our periodic reports and proxy statements; and 85 • exemptions from the requirements of holding nonbinding advisory shareholder votes on executive compensation and shareholder approval of any golden parachute payments not previously approved.
For as long as we continue to be an emerging growth company, we intend to take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including: • being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure in this Annual Report; • not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (Sarbanes-Oxley Act); • not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements; • reduced disclosure obligations regarding executive compensation in this Annual Report and our periodic reports and proxy statements; and • exemptions from the requirements of holding nonbinding advisory shareholder votes on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Collaborations involving our product candidates would pose numerous risks to us, including the following: • collaborators have significant discretion in determining the efforts and resources that they will apply to, and the manner in which they perform their obligations under, these collaborations and may not perform their obligations as expected; • collaborators may deemphasize or not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus, including as a result of a business combination or sale or disposition of a business unit or development function, or available funding or external factors such as an acquisition that diverts resources or creates competing priorities; • collaborators may rely on third parties to conduct development, manufacturing, and/or commercialization activities, and except for remedies available to us under our collaboration agreements, we have limited ability to control the conduct of such activities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; 80 • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • a collaborator with marketing and distribution rights to multiple products may not commit sufficient resources to the marketing and distribution of our product relative to other products; • we may grant exclusive rights to our collaborators that would prevent us from collaborating with others; • collaborators may not properly obtain, maintain, defend or enforce our intellectual property rights or may use our proprietary information and intellectual property in such a way as to invite litigation or other intellectual property related proceedings that could jeopardize or invalidate our proprietary information and intellectual property or expose us to potential litigation or other intellectual property related proceedings; • disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management attention and resources; • collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates; • collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all; • collaborators may not provide us with timely and accurate information regarding development progress and activities under the collaboration or may limit our ability to share such information, which could adversely impact our ability to report progress to our investors and otherwise plan our own development of our product candidates; • collaborators may own or co-own intellectual property covering our products that results from our collaborating with them, and in such cases, we would not have the exclusive right to develop or commercialize such intellectual property; and • a collaborator’s sales and marketing activities or other operations may not be in compliance with applicable laws resulting in civil or criminal proceedings.
Collaborations involving our product candidates would pose numerous risks to us, including the following: • collaborators have significant discretion in determining the efforts and resources that they will apply to, and the manner in which they perform their obligations under, these collaborations and may not perform their obligations as expected; 79 • collaborators may deemphasize or not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus, including as a result of a business combination or sale or disposition of a business unit or development function, or available funding or external factors such as an acquisition that diverts resources or creates competing priorities; • collaborators may rely on third parties to conduct development, manufacturing, and/or commercialization activities, and except for remedies available to us under our collaboration agreements, we have limited ability to control the conduct of such activities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • a collaborator with marketing and distribution rights to multiple products may not commit sufficient resources to the marketing and distribution of our product relative to other products; • we may grant exclusive rights to our collaborators that would prevent us from collaborating with others; • collaborators may not properly obtain, maintain, defend or enforce our intellectual property rights or may use our proprietary information and intellectual property in such a way as to invite litigation or other intellectual property related proceedings that could jeopardize or invalidate our proprietary information and intellectual property or expose us to potential litigation or other intellectual property related proceedings; • disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management attention and resources; • collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates; • collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all; • collaborators may not provide us with timely and accurate information regarding development progress and activities under the collaboration or may limit our ability to share such information, which could adversely impact our ability to report progress to our investors and otherwise plan our own development of our product candidates; • collaborators may own or co-own intellectual property covering our products that results from our collaborating with them, and in such cases, we would not have the exclusive right to develop or commercialize such intellectual property; and • a collaborator’s sales and marketing activities or other operations may not be in compliance with applicable laws resulting in civil or criminal proceedings.
Patient enrollment depends on many factors, including: • the size of the patient population required for analysis of the trial’s primary endpoints and the process for identifying patients; • identifying and enrolling eligible patients, including those willing to discontinue use of their existing medications; • the design of the clinical protocol and the patient eligibility and exclusion criteria for the trial; • safety profile, to date, of the product candidate under study; • the willingness or availability of patients to participate in our trials, including due to the perceived risks and benefits, stigma or other side effects of use of a controlled substance; • the willingness or availability of patients to participate in our trials, including due to impacts of public health emergencies such as the COVID-19 pandemic; • perceived risks and benefits of our approach to treatment of indication; • the proximity of patients to clinical sites; • our ability to recruit clinical trial investigators with the appropriate competencies and experience; • the availability of competing clinical trials; • the availability of new drugs approved for the indication the clinical trial is investigating; • clinicians’ and patients’ perceptions of the potential advantages of the drug being studied in relation to other available therapies, including any new therapies that may be approved for the indications we are investigating; and • our ability to obtain and maintain patient informed consents.
Patient enrollment depends on many factors, including: • the size of the patient population required for analysis of the trial’s primary endpoints and the process for identifying patients; • identifying and enrolling eligible patients, including those willing to discontinue use of their existing medications; • the design of the clinical protocol and the patient eligibility and exclusion criteria for the trial; • safety profile, to date, of the product candidate under study; • the willingness or availability of patients to participate in our trials, including due to the perceived risks and benefits, stigma or other side effects of use of a controlled substance; • the willingness or availability of patients to participate in our trials, including due to impacts of public health emergencies such as the COVID-19 pandemic; • perceived risks and benefits of our approach to treating patients for the indication the clinical trial is investigating; • the proximity of patients to clinical sites; • our ability to recruit clinical trial investigators with the appropriate competencies and experience; • the availability of competing clinical trials; • the availability of new drugs approved for the indication the clinical trial is investigating; • clinicians’ and patients’ perceptions of the potential advantages of the drug being studied in relation to other available therapies, including any new therapies that may be approved for the indications we are investigating; and • our ability to obtain and maintain patient informed consents.
Furthermore, failure to maintain compliance with the CSA, particularly non-compliance resulting in loss or diversion, can result in regulatory action that could have a material adverse effect on our business, financial condition and results of operations. The 39 DEA may seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to restrict, suspend or revoke those registrations.
Furthermore, failure to maintain compliance with the CSA, particularly non-compliance resulting in loss or diversion, can result in regulatory action that could have a material adverse effect on our business, financial condition and results of operations. The DEA may seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to restrict, suspend or revoke those registrations.
In the event of a successful claim of infringement against us, we may, in addition to being blocked from the market, have to pay substantial monetary 71 damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.
In the event of a successful claim of infringement against us, we may, in addition to being blocked from the market, have to pay substantial monetary damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.
In the future, we intend to continue to conduct research and development, preclinical testing, clinical trials, regulatory compliance, market access, commercialization and business development activities that, together with anticipated general and administrative expenses, will result in incurring further significant losses for at least the next several years. Our product candidates are in various clinical, preclinical, discovery and research stages.
We intend to continue to conduct research and development, preclinical testing, clinical trials, regulatory compliance, market access, commercialization and business development activities that, together with anticipated general and administrative expenses, will result in incurring further significant losses for at least the next several years. Our product candidates are in various clinical, preclinical, discovery and research stages.
To achieve commercial success for any approved product candidates, we must develop or acquire a sales and marketing organization, outsource these functions to third parties or enter into partnerships. 50 If our product candidates are approved for commercial sale, we plan on establishing our own market access and commercialization capabilities in primary markets in North America and in the EU.
To achieve commercial success for any approved product candidates, we must develop or acquire a sales and marketing organization, outsource these functions to third parties or enter into partnerships. If our product candidates are approved for commercial sale, we plan on establishing our own market access and commercialization capabilities in primary markets in North America and in the EU.
There is limited clinical data on the long-term efficacy of lysergide or MDMA on treating brain health disorders. Certain patients may need repeated treatments over their lifetime to avoid or 60 re-treat a relapse of their disorder. This may increase treatment costs, making it more difficult for us to secure reimbursement.
There is limited clinical data on the long-term efficacy of lysergide or MDMA on treating brain health disorders. Certain patients may need repeated treatments over their lifetime to avoid or re-treat a relapse of their disorder. This may increase treatment costs, making it more difficult for us to secure reimbursement.
Further, if we encounter delays in regulatory approvals, the period of time during which we could market a product candidate under patent protection could be reduced. 74 We have filed patent applications directed to our own proprietary formulations and processes for our product candidates when we have believed securing such patents may afford a competitive advantage.
Further, if we encounter delays in regulatory approvals, the period of time during which we could market a product candidate under patent protection could be reduced. We have filed patent applications directed to our own proprietary formulations and processes for our product candidates when we have believed securing such patents may afford a competitive advantage.
Adverse publicity from misuse of lysergide or MDMA, or any other substance that underlies our current or future product candidates or are part of the same drug or chemical class, may adversely affect the commercial success or market penetration achievable by our product candidates. Anti-psychedelic protests have historically occurred and may occur in the future and generate media coverage.
Adverse publicity from misuse of lysergide or MDMA, or any other substance that underlies our product candidates or are part of the same drug or chemical class, may adversely affect the commercial success or market penetration achievable by our product candidates. Anti-psychedelic protests have historically occurred and may occur in the future and generate media coverage.
These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMPs, and with good clinical practices (“GCPs”), for any clinical trials that we conduct post-approval, all of which may result in significant expense and limit our ability to commercialize such product candidates.
These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued 47 compliance with cGMPs, and with good clinical practices (“GCPs”), for any clinical trials that we conduct post-approval, all of which may result in significant expense and limit our ability to commercialize such product candidates.
We could in the future have difficulty attracting and retaining experienced personnel and may be required to expend significant financial resources in our employee recruitment and retention efforts. Many of the other biotechnology companies that we compete against for qualified personnel have greater financial and other resources, different risk profiles and a longer history in the industry than we do.
We could in the future have difficulty attracting and retaining experienced personnel and may be required to expend significant financial resources in our employee recruitment and retention efforts. 66 Many of the other biotechnology companies that we compete against for qualified personnel have greater financial and other resources, different risk profiles and a longer history in the industry than we do.
Because our investigational product candidates fall into categories of substances that are “controlled substances”, to conduct clinical trials on our product candidates in the United States prior to approval, each of our research sites must submit a research protocol to the DEA and obtain and maintain a DEA researcher registration that will allow those sites to handle and dispense our product candidates and to obtain the product from our importer.
