There are many ways to stay ahead of the game in terms of picking stocks, and if timing is everything then getting in early into companies should be the main focus. Often times super hyped IPO’s like Atai (ATAI.Q) debut on the Nasdaq gives the illusion of being early, but in reality, there are better ways to stay ahead of the curve. Hunting out private companies is like being a hipster, finding bands that haven’t yet broken out yet, and saying their early stuff is better. Even if you can’t get equity in the capital raises, there are still advantages to keeping your ear to the ground.
Here’s a look at some interesting private companies in the psychedelics space.
Bexson Biomedical is a California-based research stage company developing ketamine-based products for a wide variety of pain management and mental health disorders. The company’s lead indication for its BB106 therapy is post-operative pain. Bexson will also be developing new compounds targeting the NMDA receptor, similar to ketamine, for pain management. In April the company received its first patent, I’m honestly not sure how valuable this is as it is very specific, but it’s still something to be celebrated for a new startup.
The patent is directed to Bexson’s ketamine formulation that is specifically tuned to the pH and osmolality of subcutaneous tissue, and applies to racemic ketamine, as well as the R or S enantiomers. Bexson believes the new utilities identified in this patent will allow safety, comfort and pharmacokinetics that greatly improve ketamine administration for multiple routes of administration, including subcutaneous.
The company has assembled a uniquely talented team with deep knowledge of NMDA receptor chemistry. Bexson’s Series A nabbed them $4.8 million USD and was led by Noetic Psychedelic Fund back in February.
DemeRx is a Miami-based clinical-stage pharmaceutical company focused on developing ibogaine and noribogaine for the treatment of OUD. DemeRx’s mission is to advance the development of potential treatments for OUD( Opioid Use Disorder) in order to prevent patient suffering, provide better treatment retention, and decrease illegal opioid use.
DemeRx has a JV with Atai to develop ibogaine for OUD, Atai is putting a significant hunk of change at $22 million USD. Atai’s dollars should get ibogaine through its critical milestones such as a double-blind, placebo-controlled study and a greater understanding what dosing will ultimately look like.
In March the company got approval from the UK Medicines and Healthcare products Regulatory Agency (MHRA) to commence subject enrollment in a Phase 1/2a clinical trial of ibogaine HCl (DMX-1002). The Phase 1 portion of the MHRA approved trial will be conducted at the Manchester clinical unit of MAC Clinical Research (MAC), one of Europe’s largest clinical development organizations. MAC’s extensive good clinical practice experience, expertise and infrastructure will provide a platform for what is hoped to be a successful and significant trial. The approval for a Phase 1/2a clinical trial will enable DemeRx to study DMX-1002 in recreational drug users before the start of Stage 2 in opioid-dependent patients. Before the start of Stage 2, the trial will pause to allow MHRA to review human safety data together with nonclinical study results.
MagicMed Industries, the Calgary-based psychedelic startup intends on commercializing psychedelic-derived pharmaceutical candidates in its portfolio which it refers to as ‘Psybrary’. I’m making a Tobias Funke face at that name right now, but their capital raise last year was impressive as a private startup which is why I’m including it on this list.
MagicMed raised $8.1M CAD, upsized from an original $2.5M CAD in a private placement in September 2020 with plans of moving towards going public either on the CSE or TSX exchange. The company hasn’t posted an update since the private placement in regards to timelines. The initial focus of the Psybrary is on psilocybin and DMT derivatives, and it is then expected to be expanded to other psychedelics such as MDMA, LSD, mescaline, and ibogaine.
Diamond Therapeutics, a Toronto-based psychedelics company has partnered with McGill University to test low doses of LSD. The company is partnering with Dr. Gabriella Gobbi of McGill whose work investigates LSD’s effect on social interactions. The findings suggest that psychedelics could play a role in treating diseases characterized by social impairment, such as autism spectrum disorder and social anxiety disorder.
Diamond will be focused strictly on ‘tripless’ doses that don’t provide any of the hallucinations typical of most acid trips. Diamond believes these findings may help unlock the use of low-dose psilocybin for the treatment of psychiatric disorders, including anxiety and depression.
This is interesting in that there aren’t many companies if any that are focusing on targetting autism spectrum disorder. LSD has been shown to be somewhat effective in microdosing for anxiety and depression, although significant clinical trials still haven’t happened yet. MindMed (MNMD.Q) is currently working on Phase 2 clinical trials for LSD’s efficacy in treating anxiety and cluster headaches, which could open the door for further trials with the substance. The company has not completed a capital raise yet.
Reset Pharma is a New York-based company developing and commercializing novel psychedelic treatments for patients with cancer. The company’s lead program initially focuses on developing psilocybin to treat severe demoralization in patients with life-threatening cancer. These patients have clinically relevant levels of demoralization with a perceived lack of control, hopelessness and helplessness, and an increased risk of suicide. The company has partnered with NYU for developing IP related to psilocybin and cancer-related anxiety, depression, and suicidality.
Many companies IPO without a big press push, staying on top of the private side allows investors to at least get in before the hype cycle. If the stock takes off and people start buzzing about the company it’s likely that share prices are going to rise, especially in an industry like psychedelics where there are plenty of newer retail investors that believe more in the substances themselves than P/E ratios.
These private companies are also often acquired by public companies, so if news breaks that a pubco is acquiring a private co and you know the ins and outs, you can make a clearer decision whether or not you should increase or decrease your investment in said company. While none of these companies will likely IPO in 2021, aside from potentially MagicMed, maybe they could be candidates in 2022. Looking as far ahead as possible is one of the tools a retail investor can use to get some kind of leg up. Obviously, you aren’t going to beat the institutions unless you have some kind of inside connection, or can offer the company some kind of service and get some juicy early options in return.