Mind Medicine Sees Co-Founder Become An Activist Shareholder Demanding Changes

An activist shareholder battle might be brewing at Mind Medicine (NEO: MMED). This morning, co-founder of the company Dr Scott Freeman, via his holding company FCM MM Holdings, LLC, issued a release calling for changes at the company.

Chief among the changes, is that he is demanding a new strategic plan to change the direction of the company. His intention is to have the company refocus on its core drugs for research while eliminating cash burn and ending dilution wherever possible.

Freeman comments that the company has underperformed operationally, financially, and strategically – which may not be a surprise given the management exodus seen at the company over the course of the last several quarters. To right this, he proposes that the firm refocuses on its core drugs, MM-110, which he also calls 18-MC, and MM-120, a variant of LSD. With an adjusted focus, the expectation is that the firms MM-120 drug could potentially hit market in four years, rather than that of seven to eight, simply by reclassifying the current ongoing phase IIb study as a phase III study.

In terms of cash burn and dilution, he’s calling for an end to the “unnecessary” US$100 million at-the-money financing announced in May, while also demanding current costs be reduced from $45.0 million per year to under $25.0 million per year. The changes, as per Freeman, are expected to result in “significant long-term value” if undertaken.

Dr Scott Freeman, whom is a co-founder of the company, is the former Chief Medical Officer of the company, a role which he left in August 2020. He has reportedly offer to re-engage the firms management team, with a proposed position on the firms board of directors.

Freeman claims within the letter to own 4.51% of the outstanding shares of the company, or over 19.0 million shares, however SEDI filings indicate he has only held 2.0 million options in the company. FCM is also said to own 5.6% of the company, which on a combined basis would put Freeman over 10% ownership, requiring continued holdings reporting by Freeman, which have not been made.

FCM is also said to represent other early investors in the company, including Chad Boulanger, whom personally owns over 1% of the firm.

The activist letter seemingly follows the company announcing that it will be undertaking a 15 to 1 reverse split to maintain Nasdaq listing requirements.

Mind Medicine last traded at $0.84 on the Neo.

Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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