Bullish start to the year for psychedelic drug developers ahead of a plethora of potentially positive events - Revitalist Corporate (2023)

Bullish start to the year for psychedelic drug developers ahead of a plethora of potentially positive events - Revitalist Corporate (1)

Management in the neuropharmaceutical psychedelics space is bullish on near-term catalysts.Earlier this month, we caught up with most of the executives in our reporting universe from companies that use psychoactive compounds for various mood disorders, including depression, anxiety, and post-traumatic stress disorder (PTSD), among others. Collectively, the teams expressed optimism about their lead compounds and the broader focus on improving mental health outcomes worldwide, which should place more weight on evidence in the literature (e.g., Goodwin, Aaronson, et al., 2022) , which seem to indicate potential psychoactive substances. Against this bullish backdrop, and even after recent compelling data releases, we believe the space continues to be undervalued by investors due to several concerns, including: (1) management adeptness, particularly in the drug development space; (2) intellectual property protection, particularly for first-generation compounds where patent cliffs are modeled much sooner than we anticipated; (3) regulatory risk, particularly related to the potential need for therapy or support along with treatment, and how the FDA and European Medicines Agency (EMA) are expected to view this need when reviewing data packages; and (4) a perception of a currently underdeveloped mental health care infrastructure in the administration of psychoactive drugs, which could impede the uptake of potential approvals; and (5) the risk of emerging non-psychedelic compounds that may preclude the need for psychedelic experiences, thereby undermining the long-term potential of psychoactive compounds. We believe that all of these concerns have been, or are being, addressed by companies in this space, and that data readouts and regulatory feedback expected over the next year (see Figure 3), along with a robust build-out of psychiatric hospital infrastructure, should help to drive the space and unlock significant shareholder value across t

Bullish start to the year for psychedelic drug developers ahead of a plethora of potentially positive events - Revitalist Corporate (2)

Bullish start to the year for psychedelic drug developers ahead of a plethora of potentially positive events - Revitalist Corporate (3)

Bullish start to the year for psychedelic drug developers ahead of a plethora of potentially positive events - Revitalist Corporate (4)

Bullish start to the year for psychedelic drug developers ahead of a plethora of potentially positive events - Revitalist Corporate (5)

Bullish start to the year for psychedelic drug developers ahead of a plethora of potentially positive events - Revitalist Corporate (6)

Irwin Naturals; IWINF; Buy; $5 price target.Irwin Naturals, through Emergence, is in the early stages of a large-scale national acquisition of mental health clinics initially offering ketamine-assisted psychedelic therapies (KAP) for patients with mental health issues and other medical conditions. For the past few months, Emergence has reviewed the more than 600 independent ketamine clinics currently operating in the United States to identify profitable clinics that practice the standard of customer care consistent with the Irwin Naturals brand. Once identified, these clinics will be invited to join Emergence, which in return will offer an equity stake in Irwin Naturals and potential future cash milestone payments. Emergence intends to expand treatment options in clinics; We believe that potential FDA approvals of additional psychedelics for a broad spectrum of mental health disorders could meaningfully expand Emergence's offering and underpin a market that we estimate could reach $200 billion in annual revenue. During 2023, we expect Irwin to expand its clinics business in the United States after recently announced deals have closed or are close to closing and are expected to add clinics throughout Florida, Washington and Kentucky. Separately, and interestingly, on Jan. 10, Irwin announced a partnership with Braxia Scientific (BRAXF; unrated) for human clinical trials to support pharmaceutical companies in the United States. The partnership aims to combine Braxia's expertise and clinical research capabilities with Irwin's 12 emergency medical centers in five states. Irwin is expected to invest up to $2 million over the next 12 months to begin initial clinical research services, beginning with at least five Florida clinics. We believe the Braxia deal should contribute to Irwin's success by not only attracting additional clinics for Emergence, but also by providing those clinics with the expertise needed to administer psychoactive compounds. Our Irwin model includes 25 emergency clinics in 2022, expanding to 75 emergency clinics in 2023, 125 in 2024, and 175 in 2025. We estimate that the number of emergency clinics could top 300 and generate over $1 billion in annual revenue. We estimate the cash flows from this deal to be around $1.5B or $3/share (60% of the total IWINF valuation). For more details, see our October 3, 2022 coverage rollout titledAmbitious Expansion In Psychedelic Healthcare Market Underway; Start with a Buy and a price target of $5.