Because our product candidates fall into categories of substances that are “controlled substances”, to conduct clinical trials on our product candidates in the United States prior to approval, each of our research sites must submit a research protocol to the DEA and obtain and maintain a DEA researcher registration that will allow those sites to handle and dispense our product candidates and to obtain our product candidates from our importer.
We also could incur significant costs associated with civil or criminal fines and penalties. Although we maintain workers’ compensation insurance to cover us for costs and expenses, we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities.
We also could incur significant costs associated with civil or criminal fines and penalties. 65 Although we maintain workers’ compensation insurance to cover us for costs and expenses, we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities.
If we fail to defend any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel, which could adversely impact our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
If we fail to defend any such claims, in addition to paying monetary 72 damages, we may lose valuable intellectual property rights or personnel, which could adversely impact our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license. Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.
Accordingly, our efforts to enforce our 74 intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license. Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.
For 78 these reasons, a significant disruptive event of the manufacturing facility could have a material adverse effect on our business, including placing our financial stability at risk. We rely, and expect to continue to rely, on third parties, including independent clinical investigators, academic collaborators and CROs, to conduct our preclinical studies and clinical trials.
For these reasons, a significant disruptive event of the manufacturing facility could have a material adverse effect on our business, including placing our financial stability at risk. We rely, and expect to continue to rely, on third parties, including independent clinical investigators, academic collaborators and CROs, to conduct our preclinical studies and clinical trials.
Additionally, we may also be bound by contractual obligations related to data privacy and security with our partners or CROs, and our efforts to comply with such obligations may not be successful. Our obligations related to data privacy and security are quickly changing in an increasingly stringent fashion, creating some uncertainty as to the effective future legal framework.
Additionally, we may also be bound by contractual obligations related to data privacy and security with our partners or CROs, and our efforts to comply with such obligations may not be successful. 60 Our obligations related to data privacy and security are quickly changing in an increasingly stringent fashion, creating some uncertainty as to the effective future legal framework.
It is currently not anticipated that we will pay any dividends on the common shares in the foreseeable future. To the extent dividends are paid on the common shares, dividends received by shareholders who are residents of Canada for purposes of the Tax Act (and non-U.S. Holders for purposes of the Code) will be subject to U.S. withholding tax.
It is currently not anticipated that we will pay any dividends on the common shares in the foreseeable future. However, to the extent dividends are paid on the common shares, dividends received by shareholders who are residents of Canada for purposes of the Tax Act (and Non-U.S. Holders for purposes of the Code) will be subject to U.S. withholding tax.
To the extent that the results of the trials are not satisfactory to the FDA, the EMA or comparable foreign regulatory authorities for support of a marketing application, approval of our product candidates may be significantly delayed, or we may be required to expend significant resources, which may not be available to us, to conduct additional trials in support of potential approval of our product candidates.
To the extent that the results of the trials are not satisfactory to the FDA or comparable foreign regulatory authorities for support of a marketing application, approval of our product candidates may be significantly delayed, or we may be required to expend significant resources, which may not be available to us, to conduct additional trials in support of potential approval of our product candidates.
If any of the physicians or other HCPs or entities with whom we expect to do business is found not to be in compliance with applicable laws, that person or entity may be subject to significant criminal, civil or administrative sanctions, including exclusions from government 58 funded healthcare programs.
If any of the physicians or other HCPs or entities with whom we expect to do business is found not to be in compliance with applicable laws, that person or entity may be subject to significant criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.
Furthermore, for applications filed before March 16, 2013 or patents issuing from such applications, an interference proceeding can be provoked by a third party or instituted by the USPTO to determine who was the first to invent any of the subject matter covered by the patent claims of our applications and patents.
Furthermore, for applications filed before March 16, 2013 or patents issuing from such applications, an interference proceeding can be provoked by a third party or instituted by the USPTO to determine who was the first to invent any of the subject matter covered by the patent claims of our 73 applications and patents.
Market acceptance of our future product candidates by healthcare professionals, patients, healthcare payors and health technology assessment bodies will depend on a number of factors, many of which are beyond our control, including, but not limited to, the following: • acceptance by healthcare professionals, patients and healthcare payors of each product candidate as safe, effective and cost-effective; • changes in the standard of care for the targeted indications for any product candidate; • the strength of sales, marketing and distribution support; • potential product liability claims; • the product candidate’s relative convenience, ease of use, ease of administration and other perceived advantages over alternative therapies; • the prevalence and severity of adverse events or publicity; • limitations, precautions or warnings listed in the summary of product characteristics, patient information leaflet, package labeling or instructions for use; • the cost of treatment with our product candidate in relation to alternative treatments; • the steps that prescribers and dispensers must take, given that our product candidates include a controlled substance, as well as the perceived risks based upon their controlled substance status; • the ability to manufacture our product candidates in sufficient quantities and yields; • the availability and amount of coverage and reimbursement from healthcare payors, and the willingness of patients to pay out of pocket in the absence of healthcare payor coverage or adequate reimbursement; • the willingness of the target patient population to try, and of healthcare professionals to prescribe, the product candidate; 52 • any potential unfavorable publicity, including negative publicity associated with recreational use or abuse of lysergide, MDMA or any other drugs from the same drug or chemical class; • any restrictions on the use, sale or distribution of our product candidates or any future product candidates, including through a REMS program; the extent to which product candidates are approved for inclusion and reimbursed on formularies of hospitals and managed care organizations; and • whether our product candidates are designated under physician treatment guidelines or under reimbursement guidelines as a first-line, second-line, third-line or last-line product candidate.
Market acceptance of our product candidates by healthcare professionals, patients, healthcare payors and health technology assessment bodies will depend on a number of factors, many of which are beyond our control, including, but not limited to, the following: • acceptance by HCPs, patients and payors of each product candidate as safe, effective and cost-effective; • changes in the standard of care for the targeted indications for any product candidate; • the strength of sales, marketing and distribution support; • potential product liability claims; • the product candidate’s relative convenience, ease of use, ease of administration and other perceived advantages over alternative therapies; • the prevalence and severity of adverse events or publicity; • limitations, precautions or warnings listed in the summary of product characteristics, patient information leaflet, package labeling or instructions for use; • the cost of treatment with our product candidate in relation to alternative treatments; • the steps that prescribers and dispensers must take, given that our product candidates include a controlled substance, as well as the perceived risks based upon their controlled substance status; • the ability to manufacture our product candidates in sufficient quantities and yields; • the availability and amount of coverage and reimbursement from payors, and the willingness of patients to pay out of pocket in the absence of payor coverage or adequate reimbursement; 53 • the willingness of the target patient population to try, and of HCPs to prescribe, the product candidate; • any potential unfavorable publicity, including negative publicity associated with recreational use or abuse of lysergide, MDMA or any other drugs from the same drug or chemical class; • any restrictions on the use, sale or distribution of our product candidates, including through a REMS program; the extent to which product candidates are approved for inclusion and reimbursed on formularies of hospitals and managed care organizations; and • whether our product candidates are designated under physician treatment guidelines or under reimbursement guidelines as a first-line, second-line, third-line or last-line product candidate.
If preclinical studies or clinical trials of our current or any future product candidates are prolonged or delayed, we or our current or future collaborators may be unable to obtain required regulatory approvals, which would mean that we would be unable to commercialize our current or any future product candidates on a timely basis or at all, which will adversely affect our business.
If preclinical studies or clinical trials of our product candidates are prolonged or delayed, we or our current or future collaborators may be unable to obtain required regulatory approvals, which would mean that we would be unable to commercialize our product candidates on a timely basis or at all, which will adversely affect our business.
We have never commercialized a product candidate before and may lack the necessary expertise, personnel and resources to successfully commercialize our product candidates on our own or with suitable collaborators. While we are currently assembling a sales and marketing infrastructure, we have limited organizational experience in the sale or marketing of product candidates.
We have never commercialized a product candidate before and may lack the necessary expertise, personnel and resources to successfully commercialize our product candidates on our own or with suitable collaborators. While we are currently assembling a sales and marketing infrastructure, we have limited organizational experience in the sale or marketing of products.
Risks related to the discovery, development and commercialization of our product candidates We are dependent on the successful development of our investigational product candidates. We cannot give any assurance that any of our product candidates will successfully complete clinical trials or receive regulatory approval, which is necessary before any product candidate can be commercialized.
Risks Related to the Discovery, Development and Commercialization of our Product Candidates We are dependent on the successful development of our product candidates. We cannot give any assurance that any of our product candidates will successfully complete clinical trials or receive regulatory approval, which is necessary before any product candidate can be commercialized.
Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our shareholders’ equity and working capital. Our ability to generate revenue and achieve profitability depends significantly on our ability to achieve several objectives relating to the discovery, development and commercialization of our product candidates.
Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our shareholders’ equity and working capital. 35 Our ability to generate revenue and achieve profitability depends significantly on our ability to achieve several objectives relating to the discovery, development and commercialization of our product candidates.
In addition, we anticipate that 37 any regulatory approval of our product candidates may include specific requirements or restrictions on the involvement or conduct of trained healthcare practitioners in the administration of our product candidates and we have not yet received any specific guidance from the FDA, or other regulatory bodies regarding such requirements or restrictions.
In addition, we anticipate that any regulatory approval of our product candidates may include specific requirements or restrictions on the involvement or conduct of trained healthcare practitioners in the administration of our product candidates and we have not yet received any specific guidance from the FDA, or other regulatory bodies regarding such requirements or restrictions.
Coupled with increasing EU and national regulatory burdens on those wishing to develop and market therapies, this could prevent or delay marketing approval of our product candidates or any future product candidates, restrict or regulate post-approval activities and affect our ability to commercialize any product candidates for which we obtain marketing approval.
Coupled with increasing EU and national regulatory burdens on those wishing to develop and market therapies, this could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to commercialize any product candidates for which we obtain marketing approval.
For example, legal regimes may have higher levels of licensure which force us to contract with third-party treatment sites that demand higher payment rates to administer our product candidates. In addition, third-party treatment sites may have difficulty meeting regulatory or accreditation requirements.
For example, legal regimes may require higher levels of licensure which force us to contract with third-party treatment sites that demand higher payment rates to administer our product candidates. In addition, third-party treatment sites may have difficulty meeting regulatory or accreditation requirements.
The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history. Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect, which may negatively impact our ability to market our products or pipeline candidates.
The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history. Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect, which may 71 negatively impact our ability to market our products or pipeline candidates.
