Psychedelics to Get Your Mind Right
When logic and proportion
Have fallen sloppy dead
And the white knight is talking backwards
And the Red Queen’s “off with her head”
Remember what the dormouse said
Feed your head
Feed your head
If you are familiar with the above lyrics then you undoubtedly know that they are a homage to the recreational drug culture that had started to emerge in the latter half of the 1960s. Released as a single on June 24, 1967, Jefferson Airplane’s “White Rabbit” was not the first ode to drugs such as LSD, magic mushrooms, and marijuana, but it certainly became one of the decade’s most famous.
The powers that be of that time did not take kindly to the mantra of “turn on, tune in, drop out” that seemed to have been adopted overnight by millions of their youth. They considered the long hair, weird music, psychedelic art, “flower power,” hippies, anti-war protesting, free-love, and other perceived tropes of the countercultural “revolution” to be thoroughly abnormal. Their kids had gone bat-shit crazy and psychedelic drugs, along with marijuana, were—in their minds—the most obvious cause. Therefore, LSD and psilocybin (magic mushrooms) were added to the controlled substances hit list with attendant severe penalties for possession and/or sale, while penalties for the already illegal evil weed were dramatically increased.
Thus, marijuana, LSD, and psilocybin became prime targets for eradication before the “War on Drugs” was even first officially proclaimed by President Richard Nixon on June 18, 1971. This ongoing drug war has managed to ruin millions of lives, but to this day the use of psychedelics and marijuana have yet to be proven directly responsible for killing anyone, and most research results addressing apparent negative health impacts remain obtuse and nebulous. Meanwhile, the recreational use of pot, LSD, and magic mushrooms is as popular today as it was back during those groovy sixties. The vast majority of North Americans have at least tried a puff of weed, and from between 20 million to 56 million (depending on who’s doing the counting) have tried at least one psychedelic.
Psychedelics Hitting the Mainstream?
As many astute investors know, marijuana has been losing its cloak of disrepute in recent years and is rapidly becoming a valuable legal commodity that has created a fast-growing investment sector. You might be surprised to learn that 2020 might end up as the year that psychedelics started becoming equally respectable, as well, and that companies turning psychedelic drugs such as acid, magic mushrooms, and ecstasy into medicines are emerging as a hot new investment sector.
You’re trippin’, man….
Yeah, no. But we’re certainly ready to chase trails when we see them.
We are currently keeping a close eye on four companies—London, England-based Compass Pathways (NSDQ: CMPS), Toronto-based Mind Medicine (MindMed) Inc. (NEO: MMED), Vancouver-based HAVN Life Sciences Inc. (CSE: HAVN), and Vancouver-based Numinus Wellness Inc. (TSXV: NUMI)—among the small crop of firms touted as being the world’s first publicly traded psychedelics pharmaceutical companies. Other publicly traded companies in this new sector include Revive Therapeutics (CSE: RVV), Thoughtful Brands Inc. (CSE: MOTA.CN; OTCPK: PEMTF), Global Trac Solutions (OTCPK: PSYC), Codebase Ventures (CSE: CODE; OTC: BKLLF), New Wave Holdings (CSE: SPOR; OTC: TRMND), Mydecine Innovations Group (CSE: MYCO), Champignon Brands (CSE: SHRM), Hollister Biosciences (CSE: HOLL), Captiva Verde (CSE: PWR; OTC: CPIVF), Better Plant Sciences Inc. (CSE: PLNT; OTCQB: VEGGF), Thoughtful Brands (OTC: PEMTF), and Red Light Holland (CSE: TRIP).
Another company—Los Angeles-based Delic Holdings—looks like it will become the next publicly traded psychedelics firm to emerge in the nascent sector, as it plans to IPO within the next two weeks. Delic is focused on becoming the sector’s thought leader and plans to take direct and ancillary roles in all elements of the psychedelics renaissance. The company was founded by innovators and visionaries who were instrumental in gearing up the multi-billion-dollar cannabis industry and their vision for Delic includes everything from software as a service (SaaS) platforms to in-house therapy, and comprehensive media outreach to eCommerce.
At this point, you might be thinking that taking an early position in a barely birthed sector that is dabbling in substances that can send a person to prison is bark-at-the-moon lunacy. But marijuana certainly came with a similar stigma when it started emerging as an investment sector earlier this decade. With this in mind, then, perhaps we should take a closer look at psychedelics and try to discern the difference between dropping acid at a Grateful Dead concert and unlocking the therapeutic (and investment) potential of psychedelics.
