Debra Borchardt
Mind Medicine Inc. (“MindMed”) (NASDAQ: MNMD) (NEO: MMED) has priced its underwritten public offering of 7,058,823 common shares at $4.25. The shares come with warrants and the price includes both. The gross proceeds from the offering are expected to be approximately $30 million, before deducting underwriting discounts and commissions and offering expenses.
The accompanying warrant will be immediately exercisable and has an exercise price of $4.25 per common share and expires five years from the date of issuance. The offering is expected to close on or about September 30, 2022.
MindMed shares were falling by almost 50% in pre-market trading on the news. The stock was selling at roughly $3.10 a drop from yesterday’s close of $6.12. Twitter posts suggested that MindMed might have been motivated to release the offering by a move from Freeman Capital Management.
In August, Co-founder Dr. Scott Freeman through his company Freeman Capital Management sent a letter to the board of directors asking them to adopt a new strategic plan that would include refocusing on MindMed‘s core drugs, cutting cash burn, and terminating MindMed’s at-the-money equity offering. The letter is posted below.
The letter detailed steps that could cut the cash burn by almost 50% and have a marketable drug within four years. The letter also requested that Dr. Freeman be added to the board.
The letter also asked that the executives take a salary cut noting that they have received over $2 million in compensation as the stock price dropped 60%. The letter asked that the company divest the recently acquired digital medicine company HealthMode at almost half the price paid for it. MindMed paid $27 million for HealthMode but would likely only be able to sell it for $10-$15 million.
The letter also specifically said it did not want MindMed to pursue a $100 million equity offering and that the company didn’t need the money and that such an offering would hurt that company’s share price, which seems to be the case. MindMed has $120 million on hand.
MNMD Board Letter-0001