During this time, we have not experienced any material changes in our financial condition or results of operations that would explain such price volatility or trading volume. These broad market fluctuations may adversely affect the trading price of our common shares.
During 81 this time, we have not experienced any material changes in our financial condition or results of operations that would explain such price volatility or trading volume. These broad market fluctuations may adversely affect the trading price of our common shares.
Any such dividends may not qualify for a reduced rate of withholding tax under the Canada-United States tax treaty (the “Treaty”). In addition, a Canadian foreign tax credit or a deduction in respect of such U.S. withholding taxes paid may not be available. Dividends received by U.S.
Any such dividends may not qualify for a reduced rate of withholding tax under the Canada-United States income tax treaty (the “Treaty”). In addition, a Canadian foreign tax credit or a deduction in respect of such U.S. withholding taxes paid may not be available. Dividends received by U.S.
Our failure to become and remain profitable would decrease the value of our company and could impair our ability to maintain or further our research and development efforts, raise additional necessary capital, grow our business and continue our operations. We will require substantial additional capital to finance our operations.
Our failure to become and remain profitable would decrease the value of our company and could impair our ability to 36 maintain or further our research and development efforts, raise additional necessary capital, grow our business and continue our operations. We will require substantial additional capital to finance our operations.
Our operations have consumed substantial amounts of cash since inception, and we expect our expenses to increase in connection with our ongoing activities, particularly as we conduct clinical trials of, and seek marketing approval for our current product candidates and advance our other programs.
Our operations have consumed substantial amounts of cash since inception, and we expect our expenses to increase in connection with our ongoing activities, particularly as we conduct clinical trials of, and seek marketing approval for our product candidates and advance our other programs.
The success of our competitors and their product candidates relative to our technological capabilities and competitiveness could have a material adverse effect on the future preclinical studies and clinical trials of our product candidates, including its ability to obtain the necessary regulatory approvals for the conduct of such clinical trials.
The success of our competitors and their product candidates relative to our technological capabilities and competitiveness could have a material adverse effect on the future preclinical studies and clinical trials of our product candidates, including our ability to obtain the necessary regulatory approvals for the conduct of such clinical trials.
Our failure to identify and correctly interpret relevant patents may negatively impact our ability to develop, market and commercialize our products. 72 We may become involved in lawsuits to protect or enforce any future patents, which could be expensive, time-consuming and unsuccessful.
Our failure to identify and correctly interpret relevant patents may negatively impact our ability to develop, market and commercialize our products. We may become involved in lawsuits to protect or enforce any future patents, which could be expensive, time-consuming and unsuccessful.
Because of the “first-to-file” laws in the United States, such unauthorized patent application filings may defeat our attempts to obtain patents on our own inventions. 76 We may be subject to claims challenging the inventorship of our patent filings and other intellectual property.
Because of the “first-to-file” laws in the United States, such unauthorized patent application filings may defeat our attempts to obtain patents on our own inventions. We may be subject to claims challenging the inventorship of our patent filings and other intellectual property.
For example, in most cases, a patent filed today would not become known to industry participants for at least 18 months given patent rules applicable in most jurisdictions that do not require publication of patent applications until 18 months after filing.
For example, in most cases, a patent filed today would not become known to industry participants for at least 18 months given patent rules applicable in most jurisdictions that do not require publication of patent applications until 18 months after 70 filing.
Additionally, if our product candidates or future product candidates receive marketing approval and we or others later identify undesirable or unacceptable side effects caused by such product candidates, a number of potentially significant negative consequences could result, including the following: • regulatory authorities may withdraw approvals of such product candidates and require us to take our approved product candidates, if any, off the market; • regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians and pharmacies; • regulatory authorities may require a medication guide outlining the risks of such side effects for distribution to patients, or that we implement a REMS plan to ensure that the benefits of the product candidate outweigh its risks; 48 • we may be required to change the way the product candidates are administered, conduct additional clinical trials or change the labeling of the product candidate; • we may be subject to limitations on how we may promote the product candidate; • sales of the product candidates may decrease significantly; • we may be subject to litigation or product liability claims; and • our reputation may suffer.
Additionally, if our product candidates receive marketing approval and we or others later identify undesirable or unacceptable side effects caused by such product candidates, a number of potentially significant negative consequences could result, including the following: • regulatory authorities may require a recall of such product candidates or withdraw approvals of such product candidates and require us to take our approved product candidates, if any, off the market; • regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians and pharmacies; • regulatory authorities may require a medication guide outlining the risks of such side effects for distribution to patients, or that we implement a REMS plan to ensure that the benefits of the product candidate outweigh its risks; • we may be required to change the way the product candidates are administered, conduct additional clinical trials or change the labeling of the product candidate; • we may be subject to limitations on how we may promote the product candidate; • sales of the product candidates may decrease significantly; • we may be subject to litigation or product liability claims; and • our reputation may suffer.
You should read carefully, evaluate and rely only on the information contained in this prospectus supplement, the accompanying prospectus or any applicable free writing prospectus filed with 87 the SEC in determining whether to purchase our securities.
You should read carefully, evaluate and rely only on the information contained in this prospectus supplement, the accompanying prospectus or any applicable free writing prospectus filed with the SEC in determining whether to purchase our securities.
Additionally, any such product candidates, if approved, could be subject to labeling and other restrictions and market withdrawal and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our product candidates or any future product candidates.
Additionally, any such product candidates, if approved, could be subject to labeling and other restrictions and market withdrawal and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our product candidates.
The Hatch-Waxman 63 Act permits a patent term extension of up to five years for a patent covering an approved product as compensation for effective patent term loss during product development and the FDA regulatory review process.
The Hatch-Waxman Act permits a patent term extension of up to five years for a patent covering an approved product as compensation for effective patent term loss during product development and the FDA regulatory review process.
These dividends may, however, qualify for a reduced rate of Canadian withholding tax under any income tax treaty otherwise applicable to a shareholder of ours, subject to examination of the relevant tax treaty. 90 For purposes hereof, a “U.S.
These dividends may, however, qualify for a reduced rate of Canadian withholding tax under any income tax treaty otherwise applicable to a shareholder of ours, subject to examination of the relevant treaty. For purposes hereof, a “U.S.
Any increased scrutiny could delay or increase the costs of obtaining regulatory approval for our product candidates. Drug development is a lengthy and expensive process with uncertain timelines and uncertain outcomes.
Any increased scrutiny could delay or increase the costs of obtaining regulatory approval for our product candidates. 42 Drug development is a lengthy and expensive process with uncertain timelines and uncertain outcomes.
Our ability to monitor these third parties’ cybersecurity practices is limited, and these third parties may not have adequate information security measures in place. We may share or receive sensitive information with or from third parties.
Our ability to monitor these third parties’ cybersecurity practices is limited, and these third parties may not have adequate information security measures in place. We may share 68 or receive sensitive information with or from third parties.
Commercial marketing in the United States will also require scheduling-related legislative or administrative action. Scheduling determinations by the DEA are dependent on FDA approval of a substance or a specific formulation of a substance.
Commercial marketing in the United States will also require scheduling-related legislative or administrative action. Scheduling determinations by the DEA are often dependent on FDA approval of a substance or a specific formulation of a substance.
In addition, our product candidates will likely be determined to have a high potential for abuse and therefore required to be administered at our trial sites, which could limit 40 commercial update.
In addition, our product candidates will likely be determined to have a high potential for abuse and therefore required to be administered at our trial sites, which could limit commercial update.
In addition, even if we were to obtain approval, regulatory or pricing authorities may approve any current or any future product candidates for fewer or more limited indications than we request, may not approve the price we intend to charge for our product candidates, may grant approval contingent on the performance of costly post- marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate.
In addition, even if we were to obtain approval, regulatory or pricing authorities may approve any product candidates for fewer or more limited indications than we request, may not approve the price we intend to charge for our product candidates, may grant approval contingent on the performance of costly post- marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate.
Any claims against us, regardless of their merit, could be difficult and costly to defend and could materially adversely affect the market for our product candidates or any future product candidates or any prospects for commercialization of our product candidates or any future product candidates.
Any claims against us, regardless of their merit, could be difficult and costly to defend and could materially adversely affect the market for our product candidates or any prospects for commercialization of our product candidates.
If CROs, academic collaborators or clinical investigators do not successfully carry out their contractual duties or obligations or meet expected deadlines, or if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates or any future product candidates.
If CROs, academic collaborators or clinical investigators do not successfully carry out their contractual duties or obligations or meet expected deadlines, or if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates.
Some of those products may have an entirely different approach or means of accomplishing the desired product effect than our product candidates and may be more effective or less costly than its product candidates.
Some of those products may have an entirely different approach or means of accomplishing the desired product effect than our product candidates and may be more effective or less costly than our product candidates.
Finally, our current and future operations are subject to additional healthcare-related statutory and regulatory requirements and enforcement by foreign regulatory authorities in jurisdictions in which we conduct our business.
Finally, our current and future operations are subject to additional healthcare-related statutory and regulatory requirements 57 and enforcement by foreign regulatory authorities in jurisdictions in which we conduct our business.
These laws include, but are not limited to, the following: • the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, offering, receiving or paying any remuneration (including any kickback, bribe, or certain rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service, for which payment may be made, in whole or in part, under U.S. federal and state healthcare programs such as Medicare and Medicaid.
These laws include, but are not limited to, the following: • the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, offering, receiving or paying any remuneration (including any kickback, bribe, or certain rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward either the referral of an individual or purchase, lease or order or the arranging for or recommending the purchase, lease, or order of any good, facility, item or service, for which payment may be made, in whole or in part, under U.S. federal and state healthcare programs such as Medicare and Medicaid.
Social media practices in the biopharmaceutical industry continue to evolve and regulations relating to such use are not always clear. This evolution creates uncertainty and risk of noncompliance with regulations applicable to our business. For example, patients may use social media channels to comment on their experience in an ongoing blinded clinical study or to report an alleged adverse event.
Social media practices in the biopharmaceutical industry continue to evolve and regulations relating to such use are not always clear. This evolution creates uncertainty and risk of noncompliance with regulations applicable to our business. For example, patients may use social media channels to comment on their experience in an ongoing blinded clinical trial or to report an alleged adverse event.
