BRAX UNDERVALUED IN PSYCHEDELIC SPACE Braxia Scientific, undervalued in the psychedelic space
[Braxia Scientific Website](https://braxiascientific.com/)
Unless stated, this all comes from their April 15th Filing statement on [SEDAR](https://sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=
00048796). Filing statements are so good for this kind of thing. Seriously, go take a look at it. Various parts of this DD are lifted and paraphrased directly from this filing. Until the "my thoughts" section, it might not be my own words, it might be the filing statement.
# Tickers
* US:OTC $SHRMF (will be BRAXF on May 21st)
* CN:CSE $BRAX
* [My position: >150,000 shares](https://i.imgur.com/eCZXb5s.png). sorry it's split up, I hold in several accounts.
# Shares
* CEO - \~20%
* Director with \~10%
* Anthony Wilshere \~10% (idk who this is, not a director)
* Total Shares: 167 million shares
* Public Float: 125 million shares
* Tradable Float: 143 million shares
* Price: \~0.30 / share
* Market Cap: \~50mil
# Financials (2021 Q2)
* Quarterly Revenue: 249k
* Total Assets: 21mil
* Total Liabilities: 1.1mil
* Net Loss: 2mil
* EPS: (0.01)
# Who they are
[Braxia Scientific](https://www.youtube.com/watch?v=rZeNMKwvJmo) is leading the way in providing people who suffer from mental illness access to breakthrough treatments through our growing global network of multidisciplinary clinics while setting the standard of care. Braxia Scientific also aims to develop innovative ketamine and psychedelic drug formulations to provide high impact solutions for the future.
[They are divided into several companies](https://i.imgur.com/1GYepSO.png). They changed the name of the parent company since this image was filed in their amended listing statement. The parent company is now Braxia Scientific. This rebrand was planned over a year ago.
# Name/Date Aquired/Who they are
**Braxia** (formerly Champignon Brands) – The parent company, “the Company” hereafter. \[Braxia\] provides evidence-based best practices and global leadership in the implementation of ketamine in adults with depression. The product that derives from the foregoing service is what management believes to be the world’s largest data repository of clinical research data on adults with treatment-resistant depression. Champignon intends to use this data to develop NCEs suitable for Phase 1 and Phase 2 clinical trials.
**Altmed** **CRTCE** (4/20) – Operates multidisciplinary community-based clinics offering rapid-onset treatments for depression located in Ontario (Mississauga, Toronto and Ottawa) and Quebec (Montreal). In addition, management believes that CRTCE’s staff has published more peer-reviewed scientific papers documenting experience with ketamine in patients than any other center in the world. The CRTCE staff have published peer-reviewed scientific articles in the world’s leading psychiatric/medical journals including, but not limited to, The Lancet, World Psychiatry, and the American Journal of Psychiatry. They [recently published](https://pubmed.ncbi.nlm.nih.gov/33726522/) a synthesis paper on Ketamine research in the American Journal of Psychiatry which is expected to be the authoritative statement of best practices for (es)ketamine implementation for adults with major depression. Current (es)ketamine monthly patient capacity is 1040 total between the clinics. Currently staffed by 6 psychiatrists and 50 consulting staff.
**Novo** – (3/20) A biotechnology company which is focused on developing the Novo IP, which relates to novel and innovative delivery systems for the pharmaceutical and nutraceutical industries
**Tassili** – (3/20) working to develop effective psilocybin-based therapeutics for the treatment of mild traumatic brain injuries and/or PTSD.
# Trials
* Phase 2 – **Psilocybin Trial** – Applying in June for approval, expected to start in September. Partnered with Braxia CEO’s nonprofit, the “Brain and Cognition Discovery Foundation.” This will be using the CRTCE clinics.
* Phase 1B – **Novo Ketamine Cream Study** – Approved 12/20, ongoing at two Hamilton area clinics. Phase 2 is expected to occur entirely within the Company’s clinic system.
