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XPhyto: Proof of Concept for Mescalin Synthesis

Marc Davis Marc Davis,
0 Comments| June 10, 2021

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It’s become a much talked-about story on both sides of the Atlantic.

XPhyto Therapeutics Corp. (CSE: XPHY) (FSE: 4XT)(OTCQB: XPHYF) has earned considerable media coverage in recent months due to its expansion into the development of psychedelic drug formulations and all this buzz has created lofty expectations for this high-flying Canadian/German bioscience accelerator.

Fortunately, XPhyto has just announced that it is making impressive headway already. The company has just announced that it has successfully synthesized mescaline for the first time. And it is now embarking on a manufacturing scale-up, which is expected to lead to the large-scale production of standardized pharmaceutical-grade mescaline.

Company CEO Hugh Rogers says this developmental milestone clearly establishes XPhyto as a front-runner in the race to develop pharmaceutical-grade drug formulations from mescaline.

“With both its North American GMP mescaline synthesis program and German-based psilocybin biotechnology production underway, the first stage of XPhyto’s psychedelic medicine program is progressing on an aggressive timeline,” he says.

“In a very short period of time, we have achieved a lot in the psychedelic space. We’re moving fast because we see a significant market opportunity in the production of pharmaceutical-grade psychedelics, followed by the standardization of dosage formulations with precise, predictable and efficient drug delivery for clinical study and therapeutic use.”

This technological achievement marks a particularly significant proof of concept for XPhyto in a highly competitive new biotech sector where clinical validation is still a rarity. Especially considering the fact that the synthesizing of medicinal compounds to government-mandated GMP standards is typically an expensive, technologically challenging procedure. Most psychedelic startups have neither the funds, nor the scientific expertise, to achieve this.

Thankfully for XPhyto, it has been able to leverage the drug formulation expertise of its flagship German subsidiary, Vektor Pharma TF GmbH. For over a decade, Vektor has specialized in the use of proprietary oral/transmucosal strips to optimize the uptake of orally administered drugs. This includes a range of commercial painkillers, such as the highly dose-sensitive drug, fentanyl.

It is well worth noting that most drugs that are delivered via this method are shown to have especially high bioavailability versus other forms of delivery such as pill forms. They also provide a faster onset and more predictable level of efficacy because the drug does not need to be absorbed in the GI tract and metabolized via the liver. Keep in mind that dosage-control will be vital to the judicious administration of such powerfully potent drugs as psychedelics.

(Dissolvable, thin-film drug delivery formulations offer an ideal delivery system for pharmaceutical psychedelics)

Why Mescaline as Medicine?

Mescaline is a mind-expanding compound – derived from the peyote plant – that modulates neurotransmitters, such as serotonin and dopamine, which regulate cognition, perception and mood.

This appears to make it well suited to treating a variety of mental conditions, which also include post-traumatic stress disorder (PTSD), according to several early-stage clinical trials.

At this time, XPhyto is one of only several start-ups that are experimenting with mescaline with the mandate to demonstrate evidence-based efficacy of its therapeutic properties.

Rogers adds, “XPhyto intends to first produce psychedelic active pharmaceutical ingredients, which can then be incorporated into our novel sublingual and transdermal delivery systems. This is our competitive advantage, from production of API to drug formulation to clinical validation.”

Psychedelics and Psychosis: Reversing the Mythology

Until recently, the public perception has always been that any therapeutic value that psychedelics may have is outweighed by the dangers that they supposedly pose. This comes in the wake of anecdotal stories of hippies “frying their brains” with large amounts of psychedelic drugs that were consumed for recreational purposes in the 60s.

However, 21stcentury observational studies conducted by healthcare professionals in controlled environments have consistently shown that psychedelics have low potential for abuse

In fact, psychedelics rank among the least harmful drugs when factoring-in damage to health, drug dependency, economic harm, and the societal cost of crime, according to studies. This includes mescaline.

In particular, mescaline is thought to improve mood regulation by increasing blood flow and activity in the prefrontal cortex. Low activity in this area is linked to depression and anxiety. Researchers at the University of Alabama even found that mescaline could curb suicidal thoughts.

