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July 18, 2024


Investment information for the new generation


Is it time to buy the psychedelics dip? Featuring Filament Health (FH.NE)

Psychedelics are once again hinting at a major reversal. With Cannabis stocks essentially confirming reversal breakouts, will psychedelics be able to join? It comes down to that catalyst. Will both sectors reverse on positive news of government deregulations? Or is this money flowing back into cheap sectors as the overall stock markets begin to bounce?

Let’s talk about Filament Health before looking at charts.

Filament Health Corp. operates as a natural psychedelic drug discovery and extraction technology company. It propagates psychedelic plants; conducts genetic research; performs extraction procedures; runs in-house trials; and distributes IP and drug candidates to drug developers, researchers, and other licensed parties.

Filament Health has been doing things and have been putting out consistent news. It is just the overall sector drop that is impacting the stock. But are things about to turn? More on this below on the charts.

Filament has announced that it has been included in Health Canada’s list of licensed psilocybin producers through the Special Access Program (SAP). The SAP allows health care practitioners to request for patients, on an emergency basis, access to drugs that are not yet approved in Canada, such as psilocybin and psilocin.

Filament Health receiving approval from Health Canada for a Phase 2 clinical trial using PEX010, the company’s botanical psilocybin drug candidate. Cybin Therapeutics has licensed the Company’s PEX010 from Filament for use in the trial, which is expected to begin in Q3 2022. The trial will include individuals with major depressive disorder (MDD) who are undergoing selective serotonin reuptake inhibitor (SSRI) therapy, as well as those who are SSRI-naive.

On February 23rd 2022, the company announced that it entered into a licensing agreement with ATMA Journey Centers. Filament has licensed PEX010 (25 mg) to ATMA for use in clinical trials, including a Phase I psilocybin safety trial in healthy individuals enrolled in a psychedelic-assisted therapy training program.

“The selection of our natural psilocybin drug candidate for ATMA’s future clinical trials is a validation of both our product and the ease of working with Filament Health…ATMA is a leader in psychedelic-assisted psychotherapy and we are thrilled that they will be using our product,” said Filament Chief Executive Officer, Benjamin Lightburn

ATMA, which translates to inner essence, breath, or soul, is a Canadian company focused on delivering practical, innovative, and transformative experiences leveraging the potential of psychedelic medicine. It is also worth noting that ATMA is Canada’s first private therapy company to conduct legal psilocybin therapy through the Health Canada Section 56 Exemption.

A month later, on March 23rd 2022, Filament Health announced they have been issued a second patent by the Canadian Intellectual Property Office (CIPO) for the extraction and standardization of natural psilocybin and associated psychedelic compounds. The patent covers essential technology for transforming variable psychedelic raw materials into pharmaceutical-grade, standardized drug candidates.

“Two years ago, the conventional wisdom was that producing shelf-stable psilocin was impossible, Not only has Filament proved the contrary, but we have also had our innovations yet again validated by the patent office. The success rate for pending applications to issued patents in the pharmaceutical industry is 42.8%. Our success rate is 100%,” said Taran Grey, Director of Intellectual Property.

Filament IP Graphic

Now let us take a look at the charts.

TradingView Chart

On February 24th 2022, Filament hit all time record lows hitting $0.10. Keep this date in your mind.

After printing record lows, the stock just began to range. As my readers know, we really like these types of set ups here on Equity Guru. Market structure tells us that we see markets move in three ways: downtrend, range and then an uptrend. We have the downtrend and the range…the uptrend comes next. But we still need confirmation for this trigger. The stock can continue the downtrend. Take a look at price action on Filament between January 2022 to mid February 2022. We ranged, but broke down making new lows rather than breakout higher.

This is why the trigger is very important for us. Filament is back in the range, and actually testing the very lower limits of the range here at around $0.12. The breakout of the range above $0.15 is the trigger. If we get this, we can begin to say a new uptrend is beginning.

Yes, any major news can get the stock popping, but I am watching the overall psychedelics market. More specifically the ETFs PSYK and PSIL:

TradingView Chart

The Canadian ETF PSYK is also ranging. All time lows were printed on February 24th 2022.

Very similar market structure to Filament Health. The key resistance zone? The $3.70 zone.

TradingView Chart

The US psychedelics ETF, PSIL, has many more positive bullish signs. We have a downtrend line that has been taken out, and I am seeing a potential reversal pattern setting up. I am talking about the infamous inverse head and shoulders pattern. The key is that $4.50 resistance zone.

In summary, the technicals are indicating a potential reversal for psychedelics. We still have long ways to go before confirming this, but the set ups look appealing from a risk vs reward perspective. Is the catalyst going to be positive news from the deregulation side? Or just an overall move back into cheap sectors like Cannabis and Psychedelics? The key for us will be the break above $4.50 on PSIL and $3.70 on PSYK. We get those, and psychedelics begin a new uptrend. For those bullish Filament Health, if we get a close above $0.15 with the Psychedelic ETFs confirming a close above resistance, we are good to go!

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