GH research; GHRS; Buy; Price target $45. GH Research ended Q3 '22 with approximately $257 million in cash and cash equivalents. Lead candidate GH001, an inhalable form of 5-methoxy-DMT (5-MeO-DMT), a short-acting psychoactive drug administered via a vaporization device, has two Phase 1 studies in healthy volunteers and one Phase 2 study (GH001-TRD-102) in patients with treatment-resistant depression (TRD). To date, clinical results have shown that GH001 is well tolerated at the single dose levels studied and in an individualized dosing regimen (IDR) with intra-individual dose escalation within a single day. Recall that the primary endpoint of Part B of the Phase 2 portion of the Phase 1/2 study was defined as the proportion of patients in remission at day 7 post dosing, defined as a total score on the Montgomery-Åsberg Depression Rating Scale (MADRS). less than or equal to 10, with the MADRS Depression Scale being the gold standard measure of efficacy in studies evaluating novel antidepressant drugs. This primary endpoint was met in seven of eight patients (87.5%) who achieved MADRS remission by day seven (p<0.0001). Of these seven patients, all were in remission from day one, with five as early as two hours after dosing. All seven patients in remission on day 7 also achieved a MADRS clinical response, defined as a 50% or greater reduction in MADRS total score from baseline, while the remaining patient also achieved an improvement on day 7 based on MADRS score. Scale compared to baseline but did not achieve MADRS remission or MADRS clinical response. The mean MADRS change from baseline at day seven, a secondary endpoint, was -24.4 (-76%). GH has submitted clinical trial agreements (CTAs) in several European countries to conduct a multi-centre, randomized, controlled Phase 2b study evaluating GH001 in TRD (GH001-TRD-201); Pending regulatory approval, GH expects to start this study in 1Q23. GH intends to enroll approximately 80 patients in the study; the primary objective is to determine the efficacy of a 1-day IDR of GH001 compared to placebo in improving depressive symptoms, as assessed by mean change from baseline in MADRS at the end of the 7-day double-blind period; We expect top-line data from the study in 2024. GH has also initiated the following studies with GH001: (1) a phase 2a proof-of-concept study to evaluate safety and efficacy in patients with bipolar depression II (BPII) and a current depressive episode; and (2) a Phase 2a proof-of-concept study evaluating safety and efficacy in patients with postpartum depression (PPD). In addition, GH intends to conduct a phase 1 imaging study, which is expected to be conducted in the US in patients with TRD, to further elucidate the mechanism of action of GH001. Separately, a Phase 1 study evaluating GH002, an injectable 5-MeO-DMT candidate, is expected to complete in Q4 23. Overall, we are confident in GH Research's drug candidates across all neuropsychiatric indications and believe they are underappreciated by investors. For more details, see our August 16, 2022 coverage rollout titledhold deep breath; Fast-Acting Antidepressant Program Advances; Start with a Buy and a price target of $45.

COMPASS paths; CMPS; Buy; Price target $120.COMPASS ended Q3 '22 with approximately $173 million in cash and cash equivalents. Enrollment is ongoing in a Phase 3 program to evaluate COMP360, an oral formulation of psilocybin, in approximately 946 patients with TRD. The program is planned to be implemented at 150 sites in 14 countries and is expected to start in Q1 23. Two parallel studies are expected to include: (1) a single 25 mg dose of COMP360 vs placebo (psychological support) in COMP 005; and (2) a fixed repeat dose in COMP 006 to evaluate 1 mg COMP360, 10 mg COMP360 and 25 mg COMP360 with psychological support in COMP006. The primary endpoint for both pivotal studies, change from baseline in MADRS total score, is expected to be assessed at week 6. COMP005 is expected to enroll 378 TRD patients who will be randomized in a 2:1 ratio to receive 25 mg of COMP360 or placebo in the initial study with top-line data expected by the end of 2024, while COMP006 is expected to enroll 568 TRD patients randomized in a 2:1:1 ratio to receive 25 mg COMP360, 10 mg COMP360 and 1 mg COMP360 with top-line data expected in mid-2025. Interestingly, and unlike the Phase 2b program, COMP006 includes a repeat dose at week 3, which we believe may improve patient response rates and show the potential for efficacy at the lower 10 mg dose. Separately, on October 12, COMPASS announced that study COMP 401 evaluating COMP360 in patients with anorexia nervosa is ongoing and expected to complete in August 2023. Based on the initial results of an academic study, we believe that COMP 401 could produce positive results, which we believe will not be appreciated by investors based on CMPS's current valuation. In addition, the COMP 201 study evaluating COMP360 in PTSD is expected to be completed by the end of 2023. While we believe COMP360 has potential in PTSD, we believe the compelling data generated in an investigator-initiated study (IIS) of COMP360 in BPII may instead prompt management to consider an indication in bipolar depression follow. For more details see our December 9th announcement titledSeveral studies presented, including data pointing to the potential of psychedelics in bipolar depression; Repeat purchase.

