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Form 6-K Mind Medicine (MindMed) For: Nov 12

November 12, 2021 2:10 PM EST

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

  

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of November 2021

 

Commission File Number:  001-40360

 

MIND MEDICINE (MINDMED) INC.

(Name of registrant)

 

One World Trade Center

Suite 8500

New York, New York 10007

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

  ¨ Form 20-F ¨ Form 40-F  

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

 

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    MIND MEDICINE (MINDMED) INC.
    (Registrant)
   
   
     
Date:  November 12, 2021 By: /s/ Dave Guebert
    Name: Dave Guebert
    Title:   Chief Financial Officer

 

 

 

 

Form 6-K Exhibit Index

 

Exhibit Number   Document Description
     
99.1   The Registrant’s Condensed Consolidated Interim Financial Statements For The Three and Nine Months Ended September 30, 2021 and September 30, 2020
99.2   The Registrant’s Management’s Discussion and Analysis for the Quarter Ended Septemeber 30, 2021

 

 

 

Exhibit 99.1

 

Mind Medicine (MindMed) Inc.

 

Condensed Consolidated Interim Financial Statements

 

(Expressed in Thousands of United States Dollars)

 

For The Three and Nine Months Ended September 30, 2021 and September 30, 2020

 

(Unaudited)

 

 

 

 

Mind Medicine (MindMed) Inc.

Condensed Consolidated Interim Statements of Financial Position

(Unaudited)

(Expressed in thousands of United States Dollars)

As at

 

   September 30,
2021
(Unaudited)
   December 31,
2020
(Audited)
 
Assets          
           
Current          
Cash  $145,858   $80,094 
Funds held in trust (Note 5)   61    - 
Prepaid and other current assets   585    875 
           
Total current assets   146,504    80,969 
           
Non-current assets          
Property and equipment, net   114    - 
Intangible assets, net (Note 6)   21,971    4,675 
Goodwill (Note 4)   9,992    - 
           
Total assets  $178,581   $85,644 
           
Liabilities          
           
Current          
Accounts payable and accrued liabilities  $5,785   $2,377 
           
Non-current liabilities          
Deferred tax liability (Note 4)   6,750    - 
           
Total liabilities   12,535    2,377 
           
Shareholders' equity          
Share capital (Note 7)   239,857    105,604 
Warrants (Note 8)   21,059    15,871 
Contributed surplus   20,222    2,321 
Accumulated other comprehensive income   11    284 
Deficit   (115,103)   (40,813)
           
Total shareholders' equity   166,046    83,267 
           
Total liabilities and shareholders' equity  $178,581   $85,644 

 

Commitments (Note 13)

 

The accompanying notes are an integral part of these consolidated financial statements

 

1

 

 

Mind Medicine (MindMed) Inc.

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

(Unaudited)

For the Three and Nine Months Ended September 30

(Expressed in thousands of United States Dollars)

 

   Three Months
Ended
September 30, 2021
   Three Months
Ended
September 30, 2020
   Nine Months
Ended
September 30, 2021
   Nine Months
Ended
September 30, 2020
 
Expenses                    
Research and development (Note 11)  $7,071   $5,342   $17,497   $10,474 
General and administrative (Note 12)   4,975    1,579    17,774    4,703 
Share-based payments (Notes 7(i) and 9)   7,966    563    31,677    2,292 
Amortization (Note 6)   3,263    137    7,704    413 
    23,275    7,621    74,652    17,882 
                     
Loss before the undernoted items   (23,275)   (7,621)   (74,652)   (17,882)
                     
Interest income   13    2    27    11 
Other income   152    -    264    - 
Foreign exchange gain (loss)   (34)   (58)   71    (509)
Loss on revaluation of derivative liability   -    (998)   -    (873)
Listing expense (Note 3)   -    -    -    (2,172)
                     
Loss before income taxes   (23,144)   (8,675)   (74,290)   (21,425)
                     
Income taxes   -    -    -    - 
                     
Net loss for the period   (23,144)   (8,675)   (74,290)   (21,425)
Foreign currency translation adjustment   (1,156)   40    (273)   12 
                     
Net loss and comprehensive loss for the period  $(24,300)  $(8,635)  $(74,563)  $(21,413)
                     
Basic and diluted loss per common share  $(0.06)  $(0.03)  $(0.18)  $(0.09)
                     
Weighted average number of common shares outstanding                    
                     
Basic and diluted (Note 10)   420,057,107    281,008,489    406,767,251    248,982,973 

 

The accompanying notes are an integral part of these consolidated financial statements

 

2

 

 

Mind Medicine (MindMed) Inc.

Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited)

(Expressed in thousands of United States Dollars)

For the Nine Months Ended September 30, 2021

 

  

Subordinate Voting

Shares

   Multiple Voting Shares   Share Capital Amount   Warrants   Contributed Surplus   Accumulated OCI   Deficit   Total 
Balance, December 31, 2019   49,860,200    -    -    -    -    -    (5,474)   (5,474)
Consolidation of shares (Notes 3 and 7(ii)) 1   6,232,525    -    -    -    -    -    -    - 
Shares and warrants deemed issued related to the reverse takeover transaction (Notes 3 and 7(iii))   189,923,751    550,000    34,925    788    -    -    -    35,713 
Issuance of share capital net of share issuance costs (Note 7)   24,953,850    -    7,525    198    -    -    -    7,723 
Share based payments (Note 7(i))   1,867,305    -    187    -    -    -    -    187 
Warrants exercised (Note 8)   3,067,275    -    1,085    (355)   -    -    -    730 
Stock options exercised (Note 9)   275,000    -    121         (52)   -    -    69 
Stock option expense (Note 9)   -    -    -    -    2,105    -    -    2,105 
Net Loss and comprehensive loss for the period   -    -    -    -    -    -    (21,413)   (21,413)
Balance, September 30, 2020   226,319,706    550,000   $43,843   $631   $2,053   $-   $(26,887)  $19,640 
                                         
Balance, December 31, 2020   306,135,160    550,000   $105,604   $15,871   $2,321   $284   $(40,813)  $83,267 
                                         
Exchange of shares (Note 7(x))   62,688,540    (626,885)   -    -    -    -    -    - 
HealthMode acquisition share consideration (Note 4)   -    81,497    27,048    -    111    -    -    27,159 
Issuance of share capital net of share issuance costs (Note 7)   26,930,000    -    68,314    13,609    -    -    -    81,923 
Share based payments (Note 9(c))   3,285,235    -    5,059    -    -    -    -    5,059 
Warrants exercised (Note 8)   8,004,670    -    19,606    (8,421)   -    -    -    11,185 
Options exercised (Note 9)   11,941,398    -    9,824    -    (4,237)   -    -    5,587 
Shares issued for settlement of RSUs   1,756,189    -    4,402    -    (4,402)   -    -    - 
Stock option expense (Note 9)   -    -    -    -    26,429    -    -    26,429 
Net Loss and comprehensive loss for the period   -    -    -    -    -    (273)   (74,290)   (74,563)
Balance, September 30, 2021   420,741,192    4,612   $239,857   $21,059   $20,222   $11   $(115,103)  $166,046 

 

1 Number of shares reflect the retrospective application of the 8:1 share consolidation.

 

The accompanying notes are an integral part of these consolidated financial statements

 

3

 

 

Mind Medicine (MindMed) Inc.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)

(Expressed in Thousands of United States Dollars)

For the Nine Months Ended

 

   September 30, 2021   September 30, 2020 
Operating activities          
Net loss  $(74,290)  $(21,413)
Items not affecting cash          
Share-based payments (Notes 7(i) and 9)   31,677    2,292 
Listing expense - share consideration (Note 3)   -    1,539 
Amortization of intangible assets (Note 6)   7,704    413 
Loss on revaluation of derivative liability (Note x)   -    873 
Derivative gain   -    - 
Foreign exchange   (71)   - 
Changes in non-cash operating assets and liabilities          
Prepaid and other current assets   290    (601)
Accounts payable and accrued liabilities   3,407    442 
Working capital effect of Healthmode acquisition   (641)   - 
           
Net cash used in operating activities   (31,924)   (16,455)
           
Investing activities          
HealthMode acquisition – cash component (Note 4)   (475)   - 
Property and equipment   (47)   - 
           
Net cash used in investing activities   (522)   - 
           
Financing activities          
Proceeds from issuance of share capital, net of issuance costs (Note 7)   81,923    27,988 
Proceeds from exercise of warrants (Note 8)   11,185    - 
Proceeds from exercise of options (Note 9)   5,587    - 
    98,695    27,988 
Net cash provided by financing activities          
           
Increase in cash   66,249    115,533 
Foreign exchange impact on cash   (424)   - 
           
Cash, beginning of period   80,094    6,702 
           
Cash, end of period  $145,919   $18,235 
           
Supplemental cash flow Information          
Cash  $145,858   $18,235 
Funds held in trust (Note 5)   61    - 
           
Cash and funds held in trust  $145,919   $18,235 

 

The accompanying notes are an integral part of these consolidated financial statements

 

4

 

 

 

Mind Medicine (MindMed) Inc. 

Notes to Condensed Consolidated Interim Financial Statements 

(Unaudited) 

(Expressed in thousands of United States Dollars) 

For the Three and Nine Month Periods Ended September 30, 2021 and September 30, 2020

 

1.NATURE OF OPERATIONS

 

Mind Medicine (MindMed) Inc. (formerly Broadway Gold Mining Ltd.) (the “Company” or “MindMed”) is incorporated under the laws of the Province of British Columbia. Its wholly owned subsidiaries, Mind Medicine, Inc. (“MindMed US”), HealthMode, Inc. (HealthMode”), MindMed Pty Ltd. and MindMed GmbH are incorporated in Delaware, Delaware, Australia and Switzerland respectively. Prior to February 27, 2020, the Company’s operations were conducted through MindMed US.

 

The Company’s head office and address of its registered and records office is 1166 Alberni Street, Suite 1604, Vancouver, British Columbia V6E 3Z3. On February 27, 2020, MindMed completed a reverse takeover transaction with Broadway Gold Mining Ltd. (“Broadway”) by way of a plan of arrangement which resulted in the Company becoming the parent company of MindMed US. MindMed US is deemed to be the acquirer in the reverse takeover transaction. As a result, the consolidated statements of financial position are presented as a continuance of MindMed US and the comparative figures presented are those of MindMed US. See Note 3 for details.

 

MindMed is a neuro-pharmaceutical drug development platform advancing medicines based on psychedelic substances through rigorous science and clinical trials. MindMed’s mission is to discover, develop and deploy psychedelic inspired medicines and experiential therapies that alleviate suffering and improve health. The Company seeks to prove the safety and efficacy of psychedelic-based substances as disruptive technologies and solutions for a continuum of mental illnesses and high unmet medical needs through its unique drug development platform.

 

The consolidated financial statements were prepared on a going concern basis, which assumes that the Company will continue its operations for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

 

The outbreak of the novel strain of coronavirus, specifically identified as “COVID-19”, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. Depending on the length and severity of the pandemic, COVID-19 could impact the Corporation’s operations, could cause delays relating to approval from the FDA and equivalent organizations in other countries, could postpone research activities, could impair the Corporation’s ability to raise funds depending on COVID-19’s effect on capital markets, and could affect logistics and the Corporation’s ability to move materials in a timely manner to clinical trial sites or production of GMP materials (which availability of GMP materials may also impact clinical trial timelines).

 

To the knowledge of the Company’s management as of the date hereof, COVID-19 does not present, at this time, any specific known impacts to the Company in relation to the Corporation’s business objectives or disclosed milestones related thereto. The Company relies on third parties to conduct and monitor the Company’s pre-clinical studies and clinical trials. However, to the knowledge of Company’s management, the ability of these third parties to conduct and monitor pre-clinical studies and clinical trials has not been and is not anticipated to be impacted by COVID-19. The Company is not currently aware of any changes in laws, regulations or guidelines, including tax and accounting requirements, arising from COVID-19 which would be reasonably anticipated to materially affect the Company’s business.

 

Exchange Listing

 

The Subordinate Voting Shares of the Company were listed for trading on the NEO Exchange with the trading symbol “MMED” on March 3, 2020. The Subordinate Voting Shares of the Company were listed for trading on the NASDAQ Exchange with the trading symbol “MNMD” on April 27, 2021.

 

 

 

Mind Medicine (MindMed) Inc. 

Notes to Condensed Consolidated Interim Financial Statements 

(Unaudited) 

(Expressed in thousands of United States Dollars) 

For the Three and Nine Month Periods Ended September 30, 2021 and September 30, 2020

  

2.BASIS OF PRESENTATION

 

Statement of Compliance

 

These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting” (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International Financial Reporting Standards (“IFRS”) Interpretations Committee (“IFRIC”). Accordingly, certain information and footnote disclosure normally included in the annual financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the IASB, have been omitted or condensed.

 

The accounting policies applied by the Company in these unaudited condensed interim consolidated financial statements are the same as those applied in audited consolidated financial statements for the year ended December 31, 2020.

 

These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2020.

 

These condensed consolidated interim financial statements were approved for issuance by the Board of Directors on November 11, 2021.

 

Basis of Measurement

 

These consolidated financial statements have been prepared on the historical cost basis, except for certain financial assets and liabilities measured at fair value as determined at each reporting period.

 

Functional and Presentation Currency

 

These consolidated financial statements are presented in United States dollars, which is the Company’s presentation currency. The functional currency of the Company and its subsidiaries are as follows:

 

Mind Medicine (MindMed) Inc. Canadian dollar
Mind Medicine, Inc. (US operating company) US dollar
HealthMode Inc. US dollar
MindMed Pty Ltd. (Australian subsidiary) US dollar
Mind Med Discover GmbH (Swiss subsidiary) Swiss franc

 

The Company and its subsidiaries assess their functional currency individually. The functional currency of each of the Company’s subsidiaries is the currency of the primary economic environment in which each entity operates. Determination of functional currency involves certain judgments to determine the primary economic environment, and this is re-evaluated for each new entity or if conditions change.

 

Significant accounting policies

 

These condensed consolidated interim financial statements have been prepared using the same accounting policies and methods as those used in the consolidated financial statement for the year ended December 31, 2020.

 

 

 

Mind Medicine (MindMed) Inc. 

Notes to Condensed Consolidated Interim Financial Statements 

(Unaudited) 

(Expressed in thousands of United States Dollars) 

For the Three and Nine Month Periods Ended September 30, 2021 and September 30, 2020

 

2.BASIS OF PRESENTATION (Continued)

 

Use of significant estimates and assumptions

 

The preparation of financial statements in accordance with IAS 34 requires the use of certain significant estimates and assumptions. It also requires management to exercise judgment when applying the Company’s accounting policies. The critical accounting estimates and judgments have been set out in notes 2 and 3 to the Company’s consolidated financial statements for the year ended December 31, 2020.

 

Subsidiaries

 

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries:

 

·Mind Medicine, Inc. (US operating company)

·MindMed Pty Ltd. (Australian subsidiary)

·Mind Med Discover GmbH (Swiss subsidiary)

·HealthMode Inc. (digital technology subsidiary)

 

The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Company.

 

3.REVERSE TAKEOVER

 

On February 27, 2020, the Company announced the completion of its reverse takeover transaction (the “Transaction”) by way of a plan of arrangement under the Business Corporations Act (British Columbia) (the “Arrangement”) pursuant to the terms of an arrangement agreement entered into on October 15, 2019 (the “Arrangement Agreement”) between Broadway, Madison Metals Inc., Broadway Delaware Subco Inc. (“Delaware Subco”) and MindMed US.

 

The Transaction

 

Immediately prior to the closing of the Transaction, Broadway: (a) consolidated its common shares, warrants and options on an eight-for-one basis (the “Consolidation”), (b) changed its name to “Mind Medicine (MindMed) Inc.” (the “Name Change”), (c) reclassified its post-Consolidation common shares as subordinate voting shares (the “Subordinate Voting Shares”) and (d) created a new class of multiple voting shares (the “Multiple Voting Shares”) ((c) and (d) together, the “Share Capital Amendment”). Broadway’s shareholders received 6,232,525 Subordinate Voting Shares of the resulting issuer (the “Resulting Issuer”). The substance of the Transaction is a reverse acquisition of a non-operating company. The Transaction does not constitute a business combination as the Company does not meet the definition of a business under IFRS 3 – Business Combinations. Immediately after the Transaction, shareholders of MindMed US owned 97% of the voting rights of the Company. As a result, the Transaction has been accounted for as a capital transaction with MindMed US being identified as the accounting acquirer and the equity consideration being measured at fair value, using the acquisition method of accounting. The Transaction has been accounted for in the consolidated financial statements as a continuation of the financial statements of MindMed US.