Regardless of the merits or eventual outcome, liability claims may cause, among other things, the following: • decreased demand for our product candidates due to negative public perception; • injury to our reputation; • withdrawal of clinical trial participants or difficulties in recruiting new trial participants; • initiation of investigations by regulators; • costs to defend or settle the related litigation; • a diversion of management’s time and our resources; • substantial monetary awards to trial participants or patients; • recalls, withdrawals or labeling, marketing or promotional restrictions; • loss of revenue from product sales; and • the inability to commercialize our product candidates or any future product candidates, if approved.
Regardless of the merits or eventual outcome, liability claims may cause, among other things, the following: • decreased demand for our product candidates due to negative public perception; • injury to our reputation; • withdrawal of clinical trial participants or difficulties in recruiting new trial participants; • initiation of investigations by regulators; • costs to defend or settle the related litigation; • a diversion of management’s time and our resources; • substantial monetary awards to trial participants or patients; • recalls, withdrawals or labeling, marketing or promotional restrictions; 55 • loss of revenue from product sales; and • the inability to commercialize our product candidates, if approved.
Although we do not currently have any products on the market, our current and future operations may be directly, or indirectly through our relationships with investigators, healthcare professionals, customers and third-party payors, subject to various U.S. federal and state healthcare laws and regulations, including, without limitation, the U.S. federal Anti-Kickback Statute (the “federal Anti-Kickback Statute”).
Although we do not currently have any products on the market, our operations may be directly, or indirectly through our relationships with investigators, healthcare professionals, customers and third-party payors, subject to various U.S. federal and state healthcare laws and regulations, including, without limitation, the U.S. federal Anti-Kickback Statute (the “federal Anti-Kickback Statute”).
Moreover, increasing efforts by governmental and third-party payors in the EU, the United States and elsewhere to cap or reduce healthcare costs may cause such organizations to limit coverage and the level of reimbursement for newly approved therapies and, as a result, they may not cover or provide adequate payment for our product candidates or any future product candidates.
Moreover, increasing efforts by governmental and third-party payors in the EU, the United States and elsewhere to cap or reduce healthcare costs may cause such organizations to limit coverage and the level of reimbursement for newly approved therapies and, as a result, they may not cover or provide adequate payment for our product candidates.
If any third-party provider fails to meet its obligations manufacturing our current or future product candidates, or fails to maintain or achieve satisfactory regulatory compliance, the development of such substances and the commercialization of any product candidates, if approved, could be stopped, delayed or made commercially unviable, less profitable or may result in enforcement actions against us.
If any third-party provider fails to meet its obligations manufacturing our product candidates, or fails to maintain or achieve satisfactory regulatory compliance, the development of such substances and the commercialization of any product candidates, if approved, could be stopped, delayed or made commercially unviable, less profitable or may result in enforcement actions against us.
Even if we succeed in receiving marketing approval for and commercializing one or more of our product candidates, we expect that we will continue to incur substantial research and development and other expenses in order to discover, develop and market additional potential products. 32 We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future.
Even if we succeed in receiving marketing approval for and commercializing one or more of our product candidates, we expect that we will continue to incur substantial research and development and other expenses in order to discover, develop and market additional potential products. 33 We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future.
We anticipate that our expenses will increase substantially if and as we, among other things: • continue the clinical development of our product candidates and other preclinical programs in GAD, ADHD, ASD and other potential or future indications, including initiating additional and larger clinical trials; • continue the training of healthcare practitioners who are qualified to deliver our product candidates in our clinical trials; • continue to develop our regulated and unregulated digital medical products, product candidates, and devices; • establish a sales, marketing and distribution infrastructure and scale-up manufacturing capabilities to commercialize any product candidates for which we may obtain regulatory approval, including MM-120 and MM-402; • seek additional indications for our investigational product candidates and discover and develop any future product candidates, including current and future product candidates in our digital medicine pipeline; • seek regulatory approvals for any product candidates that successfully complete clinical trials; • experience heightened regulatory scrutiny; • pursue necessary scheduling-related decisions to enable us to commercialize any future product candidates containing controlled substances for which we may obtain regulatory approval, including our MM-120 and MM-402 product candidates; • experience animal toxicology issues significant enough for the FDA or other regulatory agencies to disallow investigation in humans; • explore external business development opportunities through acquisitions, partnerships, co-development deals and/or licensing deals to add future product candidates and technologies to our portfolio; • obtain, maintain, expand and protect our intellectual property portfolio, including litigation costs associated with defending against alleged patent or other intellectual property infringement claims; • add clinical, scientific, operational, financial and management information systems and personnel, including personnel to support our product development and potential future commercialization efforts; • experience any delays or encounter any issues with respect to any of the above, including studies that impede further development with unfavorable results, ambiguous trial results, safety issues or other regulatory challenges; • expand our operations in the United States, Switzerland, the United Kingdom, the European Union and potential other geographies in the future; and • incur additional legal, accounting and other expenses associated with operating as a public company listed in the U.S. and Canada, including expenses that may result due to securities litigation or shareholder activism.
We anticipate that our expenses will increase substantially if and as we, among other things: • continue the clinical development of our product candidates and other preclinical programs in GAD, ASD and other potential or future indications, including initiating additional and larger clinical trials; • continue the training of healthcare practitioners who are qualified to deliver our product candidates in our clinical trials; • continue to develop our regulated and unregulated digital medical products, product candidates, and devices; • establish a sales, marketing and distribution infrastructure and scale-up manufacturing capabilities to commercialize any product candidates for which we may obtain regulatory approval, including MM120 and MM402; • seek additional indications for our product candidates and discover and develop any future product candidates, including product candidates in our digital medicine pipeline; • seek regulatory approvals for any product candidates that successfully complete clinical trials; • experience heightened regulatory scrutiny; • pursue necessary scheduling-related decisions to enable us to commercialize any future product candidates containing controlled substances for which we may obtain regulatory approval, including our MM120 and MM402 product candidates; • experience animal toxicology issues significant enough for the FDA or other regulatory agencies to disallow investigation in humans; • explore external business development opportunities through acquisitions, partnerships, co-development deals and/or licensing deals to add future product candidates and technologies to our portfolio; • obtain, maintain, expand and protect our intellectual property portfolio, including litigation costs associated with defending against alleged patent or other intellectual property infringement claims; • add clinical, scientific, operational, financial and management information systems and personnel, including personnel to support our product development and potential future commercialization efforts; • experience any delays or encounter any issues with respect to any of the above, including studies that impede further development with unfavorable results, ambiguous trial results, safety issues or other regulatory challenges; • expand our operations in the United States, Switzerland, the United Kingdom, the European Union and potential other geographies in the future; and • incur additional legal, accounting and other expenses associated with operating as a public company listed in the U.S. and Canada, including expenses that may result due to securities litigation or shareholder activism.
Furthermore, our operating results may fluctuate due to a variety of other factors, many of which are outside of our control and may be difficult to predict, including the following: • the timing and cost of, and level of investment in, research and development activities relating to our current product candidates and any future product candidates and research-stage programs, which will change from time to time; • our ability to enroll patients in clinical trials and the timing of enrollment; • the cost of manufacturing our current product candidates and any future product candidates, which may vary depending on FDA, EMA, EC or other comparable foreign regulatory authority guidelines and requirements, the quantity of production and the terms of our agreements with manufacturers; • expenditures that we will or may incur to acquire or develop additional product candidates and technologies or other assets; • the timing and outcomes of clinical trials for MM-120, MM-402 and any of our other current or future product candidates, or competing product candidates; • the need to conduct unanticipated clinical trials or trials that are larger or more complex than anticipated; • competition from existing and potential future products that compete with MM-120, MM-402 and any of our other current or future product candidates, and changes in the competitive landscape of our industry, including consolidation among our competitors or partners; • any delays in regulatory review or approval of MM-120, MM-402 or any of our other current or future product candidates; • the level of demand for MM-120, MM-402 and any of our other current or future product candidates, if approved, which may fluctuate significantly and be difficult to predict; • the risk/benefit profile, cost and reimbursement policies with respect to our product candidates, if approved, and existing and potential future products that compete with MM-120, MM-402 and any of our other current or future product candidates; • our ability to commercialize MM-120, MM-402 and any of our other current or future product candidates, if approved, inside and outside of the United States, either independently or working with third parties; • our ability to establish and maintain collaborations, licensing or other arrangements; • our ability to adequately support future growth; • potential unforeseen business disruptions that increase our costs or expenses; 84 • future accounting pronouncements or changes in our accounting policies; and • the changing and volatile global economic and political environment.
Furthermore, our operating results may fluctuate due to a variety of other factors, many of which are outside of our control and may be difficult to predict, including the following: • the timing and cost of, and level of investment in, research and development activities relating to our current product candidates and research-stage programs, which will change from time to time; • our ability to enroll patients in clinical trials and the timing of enrollment; • the cost of manufacturing our product candidates, which may vary depending on FDA, EMA, EC or other comparable foreign regulatory authority guidelines and requirements, the quantity of production and the terms of our agreements with manufacturers; • expenditures that we will or may incur to acquire or develop additional product candidates and technologies or other assets; • the timing and outcomes of clinical trials for MM120, MM402 and any of our other product candidates, or competing product candidates; • the need to conduct unanticipated clinical trials or trials that are larger or more complex than anticipated; • competition from existing and potential future products that compete with MM120, MM402 and any of our other product candidates, and changes in the competitive landscape of our industry, including consolidation among our competitors or partners; • any delays in regulatory review or approval of MM120, MM402 or any of our other product candidates; • the level of demand for MM120, MM402 and any of our other product candidates, if approved, which may fluctuate significantly and be difficult to predict; • the risk/benefit profile, cost and reimbursement policies with respect to our product candidates, if approved, and existing and potential future products that compete with MM120, MM402 and any of our other product candidates; 82 • our ability to commercialize MM120, MM402 and any of our other product candidates, if approved, inside and outside of the United States, either independently or working with third parties; • our ability to establish and maintain collaborations, licensing or other arrangements; • our ability to adequately support future growth; • potential unforeseen business disruptions that increase our costs or expenses; • future accounting pronouncements or changes in our accounting policies; and • the changing and volatile global economic and political environment.
Revenue from the sale of any product candidate for which regulatory approval is obtained will be dependent, in part, upon the size of the markets in the territories for which we gain regulatory approval, the accepted price for the product, the acceptance of the product by physicians and patients, the ability to obtain reimbursement at any price and whether we own the commercial rights for that territory.
Revenue from the sale of any product candidate for which regulatory approval is obtained will be dependent, in part, upon the size of the markets in the territories for which we gain regulatory approval, the accepted price for the product, the acceptance of the product by physicians, payors and patients, the ability to obtain reimbursement and whether we own the commercial rights for that territory.
