InMed Pharmaceuticals Under Investigation After Major Merger Announcement

InMed Pharmaceuticals Inc. (NASDAQ: INM), a biotechnology company known for developing cannabinoid-based therapies, is now facing increased legal and shareholder scrutiny after announcing a major merger agreement with privately held Mentari Therapeutics. Several investor rights law firms have launched investigations into the transaction, raising questions about whether the deal truly serves the best interests of InMed shareholders.

The proposed merger, announced on May 19, 2026, would result in Mentari Therapeutics becoming the dominant entity in the combined company. According to the terms of the agreement, existing InMed shareholders are expected to own only approximately 1.51% of the merged organization, while Mentari stakeholders would control nearly 98.49% of the company after the transaction closes.

Details of the Proposed InMed–Mentari Merger

The merger is structured as an all-stock transaction designed to transition InMed Pharmaceuticals into a new publicly traded entity operating under the name Mentari Therapeutics. The combined business will focus primarily on migraine prevention therapies, shifting away from InMed’s historical cannabinoid-focused research programs.

Mentari Therapeutics is currently developing migraine treatments, including its lead candidates MT-001 and MT-002. The company has attracted significant institutional investor interest and recently secured a private financing commitment totaling approximately US$290 million. The financing is expected to support operations through 2028 and fund future clinical development programs.

Ownership Structure Raises Concerns

One of the most controversial aspects of the merger is the dramatic ownership imbalance. Under the proposed agreement:

• Mentari shareholders would own approximately 98.49% of the combined entity.
• Current InMed shareholders would retain only about 1.51% ownership.
• Mentari executives and board members are expected to assume leadership positions after the merger.
• The company will trade under a new Nasdaq ticker symbol once finalized.

Investor advocates argue that such a small ownership allocation for existing InMed investors could significantly dilute shareholder value and may not represent a fair transaction.

Law Firms Launch Investigations Into the Transaction

Following the merger announcement, multiple shareholder rights law firms began investigating whether InMed’s board of directors fulfilled its fiduciary responsibilities during negotiations.

Halper Sadeh LLC Investigation

Halper Sadeh LLC announced that it is investigating whether InMed Pharmaceuticals is obtaining a fair valuation in the merger with Mentari Therapeutics. The law firm stated that the investigation will focus on several key issues:

• Whether InMed shareholders are receiving fair consideration.
• Potential conflicts of interest involving company insiders.
• The transparency of disclosures provided to investors.
• Whether the sales process was conducted fairly and competitively.

The firm also noted that insiders involved in the transaction could potentially receive financial benefits unavailable to ordinary shareholders.

Brodsky & Smith Shareholder Notice

Another securities litigation firm, Brodsky & Smith, separately announced an investigation into possible claims against InMed’s board of directors related to the merger agreement. The firm is reviewing whether directors violated their fiduciary duties and whether shareholders are being treated fairly during the proposed acquisition process.

Why Shareholders Are Concerned

Many investors reacted strongly to the announcement because the deal effectively transforms InMed into a vehicle for Mentari Therapeutics rather than a merger between equals.

Although InMed management described the transaction as a “transformative opportunity,” some shareholders worry that the company’s existing pipeline and intellectual property may be undervalued.

Potential Dilution of Existing Investors

The ownership restructuring means existing shareholders could see their influence and economic stake dramatically reduced. Investor concerns include:

• Loss of voting power.
• Minimal future participation in the combined company’s growth.
• Reduced control over strategic decisions.
• Possible undervaluation of InMed’s legacy assets.

The transaction also introduces a substantial number of new shares through both the merger and related financing activities, increasing dilution risk for current investors.

InMed’s Existing Drug Pipeline Still Holds Value

Despite the merger, InMed Pharmaceuticals still maintains several research and development programs focused on cannabinoid-based therapeutics. These include:

• INM-901 — targeting Alzheimer’s disease.
• INM-089 — focused on age-related macular degeneration.
• Rare cannabinoid manufacturing technologies under the IntegraSyn platform.

Company executives stated that shareholders may still benefit from future monetization of these programs through contingent value rights (CVRs) and possible licensing agreements. However, these future returns remain uncertain and depend on successful commercialization efforts.

What Are Contingent Value Rights?

