For over a century, the pharmaceutical industry has seen an tremendous amount of growth through breakthrough R&D, patents and mass distribution of its pharmaceuticals to millions of people around the world for both better and worst. As an example of worst, most people are familiar with the tragedy that is Oxycontin and the lawsuits surrounding Purdue Pharma, the maker of the notorious painkiller which lead to the company pleading guilty to criminal charges resulting in a settlement of $8 Billion. Pharmaceuticals such as Oxycontin have led to substance abuse and opioid addiction. During that same period, victims and those who suffer any of multiple forms of addiction whether it is opioids, tobacco, alcohol or other substances, have had little to no advancement for the cure of their diseases. With the rise in popculture around alternative medicines and therapies in recent years, especially in affluent and tech inclined communities, we are in presence of a new era of development of therapeutics and hopeful solutions that is beginning to drive a resurgence in psychedelics and psychedelic therapies to assist those suffering with mental health and addiction.
In today’s article we’ll go over 3 of the top psychedelic stocks we believe are undervalued and a must watch for 2022 as we expect a resurgence of the psychedelic sector. These 3 stocks have a strong management teams, ideal share structure, cash on the books and no debt!
Novamind (CSE: NM) (OTCQB: NVMDF) operates a growing network of psychiatric clinics and research sites specializing in ketamine assisted psychotherapy for those suffering from mental illnesses such as PTSD, Suicide Ideation anxiety and depression. As of this write up, through its subsidiary Cedar Psychiatry Inc., Novamind has 6 clinics that are operational with 4 more sites set to open up in 2022.
For such an early-stage company in a new industry, we’re impressed to see Novamind is already generating revenue. As of its last financial statement reported on November 29th 2021, NM posted revenues of $1.8 Million for its third quarter ending September 31st 2021. The company also has a healthy $5.9 Million in Cash with no long-term debts!
In mid-November, Novamind announced that it intends to acquire two mental health clinics under the “Foundations for Change” brand in the state of Arizona through a Letter of Intent which it recently signed. This acquisition is set to be completed in early 2022, and will be a catalyst that may propel the stock to higher levels. According to the company’s corporate presentation, NM’s subsidiary has received over 20,000 visits at its clinics in 2020 and has administered more than 7,000 ketamine therapy treatments and 5,000 doses of Spravato™, an FDA approved formulation of ketamine for the use in adults with treatment resistant depression (TRD) and acute suicidal ideation.
Novamind also boasts an impressive list of research partners which includes Merck, Janssen (Owned by Johnson & Johnson), The university of Utah, The University of Texas in Austin, Karuna Therapeutics, Syneos Health and more.
Source: Corporate Presentation
Also something very noteworthy for investors is the fact that insiders of the company have been purchasing stock and quite a lot of it! The company’s CEO Yaron Conforti purchased 96,600 shares in the month of December, and currently holds over 3.4 million shares. Director of NM Mr. Jesse Kaplan has also purchased a total of 352,500 shares for the month of December bringing his total just over 2.4 million shares. These are very large purchases by insiders of Novamind and we believe this should not be overlooked as we head into 2022.
Novamind has a tight structure with only 42 million shares outstanding and a high insider ownership of 40%. With an acquisition set to be completed and additional clinics to be launched, both set to take place in early 2022, we view NM as an obvious winner in the psychedelic space going forward.
A growing leader in the field of psychedelics, Field Trip Health Ltd (TSX: FTRP) (NASDAQ: FTRP) is no exception to the recent pullback suffered by small-cap stocks having endured a nearly 50% decline in their stock price over the last 6 months. The question on most investors’ minds is whether or not this drastic decline represents a brilliant buying opportunity, or does it serve as a signal to investors to cut their losses and run? To answer this, let’s take a look at who Field Trip Health are and what they’ve been getting up to recently.
Field Trip Health is an innovative player in the emergence of psychedelic enhanced therapies now has 9 clinical hubs for psychedelic therapies, 6 in the United States, 2 in Canada and 1 in Amsterdam. FTRP plans on opening another 9 clinics in 2022. All its therapy centres use Ketamine for its treatments but in Amsterdam the company utilizes legal Psilocybin truffles. FTRP is also conducting a research program with the University of the West Indies located in 2,072 sq. ft custom built facility within the campus of UWI in Jamaica.
Its most recent developments include the launch of its new “Kap Co-Operative” program which is designed to enable independent therapists to practice their profession at Field Trip health centres. This program will offer these therapists with the opportunity to provide a wide range of psychedelic therapies including the latest unconventional ketamine-assisted psychotherapy. Furthermore, the “Kap Co-Operative” program is also intended to facilitate the education of a new generation of psychedelic clinicians through a series of training programs. These educational training programs will be delivered over a number of weekends sessions and will include the fundamentals of knowledge required to practice in this field. These topics will include preparation for psychedelic therapy, techniques for guiding a psychedelic experience, as well as integration of insights from a psychedelic experience. Undertaking these training programs will offer many therapists the opportunity to secure much-needed hands-on experience with psychedelic-assisted therapies which will in turn allow them to competently deliver these ground-breaking treatments to their clients.
