Last week, Compass Pathways (CMPS) commenced trading on the Nasdaq and became the first psychedelic drug company to go public on a major U.S. stock exchange.
When Compass filed to go public, the deal generated substantially more interest from investors than expected. As a result, the psychedelic therapy company upsized the pricing of the initial public offering (IPO) to $17 from a range of $14 to $16. Compass reported selling 7.5 million American Depository Shares (ADSs) for $127.5 million of gross proceeds, on Friday.
One of the reasons why investors have been excited about Compass is the smart money backing the deal. Billionaire investor and PayPal co-founder Peter Thiel has invested in the psychedelic therapy company. We believe that his involvement has played a crucial role in how Compass has raised capital.
The success of Compass’ IPO represented a significant milestone for the psychedelic therapy market. We believe that the industry is not even in the first inning of a multi-decade growth cycle. Last month, we highlighted Cybin Corp. as an attractive plan on the psychedelic therapy market. We are favorable on the similarities that Cybin has to Compass.
An Attractive Opportunity When Compared to Compass
The main reason we are excited about Cybin is due to the company’s similarities to Compass Pathways (Nasdaq: CMPS). From a clinical trial standpoint, both companies are conducting Phase 2b studies. While Cybin focuses on Major Depressive Disorder (MDD), Compass focuses on Treatment-Resistant Depression (TRD).
From a valuation standpoint, we believe that Cybin has substantial upside potential. Cybin expects to go public with a valuation that is in the $52 to $59 million range. Compass’ valuation is approximately 20x Cybin. We think the valuation disparity is favorable.
When you compare the total addressable market (TAM) size of MDD to TRD, you will notice that the market opportunity for MDD is much larger1. Cybin will target more markets than Compass and are favorable on the potential penetrating and market share that it can gain in these territories.
From an Intellectual Property (IP) standpoint, Cybin has protected the delivery mechanisms that it uses to increase bioavailability and reduce costs. The company also has a proprietary API (Application Program Interface) synthesis process and uses novel therapeutics with higher bioavailability and fewer side effects. We are commending on Cybin’s business strength from an IP standpoint and find this to be comparable to Compass’ protected IP.
Cybin’s Core Business
Cybin has attractive leverage to the psychedelic therapy market through Serenity Life Sciences, its pharmaceuticals division. Serenity focuses on developing psychedelic therapies to treat depression, addiction, anxiety, PTSD, and ADHD. Like Compass, Cybin works tirelessly on developing medicines to treat conditions that affect hundreds of millions of people.
Cybin expects to start dosing for its first study before the end of this year, which would prove to be an essential development for the operation. The first study is designed to treat patients who suffer from Major Depressive Disorder (MDD). After this, Cybin plans to investigate the potential use of psychedelics for anxiety, addiction, ADHD, and PTSD.
Cybin has visible growth prospects as it relates to its sublingual treatment for MDD. The company expects to complete trials in Jamaica, West Indies, by the end of 2021. The results should prove to be a massive catalyst for growth. We are favorable on the indications they are researching.
One of the reasons for our high conviction level in Cybin is the strength and the experience of its management team. Cybin’s leadership team is comprised of executives with a proven track record of success when it comes to bringing drugs through the FDA clinical trial process and taking them to market. We believe that the experience credited to Cybin’s management team will play a vital role in its success. Over the next year, we expect Cybin to report significant developments to its (IP) strategy.
Cybin is laser-focused on developing novel drug formulations and investigating improved natural and synthetic psychedelic molecules that will ultimately lead to creating a broad IP portfolio. Compared to psychedelic therapy companies (besides Compass), we believe that Cybin is one of the best positioned for long-term success. We find that being aware of this opportunity is note-worthy.
Cybin will complete a go-public transaction in the near future. We are excited about this emerging opportunity. If you are interested in learning more about the psychedelic therapy company, please send an email to email@example.com to be added to our distribution list.
Pursuant to an agreement between StoneBridge Partners LLC and Cybin Corp. we have been hired for a period of 180 days beginning July 1, 2020 and ending January 1, 2021 to publicly disseminate information about (Cybin Corp.) including on the Website and other media including Facebook and Twitter. We are being paid $7,500 per month (Cybin Corp.) for or were paid “0” shares of restricted common shares. We own zero shares of (Cybin Corp.), which we purchased in the open market. We plan to sell the “ZERO” shares of (Cybin Corp.) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (Cybin Corp.) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.
StoneBridge Partners owns 100 shares of Compass Pathways, which we purchased in the open market.