Long before the cannabis Green Wave hit, Zeeshan Saeed and Anthony Durkacz had launched FSD Pharma (HUGE) intending to move into the cannabis space but with a more sophisticated business plan. In an early interview, Durkacz told me “recreational marijuana will be a race to the bottom in a low margin commodity business”. He was right.
While the original HUGE plan included growing cannabis, the focus of the business was to explore the pharmacological opportunities in the cannabis world. As Durkacz pointed out in our interview, a single successful drug can produce billions in revenue.
So HUGE is not a “cannabis” company, it was and remains a bioscience company with a portfolio of assets designed to take advantage of the rapid advances in the pharmaceutical use of canniboids. Plus, because of its exposure to the medical potential of cannabis derivatives, HUGE has also gained exposure to the emerging therapeutic psychedelics world. The combination of cannabis and psychedelics puts HUGE at the forefront of two frontiers in medicine.
HUGE has one other big advantage: throughout the cannabis market collapse it has managed to hang onto its very full treasury. As of June 30, 2021 it had $43.2 million USD in the bank. This means the company can afford to execute on its new plans.
In August 2021, FSD Pharma entered into a definitive agreement to acquire 100% of the shares of Lucid Psycheceuticals. This deal closed on September 21, 2021. Lucid is a psychedelic pharmaceutical company with exclusive worldwide licensing rights to a family of new chemical entities that offer the ability to prevent, and reverse Neurodegenerative orders of the brain. These patented molecules, along with certain psychedelic substances, offer a unique pathway to what Lucid calls “Total Brain Health”.
The LUCID 21-302 molecule for multiple sclerosis (MS) was developed over many years, by doctors, scientists and researchers at the University Health Network (“UHN”). UHN is the largest health research organization in North America. Lucid has exclusively licensed LUCID21-302 from the UHN which recently received patents for it. LUCID 21-302 represents an entirely new approach to MS.
Current medical thinking sees MS as an autoimmune disorder and the drugs used to treat or lessen the effects of MS all begin with the immune system. Lucid and the researchers at the UHN looked at MS from the perspective its being an issue of neurodegeneration. This new approach looks to reverse and prevent neurodegeneration without interacting with the immune system. Lucid hopes that LUCID 21-302 will be very complementary to existing MS therapies, helping people regain the muscle function they have lost.
The global multiple sclerosis therapies market was estimated to be worth 23 billion dollars a year in 2018 and projected to increase to 28 billion by 2026. A brand new approach to MS could quickly grow in a market this big.
Lucid believes that the LUCID 21-302 molecule will be useful in treating other neurological and mental disorders. “Total Brain Health” is not confined to MS. With millions of people suffering from mental illness and various, severe, neurological disorders, the world-wide market is immense. The Lucid all share acquisition offers HUGE a unique, and potentially very lucrative, window into the rapidly advancing world of therapeutic psychedelics.
On the cannabis side, HUGE has acquired and is now trialling, “ultra-micronized palmitoylethanolamide (PEA). Ultra-Micro PEA stabilizes mast cells and down-regulates the pro-inflammatory cytokines to effectuate an anti-inflammatory response; it is also known to target the CB2 receptors of the endocannabinoid system of the human body.” The potential for cannabinoid based anti-inflamatories has been hypothesized for several years with CBD seen as a potential anti-inflammatory. However, the challenge is to make any cannabinoid derived molecule bio-available in the amounts needed to actually work. This is pure bioscience and, after the first trial – first-in-human safety and tolerability trial with no serious adverse effects – HUGE is examining a number of conditions as potential targets for this technology. From arthritis to chronic pain, there are dozens of potential applications. The question is which one to pursue.
As Huge and Lucid move towards Phase 2 clinical trials it’s worthwhile to take a look at similar companies in the drug development space. In August of this year, Eliem Therapeutics did an IPO and raised 90 million USD. It has two Phase 2a studies on one drug for pain relief and is ready to do three clinical studies on a protocol to treat depression. Currently its market cap is $419.7 million USD.
Compass Pathways (CMPS) is somewhat more advanced along its path of seeking treatment protocols for mental illness using psilocybin. While the company does not have any revenue, it enjoys a market cap of 1.346 billion USD.
By comparison, HUGE, with a market cap of 55 million USD is trading for little over its cash on hand.
Rebooting HUGE is obviously, challenging. Equally challenging is stabilizing the market and restoring shareholder trust in HUGE. These are management, rather than scientific, challenges and Durkacz and Saeed have outlined a plan for HUGE which will use the cash in the bank to drive the breakthroughs which, in turn, will create profits.
Durkacz and Saeed have plenty of “skin in the game”, neither of them has ever sold a single share in HUGE they held personally. Durkacz brings his skills and connections as an investment banker to the table, Saeed his entrepreneurial acumen. It is a formidable team and one which will ensure FSD Pharma 2.0 is firmly fixed on the road to pharmaceutical profitability.