 

Exchange Listings

 

The Subordinate Voting Shares of the Company were listed for trading on the NEO Exchange with the trading symbol “MMED” on March 3, 2020 and on the NASDAQ exchange with the trading symbol “MNMD” on April 27, 2021.

 

 

 

Mind Medicine (MindMed) Inc. 

Notes to Condensed Consolidated Interim Financial Statements 

(Unaudited) 

(Expressed in thousands of United States Dollars) 

For the Three and Nine Month Periods Ended September 30, 2021 and September 30, 2020

 

3.REVERSE TAKEOVER (Continued)

 

Purchase Price Consideration

 

MindMed US is deemed to have acquired the former Broadway as part of the Arrangement. The transaction was accounted for using the acquisition method of accounting whereby the assets acquired, and liabilities assumed were recorded at their estimated fair value at the acquisition date. The acquisition was not assessed to be a business combination and is therefore treated as an asset acquisition under the scope of IFRS 2 – Share Based Payments. The consideration consisted entirely of shares of the Company which were measured at the estimated fair value on the date of acquisition. The fair value of the Subordinate Voting Shares issued to the former Broadway shareholders was determined to be $1,539 based on the fair value of the shares issued.

 

In connection with the acquisition of Broadway, the Company incurred acquisition costs of $395.

 

Subordinate Voting Shares of the Company issued   6,232,525 
Fair value of shares issued @CAD$0.33 (USD $0.247) per share  $1,539 
Identifiable assets acquired   23 
Identifiable liabilities assumed   (261)
Net liabilities assumed   238 
Acquisition costs   365 
Total purchase price (recorded as Listing expense)  $2,142 

 

4.BUSINESS COMBINATIONS

 

On February 26, 2021 the Company acquired 100% of the issued and outstanding shares of Healthmode for aggregate consideration of $26,354, consisting of cash of CAD $286 (USD $225), a prior advance of $250, equity consideration of 81,497 multiple voting shares of MindMed (equivalent to 8,149,700 subordinate voting shares), and 33,619 stock options, which are convertible into Subordinate Voting Shares of the Company.

 

In completing this transaction, MindMed Mergerco Inc., (“Mergerco”) a wholly owned Delaware subsidiary of the Company merged with and into HealthMode. As a result, the separate corporate existence of Mergerco ceased and HealthMode continued its corporate existence as the surviving corporation of the Merger and as a wholly-owned subsidiary of the Company.

 

HealthMode’s primary operations consist of developing technologies using Artificial Intelligence (AI)-enabled digital measurement to increase the precision and speed of clinical research and patient monitoring.

 

The acquisition of HealthMode is accounted for as a business combination under IFRS 3 which requires the acquiror to determine (i) the fair value of the consideration paid, (ii) the fair value of assets acquired and liabilities assumed as well as any non-controlling interest, and recognizing the difference between (i) and (ii) as goodwill.

 

 

 

Mind Medicine (MindMed) Inc. 

Notes to Condensed Consolidated Interim Financial Statements 

(Unaudited) 

(Expressed in thousands of United States Dollars) 

For the Three and Nine Month Periods Ended September 30, 2021 and September 30, 2020

 

4.BUSINESS COMBINATIONS (continued)

 

(i)Outlined below is a summary of the purchase consideration and fair value of assets acquired and liabilities assumed:

 

Details of the consideration transferred are:    
Cash paid (CAD $286 converted to USD @ 1.2685 CAD/USD)  $225 
Cash advances paid ($USD)   250 
Fair value of shares issued (FV of a Mind Medicine (MindMed) Inc. share = USD $3.32 per share based on closing share price as at the transaction date)   27,048 
Value of options issued (33,619 options at FV of USD $3.30 /share option (using Black-Scholes model)   111 
Total  $27,634 

 

The fair value of the shares issued as consideration was determined as follows:    
Number of shares issued (equivalent)   8,149,700 
Fair value of a Mind Medicine (MindMed) Inc. share ($USD)  $3.32 
   $27,048 

 

The estimated fair values of the assets acquired, and liabilities assumed in the acquisition of Healthmode for purposes of the provisional purchase price allocation are as follows:

 

Cash  $178 
Prepaid and other current assets   74 
Property and equipment   16 
Intangible assets (acquired technology)   25,000 
Goodwill   9,992 
Total assets  $35,260 
      
Accounts payable and accrued liabilities   876 
Deferred tax liability   6,750 
Total liabilities  $7,626 
Net assets acquired  $27,634 

 

The intangible assets consist of the following:

 

Acquired technology      Useful Life  
Frontend Systems Developed  $5,000   2 years  
Backend Systems Developed   5,000   2 years  
Value of models/data/work product   5,000   2 years  
HM Pooply Product   5,000   2 years  
HM Cough Product   5,000   2 years  
   $25,000      

 

 

 

Mind Medicine (MindMed) Inc. 

Notes to Condensed Consolidated Interim Financial Statements 

(Unaudited) 

(Expressed in thousands of United States Dollars) 

For the Three and Nine Month Periods Ended September 30, 2021 and September 30, 2020

 

4.BUSINESS COMBINATIONS (continued)

 

The application of IFRS requires management to determine the fair value of the net assets acquired and liabilities assumed (with certain exceptions). As the acquisition closed on February 26, 2021, management has not completed its assessment of the fair value of assets acquired and liabilities assumed. As management completes its assessment of the fair value of net assets acquired and liabilities assumed, there could be adjustments to the values outlined above, however such adjustments are not expected to be material. This period such revisions may be made is up to 12 months from the date of the acquisition.

 

The goodwill is attributable to the value of the assembled workforce, and the related expertise and developed business function. Further, the acquisition is expected to allow the Company streamline its product development processes. None of the goodwill is expected to be deductible for tax purposes.

 

(ii)Acquisition-related costs

 

Acquisition-related costs of $296 were incurred by the Company and are included in general and administrative expenses. These costs primarily consist of diligence and legal costs.

 

(iii)Impact on revenues and net income

 

Pro forma information is not presented as it is not considered material.

 

5.FUNDS HELD IN TRUST

 

Cash held in trust of $61 (December 31, 2020 - $Nil) represents unrestricted funds held at a Canadian chartered bank by the Company’s corporate counsel, representing funds deposited for future expenses.

 

6.INTANGIBLE ASSETS

 

Cost    
Balance, December 31, 2020  $5,500 
HealthMode acquisition (Note 4)   25,000 

Balance, September 30, 2021

  $30,500 
      

Accumulated amortization

     
Balance, December 31, 2020   825 
Amortization  $7,704 

Balance, September 30, 2021

  $8,529 
      

Net carrying amount

     
      
December 31, 2020  $4,675 
September 30, 2021  $21,971 

 

10 

 

 

Mind Medicine (MindMed) Inc. 

Notes to Condensed Consolidated Interim Financial Statements 

(Unaudited) 

(Expressed in thousands of United States Dollars) 

For the Three and Nine Month Periods Ended September 30, 2021 and September 30, 2020

 

6.INTANGIBLE ASSETS (continued)

 

In July 2019, MindMed US acquired the assets of the 18-methyloxycoronaridine (“18-MC”) program from Savant Addiction Medicine, LLC in exchange for the issuance by MindMed US of 55,000,000 class A common shares. The intangible assets were valued based on the shares exchanged. The shares were valued using third party arm’s-length purchases of the MindMed US class C common shares at the time of acquisition of 18-MC which were issued at $0.10 per share.

 

In February 2021, the Company completed the acquisition of HealthMode (Note 4). The intangible assets acquired were valued based on the fair value of consideration given and assets and liabilities acquired.

 

7.SHARE CAPITAL

 

Pursuant to the terms of the Arrangement, the Company’s equity structure reflects the equity structure of Broadway (the accounting acquiree), including the equity interests Broadway issued to effect the combination. Accordingly, the equity structure of MindMed US (the accounting acquirer) is restated using the exchange ratio established in the Agreement to reflect the number of shares of the Broadway (the accounting acquiree) issued in the reverse takeover. On February 27, 2020, all outstanding Class B common shares (“Class B Shares”), Class C common shares (“Class C Shares”) and Class D common shares (“Class D Shares”) of MindMed US were exchanged for Class A common shares of MindMed US (“Class A Shares”), immediately following which all Class A Shares were exchanged, on a one-for-one basis (the “Exchange Ratio”), for Subordinate Voting Shares or Multiple Voting Shares (in the case of Multiple Voting Shares the exchange was on a one-for-one-hundred basis) of the Resulting Issuer (“Resulting Issuer Shares”) on a post-Consolidation basis. Such Class A Shares were then cancelled pursuant to the Arrangement, and the MindMed US issued 1,000 common shares to the Company as consideration for issuing the Resulting Issuer Shares to the former MindMed US shareholders.

 

Authorized

 

The Company’s authorized capital consists of (i) an unlimited number of Subordinate Voting Shares, and (ii) an unlimited number of Multiple Voting Shares.

 

The holders of Subordinate Voting Shares are entitled to one vote for each Subordinate Voting Share held. The holders of Multiple Voting Shares are entitled to 100 votes for each Multiple Voting Share held.

 

Voting Rights

 

All holders of Subordinate Voting Shares and Multiple Voting Shares are entitled to receive notice of any meeting of shareholders of the Company, and to attend, vote and speak at such meetings, except those meetings at which only holders of a specific class of shares are entitled to vote separately as a class under the Business Corporations Act (British Columbia). A quorum for the transaction of business at any meeting of shareholders is two persons present at the meeting, each of whom is entitled to vote at the meeting, and who hold or represent by proxy in the aggregate not less than 5% of the outstanding shares of the Company entitled to vote at the meeting.

 

On all matters upon which shareholders the Company are entitled to vote:

 

·each Subordinate Voting Share is entitled to one vote per Subordinate Voting Share; and

 

·each Multiple Voting Share is entitled to 100 votes per Multiple Voting Share.

 

Unless a different majority is required by law or the articles of the Company, resolutions to be approved by shareholders require approval by a simple majority of shareholders.

 

11 

 

 

Mind Medicine (MindMed) Inc. 

Notes to Condensed Consolidated Interim Financial Statements

(Unaudited) 

(Expressed in thousands of United States Dollars) 

For the Three and Nine Month Periods Ended September 30, 2021 and September 30, 2020

 

7.SHARE CAPITAL (Continued)

 

Conversion Rights and Conditions

 

Issued and outstanding Multiple Voting Shares, including fractions thereof, may at any time, subject to the FPI Condition (as defined below), at the option of the holder, be converted into Subordinate Voting Shares at a ratio of 100 Subordinate Voting Shares per Multiple Voting Share. Further, the board of directors of the Company may determine in the future that it is no longer advisable to maintain the Multiple Voting Shares as a separate class of shares and may cause all of the issued and outstanding Multiple Voting Shares to be converted into Subordinate Voting Shares at a ratio of 100 Subordinate Voting Shares per Multiple Voting Share.

 

The right of the Multiple Voting Shares to convert into Subordinate Voting Shares is subject to certain conditions in order to maintain the status of the Company as a “foreign private issuer” under United States securities laws (the “FPI Condition”).

 

Share Capital Issued

 

      Subordinate   Multiple   Total Voting     
      Voting   Voting   Rights     
Broadway share consolidation  (ii)   6,232,525         6,232,525   $1,539 
Shares exchanged under Arrangement  (iii)   189,923,751         189,923,751    27,886 
Shares exchanged under Arrangement  (iii)        550,000    55,000,000    5,500 
Bought deal financing - May 2020  (iv)   24,953,850         24,953,850    7,525 
Bought deal financing - Oct 2020  (v)   27,381,500         27,381,500    16,432 
Bought deal financing - Dec 2020  (vi)   18,170,000         18,170,000    6,340 
Warrants exercised      31,420,721         31,420,721    33,245 
Options exercised      2,563,073         2,563,073    1,318 
Share-based settlement payment  (vii)   3,000,000         3,000,000    5,570 
Director compensation  (i)   2,489,740         2,489,740    249 
Balance December 31, 2020      306,135,160    550,000    361,135,160   $105,604 
                        
Bought deal financing - Jan 2021  (viii)   20,930,000         20,930,000    59,093 
Private placement - Mar 2021  (ix)   6,000,000         6,000,000    9,221 
Warrants exercised      8,004,670         8,004,670    19,097 
Options exercised      11,941,398         11,941,398    10,333 
RSUs settled      1,756,189         1,756,189    4,402 
Healthmode acquisition  Note 4   -    81,497    8,149,700    27,048 
Conversion of shares  (x)   62,688,540    (626,885)   -    - 
Share-based settlement payment  (xi)   1,500,000         1,500,000    4,869 
Director compensation  (i)   1,785,235         1,785,235    190 
Balance September 30, 2021      420,741,192    4,612    421,202,352   $239,857 

 

12 

 

 

Mind Medicine (MindMed) Inc. 

Notes to Condensed Consolidated Interim Financial Statements 

(Unaudited) 

(Expressed in thousands of United States Dollars) 

For the Three and Nine Month Periods Ended September 30, 2021 and September 30, 2020

 

7.SHARE CAPITAL (Continued)

 

(i)On September 16, 2019, MindMed US entered into an agreement with a director of the MindMed US pursuant to which the director agreed to: (i) join the board of directors of MindMed US, (ii) obtain a loan (the “Loan”) of $500 for the sole purpose of acquiring 5,000,000 Class D shares, and (iii) purchase 5,000,000 Class D shares for $500.

 

§The Loan is secured by the Class D shares, which is the sole security and recourse against the director. One-quarter of the Loan ($125) shall be automatically deemed to be repaid and satisfied on each six-month anniversary of the date of the Loan (the “Repayment Date”) so long as the director remains a member of the board of directors of MindMed US.

 

§If the director ceases to be a member of the board of directors of MindMed US and all affiliates of MindMed US, other than as a result of his disqualification under applicable corporate law or his resignation, the Loan shall be automatically deemed to be repaid and satisfied in full and the director shall be fully and finally released from his obligations under the Loan.

 

§The principal remaining from time to time unpaid and outstanding shall bear interest, before and after an event of default at 2% per annum calculated monthly, not in advance. Accrued and unpaid interest shall be payable on each Repayment Date. The director has the right and privilege of prepaying the whole or any portion of the principal amount of the Loan at any time or times prior to maturity or if an event of default has occurred, whichever comes first, without notice, bonus or penalty. All such prepayments shall be applied first in satisfaction of any accrued but unpaid interest and thereafter to the outstanding principal amount of the Loan.

 

The Loan has been accounted for as an option plan since MindMed does not have full recourse to the outstanding loan balance. In the event the director ceases to be a member of the board of directors of MindMed US and all affiliates of MindMed US, the Class D Shares (which have since been exchanged for Subordinate Voting Shares) would be tendered back to the Company without any payment being made. As a result, the Company has not recognized a loan receivable or the corresponding Class D Shares (or resulting Subordinate Voting Shares) as outstanding. The Company has estimated a grant-date fair value, which is recorded as share-based compensation expense over a two-year vesting period with a corresponding amount to share capital. The fair value has been estimated using the Black- Scholes option pricing model with the following assumptions: (i) expected dividend yield of 0%, (ii) expected volatility of 151%, (iii) risk-free rate of 1.74%, (iv) share price of $0.10, (v) forfeiture rate of 0%, and (vi) expected life of 24 months. The total grant-date fair value is $500.

 

In connection with the Transaction, the directors of MindMed US were elected as directors of the Company. The Class D Shares issued pursuant to the Loan were converted to Subordinate Voting Shares. Total share-based compensation for the nine month period ended September 30, 2021 is $190 (2020 - $124). As of September 30, 2021, the Loan has been settled in accordance with the terms above.

 

(ii)As at February 26, 2020, Broadway had 49,860,200 common shares issued and outstanding; pursuant to the Arrangement Agreement, Broadway’s common shares were consolidated on an eight to one (8:1) basis and converted to Subordinate Voting Shares.

 

13

 

 

Mind Medicine (MindMed) Inc. 

Notes to Condensed Consolidated Interim Financial Statements 

(Unaudited) 

(Expressed in thousands of United States Dollars) 

For the Three and Nine Month Periods Ended September 30, 2021 and September 30, 2020

 

7.SHARE CAPITAL (Continued)

 

(iii)Pursuant to the Arrangement Agreement, 244,923,751 Class A Shares were exchanged for Subordinate Voting Shares or Multiple Voting Shares, as applicable. Pursuant to the Arrangement Agreement, 1,000 common shares of MindMed US were issued to Broadway in consideration of the issuance of the Subordinate Voting Shares and Multiple Voting Shares to former MindMed US shareholders. Class A Shares were exchanged for either: (a) Subordinate Voting Shares (189,923,751 Class A Shares were exchanged for 189,923,751 Subordinate Voting Shares); or (b) Multiple Voting Shares (55,000,000 Class A Shares were exchanged for 550,000 Multiple Voting Shares).