On March 17th 2021, FTRP completed a $95 Million bought deal financing with specialized institutional investors at a price of $6.50 per share, and as of this writing, shares of FTRP sit at $3.06, representing a decrease of 52.92 % since the financing. With their strong management team, innovative therapeutic solutions, and established branding and infrastructure, Field Trip Health are poised to continue their growth for many years to come. Although it is not possible for anyone to accurately predict when this market rotation out of small-cap stocks will end, when it eventually does end, it is more than likely that FTRP will see a healthy reversal in their stock price.
Another psychedelic-based company that we are bullish on in 2022 is Awakn Life Sciences Corp. which began trading in 2021 on the NEO exchange under the symbol AWKN and the OTCQB under the symbol AWKNF. Awakn Life Sciences is a biotechnology company researching, developing and delivering psychedelic therapeutics (medicines and therapies) to treat addiction. Awakn’s does this through the use of a variety of psychedelics including Ketamine, MDMA and New Chemical Entities (NCE’s). The company also currently operates two clinics, one in Norway through its acquisition of Axonklinikken AS and one in the UK. AWKN aims to further expand its footprint in the UK and Europe by opening an additional six new clinics in 2022 and expects to have a total of 20 clinics by the end of 2024. AWKN has also filed two provisional patents for two novel MDMA derived NCE’s, AWKN001 and AWKN002, furthering the company’s intellectual property portfolio surrounding its research and developments for the treatment of addiction, as well as a portfolio of an additional 8 other provisional patents. AWKN’s team is a real differentiator, having some of the biggest names in the industry driving their work forward, Prof. David Nutt, Prof. Celia Morgan and Dr. Ben Sessa amongst a host of others.
Prior to its initial listing, Awakn Life Sciences acquired the exclusive rights for the use and delivery of “Ketamine in the Reduction of Alcoholic Relapse” (KARE) psychotherapy intervention from the University of Exeter (UoE), for treatment of Alcohol Use Disorder (AUD). The KARE clinical trial which began in 2016 and concluded in 2020, is the only Phase IIab clinical trial to treat AUD using Ketamine-Assisted Psychotherapy, and was led by Prof. Celia Morgan, a leading Ketamine expert who has since been appointed as AWKN’s Head of Ketamine Assisted Psychotherapy.
The company has also signed an MOU with the UK’s NHS (National Health System) and the University of Exeter (UoE), to identify accessibility and readiness of the NHS for ketamine-assisted therapies, examine how these therapies could be implemented within the NHS, and will assess how to move its phase IIb trial into phase III. The CEO of AWKN Anthony Tennyson was quoted “The signing of the MOU is an important milestone as mental health issues continue to exacerbate globally. As we push towards our goal of delivering this novel treatment to patients across the UK, Europe and the world, we are excited to lay the groundwork with the NHS and UoE to increase access for psychedelics to treat addiction and more.” According to The Guardian, in an article entitled “New report reveals staggering cost to NHS of alcohol abuse”, alcohol abuse can cost the NHS approximately £3.5 Billion every year, creating a huge financial strain on the healthcare system, as well as cutbacks leaving patients untreated. Dr. Emmert Roberts from the Institute of Psychiatry, Psychology and Neuroscience at King’s College London stated: “Unfortunately, there’s been a reduction in trained addiction psychiatrists in the UK over the last five years and a reduction in real-terms funding to community specialist alcohol treatment services, and because of that there’s been a large reduction in the knowledge base of the healthcare profession around alcohol and other substance abuses.”
These new potential treatments such as Ketamine-assisted therapies could help the NHS tremendously by increasing the number of trained therapists to treat patients suffering from alcohol abuse and could have a significant cost savings to England’s healthcare system. These possible outcomes would be extremely beneficial to the NHS and the MOU is a testament to the interest and potential the NHS sees in Ketamine-assisted therapies.
AWKN has also acquired exclusive rights to the research data on next generation candidate MDMA and Ketamine molecules from renowned neuropsychopharmacologist Prof. David Nutt and includes over 6 years of Prof. Nutt’s research and proprietary data through his company Equasy Enterprises Inc.
In March 2021, Professor Nutt joined the AWKN team as the company’s Head of Research and was later appointed as AWKN’s Chief Research Officer.
In late September, Awakn Life Sciences obtained the exclusive rights to data pertaining to Phase IIa Bristol Imperial MDMA study for alcoholism from Imperial College London, and is being conducted to further investigate MDMA as an assisted psychotherapy for those with AUD.
From the above timeline which we sourced from the company’s corporate presentation, we can see that it is approaching Phase III clinical trials utilizing Ketamine for AUD with additional MDMA trials in close second.
- Important developments which we believe will serve as huge catalysts in early 2022 includes:
- Publication of KARE Phase II a/b study in the American Journal of Psychiatry
- The opening of a new psychedelic assisted psychotherapy clinic located in London, UK
- The opening of psychedelic assisted psychotherapy clinic located in Manchester, UK
- Receive approval from MHRA ethics committee for MDMA-assisted psychotherapy Phase IIb
- New Chemical Entity (NCE) identified in lead series
Although AWKN is in the early revenue stages, the company has an exceptional share structure of only 24.8 million shares outstanding, of which 23.8% are owned by insiders and does not have any debt!
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