One of the largest drug companies in Japan is looking to, through a $700 million buyout, take control of an experimental medicine that could be useful for treating post-traumatic stress disorder and other psychiatric conditions.
On Friday, Otsuka Pharmaceutical announced that its American subsidiary plans to acquire privately held, New York-based Transcend Therapeutics. In addition to the upfront payment, Otsuka offered up to $525 million more if Transcend’s assets ultimately hit certain sales milestones. The companies expect to complete their deal sometime between April and the end of June.
If finalized, the acquisition would hand Otsuka a drug meant to rapidly restore and improve “neuroplasticity,” or the brain’s ability to rewire and adjust the connections between neurons. Neuroplasticity impairment is a fundamental component of many psychiatric conditions — including PTSD, where chronic stress and trauma can keep brain cell networks stuck in a fear-based survival mode.
The active ingredient in Transcend’s “TSND-201” is methylone, an analog of MDMA that was first synthesized three decades ago and widely used as a “designer drug.” TSND-201 engages with certain transporter proteins that regulate neurotransmitters like serotonin, norepinephrine and dopamine, which, according to Transcend, results in “rapid and sustained enhancement of neuroplasticity.”
Transcend also highlights how its drug doesn’t act on a key serotonin receptor that governs mood, cognition and perception. Avoiding that receptor mediates the potential hallucinogenic effects, the company says. Two years ago, Lykos Therapeutics, once a leader in psychedelic drug research, tried unsuccessfully to get the Food and Drug Administration to approve MDMA as a therapy aid for PTSD. For the FDA, a major sticking point was that, because MDMA elicits unmistakable changes to cognition and the senses, most of the participants in Lykos’ studies were able to decipher if they had been given the drug or a placebo.
Results from a mid-stage clinical trial that tested TSND‑201 in adults with PTSD were published last month in the journal JAMA Psychiatry. Recruitment is now underway for the Phase 3 trial in the U.S.
“Although treatment options for PTSD remain limited, TSND‑201 is generating expectations as a potential paradigm‑shifting therapy in the field of psychiatry,” said Makoto Inoue, president and representative director of Otsuka, in a statement Friday.
Otsuka is perhaps best known for its antipsychotic medications Abilify Maintena and Rexulti. In its 2024 fiscal year, the company recorded revenue of 2.33 trillion Japanese yen — or roughly $15.4 billion — with 70% coming from its pharmaceutical unit. That was a more than 15% increase from the year prior, driven in large part by the performances of Abilify Maintena, Rexulti, the cancer treatment Lonsurf and the kidney therapy Jynarque.
Otsuka noted in its statement that the way TSND-201 works is “distinct” from its existing medicines and development programs. Purchasing Transcend, therefore, should expand the company's psychiatry and neurology portfolio and strengthen its position in those fields. Otsuka made similar predictions about its rare disease and immunology research when it acquired Jnana Therapeutics for $800 million back in 2024.
Transcend was co-founded in 2021 by Kevin Ryan, founder and CEO of AlleyCorp, a New York venture capital firm that specializes in technology and healthcare investing. Blake Mitchell, a AllyCorp alum himself, and Benjamin Kelmendi, an assistant professor of psychiatry at Yale, are also co-founders. The startup said it had raised around $50 million as of last May.