 

(iv)On May 26, 2020, the Company completed a bought deal financing resulting in the issuance of 24,953,850 units (the “May Units”) at a price per May Unit of CAD $0.53 ($0.38) for gross proceeds of $9,582. Each May Unit comprised one Subordinate Voting Share and one-half of one Subordinate Voting Share purchase warrant (each whole warrant, a "May Warrant"). Each May Warrant entitles the holder thereof to purchase one Subordinate Voting Share at an exercise price of CAD $0.79 ($0.57) until May 26, 2022. Also in connection with this transaction, the Company issued 994,034 compensation warrants to its underwriter (Note 8). Total cash share issuance costs of $1,291 were deducted from the gross proceeds.

 

(v)On October 30, 2020, the Company completed a bought deal financing resulting in the issuance of 27,381,500 units of the Company (the “October Units”) at a price per October Unit of CAD $1.05 ($0.79) for gross proceeds of $22,075. Each October Unit comprised one Subordinate Voting Share of the Company and one-half of one Subordinate Voting Share purchase warrant (an “October Warrant”). Each October Warrant entitles the holder thereof to purchase one Subordinate Voting Share at an exercise price of CAD $1.40 ($1.05) until October 30, 2023. Also in connection with this transaction, the Company issued 1,090,200 compensation warrants to its underwriter (Note 8). Total cash share issuance costs of $1,589 were deducted from the gross proceeds.

 

(vi)On December 11, 2020, the Company completed a bought deal financing resulting in the issuance of 18,170,000 units of the Company (the "December Units") at a price per December Unit of CAD $1.90 ($1.49) for gross proceeds of $26,506. Each December Unit comprised one Subordinate Voting Share of the Company and one-half of one Subordinate Voting Share purchase warrant (a “December Warrant”). Each December Warrant entitles the holder thereof to purchase one Subordinate Voting Share at an exercise price of CAD $2.45 ($1.92) until December 11, 2023. Also in connection with this transaction, the Company issued 1,624,290 compensation warrants to its underwriter (Note 8). Total cash share issuance costs of $2,197 were deducted from the gross proceeds.

 

(vii)On December 11, 2020, the Company issued 3,000,000 subordinate voting shares in settlement of a claim made by a former promoter of the Company. The shares were valued at CAD $2.42 ($1.90) which was the value on the date that the settlement was approved.

 

(viii)On January 7, 2021, the Company completed a bought deal financing resulting in the issuance of 20,930,000 units of the Company (the "January Units") at a price per January Unit of CAD $4.40 ($3.47) for gross proceeds of $72,713. Each January Unit comprised one Subordinate Voting Share of the Company and one-half of one Subordinate Voting Share purchase warrant (a “January Warrant”). Each January Warrant entitles the holder thereof to purchase one Subordinate Voting Share at an exercise price of CAD $5.75 ($4.53) until January 7, 2024. Also in connection with this transaction, the Company issued 1,255,800 compensation warrants to its underwriter (Note 9). Total cash share issuance costs of $4,900 were deducted from the gross proceeds.

 

14

 

 

Mind Medicine (MindMed) Inc. 

Notes to Condensed Consolidated Interim Financial Statements 

(Unaudited) 

(Expressed in thousands of United States Dollars) 

For the Three and Nine Month Periods Ended September 30, 2021 and September 30, 2020

 

7.SHARE CAPITAL (Continued)

 

(ix)On March 9, 2021, the Company completed a private placement bought deal financing resulting in the issuance of 6,000,000 units of the Company (the "March Units") at a price per Unit of CAD $3.25 ($2.57) for gross proceeds of $15,397. Each March Unit comprised one subordinate voting share of the Company and one-half of one Subordinate Voting Share purchase warrant (a “March Warrant”). Each March Warrant entitles the holder thereof to purchase one Subordinate Voting Share at an exercise price of CAD $4.40 ($3.48) until March 9, 2024. Also in connection with this transaction, the Company issued 360,000 compensation warrants to its underwriter (Note 9). Total cash share issuance costs of $1,096 were deducted from the gross proceeds.

 

(x)During February and March 2021, an officer of the Company exchanged 3,500,000 subordinate voting shares for 35,000 multiple voting shares. Between May and September holders of 661,885.4 multiple voting shares exchanged their shares for 66,188,540 subordinate voting shares.

 

(xi)On July 8, 2021, the Company issued 1,500,000 subordinate voting shares to a holding company of its former CEO as part of a settlement agreement. The shares were valued at CAD $4.11 ($3.25) which was the value on the date that the shares were issued.

 

Share Capital Reserved for Issuance

 

A summary of shares issued and reserved for issuance is summarized below:

 

   Number of Subordinated
Voting Share Equivalents
 
Subordinate Voting   420,741,192 
Multiple Voting   461,160 
Stock Options   23,696,365 
Restricted Share Units   9,333,056 
Compensation Warrants   1,888,350 
Financing Warrants   20,774,480 
Total – September 30, 2021   476,894,603 

 

15

 

 

Mind Medicine (MindMed) Inc. 

Notes to Condensed Consolidated Interim Financial Statements 

(Unaudited) 

(Expressed in thousands of United States Dollars) 

For the Three and Nine Month Periods Ended September 30, 2021 and September 30, 2020

 

8.WARRANTS

 

               Weighted 
               Average 
               Exercise 
   Compensation   Financing   Amount   Price 
   Warrants   Warrants   $   (CAD$) 
Balance, December 31, 2019   1,314,033    -    153    0.33 
Issued   9,210,445    36,074,118    24,502    1.29 
Exercised   (9,434,278)   (21,986,443)   (8,784)   1.02 
Expired   -    -         - 
Balance, December 31, 2020   1,090,200    14,087,675    15,871    1.78 
                     
Issued   1,615,800    13,465,000    13,609    5.31 
Issued on exercise of compensation warrants   -    408,825    -    - 
Exercised   (817,650)   (7,187,020)   (8,421)   1.75 
Expired   -    -    -    - 
Balance, September 30, 2021   1,888,350    20,774,480    21,059    4.22 

 

The weighted average market fair value of shares purchased through warrant exercises during the nine months ended September 30, 2021 was CAD$3.89 (December 31, 2020 - CAD$2.22).

 

Compensation Warrants

 

MindMed US issued 1,314,033 compensation warrants in relation to the completion of the first tranche of the MindMed US Offering which closed on December 19, 2019. Each warrant entitled the holder to purchase one Subordinate Voting Share, at CAD $0.33 per share until the expiry date. All of these warrants were exercised during 2020.

 

MindMed US issued 5,483,321 compensation warrants in relation to the completion of the second and third tranches of the MindMed US Offering which took place in February 2020. Each warrant entitled the holder to purchase one Subordinate Voting Share at $0.33 CAD per share until the expiry date. All of these warrants were exercised during 2020.

 

Pursuant to the terms of the Arrangement, all warrants of MindMed US were exchanged for warrants of the Company.

 

The Company issued 994,034 compensation warrants to the underwriter in connection with a bought deal financing (Note 7(iv)) which was completed on May 26, 2020. The warrants have an expiry date of May 26, 2022. Each warrant entitles the holder to purchase one Subordinate Voting Share at CAD $0.53 per share until the expiry date. The fair value has been estimated using the Black-Scholes option pricing model with the following assumptions: (i) expected dividend yield of 0%, (ii) expected volatility of 93%, (iii) risk-free rate of 0.30%, (iv) share price of CAD $0.55, (v) forfeiture rate of 0%, and (vi) expected life of 2 years.

 

The Company issued 1,642,890 compensation warrants to the underwriter in connection with a bought deal financing (Note 7(v)) which was completed on October 30, 2020. The warrants have an expiry date of October 30, 2022. Each warrant entitles the holder to purchase one unit at CAD $1.05 per warrant until the expiry date. Each unit entitles the holder to one Subordinate Voting Share and one half October Warrant. Each October Warrant entitles the holder to purchase one Subordinate Voting Share at CAD $1.40 until expiry on October 30, 2022. The fair value has been estimated using the Black-Scholes option pricing model with the following assumptions: (i) expected dividend yield of 0%, (ii) expected volatility of 103%, (iii) risk-free rate of 0.27%, (iv) share price of $1.18 CAD, (v) forfeiture rate of 0%, and (vi) expected life of 2 years.

 

16

 

 

Mind Medicine (MindMed) Inc. 

Notes to Condensed Consolidated Interim Financial Statements 

(Unaudited) 

(Expressed in thousands of United States Dollars) 

For the Three and Nine Month Periods Ended September 30, 2021 and September 30, 2020

 

8.WARRANTS (continued)

 

The Company issued 1,090,200 compensation warrants to the underwriter in connection with a bought deal financing (Note 7(vi)) which was completed on December 11, 2020. The warrants have an expiry date of December 11, 2022. Each warrant entitles the holder to purchase one unit at CAD $1.90 per warrant until the expiry date. Each unit entitles the holder to one Subordinate Voting Share and one half December Warrant. Each December Warrant entitles the holder to purchase one Subordinate Voting Share at CAD $2.45 until expiry on December 11, 2022. The fair value has been estimated using the Black-Scholes option pricing model with the following assumptions: (i) expected dividend yield of 0%, (ii) expected volatility of 95%, (iii) risk-free rate of 0.30%, (iv) share price of $5.56 CAD, (v) forfeiture rate of 0%, and (vi) expected life of 2 years.

 

The Company issued 1,255,800 compensation warrants to the underwriter in connection with a bought deal financing (Note 7(viii)) which was completed on January 7, 2021. The warrants have an expiry date of January 7, 2024. Each warrant entitles the holder to purchase one unit at CAD $4.40 per warrant until the expiry date. Each unit entitles the holder to one Subordinate Voting Share and one half January Warrant. Each January Warrant entitles the holder to purchase one Subordinate Voting Share at CAD $5.75 until expiry on January 7, 2024. The fair value has been estimated using the Black-Scholes option pricing model with the following assumptions: (i) expected dividend yield of 0%, (ii) expected volatility of 95%, (iii) risk-free rate of 0.24%, (iv) share price of $4.43 CAD, (v) forfeiture rate of 0%, and (vi) expected life of 3 years.

 

The Company issued 360,000 compensation warrants to the underwriter in connection with a private placement financing (Note 7(ix)) which was completed on March 9, 2021. The warrants have an expiry date of March 9, 2024. Each warrant entitles the holder to purchase one March Unit at $ CAD 3.25 per warrant until the expiry date. Each March Unit entitles the holder to one Subordinate Voting Share and one half March Warrant. Each March Warrant entitles the holder to purchase one Subordinate Voting Share at CAD $4.40 until expiry on January 7, 2024. The fair value has been estimated using the Black-Scholes option pricing model with the following assumptions: (i) expected dividend yield of 0%, (ii) expected volatility of 96%, (iii) risk-free rate of 0.42%, (iv) share price of $4.40 CAD, (v) forfeiture rate of 0%, and (vi) expected life of 3 years.

 

Financing Warrants

 

                   March     
               January   Private     
   May Bought       December   Bought   Placement     
   Deal (Note   October Bought   Bought Deal   Deal (Note   Deal (Note     
   7(iv))   Deal (Note 7(v))   (Note 7(vi))   7(viii))   7(ix))   Total 
Warrants Issued   12,476,925    14,512,193    9,085,000    -    -    36,074,118 
Exercised   (9,629,750)   (9,937,843)   (2,418,850)   -    -    (21,986,443)
Expired   -    -    -    -    -    - 
Balance December 31, 2020   2,847,175    4,574,350    6,666,150    -    -    14,087,675 
Warrants Issued   -    -    -    10,465,000    3,000,000    13,465,000 
Warrants Issued on exercise of compensation warrants             408,825              408,825 
Exercised   (1,388,320)   (2,715,300)   (3,083,400)   -    -    (7,187,020)
Expired   -    -    -    -    -    - 
Balance September 30, 2021   1,458,855    1,859,050    3,991,575    10,465,000    3,000,000    20,774,480 
Exercise Price (CAD$)  $0.79   $1.40   $2.45   $5.75   $4.40      
Expiry Date   2022-05-26    2022-10-30    2022-12-07    2024-01-07    2024-03-09      

 

17

 

 

Mind Medicine (MindMed) Inc. 

Notes to Condensed Consolidated Interim Financial Statements 

(Unaudited) 

(Expressed in thousands of United States Dollars) 

For the Three and Nine Month Periods Ended September 30, 2021 and September 30, 2020

 

9.SHARE BASED PAYMENTS

 

a)Stock Options

 

The Company has a stock option plan to advance the interests of the Company by providing employees, contractors and directors of the Company a performance incentive for continued and improved service with the Company. The plan sets out the framework for determining eligibility as well as the terms of any stock-based compensation granted. The plan was approved by the shareholders as part of the Arrangement. The standard vesting terms for employee grants are 25% on the first anniversary of the grant date and 1/48th thereafter each month for succeeding 36 months. During the period ended September 30, 2021, vesting terms on certain options, including options of the then CEO, were accelerated to vest immediately resulting in an increased compensation expense of $617.

 

During the nine months ended September 30, 2020, the Company issued 15,786,774 options to employees and directors. The fair value has been estimated using the Black-Scholes option pricing model with the following assumptions:

 

   Nine Months Ended
September 30, 2021
   Year Ended
December 31, 2020
 
Share price   $3.02CAD -$4.12CAD   $0.33CAD -$0.54CAD 
Expected volatility    94% - 96%   93% - 124% 
Risk-free rate    0.46% - 1.01%   0.3% - 1.62% 
Expected life    5 years    5 years 
Expected dividend yield    0%   0% 
Forfeiture rate    0%   0% 

 

   Number of
Options
  

Weighted
Average
Exercise Price

 
Balance, December 31, 2020   22,592,427   $

CAD 0.38

 
Issued   15,786,774    CAD 3.26 
Exercised   (11,955,982)   CAD 0.58 
Cancelled   (2,726,854)   CAD 1.62 
Balance, September 30, 2021   23,696,365   $  CAD 2.05  

 

The weighted average market price of options exercised in the nine months ended September 30, 2021 was CAD$3.97 (December 31, 2020 - CAD$3.75).

 

18

 

 

 

Mind Medicine (MindMed) Inc.

Notes to Condensed Consolidated Interim Financial Statements

(Unaudited)

(Expressed in thousands of United States Dollars)

For the Three and Nine Month Periods Ended September 30, 2021 and September 30, 2020

 

9.SHARE BASED PAYMENTS (Continued)

 

The following options were outstanding as at September 30, 2021:

 

Grant Date  Expiry Date 

Number of

Options

  

Exercise

Price

   Exercisable 
27-Feb-20  27-Feb-25   3,982,672   $0.33CAD   901,432 
24-Mar-20  24-Mar-25   300,000   $0.33CAD   112,500 
13-Apr-20  13-Apr-25   782,500   $0.54CAD   414,375 
06-May-20  06-May-25   931,250   $0.55CAD   164,583 
13-Aug-20  13-Aug-25   2,250,000   $0.43CAD   609,375 
09-Sep-20  09-Sep-25   1,703,000   $0.45CAD   257,000 
15-Jan-21  15-Jan-26   1,000,000   $3.93CAD   - 
26-Feb-21  26-Feb-26   32,622   $0.02USD   32,622 
16-Apr-21  16-Apr-26   10,871,816   $3.08CAD   2,728,300 
08-Jul-21  08-Jul-26   837,850   $4.12CAD   23,563 
11-Aug-21  11-Aug-26   740,940   $3.77CAD   13,542 
01-Sep-21  01-Sep-26   222,978   $3.70CAD   111,491 
29-Sep-21  29-Sep-26   40,737   $3.02CAD   3,395 
September 30, 2021      23,696,365         5,372,178 

 

The weighted average contractual life for the remaining options as at September 30, 2021 was 4.05 years (December 31, 2020 - 4.3 years). For the nine months ended September 30, 2021, the Company recognized compensation expense from stock options of $14,590 included in share-based payments.

 

b)Restricted Share Units

 

The Company has adopted a Performance and Restricted Share Unit (“RSU”) Plan to advance the interests of the Company by providing employees, contractors and directors of the Company a performance incentive for continued and improved service with the Company. The plan sets out the framework for determining eligibility as well as the terms of any stock-based compensation granted. The plan was approved by the shareholders as part of the Arrangement. The standard vesting terms for RSU grants are 25% on the first anniversary of the grant date and 1/48th thereafter each month for succeeding 36 months. The fair value has been estimated based on the closing price of the stock on the day prior to the grant.