Future adverse events in research into GAD, ADHD, ASD and other brain health disorders on which we focus our research efforts, or the pharmaceutical industry more generally, could also result in greater governmental regulation, stricter labeling requirements and 41 potential regulatory delays in the testing or approvals of our product candidates.
Future adverse events in research into GAD, ASD and other brain health disorders on which we focus our research efforts, or the pharmaceutical industry more generally, could also result in greater governmental regulation, stricter labeling requirements and potential regulatory delays in the testing or approvals of our product candidates.
For example, the patents covering lysergide, MDMA and 18-MC have expired. We have developed our own proprietary formulations or manufacturing methods for these products that we believe are not covered by valid claims of third-party patents, and we have filed patent applications directed to our formulations. We cannot guarantee that our proprietary formulations will avoid infringement of third-party patents.
For example, the patents covering lysergide and MDMA have expired. We have developed our own proprietary formulations or manufacturing methods for these products that we believe are not covered by valid claims of third-party patents, and we have filed patent applications directed to our formulations. We cannot guarantee that our proprietary formulations will avoid infringement of third-party patents.
Nonclinical toxicology studies may also delay or limit clinical development, for example, by limiting the dosing duration and dose interval in human clinical studies. The drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims.
Nonclinical toxicology studies may also delay or limit clinical development, for example, by limiting the dosing duration and dose interval in clinical trials. The drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims.
If we, our investigators, academic collaborators or any of our CROs fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA, the EMA, the MHRA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.
If we, our investigators, academic collaborators or any of our CROs fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.
Seeking foreign regulatory approval could result in difficulties and costs and require additional preclinical studies or clinical trials which could be costly and time-consuming. Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of our product candidates and any future product candidates in those countries.
Seeking foreign regulatory approval could result in difficulties and costs and require additional preclinical studies or clinical trials which could be costly and time-consuming. Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of our product candidates in those countries.
In addition to infringement claims against us, we may become a party to other patent litigation and other proceedings, including interference, derivation or post-grant proceedings declared or granted by the USPTO and similar proceedings in foreign countries, regarding intellectual property rights with respect to our current or future products.
In addition to infringement claims against us, we may become a party to other patent litigation and other proceedings, including interference, derivation or post-grant proceedings declared or granted by the USPTO and similar proceedings in foreign countries, regarding intellectual property rights with respect to our products.
Even if we establish sales and marketing capabilities, we may fail to launch our product candidates effectively or to market our product candidates effectively since we have limited organizational experience in the sales and marketing of product substances. In addition, recruiting and training a sales force is expensive and time-consuming, and could delay any product launch.
Even if we establish sales and marketing capabilities, we may fail to launch our product candidates effectively or to market our product candidates effectively since we have limited organizational experience in the sales and marketing of products. In addition, recruiting and training a sales force is expensive and time-consuming, and could delay any product launch.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors. Item 4. Mine Safety Disclosures. Not applicable. 93 PART II
Biggest changeRegardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors. Scott Freeman and FCM Litigation Breach of Contract Lawsuit We are a plaintiff in a lawsuit we filed against Dr.
Added
Scott Freeman and FCM MM Holdings, LLC on July 26, 2023, alleging, among other things, breach by Dr. Freeman and FCM MM Holdings, LLC of the non-disparagement and confidentiality provisions of the Separation Agreement dated August 31, 2020, between the Company and Dr. Freeman. This dispute is pending in the U.S., District Court for the District of Nevada.
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We are seeking permanent injunctive relief, as well as compensatory, punitive, and exemplary damages and attorneys’ fees. Section 14(a) Lawsuit On September 5, 2023, we filed a lawsuit in the Southern District of New York against Dr.
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Scott Freeman, Jake Freeman, Chad Boulanger, FCM MM Holdings, LLC and the other three FCM nominees Farzin Farzaneh, Vivek Jain and Alexander Wodka for violations of the federal securities laws governing proxy filings, primarily Section 14(a) of the Securities Exchange Act of 1934, as amended.
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We are seeking permanent injunctive relief and attorneys’ fees, as well as an award of damages sustained by us as a result of defendants’ actions, including expenses incurred in connection with the proxy contest caused by defendants’ material misstatements and omissions. Item 4. Mine Safety Disclosures. Not applicable. 90 PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures. 93 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 94 Item 6. Reserved. 94 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 95 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 104 Item 8.
Biggest changeItem 4. Mine Safety Disclosures. 90 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 91 Item 6. Reserved. 91 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 92 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 102 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe actual number of shareholders is greater than this number of record holders and includes shareholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. Dividend Policy We have not declared or paid any cash dividends on our share capital since our inception.
Biggest changeHolders of Record As of December 31, 2023, there were approximately 82 shareholders of record of our common shares. The actual number of shareholders is greater than this number of record holders and includes shareholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
Payment of future cash dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs, the requirements and contractual restrictions of then-existing debt instruments, and other factors that our board of directors deems relevant. Recent Sales of Unregistered Securities None.
Payment of future cash dividends, if any, will be at the discretion of our Board after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs, the requirements and contractual restrictions of then-existing debt instruments, and other factors that our board of directors deems relevant. Recent Sales of Unregistered Securities None.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information for Our Common Shares Our common shares are publicly traded on the Nasdaq Capital Market under the symbol “MNMD” and on the NEO Exchange under the symbol “MMED”.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information for Our Common Shares Our common shares are publicly traded on the Nasdaq Global Select Market under the symbol “MNMD” and on the Cboe Canada exchange (formerly "NEO Exchange") under the symbol “MMED”.
We intend to retain future earnings, if any, to finance the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.
Dividend Policy We have not declared or paid any cash dividends on our share capital since our inception. We intend to retain future earnings, if any, to finance the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.
Removed
Prior to listing on the respective exchanges, there was no public trading market for our common shares. Holders of Record As of December 31, 2022, there were approximately 84 shareholders of record of our common shares.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations Comparison of the Years Ended December 31, 2022 and 2021 The following tables summarize our results of operations for the periods presented (in thousands): For the Year Ended December 31, 2022 For the Year Ended December 31, 2021 $ Change % Change Operating expenses: Research and development $ 36,169 $ 34,789 $ 1,380 4 % General and administrative 30,162 59,065 (28,903 ) -49 % Total operating expenses 66,331 93,854 (27,523 ) -29 % Loss from operations (66,331 ) (93,854 ) 27,523 -29 % Other income/(expense): Interest income/(expense), net 1,495 (359 ) 1,854 * Foreign exchange gain/(loss), net 195 (86 ) 281 * Change in fair value of 2022 USD Financing Warrants 7,843 — 7,843 100 % Other income 2 106 (104 ) -98 % Total other income/(expense), net 9,535 (339 ) 9,874 * Loss before income taxes (56,796 ) (94,193 ) 37,397 -40 % Income tax benefit — (1,157 ) 1,157 -100 % Net loss (56,796 ) (93,036 ) 36,240 -39 % Other comprehensive gain: (Loss)/gain on foreign currency translation (419 ) 762 (1,181 ) -155 % Comprehensive loss $ (57,215 ) $ (92,274 ) $ 35,059 -38 % * Represents a change greater than 300% Operating Expenses Research and Development (in thousands): For the Year Ended December 31, 2022 For the Year Ended December 31, 2021 $ Change % Change External Costs MM-120 program $ 7,448 $ 4,591 $ 2,857 62 % MM-110 program 1,419 6,999 (5,580 ) -80 % External R&D collaborations 1,870 4,237 (2,367 ) -56 % Preclinical and other programs 7,152 6,107 1,045 17 % Total external costs 17,889 21,934 (4,045 ) -18 % Internal Costs 18,280 12,855 5,425 42 % Total research and development expenses $ 36,169 $ 34,789 $ 1,380 4 % 97 Research and development expenses increased by $1.4 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Biggest changeResults of Operations Comparison of the Years Ended December 31, 2023 and 2022 The following tables summarize our results of operations for the periods presented (in thousands): For the Year Ended December 31, 2023 For the Year Ended December 31, 2022 $ Change % Change Operating expenses: Research and development $ 52,124 $ 36,169 $ 15,955 44 % General and administrative 41,742 30,162 11,580 38 % Total operating expenses 93,866 66,331 27,535 42 % Loss from operations (93,866 ) (66,331 ) (27,535 ) 42 % Other income/(expense): Interest income, net 4,664 1,495 3,169 212 % Foreign exchange gain, net 157 195 (38 ) -19 % Change in fair value of 2022 USD Financing Warrants (6,636 ) 7,843 (14,479 ) -185 % Other (expense)/income (51 ) 2 (53 ) * Total other (expense)/income, net (1,866 ) 9,535 (11,401 ) -120 % Net loss (95,732 ) (56,796 ) (38,936 ) 69 % Other comprehensive loss: Loss on foreign currency translation (284 ) (419 ) 135 -32 % Comprehensive loss $ (96,016 ) $ (57,215 ) $ (38,801 ) 68 % * Represents a change greater than 300% Operating Expenses Research and Development (in thousands): For the Year Ended December 31, 2023 For the Year Ended December 31, 2022 $ Change % Change External Costs MM120 program $ 23,516 $ 7,448 $ 16,068 216 % MM402 program 1,904 2,584 (680 ) -26 % MM110 program 44 1,419 (1,375 ) -97 % External R&D collaborations 1,039 1,870 (831 ) -44 % Preclinical and other programs 4,775 4,568 207 5 % Total external costs 31,278 17,889 13,389 75 % Internal Costs 20,846 18,280 2,566 14 % Total research and development expenses $ 52,124 $ 36,169 $ 15,955 44 % 95 Research and development expenses increased by $15.9 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Cash flows from financing activities Cash provided by financing activities for the year ended December 31, 2022 was $59.0 million, which consisted of the net proceeds of $42.3 million from the issuance of common shares, net of issuance costs, proceeds of $17.7 million from the issuance of warrants, the proceeds of $0.7 million from exercise of warrants, and proceeds of $0.2 million from exercise of options, partially offset by $1.5 million of warrant issuance costs and $0.4 million of withholding taxes paid on vested RSUs.
