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Why Psychedelics Look like the Next Billion-Dollar Business

Featured Submission, Featured Submission
0 Comments| August 23, 2019


"Why Psychedelics like Magic Mushrooms are Looking like the Next Breakthrough Billion-Dollar Business"


There has been so much money made in Cannabis stocks and many investors are wondering what the next immense profit opportunity is going to come from. Several countries and many states are making big shifts in drug policy and research regarding psilocybin and many investors are excited about the upcoming wave of decriminalization akin to that of what we are seeing in Cannabis.
 

Decriminalization is just taking off

The State of Denver voted in May to decriminalize the fungus that contains psilocybin, a psychedelic compound. Oakland, Calif., followed Denver several weeks later and Oregon is trying to get a similar measure on the ballot for 2020. Industry experts see mushrooms having untapped medical potential that could be as big as Cannabis especially considering the clinical studies showing the mushrooms effects on people struggling with depression and post traumatic stress disorder.


Possibility of Disrupting Anti-Depressant Market

Leading researchers are projecting that Magic mushrooms could replace antidepressants within as little as five years. The $15 billion-dollar global Anti-Depressant market can be soon toppled amid a recent resurgence of the study into magic mushrooms and the data that is showing the immense benefits of psilocybin medicine.

David Nutt, the former chief drug advisor for the British government and is optimistic about the federal approval process. He told Business Insider last year that he expects to see psilocybin approved as a treatment for depression by 2027 at the latest.


Depression is a huge problem

One in six Americans takes some form of psychiatric drugs like antidepressants. It is estimated by the World Health Organization that there are over 300 million people worldwide dealing with this debilitating mental illness. Global revenue for antidepressants is projected to grow to nearly $17 billion by 2020 and in the US alone treatment of this illness is projected to cost $150 billion. This huge number only includes direct medical costs such as therapy, drugs and hospitalizations and not the overall negative effects to society.


How Psilocybin Works

 



Notable Companies entering this space


Compass Pathways

Private Company

The FDA granted “breakthrough therapy” status in October to Compass Pathways for their psilocybin drug for depression. The London Based company is now proceeding with clinical trials in North American and Europe and is set to go public with a $800M+ valuation. The under the radar company has made 20,000 doses of magic mushrooms to treat depression, is run by top scientists and is backed by Silicon Valley entrepreneur Peter Thiel. Compass is currently enrolling 216 patients across a dozen research sites and is projected to be the leader in the psilocybin space.
 

Roadman Investments Corp.

TSX: LITT

FWB:1QD

OTC: RMANF

Market Cap: $6M

YTD Performance: +50%

Include Chart:

Roadman Investments is a Canadian Venture Capital and Advisory Firm that invests capital into companies that offer breakthrough products, devices, treatments and health supplements. The company’s current focus is to acquire assets in cultivation, distribution, consumer products, services and research and development in the medicinal mushroom sector.

This Investment issuer has just recently rebranded, has a new team and is recapitalized all while having the smallest market cap. of all the public companies in the mushroom space. A microcap with a ton of cash to deploy seems to be one of the best bets for enormous gains as this sector develops.

The company has been advising and has invested $150,000 in a company specializing in the formulation and end distribution of a suite of premium artisanal mushroom health supplements company equipped with proprietary formulations of mushroom-extract-infused tea blends. Champignon Brands is the company’s initial foray into the sector and Roadman has the right of first refusal on future equity financings, the right to appoint a director and can gain general interest over the assets of the company.

One of the most distinctive strengths of the firm is its ability to provide investors with exposure to private investments that otherwise would not be available to retail investors. Roadman recently announced that Kevin Matthews has joined its advisory board. Mr. Matthews is leading medicinal mushrooms and psilocybin advocate renowned for his leadership in the successful campaign to pass Initiative 301 which resulted in Denver, Colorado becoming the first US city to decriminalize psilocybin. Kevin’s huge network in the alternative health space should give the company access to the best medicinal mushroom companies and experts in the world.


Wuhan General Group China Inc.

OTC: WUHN

Market Cap: $11.92M

Insert Chart

The company is engaged in the cultivation, processing and manufacturing of CBD and has stated it will be focusing on psilocybin as well. In May this year the company signed an LOI to get 49% a South African company called Biodelta. The deal includes all the land, buildings, and infrastructure including a specialized greenhouse and drying ovens. Preliminary forecasts would see Wuhan produce 36,000 kg of CBD in phase one (300k sq. ft), and 175,000 kg (1.3M sq. ft) at full capacity.

M2BIO is the company division that aims to develop psilocybin-based medicine. M2BIO is currently doing an in-depth review of studies performed and their results in each of these conditions and evaluate the clinical potential for use. The company plans to use Biodatas’ experience in producing medicinal plants under ISO 9001 certification to grow and commercialize medicinal mushrooms into their existing pharmacy supply chain.

The company generated $80M in revenue and achieved a gross profit of $14.5M in the last fiscal year but has over $110M in debt. This is another company out of China that just completed the acquisition of Biodelta several months ago and is saying it will be exploring psilocybin therapies. Their psilocybin division is headed by a Medical Doctor with a Bachelor of Medicine from the University of Barcelona. It is interesting to see if they will be able to start growing psilocybin and how this business division will perform for the company. The announcement of the company “entering the psilocybin market” was over 5 months ago and there have been no updates ever since. Biodelta has developed over 1,000 pharmaceutical products since it’s inception so it does offer some promise but only time will tell.

Mind Medicine ( no public site )

TSXV- BRD

OTC – BDWYF

MMED is assembling a drug development pipeline of psychedelic inspired medicines and is planning or undertaking FDA trials. The company plans to grow its pipeline of psychedelic inspired medicines through acquisitions, joint ventures and collaborative development agreements. Although the company’s initial focus is on developing an opioid addiction medication, they have stated they are looking to also make a foray into psilocybin. Their board is stacked with doctors, professors and experts that have extensive clinical trial and regulatory operations experience. The company just announced an RTO of a Gold Mining Shell Called Broadway Gold on July 26, 2019 and the stock is still halted by the exchange as they are subject to regulatory approvals and closing conditions. Before the completion of the transaction the company is due to complete a non-brokered private placement for $4,000,000 to help fund their operations. The definitive agreement for the transaction was set to close on August 20, the obligations are stated to terminate if an agreement has not been reached. This is one to watch closely as they are over their deadline but do offer significant promise in terms of psychedelic drug development. The pharmaceutical industry puts the cost of bringing a medicine from invention to pharmacy shelves at $2.7 billion so this company may have a never actually go into psilocybin given their opioid addiction focus.


Bottom Line

It’s going to be an interesting 6 months in this space especially given the upcoming IPO of Compass that will shine a bright light on to medicinal mushrooms sector opportunity. Investing early into stocks in this sector can prove rather profitable in the long run, especially given the big upside potential.




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