 

   Number of
RSUs
 
Balance, December 31, 2020   - 
Issued   11,261,745 
Settled   (1,756,189)
Cancelled   (172,500)
Balance, September 30, 2021   9,333,056 

 

For the nine months ended September 30, 2021, the Company recognized compensation expense from RSUs of $11,171 included in share-based payments.

 

19

 

 

Mind Medicine (MindMed) Inc.

Notes to Condensed Consolidated Interim Financial Statements

(Unaudited)

(Expressed in thousands of United States Dollars)

For the Three and Nine Month Periods Ended September 30, 2021 and September 30, 2020

 

9.SHARE BASED PAYMENTS (Continued)

 

c)Settlement Agreement

 

In June 2021, the Company agreed to issue to a holding company of its former CEO 1,500,000 Subordinate Voting Shares as part of a settlement agreement. The Company recognized a settlement expense from this agreement of $5,085 which is included in share-based payments.

 

10.LOSS PER SHARE

 

The weighted average number of Subordinate Voting Shares outstanding for the nine months ended September 30, 2021 was 406,767,251 (December 31, 2020 - 361,135,160). In calculating the weighted average number of shares, the Multiple Voting Shares are included assuming the shareholders executed their conversion rights. The Company has not adjusted its weighted average number of Subordinate Voting Shares outstanding in the calculation of diluted loss per share, as the effect of warrants and options is anti-dilutive.

 

11.RESEARCH AND DEVELOPMENT

 

   Sept. 30,
2021
   Sept. 30,
2020
 
 Payroll, consulting and benefits  $5,696   $2,310 
Licensing fees   800    700 
Manufacturing costs   2,649    1,680 
Clinical research and regulatory expenses   4,732    2,793 
Data and study acquisition costs   1,879    2,492 
Other   1,741    499 
   $17,497   $10,474 

 

12.GENERAL AND ADMINISTRATIVE

 

   Sept. 30,
2021
   Sept. 30,
2020
 
Payroll, consulting fees and benefits  $6,971   $1,766 
Legal fees   3,363    405 
Accounting and audit   530    227 
Marketing and investor relations   1,263    1,599 
Insurance   2,121    68 
Intellectual property   513    - 
Public company costs   940    - 
Other   2,073    638 
   $17,774   $4,703 

 

20

 

 

Mind Medicine (MindMed) Inc.

Notes to Condensed Consolidated Interim Financial Statements

(Unaudited)

(Expressed in thousands of United States Dollars)

For the Three and Nine Month Periods Ended September 30, 2021 and September 30, 2020

 

13.COMMITMENTS AND CONTINGENCIES

 

As at September 30, 2021, the Company has obligations to make future payments, representing significant research and development contracts and other commitments that are known and committed in the amount of approximately $29,748 (December 31, 2020 - $8,586). Most of these agreements are cancelable by the Company with notice. These commitments include agreements related to the conduct of the clinical trials, sponsored research, manufacturing and preclinical studies.

 

The Company enters into research, development and license agreements in the ordinary course of business where the Company receives research services and rights to proprietary technologies. Milestone and royalty payments that may become due under various agreements are dependent on, among other factors, clinical trials, regulatory approvals and ultimately the successful development of a new drug, the outcome and timing of which are uncertain.

 

The Company periodically enters into research and license agreements with third parties that include indemnification provisions customary in the industry. These guarantees generally require the Company to compensate the other party for certain damages and costs incurred as a result of claims arising from research and development activities undertaken by or on behalf of the Company. In some cases, the maximum potential amount of future payments that could be required under these indemnification provisions could be unlimited. These indemnification provisions generally survive termination of the underlying agreement. The nature of the indemnification obligations prevents the Company from making a reasonable estimate of the maximum potential amount it could be required to pay. Historically, the Company has not made any indemnification payments under such agreements and no amount has been accrued in the consolidated financial statements with respect to these indemnification obligations.

 

14.RELATED PARTY TRANSACTIONS

 

For the nine months ended September 30, 2021, the key management personnel of the Company were the board of directors, Chief Executive Officer, Chief Development Officer, Executive President, Chief Medical Officer, Chief Technology Officer and Chief Financial Officer.

 

Compensation for key management personnel of the Company was as follows:

 

  

Sept. 30,

2021

   Sept. 30,
2020
 
Payroll, consulting fees and other benefits  $4,661   $1,797 
Share-based compensation   21,329    84 
   $25,990   $468 

 

The Company incurred legal fees of $1,936 to companies controlled by a director of the Company during the nine months ended September 30, 2021.

 

As at September 30, 2021 the Company had accounts payable and accrued liabilities outstanding of $392 (December 31, 2020 - $93) to a company controlled by a director.

 

Prior to March 1, 2021, directors were only compensated through share-based compensation. Effective March 1, 2021, a new director compensation plan was adopted which includes cash, stock options and deferred share units. During the nine months ended September 30, 2021 compensation totaled $1,548 (December 31, 2020 - $384) including share-based compensation of $1,405.

 

21

 

 

Mind Medicine (MindMed) Inc.

Notes to Condensed Consolidated Interim Financial Statements

(Unaudited)

(Expressed in thousands of United States Dollars)

For the Three and Nine Month Periods Ended September 30, 2021 and September 30, 2020

 

15.MANAGEMENT OF CAPITAL

 

The Company defines its capital as share capital, warrants and deficit. The Company’s objectives when managing capital are to ensure there are sufficient funds available to carry out its research and development programs. To date, these programs have been funded through the sale of equity securities.

 

The Company also intends to source non-dilutive funding by accessing grants, government assistance and tax incentives, and through partnerships with corporations and research institutions. The Company uses budgets and purchasing controls to manage its costs. The Company is not exposed to any externally imposed capital requirements.

 

16.FINANCIAL INSTRUMENTS

 

Fair Value

 

Fair Value Measurement provides a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs are those that reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions with respect to how market participants would price an asset or liability. These two inputs used to measure fair value fall into the following three different levels of the fair value hierarchy:

 

Level 1 Quoted prices in active markets for identical instruments that are observable.

 

Level 2 Quoted prices in active markets for similar instruments; inputs other than quoted prices that are observable and derived from or corroborated by observable market data.

 

Level 3 Valuations derived from valuation techniques in which one or more significant inputs are unobservable.

 

The hierarchy requires the use of observable market data when available.

 

Cash and accounts payable and accrued liabilities are all short-term in nature and, as such, their carrying values approximate fair values. The derivative liability – foreign currency warrants are valued as Level 1 in the hierarchy, using trading values established in an active market.

 

Risks

 

The Company has exposure to credit risk, liquidity risk, interest rate risk and currency risk. The Company’s board of directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Audit Committee of the board of directors is responsible for reviewing the Company’s risk management policies.

 

(a)Credit risk

 

Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s cash. The carrying amount of these financial assets represents the maximum credit exposure. Cash and funds held in trust are on deposit with major American and Canadian chartered banks and the Company invests in high-grade short-term instruments.

 

22

 

 

Mind Medicine (MindMed) Inc.

Notes to Condensed Consolidated Interim Financial Statements

(Unaudited)

(Expressed in thousands of United States Dollars)

For the Three and Nine Month Periods Ended September 30, 2021 and September 30, 2020

 

16.FINANCIAL INSTRUMENTS (Continued)

 

(b)Liquidity risk

 

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company is a development stage company and is reliant on external fundraising to support its operations. Once funds have been raised, the Company manages its liquidity risk by investing in cash and short-term instruments to provide regular cash flow for current operations. It also manages liquidity risk by continuously monitoring actual and projected cash flows. All accounts payable and accrued liabilities are due within 12 months. The board of directors reviews and approves the Company’s operating and capital budgets, as well as any material transactions not in the ordinary course of business.

 

(c)Interest rate risk

 

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company holds its cash in bank accounts that have a variable rate of interest. The Company manages its interest rate risk by holding highly liquid short-term instruments and by holding its investments to maturity, where possible. The Company earned interest income for the nine months ended September 30, 2021 of $27 (December 31, 2020 - $13). Therefore, a 100 basis point change in the average interest rate for the nine months ended September 30, 2021 would have no material impact.

 

(d)Currency risk

 

The Company is exposed to currency risk related to the fluctuation of foreign exchange rates and the degree of volatility of those rates. Currency risk is limited to the portion of the Company’s business transactions and balances denominated in currencies other than the United States dollar.

 

Exposure to Foreign Currency (in USD)  Cash   Payables   Expenses
Nine Months
to Sept. 30, 2021
 
Canadian Dollars  $22,708   $(647)  $2,553 
Australian Dollars   359    (130)   1,648 
Swiss Francs   1,710    (82)   2,229 
British Pounds   -    (529)   742 
Czech Koruna   -    (56)   266 
Euro   -    (134)   600 
Balance, September 30, 2021  $24,777   $(1,578)  $8,037 

 

Therefore, a 1% change in the USD exchange rate would have a net impact on foreign currency balances as at September 30, 2021 of $232 (December 31, 2020 - $14). Also, a 1% change in the USD exchange rate on expenditures would have a net impact during the period of $80 assuming that all other variables remained constant.

 

23

 

Exhibit 99.2

 

MIND MEDICINE (MINDMED) INC.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS

 

FOR THE QUARTER ENDED SEPTEMBER 30, 2021

 

Dated: November 11, 2021

 

http://mindmed.co

 

 

 

 

MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

ABOUT THIS MANAGEMENT’S DISCUSSION AND ANALYSIS

 

All references in this management’s discussion and analysis, or MD&A, to the “Company”, “MindMed”, “we”, “us”, or “our” refer to Mind Medicine (MindMed) Inc., unless otherwise indicated or the context requires otherwise. The following MD&A is prepared as of November 11, 2021 for MindMed for the three and nine months ended September 30, 2021 and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2020 (the “Financial Statements”), which have been prepared by management in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

 

Our IFRS accounting policies are referred to in note 3 of the Financial Statements. All amounts are in United States dollars, unless otherwise indicated. References to “CAD$” are to Canadian dollars.

 

Mind Medicine (MindMed) Inc. (formerly Broadway Gold Mining Ltd. (“Broadway”)) was incorporated under the laws of the Province of British Columbia. Its wholly owned subsidiary, Mind Medicine, Inc. (“MindMed US”) was incorporated in Delaware. Prior to February 27, 2020, the Company’s operations were conducted through MindMed US.

 

On February 27, 2020, MindMed completed a reverse takeover transaction with Broadway by way of a plan of arrangement (the “Arrangement”) under the Business Corporations Act (British Columbia) pursuant to the arrangement agreement dated as of October 15, 2019 between Broadway, Madison Metals Inc., Broadway Delaware Subco Inc. and MindMed US (the “Arrangement Agreement”) which resulted in the Company becoming the parent company of MindMed US. MindMed US is deemed to be the acquirer in the reverse takeover transaction. As a result, the consolidated statements of financial position are presented as a continuance of MindMed US and the comparative figures presented are those of MindMed US.

 

Additional information relating to the Company, including the Company’s most recent Annual Information Form, can be found under the Company’s SEDAR profile at www.sedar.com.

 

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

 

This MD&A contains forward-looking statements within the meaning of applicable securities laws. All statements contained herein that are not clearly historical in nature are forward-looking, and the words “anticipate”, “believe”, “expect”, “estimate”, “may”, “will”, “could”, “leading”, “intend”, “contemplate”, “shall” and similar expressions are generally intended to identify forward-looking statements. Forward-looking statements in this MD&A include, but are not limited to, statements with respect to: the duration and effects of COVID-19 and any other pandemics on the Company’s workforce, business, operations and financial condition; expectations of future loss and accumulated deficit levels; projected financial position and estimated cash burn rate; requirements for, and the ability to obtain, future funding on favorable terms or at all; projections for development plans and progress of each of MindMed’s product candidates, particularly with respect to the timely and successful completion of studies and trials and availability of results from such studies and trials; expectations about MindMed’s product candidates’ safety and efficacy; expectations regarding MindMed’s ability to arrange for and scale up the manufacturing of MindMed’s product candidates; expectations regarding the progress, and the successful and timely completion, of the various stages of the regulatory approval process; expectations about the timing of achieving milestones and the cost of MindMed’s development programs; plans to market, sell and distribute product candidates; expectations regarding the acceptance of the Company’s product candidates by the market; MindMed’s ability to retain and access appropriate staff, management and expert advisers; expectations about whether various clinical and regulatory milestones will be achieved; the Company’s ability to strictly comply with federal, state, local and regulatory agencies in the United States and other jurisdictions in which the Company operates, including Australia, Switzerland and the Netherlands; the Company’s expectation that jurisdictions in which the Company operates, including Australia, Switzerland and the Netherlands, have similar regulatory frameworks as the United States; the Company’s expectations of the costs and timing to reach commercial production of drug products; the Company’s ability to secure strategic partnerships with academic research institutions and larger pharmaceutical and biotechnology companies; the Company’s continuation of strategic collaborations; MindMed’s strategy to acquire and develop new product candidates and to enhance the safety and efficacy of existing product candidates; expectations with respect to existing and future corporate alliances and licensing transactions with third parties, and the receipt and timing of any payments to be made by the Company or to the Company in respect of such arrangements; the Company’s strategy with respect to the expansion and protection of its intellectual property.

 

 1 

 

 

MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

All forward-looking statements reflect our beliefs and assumptions based on information available at the time the assumption was made. These forward-looking statements are not based on historical facts but rather on management’s expectations regarding future activities, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties, both general and specific, known and unknown, that contribute to the possibility that the predictions, forecasts, projections or other forward-looking statements will not occur. In evaluating forward-looking statements, readers should specifically consider various factors, including the risks outlined under the heading “Risk Factors” in this MD&A. Some of these risks and assumptions include, among others substantial fluctuation of losses from quarter to quarter and year to year due to numerous external risk factors, and anticipation that the Company will continue to incur significant losses in the future; uncertainty as to the Company’s ability to raise additional funding to support operations; the Company’s ability to generate product revenue to maintain its operations without additional funding; fluctuation of foreign exchange rates; the duration of COVID-19 and the extent of its economic and social impact; psychedelic inspired medicines may never be approved by regulator and the risks associated with violating any laws and regulations; the risks associated with the development of the Company’s product candidates which are at early stages of development; the difficulty of researching and developing drugs that target the central nervous system; consequences of the Company’s failure to comply with health and data protection laws and regulations; difficulty in establishing the Company’s reputation and its brand recognition; compliance with environmental, health and safety laws and regulations; unfavourable publicity or consumer perception; unfavourable future clinical research results; heightened scrutiny by the United States and Canadian authorities; inaccurate information posted on social media platforms; the Company’s reliance on the success of its product candidates; reliance on third parties to plan, conduct and monitor MindMed’s preclinical studies and clinical trials; unforeseen disruption in the process of drug development activities; reliance on third party contract manufacturers to deliver quality clinical and preclinical materials; requirements regarding commercial scale and quality manufactured products; the Company’s product candidates may fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or may not otherwise produce positive results; delays in clinical testing; risks related to filing INDs to commence clinical trials and to continue clinical trials if approved; the risks of delays and inability to complete clinical trials due to difficulties enrolling patients; the Company’s inability to obtain regulatory approval; risks associated with not achieving the Company’s milestones; competition from other biotechnology and pharmaceutical companies; the Company’s reliance on the capabilities and experience of MindMed’s key executives and scientists and the resulting loss of any of these individuals; misconduct or improper activities of the Company’s employees, contractors, consultants and agents; the Company’s ability to fully realize the benefits of its acquisitions; the inability to meet revenue targets of the Company’s investments; negative results from clinical trials; the novelty of psychedelics and the potential resulting lack of information; product liability claims; the Company’s ability to maintain product liability insurance; risks related to the Company’s information technology systems; the outbreak of infectious disease; difficulty of enforcing judgements; the Company’s limited operating history; the Company’s ability to adequately protect its intellectual property and trade secrets; the Company’s ability to source and maintain licenses from third-party owners; changes in patent law; the risk of patent-related litigation; risks related to sharing trade secrets; volatility of biopharmaceutical companies’ securities; the Company’s lack of dividends; risks related to various tax matters; the uncertainty of positive returns on the Company’s securities; risks related to the sales or conversion of the Company’s Subordinate Voting Shares; failure of the Company to maintain its internal controls; liquidity of the Company’s securities; risks related to the public markets; risks related to additional issuances and dilution of the Company’s securities; risks related to the Company’s Foreign Private Issuer status; risks related to the Company’s limited number of shareholders; risks related to the Company’s capital structure; potential declines in trading prices; risks related to published research and reports; the costs associated with maintain public listings; and other factors beyond the Company’s control, all as further and more fully described under the heading “Risk Factors” in this MD&A.

