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Psychedelic Bulletin: Numinus to Enter U.S. Clinics Market; Mydecine Announces Reverse Stock-Split; Are Magic Mushrooms Giving Investors a Bad Trip?

This Week:

  • đź—˝ Numinus to Enter U.S. Market via Acquisition of Novamind
  • 🎳 Mydecine Announces 50:1 Reverse Stock-Split
  • 🤕 Are Magic Mushrooms Giving Investors a Bad Trip?

A Brief Note

Psilocybin Alpha is currently undergoing a rebrand and name change that we’re excited to share with you next month. Alas, please bear with us should you face any issues with our website: over the past two years we have amassed a great deal of content, and not all of it is playing ball with the migration.

We look forward to returning to our ordinary programming next month, which will include deeper dives and more original analysis (all this to say we won’t comment on that Nature Medicine article in this week’s Bulletin). In the meantime, we will continue publishing our weekly Bulletins to keep you up-to-date on the space…

Psychedelic Sector News

Numinus to Enter U.S. Market via Acquisition of Novamind

Numinus Wellness is to acquire Novamind Inc. in an all-share transaction for a total consideration of  approx. CAD $26.2m. The terms imply an offer price of CAD $0.44 per Novamind share, which were trading at CAD $0.26 prior to the news.

Unsurprisingly, Novamind stock shot up on the news, and is up around 30% at the time of writing. Numinus stock, meanwhile, took a 7% hit as investors anticipate dilution.

We weren’t surprised to learn of Novamind’s acquisition, given that our cash runway data suggested Novamind is about to burn through their cash pile and showed no signs of raising.

If and when completed, the merged company will run 13 clinics and expects CAD $10m annual revenues. The deal is expected to close in June.

Separately, Numinus reported Q2 2022 results yesterday.

Mydecine Announces 50:1 Reverse Stock-Split

Earlier this week Mydecine announced a reverse stock-split to the tune of 50:1. The reverse split is due to take effect on April 20, with post-consolidated shares trading the next day.

Stock splits (regardless of their direction) don’t change the fundamental valuation of a company. A reverse stock split simply slashes the number of shares in circulation, raising the price of a share in the process. Companies may wish to inflate the price of a share to improve their image, or to (re)gain compliance with an exchange’s listing requirements, for example.

Despite the fact that such splits leave a company’s valuation unchanged, they’re often viewed as a bearish signal.

Today, MYCO is trading at around CAD $0.045. Multiplying that by 50 gets us to CAD $2.25, which is in the region of the bid price requirements of a number of senior exchanges.

Other News

Weekend Reading

“The science of psychedelics is everywhere – but we should treat it with serious scepticism”

… writes Stuart Richie in his latest instalment of Science Fictions.

Ritchie’s work focuses on “fraud, bias, negligence and hype” in science, and this week he turned his attention to the psychedelics space, which was the subject of his freshly-minted Substack.

In short, Ritchie urged his readers to bear the following in mind:

  1. The reasons people are so excited about psychedelics for mental illness are not necessarily related to how much evidence there is for the treatment;
  2. The conflicts of interest in the psychedelic research field go very deep. It’s completely plausible that these conflicts help bias the studies toward reporting more positive results than are actually true;
  3. The discussion of psychedelic research in the media often bears only a passing resemblance to what’s actually in the trials – or at least it sounds a lot more certain and optimistic than is warranted;
  4. Even the best-quality trials are flawed in important ways because—mainly due to problems of expectations and blinding—this is an incredibly difficult thing to study;
  5. We shouldn’t allow our excitement for psychedelic drug trials to run roughshod over safety concerns, and we shouldn’t be so desperate for a breakthrough mental health treatment that we roll out these drugs before we’ve tested whether they work in high-quality, smartly-designed studies.

Can the Clever Use of Old Legal Strategies Thwart Psychedelic Monopolies?

… asks Shayla Love in her latest piece over on VICE.

In this article Love describes some of the strategies being employed to challenge psychedelic patents, from defensive publishing to patent pledges and pools.

“These lower-cost, lower-effort tactics by Freedom to Operate highlight more accessible techniques to block corporate attempts to monopolize psychedelic intellectual property; they could be used by other companies or individuals. They also represent a shift in the battle against psychedelic patents. It may be impossible at this point to eradicate them altogether. The fight at this point is more about what is done with patents—which at least in theory can be tools of inclusion, rather than exclusion.”

Magic Mushrooms Are Giving Investors a Bad Trip

A Bloomberg Opinion piece covers the bearish market for psychedelics companies, noting:

“Nearly $1.8 billion was raised by psychedelics startups from public and private investors in 2021, according to research firm Psilocybin Alpha. But while clinical trial results have been broadly encouraging, the dozens of companies that have popped up in this space are mostly still a long way from gaining regulatory approval and therefore having a marketable product.

Rising interest rates have also made capital providers less tolerant of firms that won’t produce profits for years, and psychedelics companies are no exception. Those that don’t already have a strong cash buffer face a tougher time securing funding.”

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