Cash provided by financing activities for the year ended December 31, 2022 was $59.0 million, which consisted of the net proceeds of $42.3 million from the issuance of common shares, net of issuance costs, proceeds of $17.7 million from the issuance of warrants, the proceeds of $0.7 million from exercise of warrants, and proceeds of $0.2 million from exercise of options, partially offset by $1.5 million of warrant issuance costs and $0.4 million of withholding taxes paid on vested RSUs.
Our mission is to be the global leader in the development and delivery of treatments that unlock new opportunities to improve patient outcomes. We are developing a pipeline of innovative product candidates, with and without acute perceptual effects, targeting neurotransmitter pathways that play key roles in brain health disorders.
Our mission is to be the global leader in the development and delivery of treatments for brain health disorders that unlock new opportunities to improve patient outcomes. We are developing a pipeline of innovative product candidates, with and without acute perceptual effects, targeting neurotransmitter pathways that play key roles in brain health disorders.
We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval of and commercialize any of our product candidates, and we do not know when, or if at all, that will occur. We will continue to require substantial additional capital to develop our product candidates and fund operations for the foreseeable future.
We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval of and commercialize any of our product candidates, and we do not know when, or if at all, that will occur. We will 97 continue to require substantial additional capital to develop our product candidates and fund operations for the foreseeable future.
Research and Development Expenses As part of the process of preparing our financial statements, we are required to estimate research and development costs incurred during the period, which impacts the amount of accrued expenses and prepaid balances related to such costs as of each balance sheet 102 date.
Research and Development Expenses As part of the process of preparing our financial statements, we are required to estimate research and development costs incurred during the period, which impacts the amount of accrued expenses and prepaid balances related to such costs as of each balance sheet date.
We may also incur in-process research and development expense as we acquire or in-license assets from other parties. Technology acquisitions are expensed or capitalized based upon the asset achieving technological feasibility in accordance with management’s assessment regarding the ultimate recoverability of the amounts paid and the potential for alternative future use.
We may also incur in-process research and development expenses as we acquire or in-license assets from other parties. Technology acquisitions are expensed or capitalized based upon the asset achieving technological feasibility in accordance with management’s assessment regarding the ultimate recoverability of the amounts paid and the potential for alternative future use.
The preparation of these consolidated financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, expenses and related disclosures.
GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, expenses and related disclosures.
We allocate external costs by program, clinical or preclinical. Internal costs consist primary of employee-related costs including salaries, related benefits and stock-based compensation expense for employees engaged in research and development functions. We do not allocate internal costs by program because these costs are deployed across multiple programs and, as such, are not separately classified.
We allocate external costs by program, clinical or preclinical. Internal costs consist primarily of employee-related costs including salaries, related benefits and stock-based compensation expense for employees engaged in research and development functions. We do not allocate internal costs by program because these costs are deployed across multiple programs and, as such, are not separately classified.
On September 30, 2022, we closed an underwritten public offering of 7,058,823 common shares and accompanying warrants to purchase 7,058,823 common shares (the “2022 USD Financing Warrants”) at a combined offering price of $4.25 per common share, for net proceeds of $27.5 million.
Equity Financings On September 30, 2022, we closed an underwritten public offering of 7,058,823 common shares and accompanying warrants to purchase 7,058,823 common shares (the “2022 USD Financing Warrants”) at a combined offering price of $4.25 per common share, for net proceeds of $27.5 million.
Our future funding requirements will depend on many factors, including: • the scope, progress, results and costs of researching and developing our product candidates, and conducting preclinical studies and clinical trials; • the costs, timing and outcome of regulatory review of our product candidates; • the costs of future activities, including product sales, medical affairs, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval; • the costs of manufacturing commercial-grade products and sufficient inventory to support commercial launch; • the revenue, if any, received from commercial sale of our products, should any of our product candidates receive marketing approval; • the cost and timing of hiring new employees to support our continued growth; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; • the ability to establish and maintain collaborations on favorable terms, if at all; • the extent to which we acquire or in-license other product candidates and technologies; and • the timing, receipt and amount of sales of, or milestone payments related to or royalties on, our current or future product candidates, if any.
Our future funding requirements will depend on many factors, including: • the scope, progress, results and costs of researching and developing our product candidates, and conducting preclinical studies and clinical trials; • the costs, timing and outcome of regulatory review of our product candidates; • the costs of future activities, including building a commercial organization, product sales, medical affairs, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval; • the costs of manufacturing commercial-grade products and sufficient inventory to support commercial launch; • the revenue, if any, received from commercial sale of our products, should any of our product candidates receive marketing approval; • the cost and timing of hiring new employees to support our continued growth; 98 • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; • the ability to establish and maintain collaborations on favorable terms, if at all; • the extent to which we acquire or in-license other product candidates and technologies; and • the timing, receipt and amount of sales of, or milestone payments related to or royalties on, our product candidates.
The non-cash charges primarily consisted of stock-based compensation of $13.7 million, and amortization of intangible assets of $3.2 million, partially offset by a change in fair value on the 2022 USD Financing Warrants liability of $7.8 million.
The non-cash charges consisted of stock-based compensation of $13.7 million, amortization of intangible assets of $3.2 million, partially offset by a change in fair value on the 2022 USD Financing Warrants liability of $7.8 million.
Our Board of Directors approved a reverse share split of our common shares on a 15-for-1 basis, which was effected on August 26, 2022 and which brought the bid price of our common shares above the minimum bid price requirement under the Nasdaq Listing Rules. No fractional common shares were issued as a result of the August Share Split.
Our Board approved a reverse share split of our common shares on a 15-for-1 basis, which was effected on August 26, 2022 and which brought the bid price of our common shares above the minimum bid price requirement under the Nasdaq Listing Rules (“August Share Split”). No fractional common shares were issued as a result of the August Share Split.
We have experienced operating losses and cash outflows from operations since inception and will require ongoing financing in order to continue our research and development activities. We have not earned any revenue or reached successful commercialization of our products.
We have experienced operating losses and cash outflows from operations since inception and will require ongoing financing in order to continue our research and development activities. We have not earned any revenue or reached successful commercialization of our product candidates.
Historically, we have not made any indemnification payments under such agreements and no amount has been accrued in our financial statements with respect to these indemnification obligations. Critical Accounting Policies and Estimates Management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP.
Historically, we have not made any 99 indemnification payments under such agreements and no amount has been accrued in our financial statements with respect to these indemnification obligations. Critical Accounting Policies and Estimates Management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S.
This specifically includes pharmaceutically optimized product candidates derived from the psychedelic and empathogen drug classes, including MM-120 and MM-402, our lead product candidates. We were incorporated under the laws of the Province of British Columbia. Our wholly owned subsidiary, Mind Medicine, Inc. (“MindMed US”) was incorporated in Delaware. Prior to February 27, 2020, our operations were conducted through MindMed US.
This specifically includes pharmaceutically optimized product candidates derived from the psychedelic and empathogen drug classes, including MM120 and MM402, our lead product candidates. We were incorporated under the laws of the Province of British Columbia. Our wholly owned subsidiary, Mind Medicine, Inc. (“MindMed US”) was incorporated in Delaware. Prior to February 27, 2020, our operations were conducted through MindMed US.
Liquidity and Capital Resources Sources of Liquidity Since inception, we have financed our operations primarily from the issuance of equity. Our primary capital needs are for funds to support our scientific research and development activities including staffing, manufacturing, preclinical studies, clinical trials, administrative costs and for working capital.
Liquidity and Capital Resources Sources of Liquidity Since inception, we have financed our operations primarily from the issuance of equity and our Loan Agreement (as defined below). Our primary capital needs are for funds to support our scientific research and development activities including staffing, manufacturing, preclinical studies, clinical trials, administrative costs and for working capital.
Change in fair value of 2022 USD Financing Warrants Revaluation gain on the 2022 USD Financing Warrants liability was $7.8 million for the year ended December 31, 2022.
Change in fair value of 2022 USD Financing Warrants Revaluation loss on the 2022 USD Financing Warrants liability was $6.6 million for the year ended December 31, 2023. Revaluation gain on the 2022 USD Financing Warrants liability was $7.8 million for the year ended December 31, 2022.
Our future operations are dependent upon our ability to finance our cash requirements which will allow us to continue our research and development activities and the commercialization of our products.
Our future operations are dependent upon our ability to finance our cash requirements which will allow us to continue our research and development activities and the commercialization of our product candidates.
We expect our general and administrative expenses to increase substantially for the foreseeable future as we continue to support our research and development activities, grow our business and, if any of our product candidates receive marketing approval, commence commercialization activities.
We expect our general and administrative expenses to continue to increase for the foreseeable future as we continue to advance our research and development programs, grow our business and, if any of our product candidates receive marketing approval, commence commercialization activities.
Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: • Level 1 – Quoted prices in active markets for identical assets or liabilities. • Level 2 – Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. • Level 3 – Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.
Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: • Level 1 – Quoted prices in active markets for identical assets or liabilities. • Level 2 – Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. • Level 3 – Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. 100 To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment.
Research and development costs are expensed in the periods in which they are incurred. External costs consist primarily of payments to outside consultants, third-party CROs, CDMOs, clinical trial sites and central laboratories in connection with our discovery and preclinical activities, process development, manufacturing and clinical development activities.
To date, our estimated accruals have not differed materially from actual costs incurred. Research and development costs are expensed in the periods in which they are incurred. External costs consist primarily of payments to outside consultants, third-party CROs, CDMOs, clinical trial sites and central laboratories in connection with our discovery and preclinical activities, process development, manufacturing and clinical development activities.
Our expenses will increase if, and as, we: • advance our product candidates through preclinical and clinical development; • seek regulatory approvals for any product candidates that successfully complete clinical trials; • seek to discover and develop additional product candidates; • establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval and intend to commercialize on our own or jointly; and • expand our operational, financial and management systems and increase personnel, including personnel to support our development, manufacturing and commercialization efforts and our operations as a public company. 99 We expect our current cash will be sufficient to fund our current operating plans into the first half of 2025.
Our expenses will increase if, and as, we: • advance our product candidates through preclinical and clinical development; • seek regulatory approvals for any product candidates that successfully complete clinical trials; • seek to discover and develop additional product candidates; • establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval and intend to commercialize on our own or jointly; and • expand our operational, financial and management systems and increase personnel, including personnel to support our development, manufacturing and commercialization efforts and our operations as a public company.
Expected volatility —Due to our limited operating history and a lack of company-specific historical and implied volatility data, we have based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded.