 

Although the forward-looking statements contained in this MD&A are based upon what our management believes to be reasonable assumptions, we cannot assure readers that actual results will be consistent with these forward-looking statements. Any forward-looking statements represent our estimates only as of the date of this MD&A and should not be relied upon as representing our estimates as of any subsequent date. We undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as may be required by securities legislation.

 

 2 

 

 

MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

THE ARRANGEMENT

 

Name Change, Consolidation and Change in Share Classes

 

Immediately prior to the closing of the reverse takeover transaction and in connection with the Arrangement, Broadway: (a) consolidated its common shares on an eight-for-one basis (the “Consolidation”), (b) changed its name to “Mind Medicine (MindMed) Inc.” (the “Name Change”), (c) reclassified its post-Consolidation common shares as subordinate voting shares (the “Subordinate Voting Shares”) and (d) created a new class of multiple voting shares (the “Multiple Voting Shares”) ((c) and (d) together, the “Share Capital Amendment”). Broadway’s registered shareholders received replacement share certificates evidencing the Consolidation, Name Change and Share Capital Amendment.

 

Merger of the Company and MindMed US

 

Further to the terms of the Arrangement, MindMed US merged with Broadway Delaware Subco Inc., a subsidiary of Broadway, under the corporate laws of Delaware. All outstanding Class B common shares of MindMed US (“Class B Shares”), Class C common shares of MindMed US (“Class C Shares”), and Class D common shares of MindMed US (“Class D Shares”) were exchanged for Class A common shares of MindMed US (“Class A Shares”), immediately following which all Class A Shares were exchanged, on a one-for-one basis (the “Exchange Ratio”), for Subordinate Voting Shares or Multiple Voting Shares (in the case of Multiple Voting Shares the exchange was on a one-for-one-hundred basis) of the Company (“Resulting Issuer Shares”) on a post-Consolidation basis. Such Class A Shares were then cancelled pursuant to the Arrangement, and MindMed US issued 1,000 shares of common stock to the Company as consideration for issuing the Resulting Issuer Shares to the (former) Broadway shareholders. Additionally, all convertible securities of Broadway were exchanged for convertible securities of the “Resulting Issuer” (i.e., the Company) on the basis of the Exchange Ratio.

 

Concurrent financings

 

Immediately prior to the completion of the Arrangement, MindMed US also completed its brokered and non-brokered private placement financings, in multiple tranches, of Class D Shares at a price of CAD$0.33 per share (the “MindMed US Offering”). See “Description of Share Capital” section for more details of the financing.

 

STOCK EXCHANGE LISTINGS

 

Neo Exchange listing

 

The Subordinate Voting Shares of the Company were listed for trading on the Neo Exchange Inc. (“NEO Exchange”) on March 3, 2020 (“MMED”). The financing warrants issued as part of a bought deal financing which closed on May 26, 2020 also trade on the NEO Exchange (“MMED.WT”), those issued as part of a bought deal financing which closed on October 30, 2020 also trade on the NEO Exchange (“MMED.WS”), those issued as part of a bought deal financing which closed on December 11, 2020 also trade on the NEO Exchange (“MMED.WA”) and those issued as part of a bought deal financing which closed on January 7, 2021 also trade on the NEO Exchange (“MMED.WR”)

 

NASDAQ listing

 

The Subordinate Voting Shares of the Company were listed for trading on The Nasdaq Capital Market (“NASDAQ”) on April 27, 2021 (“MNMD”).

 

BUSINESS

 

The Company is a clinical stage neuro-pharmaceutical drug development company developing product candidates based on psychedelic substances through rigorous science and clinical trials. The Company’s mission is to discover, develop and deploy psychedelic inspired medicines and therapies intended to treat diseases in the areas of psychiatry, neurology, addiction, pain and, potentially, others such as anxiety disorders, substance use disorders and withdrawal and Adult Attention Deficit Disorder. The Company defines its therapies program to include medicines which have the therapeutic benefits of psychedelics without the hallucinogenic effects. The Company defines its programs to include other substances with hallucinogenic properties, which may be administered in combination with therapy that may be performed in-clinic under the supervision of medical professionals or in a similar therapeutic setting. Through The Company’s drug development platform, the Company seeks to demonstrate the safety and efficacy of psychedelic-based medicines for a continuum of medical conditions, disorders and unmet medical needs. The Company has operations in Switzerland, Australia, the United States and Canada.

 

 3 

 

 

MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

The following diagram presents the inter-corporate relationships among the Company and its subsidiaries as of the date hereof.

 

 

MindMed US is the Company’s main operating subsidiary, through which its drug development programs are overseen: Project Layla (18-MC for indications related to substance use disorders, as described below); Project Flow (LSD for Adult Attention Deficit/Hyperactivity Disorder (“ADHD”), as described below); Project Lucy (LSD for anxiety disorders, as described below); Project Angie (LSD for pain, as described below); and R(-)-MDMA to treat social anxiety and functioning in populations including Autism Spectrum Disorder. The Company’s collaboration with the University Hospital Basel’s Liechti Lab (the “UHB Liechti Lab”) and the Company’s other research and development efforts related to psychedelics are additionally supported through the Company’s Swiss subsidiary, MindMed Discover GmbH. Additionally, MindMed Pty Ltd. is conducting a Phase 1 study in normal healthy volunteers to determine the safety, tolerability and pharmacokinetics of single ascending doses (SAD) and multiple ascending doses (MAD) of 18-MC for as part of Project Layla and its program to develop novel therapies for substance use disorders.

 

In furtherance of the Company’s mission to address unmet medical needs, including in particular the areas of mental health and addiction, the Company is conducting preclinical studies to develop a portfolio of product candidates and assemble a compelling drug development pipeline of psychedelic inspired medicines and therapies for human clinical trials in accordance with the regulations of the FDA and regulatory authorities in other jurisdictions where the Company or its affiliates operate. The Company’s approach to development focuses on therapeutic areas that represent significant unmet medical need. This includes in particular a focus on the development of treatments for psychiatric, substance use, neurological and pain disorders. In the United States, 51.5 million adults suffer from mental illness including a 21% one-year prevalence of anxiety disorders. Economically, this reality is represented by a total annual cost of mental health in the United States of US$148 billion. While treatment options are available, 88% of patients with opioid use disorder relapse upon discontinuation of buprenorphine; 59% of Generalized Anxiety Disorder patients report having residual symptoms; and 13% of the United States population report having uncontrolled pain.

 

The Company utilizes a discover, develop and deploy process in order to advance psychedelic inspired medicines and therapies. The Company defines discover as being the non-clinical, preclinical, and human clinical trials of psychedelic substances led by academic clinical investigators (i.e., investigator-initiated trials (“IITs”)), discovery of new chemical entities and formulations based on psychedelics, and the advancement of research and development on technologies that seek to demonstrate the safety and efficacy of psychedelic inspired medicines and therapies and/or to facilitate advancement of the Company’s develop and deploy initiatives. The Company defines develop as being drug development programs that are being advanced from the discover mandates, or originating from other sources, and transitioned to be company-sponsored drug development programs seeking to achieve marketing authorization. The Company defines deploy as the commercialization mandates that will aim to partner with insurers, technology companies, care providers and other delivery-focused stakeholders to scale access to the Company’s medicines, if approved for marketing by regulatory authorities.

 

 4 

 

 

MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

The Company’s business is premised on a growing body of research supporting the use of psychedelics to treat a myriad of mental health problems. For all product candidates, the Company will continue 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 other international regulatory authorities. This entails, among other things, conducting clinical trials utilizing research scientists, using internal and external clinical drug development teams, producing and supplying drugs according to current Good Manufacturing Practices (“GMP”), and conducting all trials and development in accordance with the regulations of the FDA and other international regulatory authorities.

 

This approach places the Company in an industry in which there are high barriers to entry, due to the need to conduct trials pursuant to applicable regulations, the time and costs required to do so, and the related need to develop and protect intellectual property associated with drug development. Therefore, the Company’s ability to build a compelling drug portfolio and pipeline and to raise the financing necessary for its operations are key to its success.

 

Processes

 

Discover

 

In the Discover projects, the Company conducts research and development (“R&D”) activities originating from internally generated concepts and from external collaborations. The Company is collaborating with the UHB Liechti Lab on various psychedelics and new potential therapeutic programs based on a multi-year, exclusive collaboration agreement with the UHB Liechti Lab on March 1, 2020. The agreement first covered LSD and psilocybin, but has since been expanded to incorporate other compounds and psychedelic substances such as MDMA, DMT and mescaline. These investigator-initiated clinical trials, intellectual property and technologies may ultimately be translated to commercial development programs. The Company is continually evaluating the acquisition of agreements and studies focusing on the medical benefits of other psychedelic substances and new chemical entities similar to known psychedelic substances to advance its R&D efforts.

 

On November 24, 2020, the Company announced that as part of its Discover projects, it established a digital medicine division known as “Albert”. Albert is in the process of assembling and recruiting a team of technologists, therapists and clinical drug development experts to help the Company research, develop and build an integrated technical platform and comprehensive toolset aimed at delivering psychedelic inspired medicines and therapies combined with digital therapeutics. Digital therapeutics are defined as evidence-based therapeutic interventions for patients to diagnose, prevent, manage or treat a mental disorder or disease or to facilitate the use of certain pharmaceutical products, such as the Company’s drug candidates. The Company will be evaluating the potential to pair digital tools, which may include wearables and the latest in machine learning, with psychedelic assisted therapies in order to give healthcare providers the ability to optimize and better understand the patient journey and therapeutic outcomes from pre-care through after-care. Recent advancements in digital therapeutics have the potential to enable a real time assessment of efficacy in both clinical trials and real-world settings which could lead to a more robust understanding of the value of a treatment and long-term impact on patient outcomes.

 

Develop

 

The Company is pursuing a pipeline and discovery strategy that seeks to advance both previously studied “classic psychedelic” molecules and psychedelic-inspired therapies that represent novel advancements on the classic psychedelics. The Company defines first generation or “classic psychedelics” as those that have been known and extensively used historically, including such molecules as DMT, MDMA, psilocybin and LSD. The Company defines second generation or optimized psychedelic-inspired drug candidates as those that have been pharmacologically modified or optimized to overcome limitations of the classic psychedelics. Second generation psychedelic-inspired therapies include closely related prodrugs or analogues, novel dosage forms, novel treatment models, novel administration methods and other improvements on classic psychedelics. The Company defines third generation psychedelic-inspired therapies as new chemical entities, which includes novel structural analogues to classic psychedelics.

 

 5 

 

 

MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

Psychedelic therapies represent a novel treatment paradigm that is believed to be primarily mediated by agonist activity at serotonin, dopamine and other cellular receptors in the brain (depending on the specific subclass of psychedelic). Among the serotonergic psychedelics, such as LSD and psilocybin, the mechanism of action is believed to be agonism of the serotonin 5-HT2A receptor which results in increases in global brain connectivity, entropic brain activity and increased single neuron excitability. LSD has also been shown to increase cerebral blood flow and functional connectivity in the brain. LSD and psilocybin have both been shown to demonstrate robust clinical responses in a wide range of conditions and are believed to be rapid acting therapies that also have sustained action for many days or weeks following a single administration.

 

Currently, the Company’s commercial development pipeline consists of programs relating to 18-MC,LSD and R(-)-MDMA. The Company’s immediate commercial development priorities are to develop treatments for substance use disorders or associated signs, symptoms and conditions, by developing a non-hallucinogenic congener of the psychedelic molecule ibogaine (18-MC), conduct clinical trials of LSD for adult ADHD anxiety disorders, specifically for the treatment of Generalized Anxiety Disorder, and conduct clinical trials of R(-)-MDMA for the treatment of social anxiety and functioning in populations affected by the Autism Spectrum Disorder. The Company is also planning to initiate regulatory discussions with the FDA in 2021 with an aim of advancing LSD for the treatment of certain pain conditions into clinical trials in 2022.

 

The Company is continuously assessing the opportunity to expand target disease indications and geographic markets for development and deployment of its drug candidates. The four disease areas or therapeutic franchises of primary focus for the development of its drug candidates are: psychiatry, addiction medicine, pain and neurology.

 

The Company pursues intellectual property and market protection strategies to protect all of its development candidates and innovations, seeking to maximize market protection and exclusivity in anticipation of potential approval of its therapies or technologies. While this intellectual property strategy extends beyond the pursuit of patent applications, such applications are a central component of this strategy. The Company seeks to file patent applications on all of all substantial inventions across its pharmaceutical and digital health pipelines, including pursuing patent applications and other intellectual property for composition of matter claims (e.g. for new chemical entities), methods of use claims (e.g. for new indications), method of manufacturing claims and all other available claims such as those covering combination therapies, artificial intelligence and machine learning algorithms, innovative dosing protocols, unique physiochemical attributes or formulations and forms and methods of administration that may have unique pharmacokinetics. At present, the Company has filed over 30 provisional patent applications which among other claims encompass over 45 compounds (including over 30 of which the Company believes are new chemical entities), 11 of which applications cover LSD and four of which cover 18-MC. In relation to the Company’s multi-generational approach to developing psychedelic-inspired therapies, each generation of psychedelic-inspired drug candidates is represented by a unique intellectual property landscape, with the strongest intellectual property being available for third generation candidates, intellectual property available for novel innovations of second generation candidates and specific intellectual property available for classic psychedelics where gaps in the prior art exist.

 

Deploy

 

The Company’s strategy is currently focused on the discovery and development of product candidates based on psychedelic substances, but the Company may ultimately seek to commercialize and deploy its psychedelic inspired medicines and therapies to patients. As a result, the Company has entered into a funding arrangement with NYU Langone Health to establish the NYU Langone Training Program to help the Company understand and prepare for the future deploy phase of its business plan.

 

Overview of Current Projects

 

The Company currently has ten significant projects, none of which have yet generated revenue:

 

1.developing a non-hallucinogenic version of the psychedelic ibogaine to treat select substance use disorder(s), known as “Project Layla”;

 

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MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

2.developing LSD for the treatment of anxiety disorders, specifically Generalized Anxiety Disorder, known as “Project Lucy”;

 

3.developing LSD for the treatment of select pain conditions, known as “Project Angie”;

 

4.developing R(-)-MDMA for the treatment of social anxiety and functioning in populations including Autism Spectrum Disorder;

 

5.executing a clinical trial of LSD for the treatment of adult ADHD, known as “Project Flow”;

 

6.the ongoing collaboration with the UHB Liechti Lab;

 

7.the ongoing collaboration with MindShift Compounds AG;

 

8.the ongoing collaboration with Nextage Therapeutics Ltd. (“Nextage”);

 

9.Albert, which combines digital therapeutics with psychedelic inspired medicines and therapies; and

 

10.the NYU Langone Training Program.

 

Develop Projects

 

Project Layla (18-MC for the treatment of indications linked to substance use disorders)

 

The Company’s lead third generation/new chemical entity (NCE) drug candidate, 18-MC, is a α3β4 nicotinic receptor antagonist that is being developed for the treatment of substance use disorders and associated indications. 18-MC is a non-hallucinogenic analogue, or congener, of the classic psychedelic ibogaine. 18-MC would be the first drug approved that carries out its action by α3β4 antagonist which results in regulation of dopamine levels in the brain. Opioid use results in spikes in brain dopamine levels which amplify the risk of developing addiction. In Opioid Use Disorder (“OUD”), dopamine levels are dysregulated, spiking with each use of opioids and dropping in between uses. Current therapies for OUD, called medication assisted therapy or MAT, primarily have their effects by being partial agonists or antagonists at the same receptors as opioids. While potentially life-saving, agonist therapies result in more regulated but cyclical levels of dopamine in the brain. The novelty of 18-MC is that it is believed to regulate dopamine levels in a way that could stabilize dopamine levels enabling a return to sustained baseline levels.

 

Ibogaine has been historically used and studied as a treatment for opioid addiction, with promising preliminary efficacy, though its use is likely to be significantly limited by its hallucinogenic effects, potential neurotoxicity and well-established risk of sudden death due to cardiovascular failure (specifically, bolus administration of ibogaine can result in a cardiovascular arrhythmia called Torsade de Pointes which can result in sudden death). Unlike ibogaine, 18-MC is not hallucinogenic, does not have the same cardiovascular risk and is not believed to be neurotoxic. In addition to this safety profile, 18-MC administration has been shown to result in approximately the same efficacy in animal models of cocaine, opioid and other substance self-administration in animal models of disease.