Atai life sciences; ATAI; Buy; Price target $20.atai ended Q3'22 with $304 million in cash and investments. In 1H23 we expect Phase 1 safety data for DMX-1002, an ibogaine candidate, in opioid use disorder (OUD). Also in 1H23, we expect the final patient in Cohort 3 to be dosed in the single ascending dose (SAD) portion of the Phase 1 study evaluating DMX-1002. Additionally, peak data from the Phase 1 study evaluating EMP-01, an MDMA derivative, is expected in mid-2023. VLS-01, an N,N-dimethyltryptamine (DMT) candidate, is expected to generate pharmacokinetic (PK) and safety data from a Phase 1 study in 1H23. In particular, we believe that the behavioral assessments along with the PK and safety scores should demonstrate that VLS-01 is well tolerated with an acceptable safety profile. In addition, we believe that following the disappointing top-line data recently reported from a Phase 2a study in PCN-101, an R-ketamine candidate, VLS-01 was evaluated in patients with TRD. is one of atai's most promising assets. Separately, on Jan. 9, atai announced phase 1 data showing that GRX-917, a deuterated etifoxine, was well tolerated with sedation comparable to placebo. In addition, the study demonstrated targeting via dose-dependent activation of quantitative electroencephalography (qEEG) frontal beta performance, a biomarker of GABA-A receptor-associated anxiolytic activity consistent with GRX-917's putative mechanism of action. A GRX-917 efficacy study is expected to begin in 1H23, with results expected in 2024. For more details see our January 19th announcement titledRemains focused on advancing broad pipeline after recent setbacks; price target lowered to $20; keep buying.

mental medicine; MNMD; Buy; $75 price target.MindMed ended Q3 '22 with approximately $155 million in cash and cash equivalents. This leaves MindMed with sufficient capital to meet operational requirements by 1H25, well ahead of the Phase 2 proof-of-concept data for generalized anxiety disorder (GAD) and attention-deficit hyperactivity disorder (ADHD) that we believe investors are supporting continue to be underestimated. In 2023, we expect to begin recruitment for a Phase 1 study evaluating MM-402, the R-enantiomer of 3,4-methylenedioxymethamphetamine (R(-)-MDMA), in autism spectrum disorders (ASD ), which we believe will bring important advances to the early-stage pipeline. In late 2023 we expect top-line Phase 2b data in the program evaluating MM-120 (LSD) at GAD. We anticipate a positive result to further clinically validate LSD in anxiety and potentially expand the pipeline. Also in late 2023, we expect top-line data from the Phase 2a study in a program evaluating MM-120 in adult ADHD. We have low expectations of the ADHD program; However, a positive result would represent significant upside potential from our estimates. For more details on MindMed, see our January 19th announcement entitledMM-120 on Track to Generate Phase 2 Data in Anxiety and ADHD by Late 2023; Repeat purchase.