Treasury instruments with maturities similar to the expected term of our stock options. 101 Expected volatility —Due to our limited operating history and a lack of company-specific historical and implied volatility data, we have based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded.
Recent Accounting Pronouncements See Note 2—Summary of Significant Accounting Policies to our consolidated financial statements included elsewhere in this Annual Report for information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition of results of operations. 103 Emerging Growth Company Status We are an “emerging growth company,” as defined in the JOBS Act.
Recent Accounting Pronouncements See Note 2—Summary of Significant Accounting Policies to our consolidated financial statements included elsewhere in this Annual Report for information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition of results of operations.
These assumptions include: Fair Value of common shares — The fair value of our common shares is determined based upon the closing price of our common shares one day prior to grant. Risk-free interest rate —The risk-free rate assumption is based on the U.S. Treasury instruments with maturities similar to the expected term of our stock options.
These assumptions include: Fair Value of common shares — The fair value of our common shares is determined based upon the closing price of our common shares one day prior to grant. Risk-free interest rate —The risk-free rate assumption is based on the U.S.
Cash used in operating activities for the year ended December 31, 2021 was $45.8 million, which consisted of a net loss of $93.0 million, partially offset by $45.3 million in non-cash charges and a net change of $1.9 million in our net operating assets and liabilities.
Cash used in operating activities for the year ended December 31, 2022 was $50.1 million, which consisted of a net loss of $56.8 million, partially offset by $10.5 million in non-cash charges and a net change of $3.8 million in our net operating assets and liabilities.
Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies .
Emerging Growth Company Status We are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies .
Other Income (Expense) Interest Income/(Expense), Net Interest income, net increased by $1.9 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Other Income (Expense) Interest Income, Net Interest income, net increased by $3.2 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
On February 26, 2021, we acquired 100% of the issued and outstanding shares of HealthMode Inc. (“HealthMode”), a digital medicine and therapeutics company that used artificial intelligence enabled digital measurement to increase the precision and speed of clinical research and patient monitoring. The acquisition enabled us to build our digital medicine division.
On February 26, 2021, we acquired 100% of the issued and outstanding shares of HealthMode Inc. (“HealthMode”), a digital medicine and therapeutics company that used artificial intelligence enabled digital measurement to increase the precision and speed of clinical research and patient monitoring. Since inception, we have incurred losses while advancing the research and development of our products and processes.
During the period ended December 31, 2022, we continued to enhance the resources required to build our pipeline of opportunities. This included adding personnel and contract resources and ramping up the non-clinical aspects of our activities. In addition, considerable effort was directed towards employing a successful financing strategy.
During the period ended December 31, 2023, we continued to enhance the resources required to build our pipeline of opportunities. This included adding personnel and contract resources and ramping up the non-clinical aspects of our activities.
Our net losses were $56.8 million for the year ended December 31, 2022 and $93.0 million for the year ended December 31, 2021. As of December 31, 2022, we had an accumulated deficit of $194.5 million and cash and cash equivalents of $142.1 million.
Our net losses were $95.7 million for the year ended December 31, 2023 and $56.8 million for the year ended December 31, 2022. As of December 31, 2023, we had an accumulated deficit of $290.2 million and cash and cash equivalents of $99.7 million.
The increase was primarily due to increases of $2.9 million in expenses related to clinical research for MM-120 and $5.4 million in internal personnel costs as a result of increasing research and development capacities, offset by a decrease of $5.6 million in expenses related to our MM-110 program, and a decrease of $2.4 million of expenses in connection with various external R&D collaborations.
The increase was primarily due to increases of $16.1 million in expenses related to clinical research and product development for the MM120 GAD trial, $2.6 million in internal personnel costs as a result of increasing research and development capacities, offset by a decrease of $0.7 million in expenses related to our MM402 program, a decrease of $0.8 million of expenses in connection with various external research and development collaborations, and a decrease of $1.2 million in expenses related to preclinical activities and the MM110 program.
August 2022 Reverse Share Split As previously disclosed, on May 27, 2022 we received a letter from Nasdaq’s Listing Qualifications Department notifying us that we were not in compliance with Nasdaq Listing Rule 5550(a)(2), as the minimum bid price for our listed securities was less than $1.00 95 for the previous 30 consecutive business days.
Our Phase 1 clinical trial is intended to characterize the tolerability, pharmacokinetics and pharmacodynamics of MM402 and will enable further clinical trials to characterize the effects of repeated daily doses of MM402 and the exploration of early signs of efficacy in the ASD population. 93 August 2022 Reverse Share Split As previously disclosed, on May 27, 2022 we received a letter from Nasdaq’s Listing Qualifications Department notifying us that we were not in compliance with Nasdaq Listing Rule 5550(a)(2), as the minimum bid price for our listed securities was less than $1.00 for the previous 30 consecutive business days.
Inc. as sales agents (together, the “Sales Agents”), pursuant to which we may issue and sell common shares for an aggregate offering price of up to $100.0 million under the ATM. Pursuant to the ATM, we will pay the Sales Agents a commission rate equal to 3.0% of the gross proceeds from the sale of any common shares.
Inc. as sales agents (together, the “Sales Agents”), pursuant to which we may issue and sell common shares for an aggregate offering price of up to $100.0 million under an at-the-market offering program (the “ATM”).
Gain on revaluation of the 2022 USD Financing Warrants liability consists of the change in the fair value of our 2022 USD Financing Warrants that were issued as part of our public equity offering which closed on September 30, 2022. No liability classified warrants were outstanding during the year ended December 31, 2021.
Change in fair value of 2022 USD Financing Warrants consists of revaluation gains and losses attributed to the change in the fair value of our 2022 USD Financing Warrants that were issued as part of our public equity offering which closed on September 30, 2022.
Cash Flows For the Year Ended December 31, 2022 For the Year Ended December 31, 2021 Net cash used in operating activities $ (50,139 ) $ (45,824 ) Net cash used in investing activities — (297 ) Net cash provided by financing activities 59,051 98,824 Foreign exchange impact on cash (309 ) 742 Net increase in cash $ 8,603 $ 53,445 100 Cash flows from operating activities Cash used in operating activities for the year ended December 31, 2022 was $50.1 million, which consisted of a net loss of $56.8 million, partially offset by $10.5 million in non-cash charges and a net change of $3.8 million in our net operating assets and liabilities.
Cash Flows For the Year Ended December 31, 2023 For the Year Ended December 31, 2022 Net cash used in operating activities $ (64,365 ) $ (50,139 ) Net cash provided by financing activities 21,848 59,051 Foreign exchange impact on cash 79 (309 ) Net (decrease)/increase in cash and cash equivalents $ (42,438 ) $ 8,603 Cash flows from operating activities Cash used in operating activities for the year ended December 31, 2023 was $64.4 million, which consisted of a net loss of $95.7 million, partially offset by $25.1 million in non-cash charges and a net change of $6.2 million in our net operating assets and liabilities.
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Cash and cash equivalents, prepaid and other current assets, accounts payable, and accrued liabilities are all short-term in nature and, as such, their carrying values approximate fair values.
Cash and cash equivalents, prepaid and other current assets, accounts payable, and accrued liabilities are all short-term in nature and, as such, their carrying values approximate fair values.
While our significant accounting policies are described in more detail in the notes to our consolidated financial statements appearing elsewhere in this Annual Report, we believe the following accounting policies are the most critical for fully understanding and evaluating our financial condition and results of operations. 101 Business Combinations At the time of acquisition, we determine whether what is acquired meets the definition of a business, in which case if it does, the transaction is considered a business combination, and otherwise it is recorded as an asset acquisition.
While our significant accounting policies are described in more detail in the notes to our consolidated financial statements appearing elsewhere in this Annual Report, we believe the following accounting policies are the most critical for fully understanding and evaluating our financial condition and results of operations.
Cash provided by financing activities for the year ended December 31, 2021 was $98.8 million, which consisted of the net proceeds of $81.9 million from the issuance of common shares and warrants, net of issuance costs, the net proceeds from exercise of warrants of $11.2 million, and proceeds of $5.7 million from exercise of options.
Cash flows from financing activities Cash provided by financing activities for the year ended December 31, 2023 was $21.8 million, which consisted of proceeds of $15.0 million from our credit facility partially offset by $0.8 million payment of our credit facility issuance costs, $7.5 million of net proceeds from the issuance of common shares under our ATM, net of issuance costs, and $0.1 million of proceeds from the exercise of the 2022 USD Financing Warrants.
This was primarily due to interest earned on our cash and cash equivalents as a result of higher cash and cash equivalents and higher interest rates during the year ended December 31, 2022. Foreign Exchange Gain/(Loss), Net Foreign exchange gain increased by $0.3 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.
This was primarily due to interest earned on our cash and cash equivalents as a result of higher interest rates during the year ended December 31, 2023, partially offset by interest expense related to our credit facility.
General and Administrative General and administrative expenses consist primarily of compensation costs, including stock-based compensation, for executive management and administrative employees, including finance and accounting, legal, human resources and other administrative 96 functions, professional services fees, advisory and professional services fees in connection with financing transactions, insurance expenses and allocated expenses.
We expect our research and development expenses to increase for the foreseeable future as we continue the clinical development of our product candidates and other preclinical programs in GAD, ASD and other potential or future indications, including initiating additional and larger clinical trials. 94 General and Administrative General and administrative expenses consist primarily of compensation costs, including stock-based compensation, for executive management and administrative employees, including finance and accounting, legal, human resources and other administrative functions, professional services fees, advisory and professional service fees in connection with financing transactions, insurance expenses and allocated expenses.
Fully Diluted Share Capital The number of issued and outstanding common shares on a fully converted basis as of December 31, 2022 was as follows: Number of Common Share Equivalents Common Shares 37,979,136 Stock Options 2,190,315 Restricted Stock Units 1,570,382 Compensation Warrants 125,890 Financing Warrants 1,286,282 2022 USD Financing Warrants 7,058,823 Total - December 31, 2022 50,210,828
Fully Diluted Share Capital The number of issued and outstanding common shares on a fully converted basis as of December 31, 2023 was as follows: Number of Common Share Equivalents Common Shares 41,101,303 Stock Options 2,161,734 Restricted Share Units 2,294,056 CAD Compensation Warrants 107,720 CAD Financing Warrants 897,667 2022 USD Financing Warrants 7,031,823 Total - December 31, 2023 53,594,303
Research and development expenses account for a significant portion of our operating expenses.