* Phase 1B – **Novo IN Ketamine Study** – Finishing chemical analysis and stability work. Expected to start before end of 2021 (page 20 for trail stuff in the filing)
# Upcoming Patents
* Expected to be submitted mid 2021
* Esketamine derivative
* Psilocybin derivative
# Patents Pending
* WIPO (PCT) Patent Appln No. CA2020/051040
* CONTROLLED RELEASE FORMULATIONS OF MULTIPLE ACTIVE PHARMACEUTICAL AGENTS, AND PSILOCYBE-DERIVED AGENTS IN COMBINATION WITH CANNABIS-DERIVED AGENTS AND METHODS FOR THEIR USE
* WIPO (PCT) Patent Appln No. CA2020/051371
* CONTROLLED RELEASE FORMULATIONS OF PSILOCYBE-DERIVED AGENTS AND METHOD FOR THEIR USE, AND METHODS AND COMPOSITIONS FOR THREATING MILD TRAUMATIC BRAIN INJURY WITH POST TRAUMATIC STRESS DISORDER
Comparison to patents of other companies? [It isn’t even a competition](https://i.imgur.com/SxbqmH3.png). Braxia is smoking the competition. (red arrow isn't mine, sorry)
# Training Program
>CRTCE is planning to implement an academy (the “CRTCE Academy”) to train healthcare providers on the implementation of ketamine and related psychedelics for adults with common mental health conditions. Once implemented, the CRTCE Academy is expected to train healthcare providers on pharmacology and integrated psychosocial/psychotherapeutic interventions that are evidence-based and, where required, approved by regulators. The CRTCE Academy is expected to certify healthcare providers and provide ongoing continuing medical.
# Recent Board Appointment
>On February 4, 2021, Champignon announced that Ms. Olga M. Cwiek had joined its board of directors. Ms. Cwiek served as a senior television executive at CBC and CTV specializing in television program acquisitions, labour and performer contract negotiations and design/administration of human resources policies and practices including human rights protections and enforcement. Champignon also announced the resignation of Bill Wilkerson, LL. D. (Hon) who had retired from its board of directors.
# Risks
If any of you are aware of this company, or bothered to look it up on Yahoo Finance, you are aware that they have had some regulatory / legal issues. What happened was their *former* CFO filed paperwork incorrectly for the acquisitions of Artisan, Novo and Tassili last year. Due to the previously misfiled paperwork, they filed the acquisition of Altmed incorrectly as well (should have been an RTO). Presumably this paperwork was correct, but based on the faulty paperwork filed previously. When Altmed (and the clinics) were acquired, it was a month later that the current CEO was appointed. It was a month after the current CEO was appointed that the hammer came down on the paperwork filed before he got there. Regulators put a halt on the stock. This only impacted the Canadian ticker, the US ticker was still trading. Their former CFO was incompetent. On several occasions he failed to file paperwork because he thought they didn’t need to, or it was filed incorrectly. Roger McIntyre fired the former CFO as well as the General Council. The CFO and General Council were all replaced. (details on page 12 of the 4/12/21 Filing Statement on Sedar)
Of course, this all had an impact on stock price. Where there is a big drop in stock price, there is a stock-drop lawsuit. These are the ambulance chasers of the stock world. The accounting error that led to all the problems and poor decisions is succinct.
>The Company determined that the intangible assets did not meet the definition of intangible assets for the purposes of international financial reporting standards and as result will be recorded as transaction costs in the Company's statement of loss and comprehensive loss. The effect of the restatement did not affect the Company's cash position.
Notably, nothing has materially changed for the company. They still own the IP, they still have the same cash etc. They just couldn’t book the IP as an intangible asset. As far as I have read in statements, all the other issues with paperwork have stemmed from this single error. Rounded up, the total change in intangible assets due to the correction is -14million.