 

Project Layla is focused on opioid withdrawal treatment, the treatment of opioid use disorder and the treatment of other substance use disorders, in respect of which the Company is currently conducting a Phase 1 trial evaluating 18-MC, a non-hallucinogenic synthetic derivative of the psychedelic substance ibogaine. The preliminary data from this trial suggests that, at the doses tested to date, no serious adverse events have been reported in 18-MC. In Study MMED003, a Phase 1 clinical trial being conducted at a single clinical research site in Perth, Australia, a total of 75 subjects have been administered 18-MC at doses ranging from 4 to 325 milligrams twice per day (for one day; 5 subjects per arm) and 2 to 90 milligrams twice per day (for up to 7 days, n=5 per arm). Based on the safety profile observed in this study to date, the study’s safety review committee has determined to continue dose escalation in the study to gather data from subjects administered higher doses of 18-MC for one or seven days. Because early findings from this study indicated that plasma levels of 18-MC were greater than expected, the Company has determined to take additional time to evaluate the data from the Phase 1 trial. Following completion of the Phase 1 trial which is anticipated in late 2021, the Company intends to conduct a Phase 2a proof of concept study, to evaluate 18-MC’s effectiveness in mitigating the symptoms of opioid withdrawal in patients undergoing opioid detoxification and assess the safety and tolerability of 18-MC in this patient population. A meeting with the FDA to discuss the development program for 18-MC was originally scheduled for the second quarter of 2021 but, at the request of the FDA, the meeting request was withdrawn and will be resubmitted following completion of Study MMED003.

 

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MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

Findings from the Phase 2 trial could greatly impact timelines and future capital requirements for Project Layla. In addition, the Company may need to conduct additional Phase 2 trials or additional Phase 1 studies to progress Project Layla, which may impact timelines and required capital. The Company may elect to add additional drug development projects that complement Project Layla and its development programs targeting substance use disorders, including hallucinogenic treatments for substance use disorders, but none have been selected for development at this time.

 

Project Lucy (LSD for the treatment of anxiety disorders, specifically Generalized Anxiety Disorder)

 

The Company’s lead classic psychedelic drug candidate, its proprietary form of LSD (“MM-120”), is being developed leveraging extensive preclinical and clinical research dating back to the original discovery of LSD by a scientist at Sandoz named Albert Hoffman. This body of historical evidence includes 29 published clinical studies of LSD, 12 of which have been published since 2008, and encompasses over 1,000 patients that have been administered a form of LSD in clinical trials. Early uses and research of LSD was focused on the treatment of anxiety, depression and alcoholism, though modern evidence from preclinical, clinical and naturalistic studies of LSD have expanded its potential use cases. Modern research has further characterized the pharmacokinetics and pharmacodynamics of LSD, which is being used to inform the clinical development approach for MM-120. Despite this strong historical body of evidence for LSD, it has been largely overlooked by commercial development programs in recent years with more commercial entities focusing on the development of psilocybin. The Company believes this creates a unique opportunity to pursue MM-120, particularly given some of the potential advantages of LSD over psilocybin such as the lack of need for bioactivation as psilocybin must be metabolized in the body to have its pharmacological activity and MM-120’s high potency that translates into a low microgram therapeutic range whereas psilocybin is typically administered at larger doses.

 

As part of the Company’s decision to add a therapy for anxiety disorders to its clinical development pipeline, the Company established Project Lucy. In December 2020, the Company successfully completed a pre- investigational new drug application (“IND”) meeting with the FDA for the treatment of an anxiety disorder with LSD. The Company intends to submit an IND with the FDA in the second half of 2021, with a Phase 2b clinical trial evaluating experiential doses of LSD in an anxiety disorder. The Company is assembling and using data from its data acquisition from the UHB Liechti Lab to help support its IND filing to the FDA.

 

As a result of the Company’s data acquisition from the UHB Liechti Lab, the Company received the data and worldwide rights to an ongoing Phase 2 academic trial in respect of LSD for anxiety administered by Professor Dr. Matthias Liechti and a psychedelic therapy expert, Dr. Peter Gasser. Dr. Gasser was appointed as the Clinical Advisor for Project Lucy in August 2020. The data and know-how will help build the Company’s understanding of LSD’s uses for anxiety disorders and its potential as a medication for serious mental health conditions.

 

On November 2, 2020, the Company announced that, in collaboration with the UHB Liechti Lab, it has completed an academic Phase 1 study measuring LSD dose-dependent induced subjective responses at doses of 25 micrograms up to 200 micrograms of LSD. The academic study provided relevant data to support Project Lucy as the Company identifies optimal dose levels of LSD to test in its intended Phase 2 LSD anxiety trial.

 

Project Flow (LSD for the treatment of adult ADHD)

 

As part of Project Flow, the Company is preparing a clinical trial of LSD for adult ADHD. A Phase 2a proof of concept trial for the low dose LSD program has received regulatory approvals from the Netherlands and Switzerland. The Company has selected two principal investigators and signed clinical trial agreements with the UHB Liechti Lab and Maastricht University. After the Company’s clinical team assesses the results from the Phase 2a proof of concept clinical trial, the Company will determine the best future strategy for additional clinical trials based on these findings and future milestones for Project Flow. The Company anticipates that the trial will run over two years commencing in the fourth quarter of 2021.

 

Project Angie (LSD for the treatment of pain)

 

Beyond the most common uses of psychedelics for the treatment of psychiatric conditions (such as depression or anxiety), mounting mechanistic and clinical evidence supports other potential clinical applications such as in the treatment of pain. Psychedelics like LSD are believed to have a novel mechanism of action among pain therapies, targeting the descending pain pathways as opposed to existing therapies (opioids, nonsteroidal anti-inflammatory drugs (NSAIDs), aesthetics and N-Methyl-D-aspartic acid (NMDA) antagonists, which target the ascending pain pathways). Even doses at the low end of LSD’s therapeutic range (i.e. a 20-microgram dose) have been shown to increase pain tolerance and decrease perceived pain when tested in experimental models of acute pain.

 

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MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

The Company is in the initial planning stages to conduct clinical trials of LSD for the treatment of pain. The Company is currently preparing to submit a pre-IND meeting request to FDA in the second half of 2021. Clinical studies under Project Angie are not anticipated to commence until 2022 and are subject to the outcome of the proposed pre-IND meeting.

 

Discover Projects

 

UHB Liechti Lab Initiatives

 

R&D Collaboration & Exclusive License to Clinical Trials of LSD, MDMA, DMT, Psilocybin, Mescaline

 

On April 1, 2020, the Company announced that it had signed a multi-year, exclusive collaboration with the UHB Liechti Lab, the world-leading psychedelics pharmacology and clinical research group based in Basel, Switzerland. Pursuant to the agreement, the Company acquired exclusive worldwide rights to data, compounds, and patent rights associated with the UHB Liechti Lab’s research with LSD and other psychedelic compounds, including data from preclinical studies and completed or ongoing LSD and MDMA clinical trials. The Company has commenced work with the UHB Liechti Lab to file patent applications for the data and clinical trials it has generated over a 10-year period and from current ongoing trials.

 

The Company will support ongoing and planned R&D clinical trials and commercial development trials under the direction of Professor Dr. Liechti. Professor Dr. Liechti will have primary responsibility for the development of the selected compounds, and the Company will provide research funding and milestone payments in return for the exclusive license to existing and future data and intellectual property generated from clinical trials. UHB Liechti Lab will receive royalties and development revenue on any products marketed through the collaboration.

 

MDMA Research

 

The Company added the psychedelic compound MDMA to its discover portfolio with research being led by Professor Dr. Liechti. After starting the UHB Liechti Lab, over the past ten years Professor Dr. Liechti has led multiple clinical trials of the safety and pharmacodynamics of MDMA. The cumulative data from the work done in the UHB Liechti Lab will enable the Company to design clinical trials and form a strategy for MDMA or its derivatives as potential future development programs in its portfolio.

 

The Company committed to fund future R&D of new psychedelic therapies being pursued by the UHB Liechti Lab with the intention to create next-generation psychedelic inspired medicines that incorporate MDMA as a component of these therapies. The UHB Liechti Lab and the Company plan to explore combination treatments of LSD and MDMA to optimize the subjective effect profiles and potentially join the benefits of both psychedelics in various treatment paradigms. A combined MDMA and LSD randomized placebo-controlled Phase 1 trial was initiated in early 2021.

 

DMT Research

 

The Company will also fund the UHB Liechti Lab to perform research on DMT, the principally active ingredient in ayahuasca. The Company is providing funding for a Phase 1 clinical trial testing various intravenous dosing regimens of DMT that began in July 2021. 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, will be evaluated in the Phase 1 clinical trial. Through this Phase 1 clinical trial, the Company and the UHB Liechti Lab are exploring how DMT can achieve experiential effects similar to ayahuasca by testing a more controlled intravenous dosing method. The Phase 1 study is a randomized, double blind, placebo-controlled, five-period crossover trial in 30 healthy volunteers who will undergo five sessions with different DMT doses.

 

The human safety data and associated know-how gathered in this Phase 1 clinical trial will better enable the Company’s clinical team to design future potential drug development programs based on DMT sessions. Currently, no study has definitively determined the elimination half-life of DMT and other pharmacokinetic parameters and there is limited known data on dosing regimens of pure DMT. This Phase 1 study is expected to provide a well-controlled study setting to illuminate these shortcomings in the current clinical understanding of DMT and is anticipated to pave the way for future Phase 2a proof of concept efficacy studies in various indications.

 

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MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

Neutralizer Technology Research

 

In collaboration with the UHB Liechti Lab, the Company filed a provisional patent application for neutralizer technology intended to shorten and stop the hallucinogenic effects of using LSD during a therapy session. This innovative approach may help reduce the acute effects of a psychedelic drug and help shorten the hallucinogenic effects when required by a patient or medical professional. The Company is seeking to develop research findings that may one day inform therapists and other medical professionals on how to better control the effects of dosing LSD in a clinical setting to potentially improve the patient experience and outcomes. This could pave the way for greater therapeutic applications of LSD and shorter-acting psychedelic therapy treatments.

 

The Company is working in collaboration with the UHB Liechti Lab on a Phase 1 double-blind, placebo-controlled, random-order two-period crossover design clinical trial evaluating the effect of ketanserin on the acute response to LSD in healthy subjects after LSD administration. The study is being conducted at the UHB Liechti Lab and is expected to be completed in Q4 2021. This study is intended to support the provisional patent application.

 

Personalized Medicine Technology Research

 

The Company, in collaboration with UHB Liechti Lab, is also in the process of researching and developing technologies and analytics that will seek to personalize psychedelic therapy experiences. One such research effort aims to optimize the dosing of MDMA, LSD and other psychedelics based on individual characteristics including age, gender, pharmacogenetics, personality traits, moods, metabolic markers and therapeutic drug monitoring. Through its clinical research, the UHB Liechti Lab is seeking to identify ways to predict and optimize the amount of a psychedelic dose and dosing regimen for therapy. To assemble a patient’s personalized dosing regimen and therapy session, the Company and the UHB Liechti Lab’s analytics method is being developed to aggregate multiple data and criteria of patients in a pre-dose screening and analysis process. Three provisional patent applications have been filed covering MDMA dose optimization and LSD dose response. The Company has received exclusive global rights from the UHB Liechti Lab to commercialize the outcome of these provisional patent applications. Further, biomarkers such as brain-derived neurotrophic factor (“BDNF”) are assessed and evaluated to potentially be used as predictors of markers of positive effects on neuroplasticity and therapeutic response.

 

LSD for Treatment of Cluster Headache Research

 

The Company is supporting and collaborating on a Phase 2 clinical trial evaluating LSD for the treatment of cluster headaches at the UHB Liechti Lab. Cluster headaches are a relatively uncommon primary headache disorder that is one of the trigeminal autonomic cephalgias; they are considered to be among the most severe forms of pain. The Phase 2 trial began recruiting patients in the first quarter of 2019 and has commenced treating patients with LSD. The intention of this trial is to evaluate the administration of LSD to target cluster headache patients. As part of this collaboration with the UHB Liechti Lab, the Company acquired the exclusive global rights to all data and intellectual property generated in this Phase 2 trial of LSD for cluster headaches.

 

LSD for Treatment of Major Depression Disorder Research

 

The Company is supporting and collaborating on a Phase 2 clinical trial evaluating LSD for depression at the UHB Liechti Lab. This study will evaluate the potential benefits of LSD-assisted psychotherapy in patients suffering from major depressive disorder. This is a randomised, double-blind, active-placebo-controlled trial using either two moderate to high doses of LSD (100 micrograms and 100 micrograms or 100 micrograms and 200 micrograms) as intervention and two low doses of LSD (25 micrograms and 25 micrograms) as active-placebo control. The study is planned to include 60 patients over the age of 25 with major depressive disorder (according to the Diagnostic and Statistical Manual of Mental Disorders (“DSM”)). The main outcome measurements are expected to be changes in depressive symptomatology (Inventory of Depressive Symptomatology, Self-Report and Beck Depression Inventory), anxiety (State-Trait Anxiety Inventory), and general psychopathology (Symptom Checklist-90) compared with active-placebo-assisted psychotherapy. This investigator-initiated study started in early 2020 and is planned to be completed in 2023.

 

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MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

Maastricht University Initiatives

 

On January 12, 2021, the Company announced an LSD study evaluating the potential benefits of LSD on cognitive performance, sleep quality, mood, neuroplasticity markers, emotion regulation, quality of life and immune system response. The study will be conducted in collaboration with Dr. Kim Kuypers of Maastricht University in the Netherlands, a global, leading authority on the use of psychedelics. In order to advance the scientific understanding of low doses of LSD for clinical purposes, the randomized placebo-controlled study will specifically measure the effects of low doses of LSD on neuroplasticity markers such as BDNF plasma levels. Leveraging Albert, the Company is integrating innovative digital tracking devices and software into the study to better assess LSD’s effects on various digital clinical markers on the human body. The study is planned to start in Q4 2021.

 

MindShift Compounds AG Initiatives

 

The Company entered into an agreement with MindShift Compounds AG, to develop and patent next-generation psychedelic compounds with psychedelic or empathogenic properties. The first initial compounds have already been synthesized by MindShift Compounds AG and the Company filed related provisional patent applications. The Company plans to begin first-in-human Phase 1 clinical trials as early as the first quarter of 2022 through its existing clinical trial platform for psychedelic and empathogenic compounds in Switzerland. These initiatives are intended to expand the Company’s current clinical pipeline with additional compounds with similar and potentially improved therapeutic properties. The Company acquired the exclusive global rights related to intellectual property derived from the medicinal chemistry/synthesis, drug discovery and product development efforts through its collaboration with MindShift Compounds AG.

 

Nextage Initiatives

 

The Company launched an exclusive collaboration with Nextage, an Israeli innovative drug development company, to optimize the delivery of certain psychedelic drug candidates, leveraging Nextage's proprietary Brain Targeting Liposome System (BTLS) delivery technology. Utilizing this technology, the Company and Nextage are collaborating to develop a proprietary formulation of ibogaine derivatives, seeking to minimize the systemic exposure while maintaining effective concentrations in the brain, with the objective of improving the benefit-risk profile of their delivery.

 

Deploy Projects

 

Albert and HealthMode

 

The Company established a digital medicine division known as “Albert”. Albert aims to have a team of technologists, therapists, and clinical drug development experts to help the Company research, develop and build an integrated technical platform and comprehensive toolset aimed at delivering psychedelic inspired medicines and therapies combined with digital therapeutics. Digital therapeutics are defined as evidence-based therapeutic interventions for patients to prevent, manage, or treat a mental disorder or disease. The potential to pair digital tools, which may include wearables and the latest in machine learning, with psychedelic assisted therapies, can give healthcare providers the ability to optimize and better understand the patient journey and therapeutic outcomes from pre-care through after-care. Recent advancements in digital therapeutics have the potential to enable a real time assessment of efficacy in both clinical trials and real-world settings, which can lead to a more robust understanding of the value of a treatment and long-term impact on patient outcomes.

 

In February 2021, the Company completed the acquisition of HealthMode, Inc. (“HealthMode”) to build out the Albert division. HealthMode is a digital medicine and therapeutics company that uses artificial intelligence (“AI”) enabled digital measurement to increase the precision and speed of clinical research and patient monitoring. With the acquisition, the Company has gained access to HealthMode’s intellectual property, platforms for clinical drug trials and its entire 24 person digital medicine team. The Company will incorporate HealthMode’s machine learning engineering, product development and operations employees based in Silicon Valley, New York City, Bratislava and Prague into Albert.

