FCM Releases Letter to Fellow MindMed Shareholders Highlighting Board and Management’s Track Record of Shareholder Value Destruction
$MNMD
Dear Fellow MindMed Shareholders,
FCM MM Holdings, LLC and its affiliates (collectively, “FCM”) beneficially own 1,368,538 shares of Mind Medicine (MindMed) Inc. (the “Company” or “MindMed”) – approximately 3.5% of MindMed’s shares outstanding. As one of MindMed’s largest investors, we believe our interests are clearly aligned with yours. We have invested millions of dollars in the Company because, like you, we believe the Company has tremendous potential, and it could be well-positioned to capitalize on the massive opportunities in the psychedelic medicine sector over the next several years.
Unfortunately, the current members of MindMed’s board of directors (the “Board”) have not been effective in creating shareholder value – rather, they have overseen the destruction of over a billion dollars in shareholder value as the stock has plunged 95%1, all while tripling their own compensation and lavishing themselves and executives with over $51M2 (31.8% of operating costs) in compensation over the past two years. In the same period, MindMed spent just 12.7% of its total operating costs on its core drugs3, MM-110 and MM-120. Why? We believe the Board’s incentives are not aligned to maximize long-term shareholder value – the Board owns4 a meager 0.22% of MindMed’s shares outstanding, less than its peers where the average board owns over 7%5.
Since 2021, we have attempted to engage constructively with the Board on our ideas for adding value for the benefit of all MindMed shareholders, including our Value Enhancement Plan that we presented to the Board and management in August 2022. We remain dumbstruck by the Board’s lack of urgency in addressing the critical issues we raised with them. Unfortunately, we had to take the extraordinary step of nominating four highly qualified director candidates because FCM determined that the only way to put MindMed back on track and stop the destruction of further shareholder value would be to reconstitute the Board and take immediate action for the benefit of all shareholders.
The Board and management has been responsible for MindMed’s current course which is synonymous with critical delays, ill-conceived and botched regulatory strategies, excessive spending and compensation, and destructive financings that were “poorly timed and ill-conceived…[and had] such punitive economics”6.
We strongly believe that real change is needed now to revitalize the Company while there is still time and money left. Our plan is simple:
·Align G&A Expenses and Headcount with MindMed’s Actual Needs: Conduct a rapid review of the Company’s general and administrative (“G&A”) expenses and eliminate unnecessary expenses and headcount to help ensure MindMed has the resources to support its clinical development programs.
·Return to a Coherent Clinical Development Strategy: Initiate the long overdue Phase III clinical trial for MM-120 (LSD) in 2023 based on the two Phase II clinical trials in Generalized Anxiety Disorder (GAD) already completed by MindMed’s collaborator, Dr. Matthias Liechti. MindMed has been ensconced in a Phase IIb dose finding study whose design, in our view, is fundamentally flawed and over all unnecessary – worse, the Phase II study has been chronically behind schedule for more than two and a half years. Bringing MM-120 (LSD) to market in a safe and swift manner would be a first step in restoring shareholder value.
·Building a Qualified Management Team: MindMed’s CEO has no apparent experience with Phase III of the FDA process and has never brought a drug to market – e.g. Mr. Robert Barrow spent 10-years at Olatec Therapeutics developing Phase I and Phase II studies for topical gels for osteoarthritis which follows a different regulatory approval process than psychedelic drugs. Additionally, MindMed’s CMO, Dr. Daniel Karlin, does not appear to have any experience in drug development – he spent his career in bioinformatics and only came to MindMed following its acquisition of HealthMode. We are highly concerned that Dr. Karlin does not have sufficient time to devote to MindMed, as Dr. Karlin currently works eight other jobs7. Further, this apparent lack of expertise by executives likely caused damaging and lasting reputation effects with the FDA – as the ill-conceived clinical trials in the MM-110 and MM-120 programs, some with patient safety implications, may lead to a more cautious and guarded FDA approach to MindMed’s clinical trials in the future.
·Align Director and Executive Compensation with the Creation of Sustainable Shareholder Value: Adopt director ownership policies, blackouts on director and management share sales until after key milestones are reached and utilize performance-based awards such as performance (preferred) stock-units. Should at least three of our directors be elected, Dr. Freeman, Mr. Freeman, and FCM will commit to not selling a single share of stock8 until at least 2025.
·Adopt Corporate Governance Best Practices: Adopt annual “Say-On-Pay” votes to allow shareholders to voice their views on executive compensation practices.
·Investor Relations Enhancements: Hold quarterly investor townhalls and establish clear methods for contacting management so that shareholders can stay informed and engaged.
Accordingly, to execute on this plan, we have nominated four exceptionally qualified individuals for election as directors at this year’s Annual Meeting scheduled for June 15, 2023: Dr. Scott Freeman, Dr. Farzin Farzaneh, Mr. Vivek Jain, and Mr. Alexander Wodka (see Exhibit A for full biographies). We believe our nominees have the biotechnology skills and experience, along with financial acumen and corporate governance knowledge, to greatly enhance MindMed’s value and ensure the Company executives and directors stop treating its shareholders as an afterthought.
The cornerstone of our plan is to focus MindMed’s resources on bringing MM-120 to market, quickly and safely, by initiating a Phase III trial in 2023. Notably, Dr. Freeman has decades of clinical drug development experience, successfully worked with the FDA’s Office of Neuroscience, designed FDA strategies, and brought drugs to market using the accelerated approval process.
We have elaborated more detail on our plan and the issues afflicting MindMed in Exhibit B. FCM will be providing an in-depth operational and clinical development plan in the coming weeks.
The Time for Action Has Arrived
We encourage shareholders to waste NO TIME and vote on the BLUE card FOR our director candidates today.
The choice is STRIKING for shareholders:
(1) An incumbent board who spends 2.5x more on themselves than advancing the Company’s core drugs to market.
– OR –
(2) FCM’s recommended director-nominees to create an accountable, effective, and aligned board to build shareholder value with a laser focus on bringing MM-120 to market by spending at least 30% of operation expenditures9 on core R&D.
Fellow shareholders, you have an opportunity to make your voice heard and put MindMed back on track by voting on the BLUE proxy for all four of our highly qualified nominees. We strongly believe that they will bring the right mix of skills, expertise, and fresh perspective that the Board desperately needs.
If you have any questions or require any assistance with your vote, please contact Okapi Partners LLC, at (855) 305-0856 or info@okapipartners.com
We look forward to your support at the Annual Meeting.
Sincerely,
FCM MM Holdings, LLC
Source:
https://www.sec.gov/Archives/edgar/data/1813814/000092189523001061/dfan14a13522002_05042023.htm