What a Long, Strange Trip it’s Been
For starters, LSD, magic mushrooms, mescaline, and other psychedelics didn’t just emerge with the hippies and counterculture of the 1960s, as various cultures throughout history—from ancient Greeks and Hindus to North American Indians—utilized psychedelic plants in religious rites and for meditative purposes. Many animals, it should be noted, also have a strong affinity for plants and fungi that contain psychedelic compounds. Modern day research into psychedelics as a neurological medicine kicked into high gear in the 1950s and early ‘60s, after Sandoz Labs sent thousands of samples of LSD—discovered in the 1940s by Dr. Albert Hoffman—to researchers around the world. Between 1950 and 1965 more than 40,000 patients were dosed in various studies that resulted in more than 1,000 research papers, some with promising results in treating depression, addiction, and other conditions. Meanwhile other researchers started looking into the potential medical promise of using psilocybin, mescaline, and other psychedelics.
All of these research efforts came to a grinding halt after the U.S. Food and Drug Administration (FDA) shut down all research and made known psychedelics illegal in a knee-jerk reaction to the huge upsurge in recreational use that started in the mid-1960s. Countries around the world followed suit, and when other psychedelics with medicinal promise emerged in the following decades—such as MDMA (ecstasy)—research efforts were quickly halted by governments whenever recreational use started gaining ground. This despite any encouraging medical-use findings in the initial research.
From Being “Far Out” to Gaining “Respectability”
In the past two decades, though, the FDA, U.S. Drug Enforcement Administration, and other governments’ regulators have been quietly easing barriers to research, and scientists are once again finding therapeutic uses for the drugs. These findings are leading to increasing numbers of clinical drug trials that could help bring these psychedelics to market as legal pharmaceutical drugs.
Conditions being treated in psychedelic drug studies in the clinical and pre-clinical trial stage include:
- End-of-life pain and anxiety treatment for late-stage cancer patients
- Depression
- Treatment-resistant depression
- Anorexia nervosa
- Anxiety disorder
- Post-traumatic stress disorder
- Lyme disease syndrome
- Alzheimer’s disease
- Attention Deficit Disorder
- Opioid use disorder
- Alcoholism
Meanwhile, The Johns Hopkins University School of Medicine, which was first to the plate with renewed psychedelic research in 2000—and has since established the world’s largest psychedelic research center—continues to pump out new research supporting the use of psychedelics for therapeutic uses. Additionally, big pharma has taken notice, as recently evidenced by Johnson & Johnson (NYSE: JNJ) receiving FDA approval for a chemical cousin of the psychedelic drug ketamine.
Given all this, we’d say that even if Nancy “Just-Say-No” Reagan herself were to return from the afterlife to reinvigorate the War on Drugs, there’s no putting this psychedelics genie back into the magic lamp. It seems inevitable that psychedelics will continue to make headway as a valuable therapeutic. Additionally, there are signs that recreational usage of psychedelics is being destigmatized and could follow gateway drug marijuana’s path towards becoming decriminalized. Psilocybin is now legal in several countries, and has been decriminalized by a few others, along with the U.S. cities of Denver, Oakland and Santa Cruz. LSD is also now fully legal in a few countries and has been decriminalized in a smattering of others. Thus, while magic mushrooms likely hold the most current promise for a possible recreational market, LSD looks like it may eventually follow.
Wanna Go Tripping on Wall Street and Bay Street?
So, with regulatory easement, vigorous positive research, growing media coverage, and numerous publicly traded firms, you can get psychedelic on Wall Street and Bay Street. And we don’t mean you should drop acid or go shrooming there (especially during a market dive), but maybe consider dropping some coin on what may prove to be an especially hot new sector (flashback on the marijuana sector success, anyone?).
As a nascent sector, though, what of its valuation? With lots of media attention this year, pundits have been weighing in, with the initial oft-quoted $5 billion market valuation starting to lose ground to more lofty projections. In fact, headlines such as the May 7th “A $5 Billion Market Valuation for Psychedelics May be Too Low” will likely prove prescient as Compass Pathways’ share price soared 70% on its first day of trading September 18, giving it a valuation that neared C$1.5 billion. Not too shabby for a company dealing with a product (magic mushrooms) that has long been illegal, stigmatized, and only available in the underground market or if you knew what to look for in cow pastures.
As a sector, psychedelics—like marijuana—could find favor within the $30-trillion-plus mega trend of environmental, social, and governance (ESG) investing, which realized 34% growth between 2016 and 2019. And, like marijuana, the sector’s valuation could garner a huge rush if the recreational market potential starts coming into play as a result of increasing relief of regulatory restrictions.