 

The Company’s digital projects are oriented around developing product candidates that will be applied to two primary clinical periods: activities during a treatment session (referred to as “intrasession”) and activities between treatment sessions (referred to as “intersession”). Each product candidate consists of a platform that contains a number of separate underlying components, some of which the Company anticipates will be within the scope of the Food, Drug & Cosmetic Act’s definition of medical devices and others will not be regulated as medical devices. For the medical device products, the Company will engage with the FDA and other international regulatory authorities to receive guidance along the development pathway, culminating with a potential submission for regulatory clearance or approval. The Company expects that each medical device product candidate in development will be, for the purpose of FDA regulations, Investigational Device Exemption (IDE) exempt, non-significant risk, Class I or Class II Software as Medical Device (SaMD).

 

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MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

The intersession monitoring platform may include components that support patient education, engagement, preparation and assistance; deep digital diagnosis that allows greater granularity to complement DSM diagnoses; support for treatment selection: modality dose and timing; real world monitoring of trends for relapse prediction and re-treatment decisions; engagement in health maintenance behaviors; and AI models to inform psychotherapeutic intervention. The intrasession monitoring platform may include components that provide in-session monitoring for safety, efficacy and additional interventions; clinician decision support for drug and non-drug therapeutic sessions; and predictive models linking interventions and treatment outcomes.

 

In the intersession monitoring platform, the Company has current products that are being used in clinical studies for the detection and prediction of transdiagnostic agitation, opioid withdrawal for people with opioid use disorders, monitoring of acute and chronic pain and tracking symptoms and medication in Parkinson’s disease. The Company also has products for measurement of anxiety disorders, substance use disorders and pain measurement that are either currently collecting clinical data (from existing data sources) or are intended to start doing so by the end of 2021. Earlier in the digital pipeline, the Company has intrasession products that could potentially monitor anxiety and affective disorders and provide decision support among other subject monitoring.

 

NYU Langone Health Psychedelic Medicine Clinical Training Program

 

The Company entered into a funding arrangement with NYU Langone Health to establish the NYU Langone Training Program to assist the Company understand and prepare for the future deploy phase of its business plan. The Company committed US$5 million over a five-year period to found and launch a clinical training program focused on psychedelic assisted therapies and psychedelic inspired medicines at NYU Langone Health, one of the United States’ premier academic medical centers.

 

The NYU Langone Training Program is the first step in a larger initiative to establish a Center for Psychedelic Medicine at NYU Langone Health. The NYU Langone training program is intended to train additional clinical researchers in psychedelic medicines. In addition, the Company hopes to work with NYU Langone and other academic institutions as it prepares for the future deploy phase of its business plan that will inevitably require training large numbers of medical personnel including psychiatrists to administer psychedelic assisted therapies at scale in the United States. NYU Langone Health will have full and free discretion in using the funds for the development and conduct of the training program and operations of the Center for Psychedelic Medicine. The launch of the Center for Psychedelic Medicine at NYU Langone Health is still subject to additional funding from other parties. It is not anticipated that the Company will generate future revenue from this project.

 

BUSINESS COMBINATION

 

On February 26, 2021, the Company acquired 100% of the issued and outstanding shares of HealthMode for aggregate consideration of $27,634,000, consisting of cash of CAD $285,788 ($225,000), a prior advance of $250,000, equity consideration of 81,497 multiple voting shares of MindMed (equivalent to 8,149,700 subordinate voting shares), and 33,619 stock options, which are convertible into Subordinate Voting Shares of the Company.

 

In the completion of this transaction, MindMed Mergerco Inc. (“Mergerco”), a wholly owned Delaware subsidiary of the Company merged with and into HealthMode. As a result, the separate corporate existence of Mergerco ceased and HealthMode continued its corporate existence as the surviving Company in the Merger and as a wholly-owned subsidiary of the Company.

 

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MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

HealthMode’s primary operations consist of developing technologies using AI-enabled digital measurement to increase the precision and speed of clinical research and patient monitoring.

 

(i)Outlined below is a summary of the purchase consideration and fair value of assets acquired and liabilities assumed

 

Details of the consideration transferred are:     
      
Cash paid (CAD $285,788 converted to USD @ 1.2685 CAD/USD)  $225,000 
      
Cash advances paid   250,000 
      
Fair value of shares issued (FV of a Company share = USD $3.32 based on closing share price as at the transaction date)   27,048,000 
      
Value of options issued (33,619 options at FV of USD $3.30 /share option (using Black-Scholes model)   111,000 
      
Total  $27,634,000 

 

The fair value of the shares issued as consideration was determined as follows:

 

The estimated fair values of the assets acquired, and liabilities assumed in the acquisition of HealthMode for the purposes of the provisional purchase price allocation are as follows:

 

Cash  $178,000 
      
Prepaid and other current assets   74,000 
      
Property and equipment   1,000 
      
Intangible assets (acquired technology)   25,000,000 
      
Goodwill   9,992,000 
      
Total assets  $35,260,000 
      
Accounts payable and accrued liabilities   876,000 
      
Deferred tax liability   6,750,000 
      
Total liabilities  $7,626,000 
      
Net assets acquired  $27,634,000 

 

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MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

The intangible assets consist of the following:

 

       Useful
Life
Frontend Systems Developed  $5,000,000   2 years
         
Backend Systems Developed   5,000,000   2 years
         
Value of models/data/work product   5,000,000   2 years
         
HM Pooply Product   5,000,000   2 years
         
HM Cough Product   5,000,000   2 years
         
   $25,000,000    

 

The application of IFRS requires management to determine the fair value of the net assets acquired and liabilities assumed (with certain exceptions). As the acquisition closed on February 26, 2021, management has not completed its assessment of the fair value of assets acquired and liabilities assumed. As management completes its assessment of the fair value of net assets acquired and liabilities assumed, there could be adjustments to the values outlined above, however such adjustments are not expected to be material. This period such revisions may be made is not to 12 months from the date of the acquisition.

 

The goodwill is the attributable value of the assembled workforce, and the related expertise and developed business function. Further, the acquisition is expected to allow the Company to streamline its product development processes. None of the goodwill is expected to be deductible for tax purposes.

 

(ii)Acquisition-related costs

 

Acquisition-related costs of $296,000 were incurred by the Company and are included in general and administrative expenses. These costs primarily consist of diligence and legal costs.

 

LEGAL PROCEEDINGS

 

To our knowledge, there have not been any legal or arbitration proceedings, including those relating to bankruptcy, receivership or similar proceedings, those involving any third party, and governmental proceedings pending or known to be contemplated, which may have, or have had in the recent past, significant effect on our financial position or profitability.

 

Also, to our knowledge, there have been no material proceedings in which any director, any member of senior management, or any of our affiliates is either a party adverse to us or has a material interest adverse to us.

 

RESULTS OF OPERATIONS

 

For the Third Quarter of 2021

 

Overview

 

Since inception, we have incurred losses while advancing the research and development of our products and processes. Comprehensive loss for the three months ended September 30, 2021 was $24,300,000. The loss was due primarily to general and administrative expenses of $4,975,000, research and development costs of $7,071,000 and share-based payments of $7,966,000.

 

During the period ended September 30, 2021, MindMed continued to enhance the resources it requires to build its pipeline of opportunities. This included adding personnel and contract resources and ramping up the nonclinical aspects of our activities. During the period, the company also completed the transition from Co-founder CEOs to new senior management and enhanced the board of directors by adding new board members.

 

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MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

Research and Development

 

To date, our resources were focused primarily on the development of our 18-MC and LSD programs and the commencement of related clinical activities. We have commenced clinical studies and have funded data and study acquisitions and have begun to acquire materials required to supply our studies.

 

Since inception to September 30, 2021, the Company has expended approximately $34,932,000 on research and development, including consulting and licensing fees, manufacturing costs, clinical research and regulatory data and study acquisition costs, as follows:

 

Costs  Q3-21(1)
(US$)
   Q2-21(1)
(US$)
   Q1-21(1)
(US$)
   Q4-20(1)
(US$)
   Q3-20(1)
(US$)
   Q2-20(1)
(US$)
   Q1-20(1)
(US$)
   Incep’n
to Dec.
19(1)
(US$)
   Total(1)
(US$)
 
Payroll, consulting and benefits   1,931    2,496    1,269    842    1,011    627    672    801    9,649 
Licensing fees   400    -    400    -    200    -    500    727    2,227 
Manufacturing costs   964    589    1,096    2,161    782    691    207    333    6,823 
Clinical research and regulatory expenses   1,993    924    1,815    1,323    1,858    930    5    115    8,963 
Data and study acquisition cost   1,181    -    698    346    1,219    690    584    -    4,718 
Other   602    657    481    240    272    83    143    73    2,552 
Total   7,071    4,667    5,759    4,912    5,342    3,021    2,111    2,049    34,932 

 

Note:

 

(1)All dollar amounts are in thousands.

 

The table below describes the next stage of each of the Company’s material projects, as well as the anticipated timing and costs required to complete such stage.

 

Project  Stage of Project  Expected
Timing to
Complete
Stage
 

Expected Costs
to Complete
Stage(1)

(US$)

  

Total
Proceeds
Allocated(1)(2)

(US$)

 
Discover  UHB Liechti Lab clinical trials  Phase 1 IIT, LSD and MDMA  late 2022   Nil    10,346(3)
      Phase 1 IIT, DMT regimen  mid 2022   530      
      Phase 1 IIT, LSD and ketanserin  early 2022   110      

 

15

 

 

MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

 

   Phase 1 IIT, LSD bioequivalence  early 2023   110      
   Phase 1 IIT, Mescaline Dose Response  mid 2023   760      
   Phase 1 IIT, Novel MDMA  early 2024   710      
   Phase 1 IIT, SERT- psilocybin  complete   Nil      
   Phase 2 IIT evaluating LSD for the treatment of cluster headaches  late 2023   200      
   Phase 2 IIT evaluating LSD for the treatment of Major Depressive Disorder  Early 2024   54    - 
   Phase 2 IIT evaluating LSD for the treatment of anxiety disorders  Early 2022   56    - 
MindShift Compounds AG Collaboration  Drug discovery efforts to identify and synthesize novel psychedelic-related molecules  Ongoing   1,580    2,000 
Nextage Therapeutics Collaboration  Formulation development and optimization of ibogaine derivatives in brain target liposome delivery system  Early 2022   500    - 
Albert  Beginning stages of assembling a team of technologists, therapists, and clinical drug development experts  Ongoing(4)   To be determined(4)    15,701 

Develop  Project Layla  Phase 1 trial evaluating 18-MC  late 2021   4,000    7,870(3)
      Phase 2a proof of concept study evaluating 18-MC  late 2023   5,600      
   Project Lucy  Phase 2b clinical trial evaluating experiential doses of LSD in an anxiety disorder  late 2023   18,000    16,782 
   Project Flow  Phase 2a proof of concept trial for the repeat low dose LSD in adult ADHD  late 2023   3,500    3,084(3)

 

16

 

 

MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

   University Maastricht, LSD microdosing study  Phase 1 IIT, LSD microdosing  mid 2022   460    550 
Deploy  NYU Langone Health  Investment to found and launch a clinical training program focused on psychedelic assisted therapies and psychedelic inspired medicines  5 years   5,000    N/A(5) 

 

Notes:

 

(1)All dollar amounts are in thousands.

(2)The “Total Proceeds Allocated” column in the table above sets out the aggregate amounts allocated to each project in the prospectuses related to the Company’s offerings completed on May 26, 2020 (the “May Offering”), October 30, 2020 (the “October Offering”), December 11, 2020 (the “December Offering”) and the January 7, 2021 (the “January Offering”). While the Company anticipates that the amounts described in the “Expected Costs to Complete Stage” column above will be used to complete the next stage of each project, the nature, timing and costs related to future stages of each project are difficult to predict, and as such the amounts above are subject to change. The amounts allocated to each project in the applicable prospectus has been converted to United States dollars based on (i) the May 30, 2020 Bank of Canada exchange rate of US$1.00 = C$1.3785 in respect of the May Offering; (ii) the October 30, 2020 Bank of Canada exchange rate of US$1.00 = C$1.3318 in respect of the October Offering; (iii) the December 11, 2020 Bank of Canada exchange rate of US$1.00 = C$1.2769 in respect of the December Offering and (iv) the January 7, 2021 Bank of Canada exchange rate of US$1.00 = CAD$1.2707 in respect of the January Offering.

(3)In the prospectuses related to the May Offering, the October Offering, the December Offering and the January Offering, the Company has also allocated an aggregate of $16,038 towards the chemistry, manufacturing and control of substances such as LSD and 18-MC, among others.

(4)The Company continues to evaluate its full budget and strategy for Albert and will make announcements related thereto through is regular continuous and timely disclosure once this process is complete and certain key hires and personnel are in place. The Company anticipates that in 2021 it will undertake a product ideation phase with a digital therapeutic development budget of approximately $7 million to hire additional personnel and leadership for the division and advance digital therapeutic projects.

(5)The Company has not specifically allocated proceeds from the Prior Offerings towards the NYU Langone Health program. The Company expects that the costs of such program attributable to the Company will be funded from amounts the Company has previously allocated towards general or other working capital purposes in respect of the Prior Offerings.

 

The allocation of capital towards the Company’s ongoing projects and programs is largely dependent on the success, or difficulties encountered, in any particular portion of the process and therefore the time involved in completing it; in turn the time and costs associated with completing each step are highly dependent on the incremental results of each step and the results of other programs, and the Company’s need to be flexible to rapidly reallocate capital to projects whose results show the greatest potential. As such, it is difficult for the Company to anticipate the timing and costs associated with taking the projects to their next planned stage, and the Company cannot make assurances that the foregoing estimates will prove to be accurate, as actual results and future events could differ materially from those anticipated. Accordingly, investors are cautioned not to put undue reliance on the foregoing estimates.

 

Additionally, identifying the timing and costs of such projects beyond their immediate next steps go to the core differentiating factors with respect to the Company and its competitors. The disclosure of prospective costs and timing other than as already disclosed by the Company would negatively impact shareholder value and undermine the Company’s proprietary technology. In keeping with pharmaceutical industry practice, it is the Company’s policy to disclose these details in conjunction with our financial statements, and to publicly disclose published patent applications, published scientific papers, scientific symposia and the attainment of key milestones only. In addition, the premature disclosure of proprietary data would have a material and adverse effect on the Company’s patent and other intellectual property rights and could result in the breach of confidentiality obligations.

 

17

 

 

MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

General and Administrative

 

Components of general and administrative expenses were as follows:

 

  

Q3-21(1)

(US$)

  

Q2-21(1)

(US$)

  

Q1-21(1)

(US$)

  

Q4-20(1)

(US$)

  

Q3-20(1)

(US$)

  

Q2-20(1)

(US$)

  

Q1-20(1)

(US$)

  

May 30 to
Dec 31,
19(1)

(US$)

 
Payroll, consulting fees and benefits   1,534    2,608    2,829    937    717    308    741    1,174 
Legal fees   1,011    1,187    1,165    408    144    231    31    1,045 
Accounting and audit   168    228    134    75    98    65    63    312 
Marketing and IR   199    294    770    782    550    686    312    185 
Insurance   825    645    651    309    51    50    37    4 
Public company costs   532    408    -    -    -    -    -    - 
Other   581    908    584    476    41    213    365    385 
Total   4,975    6,666    6,133    2,987    1,601    1,553    1,549    3,105 

 

Note:

 

(1)All dollar amounts are in thousands.

 

During the three months ended September 30, 2021, general and administrative expenses decreased primarily due to the absence of one time payroll costs associated with transitioning executive officers in the prior two quarters. The Company continues to grow its management team in anticipation of pursuing and executing on opportunities identified. In addition, there has been additional focus on building the Company’s capabilities to scale for anticipated growth.

 

Share-based payments

 

Share-based compensation of $7,966,000 for the quarter resulted from stock options provision ($3,738,000), from RSU and DSU provisions ($4,176,000) and from share-based compensation related to an arrangement for a director to purchase Class D Shares of the Company ($52,000) through a loan advanced by MindMed US to the director pursuant to an agreement dated September 16, 2019 with MindMed US and the director. Pursuant to the agreement, if the director ceases to be a member of the board of directors of MindMed US and all affiliates of MindMed US, other than as a result of his disqualification under applicable corporate law or his resignation, the loan shall be automatically deemed to be repaid and satisfied in full and the Class D Shares (which have since been exchanged for Subordinate Voting Shares) would be tendered back to the Company without any payment being made. The loan has been accounted for as an option plan since the Company does not have full recourse to the outstanding loan balance. The director ceased to be a director of MindMed US and all affiliates of MindMed US as at September 29, 2021 and as of September 30, 2021, in accordance with the terms of the agreement, the loan term is complete and the loan is considered to have been repaid.