>During the three most recently completed financial years: (i) no penalties or sanctions were imposed against Champignon or AltMed Capital by a court relating to securities legislation or by a securities regulatory authority (other than the BCSC Orders); (ii) no other penalties or sanctions were imposed by a court or regulatory body against Champignon or AltMed Capital that would likely be considered important to a reasonable investor in making an investment decision; and (iii) Champignon or AltMed Capital did not enter into any settlement agreements before a court relating to securities legislation or with a securities regulatory authority.
This was *after* regulators poured over their books, no one got in trouble. Right now, the ambulance chasers are rushing to represent the class. Deadline to file is June 9th. I hope/expect that the constant barrage of lawyer ads showing up on feeds for this company will go away after that. I don’t see a former CBC exec being willing to join this board if the company was going to get slaughtered by these law firms.
The stock is no longer halted, all their financials were audited and submitted to regulators. Other than the stock-drop lawsuits, this event is now behind them.
# My thoughts
I don’t place much risk on the lawsuits. I think the biggest risk is their low stock price limiting their ability to raise funds and develop the company. Seeing as I think the company has strong value and I intend to accumulate more shares at these levels, I am not going to cry too much about a low share price now, but it could be damaging if it continues for too long. For now, the Company has said they are well capitalized.
The current issues faced by the company are not a reflection of the current management, they are a reflection of the previous management. How they are handled *is* a reflection of the current management. During all this turmoil they have managed to seek new patents, expand, and start trials. To me, this signals that the management team is strong.
Clinic side, I see this company as the only serious contender. The CEO is an [absolute heavyweight](https://www.uhnresearch.ca/researcher/roger-s-mcintyre) in clinical pharmacology. Their strong patent acquisition and focused development of the company put them far ahead of their competition. He has even been running presentation circuits in uni's prior to his current position. Many are still on youtube.
>Dr. McIntyre was named by Clarivate Analytics/Thomson Reuters in 2014, 2015, 2016, and 2017 as one of “The World’s Most Influential Scientific Minds”. This distinction is given by publishing the largest number of articles that rank among those most frequently cited by researchers globally in 21 broad fields of science and social science during the previous decade.
Right now I think they suffer from a public sentiment issue. They are often left out of conversations in this space. People that got in right after the IPO feel burned by the halt and stock drop. New investors only see the law firm ads when looking up the company, and they don't see them trending on their favorite subs. Furthermore, the company hasn’t done much in publishing their news during the halt. I think things are changing though. The halt is done, they finished rebranding to Braxia, the deadline for the law firms is June 9th, and there are several major catalysts on the horizon. Braxia used to be good at working with the media, I suspect they will be going on a blitz over the next couple of months ahead of their AGM.
The fact that all of this has them trading at <17% of their ATH less than a year ago is wild to me. Nothing significant has changed in my perception of the company. I saw all of this unfolding after the halt and began buying in. At the moment I think there is a good amount of liquidity from the pre-halt bagholders that people can get into this without much risk of slippage. We are sitting near all-time lows, this isn’t a DD on some company they just ran 400%. You are absolutely buying into fear and negative sentiment and a stock that is probably pricing in more than a worst-case scenario. You are not buying into euphoria, so this is going to feel different than a lot of stocks that get DD’s on reddit. This isn't a meme stock. You want to know what a company looks like before it goes on a run from ATL? Its covered in dirt. The share price is garbage. The sentiment is trash. The media on it is brutal. But the underlying company, with the right DD and a little clorox, looks good.
I see their edge coming from a regulatory and IP moat. I don't think any of their clinic competitors (NUMI and Field Trip) are remotely close to their caliber on this.
**Tldr**: This is a mid to long term hold for me. I think this is a strong value play plagued by bad sentiment from poorly informed retail traders. If the stock were to pop instantly my "sell half" target would be $2. I think anything under $0.5 is borderline theft. If we get a normal bull trend up to $2 I would probably keep holding. I mean come on, patents for controlled release of psilocybin and weed extracts is awesome.