Psychedelics Companies We’re Keeping an Eye On
Delic Holdings
Delic is holding most of our attention right now due to its imminent go-public initiative via RTO. We plan to follow up this sector overview with a deep dive examination of the company within the next week. For now, we can tell you that Delic operates three subsidiary companies that include the eCommerce lifestyle brand, “The Delic;” a psychedelics news and culture website, “Reality Sandwich;” and a psychedelics wellness summit, “Meet Delic.” It is also poised to close revenue-generating deals involving production, distribution, in-house psychedelics therapy, and SaaS support for psychedelics-related initiatives. The company has also developed what is being called the largest psychedelics media platform in the world, along with an associated “lifestyles” online store.
With an extensive background in helping launch the cannabis business, Company founders and advisors know all the major players in the psychedelics business space and are poised to offer Delic’s business solutions to assist psychedelics companies with all elements needed to execute their visions and grow their brands.
Compass Pathways PLC (NSDAQ: CMPS)
Compass Pathways is a mental health care company that developed COMP360, a psilocybin formulation that has “breakthrough therapy status” from the U.S. FDA and is in Phase IIb clinical trials to treat patients with treatment-resistant depression. The company also holds a U.S. patent for a psilocybin therapy protocol involving micro-dosing for treating depression.
The company went public on Sept. 18, with the first trade of US$23.40 soaring more than 37% over the US$17 IPO price and the US$29 closing price representing a near 100% gain. Since then the share price has seen a high of US$47.29 and has been trading recently in the low US$30s range.
Mind Medicine (MindMed) Inc. (NEO: MMED; OTC: MMEDF)
MindMed, which has trademarked the slogan “Psychedelic Inspired Medicine™,” discovers, develops, and deploys psychedelic inspired medicines to alleviate suffering and improve health. Company initiatives include:
- Preparing the world’s first Phase II trial of using micro doses of LSD to treat adult attention deficit disorder (ADHD).
- Preparing a Phase II study that uses a synthetic derivative of Ibogaine (a psychedelic derived from the West African Iboga shrub) to treat opioid addiction.
- Patenting a drug in collaboration with Basel University’s Liechti Laboratory that significantly limits the hallucinogenic effects of LSD. The LSD neutralizer could help researchers expand appropriate uses of the drug and improve its potential therapeutic use.
- Researching LSD, psilocybin, and ketamine to treat mental health-related conditions.
MindMed, which was trading at US$0.78 as of this writing, raised just over $24 million before going public with the issuance of more than 78 million common shares offered at $0.33. Since the IPO, the share price has seen up to 100% gains and the company has a current market cap of around $158 million (Cd.).
HAVN Life Sciences Inc. (CSE: HAVN)
HAVN Life Sciences went public in early September with the stated goal of solving the psilocybin supply chain problem of delivering naturally derived psilocybin directly to researchers. Operating with two divisions, HAVN’s labs division focuses on research and development of legally extracting psilocybin from mushrooms in order to address supply chain problems. Its retail division will sell natural health products composed of novel compounds derived from legal medicinal mushroom varieties. The company plans to use revenues from the retail division to support lab division initiatives, some of which cannot be started until the company receives its controlled drugs and substances dealer’s license from the Canadian government.
Numinus Wellness Inc. (TSXV: NUMI)
Numinus is a fully integrated operating company that operates a wellness centre, cannabis testing and research facility, and is licensed by health Canada to test, sell, distribute, and eventually conduct research on psychedelic substances. Through a merger with Salvation Botanicals and expected sustainable annual revenues of $25 million from cannabis extraction, the company went public earlier this month via a reverse merger (RTO) with Rojo Resources. NUMI, it should be noted, may also be eyeing potential recreational market opportunities, given that the legality (decriminalization in Denver, etc.) of psilocybin is referenced in some of its investor outreach materials. Plans for the rest of the year include:
- Fourth Quarter cannabis processing and extraction licensing by Health Canada
- Acquire and integrate two to four existing Canadian wellness centres with the Numinus model.
- Receive inputs from the Multidisciplinary Association for Psychedelic Studies (MAPS) on space/clinic requirements for trials.
- Amend Controlled Substances Act dealer’s license to include import/export, packaging, and R&D.
- Begin advanced therapeutic, evidence-based patient studies in psychedelic therapies under a Memorandum of Understanding with the British Columbia Centre on Substance Abuse.