 

Finance income and costs and foreign exchange gains and losses

 

During the quarter ended September 30, 2021, we recorded a net foreign currency loss of $34,000 and a loss on foreign currency translation of $1,156,000. The net foreign currency loss in the current period reflected a weakening of the Canadian dollar versus the U.S. dollar while holding a portion of the cash received from financing in Canadian currency. The majority of the cash held has been converted to US dollars.

 

18

 

 

MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

Prior use of Proceeds

 

MindMed US Offering

 

The table below describes the differences between the Company’s anticipated use of the net proceeds from the MindMed US Offering completed by MindMed US in three tranches between December 2019 and February 2020, as disclosed in the management information circular (the “Circular”) of the Company (then called Broadway Gold Mining Ltd.) dated December 29, 2019, and the Company’s actual use of the net proceeds for the MindMed US Offering as of September 30, 2021:

 

Component 

Original
Planned Use of
Proceeds(1)

(C$)

  

Revised
Planned Use of
Proceeds(1)(2)

(C$)

   Revised
Planned Use of
Proceeds(1)(3) 
(US$)
  

Actual Use of
Proceeds(1)

(US$)

  

Difference in
Amounts(1)

(US$)

 
Research and development   11,500    19,521    14,579    12,559    2,020 
General and administration costs   4,600    7,808    5,832    7,830    (1,999)
Working capital   482    819    611    632    (21)
Total   16,582    28,148    21,022    21,022    Nil 

 

Notes:

 

(1)All dollar amounts are in thousands.

(2)At the time of the Circular, the Company anticipated that the proceeds of the MindMed US Offering would be $16,582. Upon closing of the MindMed US Offering, the actual proceeds were $28,808. As a result of holding a portion of the remaining cash in Canadian dollars, there was an unrealized foreign exchange loss of $660, reducing the proceeds of $28,808 to $28,148 in the above table. The planned use of proceeds as disclosed in the Circular has been revised on a pro rata basis in the above table to account for the increased actual proceeds realized from the MindMed US Offering.

(3)Revised use of proceeds converted to United States dollars based on the February 27, 2020 Bank of Canada exchange rate of US$1.00 = C$1.339.

 

The actual use of proceeds from the MindMed US Offering differed in certain respects from the anticipated use of proceeds at the time of the Circular. These differences were caused by a number of factors, including that the actual proceeds received from the MindMed US Offering were approximately 70% higher than originally anticipated. Had the anticipated proceeds from the MindMed US Offering at the time of Circular been as high as the actual proceeds, the Company’s estimation of the allocation of proceeds to be put towards research and development versus general and administration costs would likely have been different at the time, as the original planned use of proceeds was not necessarily meant to scale on a one-to-one basis with additional proceeds. Additionally, since the time of the MindMed US Offering and before December 31, 2020, the Company completed the May Offering, the October Offering and the December Offering. The costs related to such offerings also resulted in increased general and administration costs than were anticipated at the time of the Circular.

 

19

 

 

MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

May 2020 Offering

 

The table below describes the differences between the Company’s anticipated use of the net proceeds from the May 2020 Offering as disclosed in the final prospectus of the Company dated May 21, 2020, and the Company’s actual use of the net proceeds for the May Offering as of September 30, 2021:

 

Component 

Planned Use of Proceeds(1)

(C$)

   Planned Use of Proceeds(1)(2)(US$)  

Actual Use of Proceeds(1)

(US$)

  

Difference in Amounts(1)

(US$)

 

Funding the Company’s collaboration with University Hospital Basel’s Liechti Laboratory, including:

   7,200    5,223    4,868    330 
License fees   1,000    725    725    Nil 
Financial support for studies   3,000    2,176    1,846    330 
Clinical trials   2,500    1,814    1,814    Nil 
Project management and support   700    508    508    Nil 

Other general corporate and working capital, including:

   3,110    2,256    2,256    

Nil

 
Management and contract personnel costs   2,200    1,596    1,596    Nil 
Professional fees   300    218    218    Nil 
Marketing   400    290    290    Nil 
Other   210    152    152    Nil 
Total   10,310    7,479    7,149    330 

 

Notes:

 

(1)All dollar amounts are in thousands.
(2)Use of proceeds converted to United States dollars based on the May 30, 2020 Bank of Canada exchange rate of US$1.00 = C$1.3785.

 

20

 

 

MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

October 2020 Offering

 

The table below describes the differences between the Company’s anticipated use of the net proceeds from the October 2020 Offering as disclosed in the final prospectus of the Company dated October 26, 2020, and the Company’s actual use of the net proceeds for the October Offering as of September 30, 2021:

 

Component 

Planned Use of Proceeds(1)

(C$)

  

Planned Use of Proceeds(1)(2)

(US$)

  

Actual Use of Proceeds(1)

(US$)

  

Difference in Amounts(1)

(US$)

 

Develop mandate, including:

   16,550    12,426    11,564    862 
Addiction Program (18-MC)   3,800    2,853    2,853    Nil 
Microdose LSD Program   1,500    1,126    484    642 
Project Lucy (Experiential LSD)   3,500    2,628    2,408    220 
Chemistry, manufacturing and control (LSD & 18-MC)   7,750    5,819    5,819    Nil 

Discover mandate, including:

   2,650    1,990    1,719    271 
License Fees   1,000    751    751    Nil 
R&D   1,650    1,239    968    271 

Other general corporate and working capital purposes, including:

   3,800    2,853    2,853    

Nil

 
Management and contract personnel costs   2,700    2,027    2,027    Nil 
Professional fees   300    225    225    Nil 
Corporate development, marketing and public and investor relations   800    601    601    Nil 
Total   23,000    17,269    16,136    1,133 

 

Notes:

 

(1)All dollar amounts are in thousands.
(2)Use of proceeds in respect of the October Offering converted to United States dollars based on the October 30, 2020 Bank of Canada exchange rate of US$1.00 = C$1.3318. Use of proceeds in respect of the December Offering converted to United States dollars based on the December 11, 2020 Bank of Canada exchange rate of US$1.00 = C$1.2769.

 

21

 

 

MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

December 2020 Offering

 

The table below describes the differences between the Company’s anticipated use of the net proceeds from the December 2020 Offering as disclosed in the final prospectus of the Company dated December 7, 2020, and the Company’s actual use of the net proceeds for the December Offering as of September 30, 2021:

 

Component 

Planned Use of Proceeds(1)

(C$)

   Planned Use of Proceeds(1)(2) (US$)  

Actual Use of Proceeds(1)

(US$)

  

Difference in Amounts(1)

(US$)

 
Albert digital medicine division:   10,000    7,831    2,623    5,208 

Develop mandates, including:

   5,500    4,307    800    3,507 
Microdose LSD Program   2,500    1,958    Nil    1,958 
Chemistry, manufacturing and control (LSD, 18-MC and others)   3,000    2,349    800    1,549 

Other general corporate and working capital purposes, including:

   12,219    9,568    7,219    2,349 
Addiction Program (18-MC)   3,500    2,741    2,741    Nil 
Project Lucy (experiential LSD)   3,000    2,349    Nil    2,349 
R&D collaborations and UHB Liechti Lab   2,000    1,566    1,566    Nil 
Management and contract personnel costs   2,718    2,129    2,129    Nil 
Professional fees   300    235    235    Nil 
Corporate development, marketing and public and investor relations   700    548    548    Nil 
Total   27,719    21,706    10,642    11,064 

 

Notes:

 

(1)All dollar amounts are in thousands.
(2)Use of proceeds in respect of the October Offering converted to United States dollars based on the October 30, 2020 Bank of Canada exchange rate of US$1.00 = CAD$1.3318. Use of proceeds in respect of the December Offering converted to United States dollars based on the December 11, 2020 Bank of Canada exchange rate of US$1.00 = CAD$1.2769.

 

22

 

 

MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

January 2021 Offering

 

The table below describes the differences between the Company’s anticipated use of the net proceeds from the January 2021 Offering as disclosed in the final prospectus of the Company dated January 7, 2021, and the Company’s actual use of the net proceeds for the January Offering as of September 30, 2021:

 

Component 

Planned Use of Proceeds(1)

(C$)

   Planned Use of Proceeds(1)(2) (US$)  

Actual Use of Proceeds(1)

(US$)

  

Difference in Amounts(1)

(US$)

 
Albert digital medicine division:   10,000    7,870    Nil    7,870 

Develop mandates, including:

   41,225    32,443    589    31.855 
Project Lucy (Experiential LSD)   15,000    11,805    Nil    11,805 
Project Layla   10,000    7,870    Nil    7,870 
Microdose LSD Program   6,225    4,899    Nil    4,899 
Chemistry, manufacturing and control (LSD, 18-MC and others)   10,000    7,870    589    7.281 

Other general corporate and working capital purposes, including:

   23,550    18,533    4,070    14,463 
R&D collaborations, UHB Liechti Lab and new chemical entities (NCE)   15,000    1,050    812    10,993 
Management, technical consultants and contract personnel costs   6,000    4,722    1.252    3.470 
Professional fees   1,500    1,180    1.180    Nil 
Corporate development, marketing and public and investor relations   1,050    826    826    Nil 
Total   74,755    58,847    4,659    54,188 

 

Notes:

 

(1)All dollar amounts are in thousands.
(2)Use of proceeds in respect of the January Offering converted to United States dollars based on the January 7, 2021 Bank of Canada exchange rate of US$1.00 = C$1.2707.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Cash and working capital

 

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.

 

We have experienced operating losses and cash outflows from operations since incorporation, will require ongoing financing in order to continue our research and development activities and we have not earned any revenue or reached successful 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 products. There can be no assurance that we will be successful in continuing to finance our operations.

 

On February 18, 2020, MindMed US completed the second tranche of the MindMed US Offering, issuing a total of 37,105,370 MindMed Class D Shares at a price of CAD$0.33 ($0.25) per share for gross proceeds of $9,227,000. On closing of the second tranche, MindMed issued Canaccord Genuity Corp. (“Canaccord”), as agent, 2,596,376 compensation warrants.

 

23

 

 

 

MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

On February 26, 2020, MindMed US completed the third tranche of the MindMed US Offering, issuing a total of 41,227,788 MindMed Class D Shares at a price of CAD$0.33 ($0.25) per share for gross proceeds of $10,252,000. On closing of the third tranche, MindMed US issued Canaccord 2,045,945 compensation warrants and Eight Capital, as advisory agent, 840,000 compensation warrants.

 

As of February 26, 2020, Broadway had 49,860,200 Broadway common shares (“Broadway Common Shares”) issued and outstanding; pursuant to the Arrangement Agreement, Broadway Common Shares were consolidated on an eight to one (8:1) basis and converted to Subordinate Voting Shares.

 

On May 26, 2020, the Company completed a bought deal financing resulting in the issuance of 24,953,850 units at a price per unit of CAD$0.53 for gross proceeds of $9,582,000. Each unit comprised one Subordinate Voting Share and one-half of one Subordinate Voting Share purchase warrant (each whole warrant, a “May Warrant”). Each May Warrant is exercisable at CAD$0.79 until May 26, 2022.

 

On October 30, 2020, the Company completed a bought deal financing resulting in the issuance of 27,381,500 units of the Company at a price per unit of CAD$1.05 for gross proceeds of $22,075,000. Each unit comprised one Subordinate Voting Share of the Company and one-half of one Subordinate Voting Share purchase warrant (each whole warrant, an "October Warrant"). Each October Warrant entitles the holder thereof to purchase one Subordinate Voting Share at an exercise price of CAD$1.40 until October 30, 2023.

 

On December 11, 2020, the Company completed a bought deal financing resulting in the issuance of 18,170,000 units of the Company at a price per unit of CAD$1.90 for gross proceeds of $26,506,000. Each unit comprised one Subordinate Voting Share of the Company and one-half of one Subordinate Voting Share purchase warrant (each whole warrant, a "December Warrant"). Each December Warrant entitles the holder thereof to purchase one Subordinate Voting Share at an exercise price of CAD$2.45 until December 11, 2023.

 

On January 7, 2021, the Company completed a bought deal financing resulting in the issuance of 20,930,000 units of the Company at a price per unit of CAD$4.40 for gross proceeds of $72,713,000. Each unit comprised one Subordinate Voting Share of the Company and one-half of one Subordinate Voting Share purchase warrant (each whole warrant, a "January Warrant"). Each January Warrant entitles the holder thereof to purchase one Subordinate Voting Share at an exercise price of CAD$5.75 until January 7, 2024.

 

On March 9, 2021, the Company completed a private placement financing resulting in the issuance of 6,000,000 units of the Company at a price per unit of CAD$3.25 for gross proceeds of $15,397,000. Each unit comprised one Subordinate Voting Share of the Company and one-half of one Subordinate Voting Share purchase warrant (each whole warrant, a "March Warrant"). Each March Warrant entitles the holder thereof to purchase one Subordinate Voting Share at an exercise price of CAD$4.40 until March 9, 2024.

 

Our cash and working capital as at September 30, 2021 were $145,858,000 and $140,719,000 respectively. The increase in cash since year end was due mainly to the $98,695,000 of net financings mentioned above net of the cash used in operations of $31,924,000.

 

Cash flows from operating activities

 

Cash used in operating activities of $31,924,000 for the nine months ended September 30, 2021 was mainly due to the comprehensive loss of $74,290,000 offset by non-cash share-based payments of $31,677,000.

 

Cash flows from investing activities

 

Cash used in financing activities totaled $522,000 for the nine months ended September 30, 2021 primarily related to the cash portion of the HealthMode acquisition.

 

24

 

 

MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

Cash flows from financing activities

 

Cash provided by financing activities totaled $98,695,000 for the nine months ended September 30, 2021. This includes $81,923,000 from financings, $11,185,000 from exercise of warrants and $5,587,000 from exercise of stock options.

 

Contractual Obligations and Contingencies

 

We enter into research, development and license agreements in the ordinary course of business where we receive research services and rights to proprietary technologies. Milestone and royalty payments that may become due under various agreements are dependent on, among other factors, clinical trials, regulatory approvals and ultimately the successful development of a new drug, the outcome and timing of which is uncertain.

 

We periodically enter into research and license agreements with third parties that include indemnification provisions customary in the industry. These indemnities generally require us to compensate the other party for certain damages and costs incurred as a result of claims arising from research and development activities undertaken by us or on our behalf. In some cases, the maximum potential amount of future payments that could be required under these indemnification provisions could be unlimited. These indemnification provisions generally survive termination of the underlying agreement. The nature of the indemnification obligations prevents us from making a reasonable estimate of the maximum potential amount we could be required to pay. 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.

 

Other than as disclosed below, we did not have any contractual obligations relating to long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or other long-term liabilities reflected on our statement of financial position as at September 30, 2021:

 

    Payment due by period(1) 
Contractual
Obligations(1)
   Total    Less than 1
year
    1 to 3 years    3 to 5 years    More than 5
years
 
Purchase obligations(2)  $29,748   $15,304   $10,260   $4,184   $- 

 

Notes:

(1)Contractual obligations in the above table do not include amounts in accounts payable and accrued liabilities on our statement of financial position as at September 30, 2021.

(2)Purchase obligations include all non-cancellable contracts, and all cancellable contracts with $5,000 or greater remaining committed at the period end including agreements related to the conduct of our clinical trials, preclinical studies and manufacturing activities.

(3)All dollar amounts are in thousands.

 

25

 

 

MIND MEDICINE (MINDMED) INC.

Management’s Discussion and Analysis

 

DESCRIPTION OF SHARE CAPITAL

 

The continuity of the number of our issued and outstanding shares from May 30, 2019 to the date of the reverse takeover transaction is presented below. Prior to the completion of the reverse takeover transaction, the share capital of MindMed US was reported. Subsequent to that date, share capital of MindMed is reported:

 

Mind Medicine, Inc. Share Capital

 

   Class A
Voting
   Class B
Voting
   Class C
Non-Voting
   Class D
Non-Voting
   Total 
Acquisition of 18-MC program   55,000,000    -    -    -    55,000,000 
Class B shares   -    35,000,000    -    -    35,000,000 
Private placement   -    -    46,993,671    -    46,993,671 
Private placement   -    -    -    10,000,000    10,000,000 
Director compensation   -    -    -    725,025    725,025 
Offering - First Tranche   -    -    -    18,771,897    18,771,897 
Balance, December 31, 2019   55,000,000    35,000,000    46,993,671    29,496,922    166,490,593 
Offering - Second Tranche   -    -    -    37,105,370    37,105,370 
Employee termination expense   -    -    -    100,000    100,000 
Offering - Third Tranche   -    -    -    41,227,788    41,227,788 
Shares exchanged under Arrangement   (55,000,000)   (35,000,000)   (46,993,671)   (107,930,080)   (244,923,751)
Balance after Arrangement   -    -    -    -    - 

 

Mind Medicine (MindMed) Inc. Share Capital