Elsewhere, a researcher at Harvard University found that mescaline use leads to reduced rates of alcoholism and drug abuse among Native Americans.

Even the US Food & Drug Administration (FDA) considers psychedelics to be a breakthrough therapy for treating severe depression, causing the leading companies in this nascent sector to enjoy buoyant share prices.

Keep in mind the fact that there is a whole array of other anti-psychotic medications that might one day be replaced by psychedelics. In fact, the mental health market is worth an estimated $70 billion a year globally, according to Bloomberg. Psychedelics stand to earn a sizeable share of this enormous market.

Investment Summary

XPhyto benefits from a highly differentiated business model. It has just proved its ability to successfully synthesis mescaline as the first major step towards doing this on an industrial scale for a certified active pharmaceutical ingredient.

This clearly makes this innovative bioscience accelerator an industry frontrunner in the psychedelics sector. (XPhyto is also an industry leader as a developer of super-fast PCR COVID-19 testing diagnostics in Europe.)

Additionally, the company’s drug formulation and drug delivery expertise also offer a clear competitive advantage. This is because of Vektor’s proprietary expertise in developing sublingual and transdermal therapeutics that deliver extremely precise and efficient doses.

Of particular importance, Vektor’s expertise has already been commercially validated by the pharmaceutical industry via the company’s contract development work and other pharmaceutical and narcotics programs.

This methodology therefore promises to prove invaluable for safely administering mescaline and other psychedelics.

Yet very few companies have recognized its commercial potential, giving XPhyto the opportunity to secure first-mover advantage, assuming that mescaline wins FDA approval and is rescheduled by the DEA.

XPhyto’s focus on mescaline as a lead drug candidate makes it a strong contender with an early-mover advantage in the race to bring the next potential blockbuster psychedelic drug to market. Accordingly, XPhyto promises to become a rising star within this science-driven psychedelic renaissance.

The company share price still benefits from a relatively tight share structure of approximately 70 million shares outstanding, while its market capitalization is less than CDN $150 million. Yet its small handful of competitors that are at a comparatively well-advanced stage in the development of psychedelic drug candidates all command much higher market capitalizations. Therefore, the upside potential for XPhyto remains considerable.

Furthermore, the company believes that its Covid-19 test kit can also become a powerful catalyst to higher share price multiples. Having recently commercialized a 25-minute PCR test kit, commercially known as COVID-ID Lab, it looks to disrupt the EU’s coronavirus testing protocols with significant business development news expected on this front over the coming months.

Such a scenario should act as a powerful catalyst to higher share prices in response to upbeat news flow.

With that said, I believe that the second half of 2021 will be a time during which the company’s consolidated share price breaks out, earning a re-rating to the update due to the emerging success of the company’s pioneering business verticals, of which mescaline plays a dynamic role.

The takeaway here is that it may be a good idea to keep your eyes on this stock. Its resurgence as a strong sector performer – as was very much the case in Q1 of this year – appears close at hand.

Remember to do your homework. The best source for full disclosure about the company is the company itself, SEDAR or CSE profile pages for regulatory filings and news releases.

ABOUT THE AUTHOR: Marc Davis has a deep background in the capital markets spanning 30 years, having mostly worked as an analyst and stock market commentator. He is also a longstanding financial journalist. Over the years, his articles have appeared in dozens of digital publications worldwide. They include USA Today, CBS Money Watch, The Times (UK), Investors’ Business Daily, the Financial Post, Reuters, National Post, Google News, Barron’s, China Daily, Huffington Post, AOL, City A.M. (London), Bloomberg, (Germany) and the Independent (UK). He has also appeared in business interviews on the BBC, CBC, and SKY TV.

Marc is also an enthusiastic investor in XPhyto Therapeutics and his commentary is not intended to be a solicitation for other investors to purchase this stock. Investors are always advised to consult a professional investment advisor before making investment decisions.

FULL DISCLOSURE: Xphyto Therapeutics Corp. is a client of Stockhouse Publishing.

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