Contingent Value Rights, commonly known as CVRs, are financial instruments that may provide shareholders with additional payments if certain future milestones are achieved. In this case, InMed shareholders could potentially receive proceeds if the company’s remaining assets are sold or licensed after the merger closes.

However, CVRs are highly speculative and may never generate meaningful returns. Their value depends on future business performance, licensing deals, regulatory approvals, and market conditions.

Financial Impact of the Deal

The combined company is expected to have an estimated market capitalization of approximately US$421.4 million after completion of the merger and financing transaction.

The private financing round supporting Mentari Therapeutics includes participation from several major institutional investors and healthcare-focused investment firms. The financing demonstrates strong confidence in Mentari’s migraine treatment pipeline but also highlights the unequal balance between the two merging organizations.

Major Investors Supporting the Financing

The financing round reportedly includes participation from:

• Fairmount
• Janus Henderson Investors
• Wellington Management
• Blackstone Multi-Asset Investing
• Perceptive Advisors
• Venrock Healthcare Capital Partners

The significant institutional backing further reinforces Mentari’s dominant position in the transaction.

Market Reaction and Stock Volatility

InMed Pharmaceuticals has experienced significant stock volatility over the past year. According to market analysis data, the company’s share price has fluctuated dramatically, reflecting investor uncertainty and financial instability.

Recent reports indicate:

• Substantial dilution of shares outstanding.
• Sharp fluctuations in stock price.
• High weekly volatility compared to other biotechnology companies.
• Long-term declines in shareholder value.

These market conditions may have contributed to the company’s decision to pursue a strategic merger opportunity.

Corporate Governance Questions Emerge

The investigations launched by shareholder law firms also focus on corporate governance concerns. Specifically, attorneys are examining whether company executives and board members acted in the best interests of investors during merger negotiations.

Possible Areas of Legal Review

• Disclosure transparency during shareholder communications.
• Potential conflicts of interest involving management.
• Fairness of merger valuation.
• Whether alternative offers were properly considered.
• Compliance with federal securities laws.

Such investigations are common in large mergers and acquisitions involving publicly traded companies, especially when shareholder dilution becomes substantial.

Biotechnology Industry Context

The biotechnology sector has seen a growing number of mergers and reverse merger transactions in recent years. Smaller public biotech firms often merge with private companies seeking faster access to public markets and institutional capital.

In this case, Mentari Therapeutics appears to be using InMed’s Nasdaq listing infrastructure to accelerate its own growth strategy and market presence.

Reverse mergers can provide benefits such as:

• Reduced time to public listing.
• Access to existing shareholder structures.
• Improved financing opportunities.
• Enhanced market visibility.

However, these transactions can also generate controversy when legacy shareholders receive limited ownership in the combined organization.

What Happens Next?

The merger remains subject to several important conditions before completion:

• Approval by shareholders of both companies.
• Regulatory clearances.
• Nasdaq listing approval.
• Completion of required financing transactions.

The companies currently expect the deal to close during the second half of 2026.

Until then, shareholder investigations and legal reviews are likely to continue as investors seek greater clarity regarding the fairness and long-term implications of the transaction.

Investor Rights and Legal Options

Shareholders who believe they may be negatively impacted by the merger are encouraged by several law firms to review their legal rights and options. Potential actions could include:

• Participating in shareholder investigations.
• Seeking additional disclosures from the company.
• Challenging the fairness of the merger process.
• Pursuing financial remedies if misconduct is identified.

Legal experts note that shareholder investigations do not necessarily mean wrongdoing occurred, but they are designed to ensure transparency and accountability during major corporate transactions.

Conclusion

The proposed merger between InMed Pharmaceuticals and Mentari Therapeutics represents a major turning point for both companies. While the transaction may provide Mentari with substantial funding and public market access, many InMed shareholders remain concerned about dilution, valuation fairness, and long-term shareholder value.

As legal investigations continue and shareholders evaluate the details of the deal, the biotechnology and investment communities will closely monitor whether the merger ultimately delivers the benefits promised by company leadership.

The outcome of the transaction could also become an important example of how modern biotech reverse mergers impact retail investors, corporate governance standards, and shareholder rights in publicly traded healthcare companies.

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