Components of Operating Results Operating Expenses Research and Development Research and development expenses account for a significant portion of our operating expenses. Research and development expenses consist primarily of direct and indirect costs incurred for the development of our product candidates.
Each 2022 USD Financing Warrant is immediately exercisable for one common share at an initial exercise price of $4.25 per common share, subject to certain adjustments and will expire on September 30, 2027. Our cash and cash equivalents and working capital as of December 31, 2022 were $142.1 million and $128.2 million, respectively.
Each 2022 USD Financing Warrant is immediately exercisable for one common share at an exercise price of $4.25 per common share, subject to certain adjustments and will expire on September 30, 2027. On May 4, 2022, we filed a shelf registration statement on Form S-3 (the “Registration Statement”).
To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by us in determining fair value is greatest for instruments categorized in Level 3.
Accordingly, the degree of judgment exercised by us in determining fair value is greatest for instruments categorized in Level 3. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
Research and development expenses consist primarily of direct and indirect costs incurred for the development of our product candidates, including: • payroll, consulting and benefits expenses; • licensing fees; • manufacturing costs to produce clinical trial materials; • clinical research costs associated with discovery, preclinical and clinical testing of our product candidates; • data and study acquisition cost; and • allocated operational expenses, which include direct or allocated expenses for information technologies and human resources.
External expenses include: • payments to third parties in connection with the clinical development of our product candidates, including licensing fees and fees to contract research organizations ("CROs") and consultants; • the cost of manufacturing products for use in our preclinical studies and clinical trials, including payments to contract manufacturing organizations ("CMOs") and consultants; • payments to third parties in connection with the preclinical development of our product candidates, including outsourced professional scientific development services, consulting research fees and sponsored research arrangements with third parties; and • allocated operational expenses, which include direct or allocated expenses for information technologies and human resources.
The increase in cash and cash equivalents was due mainly to the $58.6 million of net proceeds from financings mentioned above net of the cash used in operations of $50.1 million during the year ended December 31, 2022. Future Funding Requirements To date, we have not generated any revenue.
Our cash and cash equivalents and working capital as of December 31, 2023 were $99.7 million and $71.6 million, respectively. Future Funding Requirements To date, we have not generated any revenue.
We are not obligated to make any sales of common shares under the ATM. As of December 31, 2022 we sold 2,311,652 common shares for net proceeds of $31.1 million under the ATM.
Pursuant to the ATM, we will pay the Sales Agents a commission rate equal to 3.0% of the gross proceeds from the sale of any common shares. We are not obligated to make any sales of our common shares under the ATM.
Removed
We plan to utilize these technologies in our clinical trials to enhance the quality of the data that is collected during our clinical trials. Since inception, we have incurred losses while advancing the research and development of our products and processes.
Added
Research & Development Program Update MM120 (Lysergide D-tartrate) On August 3, 2023, we announced that, based on a review of the Company’s statistical assumptions, the target patient enrollment for our Phase 2b trial evaluating MM120 (lysergide D-tartrate) for generalized anxiety disorder (“GAD”) has been lowered from 200 to 180 participants while maintaining the statistical power (approximately 90%) to achieve the trial’s objectives.
Removed
Global Economic Conditions Worldwide economic conditions remain uncertain and we continue to monitor the impact of macroeconomic conditions, including those related to the COVID-19 pandemic, the Russia-Ukraine war and rising inflation rates.
Added
However, on September 12, 2023, we announced that we had completed patient enrollment, with 198 patients having been enrolled in the trial who received a single administration of 25 µg, 50 µg, 100 µg or 200 µg of MM120 or placebo. In December 2023, we announced positive topline results from our Phase 2b clinical trial of MM120 GAD.
Removed
Changes in economic conditions, supply chain constraints, logistics challenges, labor shortages, the Russia-Ukraine war, and steps taken by governments and central banks, particularly in response to the COVID-19 pandemic, have led to higher inflation, which has led to an increase in costs and has caused changes in fiscal and monetary policy, including increased interest rates.
Added
The trial met its primary endpoint, with MM120 demonstrating statistically significant and clinically meaningful dose-dependent improvements on the Hamilton Anxiety (“HAM-A”) rating scale compared to placebo at Week 4. MM120 was administered as a single-dose in a monitored clinical setting with no additional therapeutic intervention.
Removed
Additionally, the general consensus among economists suggests a higher recession risk may continue over the next year, which, together with the foregoing, could result in further economic uncertainty and volatility in the capital markets in the near term, and could negatively affect our operations. Furthermore, such economic conditions have produced downward pressure on share prices.
Added
MM120 100 µg – the dose achieving the highest level of clinical activity – demonstrated a 7.6-point reduction compared to placebo at Week 4 (-21.3 MM120 vs. -13.7 placebo; p Additional secondary and exploratory endpoints included in the primary topline results included HAM-A response and remission rates and CGI-S scores.
Removed
Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates continue to rise) on our operating costs, including our labor costs and research and development costs, due to supply chain constraints, consequences associated with COVID-19 and the ongoing conflict between Russia and Ukraine, and employee availability and wage increases, which may result in additional stress on our working capital resources.
Added
Clinical response (50% or greater improvement in HAM-A) at Week 4 was achieved in 78% of participants treated with MM120 (100 µg or 200 µg) compared to 31% for placebo. Clinical remission (HAM-A ≤ 7) at Week 4 was achieved in 92 50% of participants treated with MM120 100 µg compared to 18% for placebo.
Removed
Components of Operating Results Operating Expenses Research and Development To date, our resources have focused primarily on the research and development of our product candidates MM-120, MM-402 and MM-110 (prior to when we paused development of MM-110 in the third quarter of 2022) and the commencement of related clinical activities, including funding data and study acquisitions and acquiring the materials required to supply our studies.
Added
CGI-S scores demonstrated a statistically significant and clinically meaningful improvement compared to placebo in the 100 µg (p≤0.001) and 200 µg (p≤0.01) dose groups.
Removed
Acquired in-process research and development costs that have no alternative future use are immediately expensed. We expect our research and development expenses to increase for the foreseeable future as we continue the clinical development of our product candidates and other preclinical programs in GAD, ADHD, ASD and other potential or future indications, including initiating additional and larger clinical trials.
Added
On average, participants receiving MM120 (100 µg or 200 µg) experienced a 2-unit improvement in the CGI-S score at Week 4, with statistically significant improvements observed as early as one day after treatment and continuing at all evaluated timepoints through Week 4.
Removed
We also expect to increase the size of our administrative function and facility costs to support the growth of our business.
Added
We expect to present additional topline 12-week data from the trial in the first quarter of 2024 and to present full results at a scientific meeting in 2024. MM120 was generally observed to be well tolerated, with mostly transient mild-to-moderate adverse events ("AEs") that appear consistent with the pharmacodynamic effects of MM120.
Removed
General and Administrative General and administrative expenses decreased by $28.9 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Added
The overall four-week completion rate in the trial was approximately 90% and was 97.5% in the high dose groups, and no participants in the high dose groups discontinued due to an adverse event through Week 4. There were no drug-related serious adverse events.
Removed
The decrease was primarily due to a decrease of $27.4 million in non-cash stock-based compensation expenses primarily relating to the modification of stock option awards and RSUs recorded during the year ended December 31, 2021.
Added
The most common adverse events (at least 10% incidence in the high dose groups) occurred on dosing day and included illusion, hallucinations, euphoric mood, anxiety, thinking abnormal, headache, paraesthesia, dizziness, tremor, nausea, vomiting, feeling abnormal, mydriasis and hyperhidrosis. We expect that results of this trial will support the advancement of MM120 into Phase 3 clinical development for GAD.
Removed
The increase was primarily due to favorable changes in foreign exchange rates during the year in relation to our 2022 USD Financing Warrants. Other Income Other income decreased by $0.1 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily due to a cessation of sales of branded merchandise.
Added
We plan to hold an End-of-Phase 2 meeting with the FDA in the first half of 2024 and expect to initiate Phase 3 clinical trials in the second half of 2024.
Removed
Income Tax Benefit There was no income tax benefit or expense for the year ended December 31, 2022 compared to an income tax benefit of $1.2 million for the year ended December 31, 2021. Income tax benefit for the year ended December 31, 2021 was primarily due to the HealthMode acquisition.
Added
In October 2023, we announced that the enrollment for our Phase 2a trial evaluating MM120 in a subperceptual repeat administration dosing regimen for the treatment of attention deficit hyperactivity disorder (“ADHD”) was completed. This proof-of-concept trial for the treatment of ADHD is designed to assess the safety and efficacy of repeated low-dose MM120 administration in 53 patients.
Removed
There can be no assurance that we will be successful in continuing to finance our operations. 98 Our previous equity structure included Multiple Voting Shares, which had no par value and were eligible to be exchanged with Subordinate Voting Shares on a one-for-one-hundred basis, and Subordinate Voting Shares, which had no par value and were equivalent in rights to common shares.
Added
In January 2024, we announced that our Phase 2a trial in ADHD did not meet its primary endpoint. We do not plan any further development activities for the sub-perceptual dose regimen.
Removed
All equity financings described below, as applicable, have been revised to reflect the conversion of all outstanding Multiple Voting Shares and Subordinate Voting Shares to common shares, which was completed on June 30, 2022.
Added
We believe that the results of our Phase 2a trial, in conjunction with the findings from our Phase 2b trial of MM120 in GAD, support the critical role of perceptual effects of MM120 in mediating a clinical response.
Removed
On January 7, 2021, we completed a bought deal financing resulting in the issuance of 1,395,333 units at a price per unit of CAD$66.00 ($52.05) for gross proceeds of $72.6 million. Each unit comprised one common share and one-half of one common share financing warrant (each whole warrant, a “January Warrant”).
Added
We intend to continue prioritizing development of the MM120 program in GAD and other psychiatric indications, using the single perceptual dose (100 μg or greater) regimen that has shown strong positive results in numerous studies.
Removed
Each January Warrant entitles the holder thereof to purchase one common share at an exercise price of CAD$86.25 ($67.95) until January 7, 2024. Also, in connection with this transaction, we issued 83,720 compensation warrants to the underwriter.
Added
In April 2023, our collaborators at the University Hospital Basel (“UHB”) released positive topline data from a double-blind, investigator-initiated trial evaluating lysergide in the treatment of major depressive disorder (“MDD”). The topline data demonstrated significant, rapid, durable and beneficial effects of lysergide and its potential to mitigate symptoms of MDD.

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