cybin; CYBN; Buy; $10 price target.Cybin ended Q3 '22 with approximately $22 million in cash and cash equivalents. A Phase 2a study to evaluate the safety, tolerability, PK and pharmacodynamics (PD) of multiple ascending oral doses of CYB003, a deuterated psilocybin analogue and Cybin's lead candidate, in patients with major depressive disorder (MDD) is currently enrolling. This study has an estimated enrollment of 40 participants and an estimated primary completion date of July 2023Clinical Studies.gov.In addition, in December, Cybin announced preclinical data for CYB003 supporting its progression into clinical development; the data showed: (1) CYB003 mirrored the in vitro binding profile and in vivo activity of psilocin and was safe, well tolerated and orally active; (2) The effect of CYB003 on locomotor activity (LMA) is very similar to that of psilocin; (3) there was a dose-dependent increase in both blood pressure and heart rate; (4) CYB003 exhibits a psilocin-like serotonin (5-HT) receptor binding profile and similar off-target activity; (5) CYB003 showed less variability in plasma levels, shorter time to peak (Cmax), and shorter duration in rodents than psilocybin, which is the prodrug for psilocin. Separately, in June 2022, Cybin announced an agreement to acquire a Phase 1 study evaluating DMT from Entheon Biomedical (ENTBF; unevaluated) to accelerate the development path for CYB004, a deuterated form of DMT, by approximately nine months . Cybin's intent is to develop DMT for anxiety disorders. The Phase 1 EBRX-101 study has been renamed CYB004-E. We believe this compound may be successful with a US composition of matter patent in the future, based in part on support in the literature for psychoactive compounds in mood disorders and also supported by Small's January 25 top-line data release Pharma (DMTTF; Buy), which announced positive data from a Phase 2a study evaluating SPL026, an intravenous (IV) formulation of DMT, in patients with moderate to severe MDD. Additionally, we believe the data from the SPL026 program should help inform Cybin on how best to proceed with its clinical program in GAD and that the deuterated form of DMT proves to be a more ideal PK and PD -Profile might turn out; we also note that CYB004 has a composition of matter patent in USA. Finally, we highlight pilot results published by Kernel, Cybin's collaborating partner and a leader in non-invasive neuroimaging; Specifically, Cybin announced on January 18 that the results of the proof-of-principle provided an important proof-of-principle for Kernel Flow as a wearable functional system that enables real-time measurements of changes in brain blood oxygenation associated with neural activity using near-infrared spectroscopy in the time domain ( TD-fNIRS). Although still at an early stage, we believe that the emerging data from Kernel could provide crucial insights into the mechanism of action of psychoactive substances, potentially enabling optimized drug discovery in the mental health care field in the years to come. See our December 16 update titled for more detailsCompelling pre-clinical data presented at ACNP indicate potential differentiation of CYB003; Repeat purchase.

Numinus Wellness; NUMIF; not rated.As of November 30, 2022, Numinus had approximately C$26 million in cash. Numinus develops proprietary psychedelic-focused therapeutics and has a clinical network that expanded with the acquisition of Novamind, a mental health company providing safe access to psychedelic medicine through a network of clinics and clinical research facilities in mid-2022. Key benefits of the acquisition include: (1) expansion of Numinus' operations and brand in the United States; (2) Extension of client programming as complementary service offerings would be shared and extended across the combined network; (3) combines Novamind's clinical research site management capabilities with Numinus' research laboratory and analytical testing expertise; and (4) accelerating Numinus' path to profitability. As a result of the completion of the Novamind acquisitions, the Numinus network has expanded to 17 clinics in North America and over 111 physicians. Numinus Clinics offer ketamine and psilocybin treatments. We believe Numinus' diversified mental health strategy could be successful as Numinus expands its ecosystem of healthcare solutions. This ecosystem is dedicated to the research, development and delivery of psychedelic assisted psychotherapy; It includes Numinus Biosciences, a Health Canada licensed laboratory for research into psychedelic substances, Numinus Health, which supports practitioners in the delivery of treatments by providing centralized, Numinus-owned training, facilities and other operational resources, as well as developing intellectual property while providing analytical services offers for revenue generation.

small pharma; DMTTF; Buy; Price target $2.50.As of November 30, 2022, Small Pharma had approximately $23 million in cash and cash equivalents. On January 25, Small Pharma reported compelling top-line data from a Phase 2a study evaluating SPL026, IV DMT, with supportive therapy in 34 patients with moderate to severe MDD. SPL026 was well tolerated and the study met the primary endpoint of demonstrating a statistically significant and clinically relevant reduction in depressive symptoms two weeks after dosing compared to placebo, while the secondary endpoints demonstrated a sustained treatment effect of 12 weeks. Detailed results are to be presented at upcoming scientific meetings and published in a peer-reviewed journal. Overall, the results bolster our confidence in SPL026 as it moves into phase 2b, and also bolster our confidence in the potential of short-acting psychedelics as fast-acting antidepressants. We believe the next anticipated potential positive event for Small is the advancement of SPL026 into a larger Phase 2b trial, which we believe should keep Small at the forefront of DMT-focused mental health companies. See our January 25th update titled for more detailsShort-acting psychoactive compound SPL026 shows potential in MDD after positive phase 2a study; Repeat purchase.

