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MagicMed to Be Acquired by Nasdaq-Listed Company

Psilocybin Alpha Understands That MagicMed Will Be Acquired by Nasdaq-listed Enveric Biosciences

  • MagicMed Industries has inked an amalgamation agreement with medical CBD biotech Enveric Biosciences (NASDAQ: ENVB).
  • Psilocybin Alpha understands MagicMed will be acquired by the listed company via an all-stock transaction.
  • Upon closing of the transaction, MagicMed’s CEO Dr. Joseph Tucker would be appointed CEO of Enveric Biosciences; Enveric’s current CEO, David Johnson, will become Executive Chairman.
  • If and when the transaction is completed, MagicMed would become the third psychedelics company listed on the prestigious exchange; though not in the conventional (up)listing manner.

Calgary-based MagicMed, which is “focused on assembling a portfolio of intellectual property” relating to psychedelic derivatives, is set to be acquired by Nasdaq-listed Enveric Biosciences by way of an amalgamation transaction.

This news comes nearly six months after MagicMed closed its last (and only) major financing in which the company raised $8.1m and stated its intent to list on the CSE; reserving the ticker symbol MGIC. The company has been largely silent on its go-public plans since.

MagicMed: A Refresher

IP is central to MagicMed’s business model. Don’t take our word for it, below are a few statements made by company representatives and advisors.

In an interview with Proactive, CEO Dr. Joseph Tucker explained, “…what we really wanted to do is begin by capturing as much intellectual property as possible.”

More recently the company’s marketing director, Natalie Dolphin, discussed MagicMed’s PsyAI platform in an interview on Psychedelic Finance: “One of MagicMed’s core strategies is to explore intellectual property,” going on to explain, “we will look to incorporate our PsyAI™ platform into our IP strategy as well.”

In a press release MagicMed’s IP advisor, Harm Deckers, explained:

“Filing this broad portfolio of patent applications is an important moment for the Company. Now that these patent applications claiming composition, manufacture, and methods of use are on file with the U.S. Patent and Trademark Office, international patent treaties prevent worldwide the issuance of claims to other parties, should any file patent applications in the future on any of these 125 million molecules”.

In concrete terms, the company appears to have filed just over a dozen patent applications, according to press releases. In December 2020, for example, MagicMed announced that its portfolio of psilocybin derivatives (“which also captures DMT derivatives”), dubbed ‘Psybrary’, covered “over 125 million molecules.”

It is important to note that not one of MagicMed’s patent applications has yet been published, let alone granted. Indeed, it appears to have only filed its first psychedelic derivative patent application in the summer of 2020, according to the related press release.

MagicMed is a relatively small company and as such has not received a great deal of media attention, despite healthy marketing spend (projections of which were broadly equal to its R&D spend, according to a preliminary prospectus filed in February). Given the patent debate within the space, some will undoubtedly be critical of the company’s IP strategy. Others have questioned the rigor of the company’s patents and their priority dates.

This transaction, and any resultant Nasdaq presence, will surely draw more attention to the company and its strategy in the coming weeks and months.

A Brief Look at Enveric Biosciences

According to its website, “Enveric Biosciences is a patient-first biotechnology company developing rigorously tested, novel cannabinoid medicines to improve quality of life for cancer patients.”

By Nasdaq standards, Enveric Biosciences is a penny stock, trading below $5. With a market cap of around $58m, Enveric is on the borderline of nano- and micro-cap classifications.

This is compared with an average (mean) market cap of Nasdaq-listed companies in the healthcare category (which includes biotech) of $7.44bn, and a median of $492m.

Enveric is no stranger to M&A: the company gained its name after a spin-off and tender offer that took place under half a year ago. After a merger of tech firm Ameri Holdings and Jay Pharma, the combined entity was called Enveric Biosciences Inc. Enveric commenced trading on Nasdaq on December 31, 2020 under ticker symbol ENVB, after undergoing a 1-for-4 reverse split of its common stock.

ENVB opened trading at $6.88 on its first day on the Nasdaq, closing at $5.92. 4 months later, on April 30, 2021, the company was trading at $2.38, down 65%.

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Some observers noted that it was “odd” that the price of the stock was up 12% on Friday 21st May, from the previous close of $2.43, with an abnormally high volume of 17.4m shares traded. This was in the absence of company news.

Terms of the Transaction

The transaction is expected to be structured as an amalgamation, under which Enveric will issue MagicMed an aggregate of just under 10 million shares of common stock, plus facilities (such as options and warrants) to acquire an additional 9 million shares.

Enveric shareholders will own c.63% of the combined company’s common stock, with MagicMed shareholders owning the remaining c.37%.

Enveric will also receive c.$4m in cash from MagicMed’s treasury.