Mindset Pharma; MSSTF; Buy; $5 price target.As of Q3 '22, Mindset had approximately CAD$8 million in cash and cash equivalents. Lead candidate MSP-1014, a psilocybin analog derived from Mindset's Family 1 drug discovery program, is scheduled to begin Phase 1 development in 2023. Remember Mindset received scientific advice from the UK Medicines and Healthcare Products Regulatory Agency (MHRA) in September 2022. on a number of issues to complete its Phase 1 clinical trial plan for the first-in-human evaluating MSP-1014 for the treatment of MDD; CEO James Lanthier penned a Nov. 30 letter to shareholders noting that the MHRA's guidance should enable Mindset to "significantly reduce the time and cost of advancing to human clinical trials, additional preclinical safety studies." bypass those normally required for this clinical transition and enable mindset to proceed directly with patient care. This first-in-human trial will allow Mindset to collect a valuable and broader set of human phase 1b/2a clinical data in patients.” We believe that the phase 1b portion of the program could generate initial data by the end of 2023, providing a first look at the safety, PK and psychedelic experience of MSP-1014. Also keep in mind that MSP-1014 has shown greater 5-HT2A activity than psilocybin and an attenuated reduction in locomotor activity in pre-clinical studies, and has also demonstrated constant body temperature at higher doses, which Mindset says could indicate a potential safety benefit. Separately, on October 5, 2022, Mindset announced that it had selected a lead clinical psychedelic candidate, MSP-2020, and a second backup drug candidate, MSP-2003, from its Family 2 program after extensive preclinical screening studies were collaborating with Otsuka Pharmaceuticals (4578.T, unevaluated) to advance to IND-enabling studies; Importantly, MSP-2020 and MSP-2003 are both novel and patentable compounds; Phase 1 development is expected to begin in 2023. We believe this is an important advancement in the early-stage pipeline with the potential to increase potency and efficacy compared to psilocin and psilocybin. In addition, the lead compound(s) from Mindsets Family 3 are expected to enter Phase 1 development as early as late 2023. We believe this could be an important advance towards applications of subperceptual dosing. For more details, see our November 17, 2022 announcement titledHCW “At Home” Recap: Once again purchasing prior to advancing lead psychedelic compound MSP-1014 into clinical development.

Reunion Neuroscience; REUN; Buy; Price target $20.In Q3 22, Reunion had approximately CAD$21 million in cash and cash equivalents. On January 9, Reunion announced encouraging interim results from a Phase 1 study evaluating RE104 (4-OH-DiPT prodrug) in healthy volunteers. RE104 appeared safe and well-tolerated, demonstrating robust and pervasive PD effects with a shorter psychedelic experience of around three to four hours compared to the six to eight hour duration of psilocybin. Reunion has continued dose escalation and initiated an additional cohort in this Phase 1 study, which we believe demonstrates confidence in the safety of the compound. Based on the preliminary data, we believe that the potency and pharmacological profile of RE104 appears to be similar to that of psilocybin but with a shorter duration of action, suggesting RE104 in a variety of mood disorders such as depression and anxiety where psilocybin has also shown potential , could make attractive. We anticipate that Reunion will hold a New Drug Discovery (IND) meeting for RE104 in Q1 23 ahead of an expected IND filing to conduct a Phase 2 study evaluating RE104 in patients with PPD; We believe the Phase 2 program could begin enrolling patients in 1H23. Importantly, we believe that initial data from the Phase 2 study evaluating RE104 in PPD could be reported in 2024, thereby de-risking the program, which remains grossly underestimated by investors. In addition, we believe these catalysts could advance an important clinical advance for RE104, which we believe could become a differentiated therapy for PPD and potentially expand to additional depression indications such as TRD. Regardless, we anticipate that in 2023, a lead candidate will emerge from the RE200 drug discovery series, which are drug discovery candidates that demonstrate selective efficacy at the 5HT2A target receptors and lack off-target 5HT2B receptor agonism. For more details see our January 19th announcement titledRE104 Approaches Phase 2 in Postpartum Depression Following Positive Preliminary Phase 1 Data; Hiring CMO; Repeat purchase.

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