The 2020 election proved to be a major catalyst for the psychedelic therapy market and we have noticed a significant spike in interest in the sector. The main driver behind the increased interest is the legislation that was passed in Oregon that decriminalized psilocybin.
We are starting to see similarities between the cannabis and the psychedelic sectors and are excited about this. If the psychedelic sector advances in a way that is similar to the cannabis industry, there will be a tremendous opportunity for companies that can gain an early mover advantage.
We have been highly focused on the psychedelic therapy market and have been working to identify companies that will benefit from this. When we are analyzing one of these companies, we are interested in businesses that have a few key traits. Some of the traits that we look for are:
- The experience of the management team
- The assets and intellectual property (IP) that are owned by the business
- The amount cash and human capital that is associated with the business
- The vertical of the industry that the business is focused on
Havn Life Thesis
Havn Life Sciences Inc. (CSE:HAVN) (FSE:5NP) (OTC: HAVLF) is an opportunity that we are excited about and believe that it has the traits that we are looking for in a psychedelic therapy company. A few months ago, the company commenced trading on the Canadian Stock Exchange (CSE) and is an opportunity that we are excited about for the following reasons:
- The company recently launched a line of products and expect to see additional products brought to market in 2021
- The management team has a proven track record of success in the cannabis industry and we are favorable on the collective experience of the team
- Havn Life has formed strategic relationships with major agencies and are favorable on how this has differentiated the opportunity
- The balance sheet is strong and Havn Life is well capitalized to execute
- At current levels, we consider the valuation to be compelling and are favorable on the risk-reward profile
About Havn Life
Havn Life is comprised of two divisions (Havn Labs and Havn Retail) that can create value for each other and are bullish on the amount of synergies that can be found between them. As it relates to the product launch, we expect to see both divisions play an important role in the growth of the functional mushroom business and are favorable on how it differentiates the opportunity.
We consider Havn Life to be an attractive play on the burgeoning psychedelic therapy market and believe that the opportunity is flying under the radar. The biotech company is focused on improving daily life through the research and development of standardized psychoactive compounds that are derived from plants and fungi. We expect the functional mushroom business to generate cash flow to support the psychedelic therapy side of the business and are favorable on the structure of the operation.
When it comes to any emerging industry, the management team is the most important aspect of any company. In regard to the psychedelic therapy market, the strength of the management team is of the utmost importance and we find this to be a key aspect of the Havn Life story.
Health Canada Approves the Sale of Seven Products
Earlier this month, Havn Life reported an important milestone and announced its initial seven natural health supplements. The formulations are designed to support and enhance memory and brain function, the immune system, energy levels, and overall wellness while reducing the negative impacts of stress.
The initial products that will be launched by Havn Life are expected to be available in 2021 and we are favorable on how the management team has been able to drive this aspect of the business forward. The initial product line has been formulated with adaptogens and antioxidants to support overall health. The initial products include:
- Mind Mushroom: A blend of four mushrooms that is designed to help balance the immune system, fight cell damage, and increase energy
- Bacopa Brain: Developed to support cognitive function and the nervous system
- Rhodiola Relief: Formulated to support mental focus and mental stamina
- Cordyceps Perform: Help support a healthy immune system
- Chaga Immunity: Help stimulate the immune system and control inflammation
- Reishi Recharge: A multi-purpose mushroom that has been used to strengthen the heart, reduce fatigue, insomnia, and appetite
- Lion’s Mane Memory: Helps maintain and balance the immune system
Health Canada has approved the sale of the initial product line and are favorable on this. In the near future, we expect to learn more about Havn Life’s plan to distribute the product line across Canada and expect this to improve visibility from a cash flow generation standpoint.
The diversity of the product line is significant and we expect this to help Havn Life attract new consumers. We believe that the initial launch is just the first step of a multi-stage product rollout and expect to see the company bring additional products to market in 2021.
Enters into a Supply Agreement with Revive
A few weeks ago, Havn Life reported to have entered into an agreement to supply Revive Therapeutics Ltd. (CSE: RVV) (OTC: RVVTF) with psychedelic compounds for use in investigational new drug (IND) studies. We find the agreement to be significant as Havn Life will provide Revive with the necessary input products to conduct studies and clinical trials under Food and Drug Administration (FDA) guidelines.
Revive is focused on the research and development of therapeutics for rare disorders and infectious diseases. The company is working to advance psilocybin-based therapeutics for mental health and abuse disorders and we will monitor how it is able to execute. If Revive can prove to be successful, we expect Havn Life to see increased demand for its products and find the upside potential that is associated with this to be substantial.
One of the reasons we consider Revive to be a strategic partner for Havn Life is related to the clinical study that it is conducting on the treatment of methamphetamine use disorder under FDA guidelines at the University of Wisconsin-Madison. The university has a state-of-the-art research lab and we are bullish on the potential that is associated with the relationship.
Although the psychedelic industry is in its infancy, the signing of a supply agreement serves as a validation for the Havn Life team and its business objectives and revenue streams. Over the next year, we expect the company to enter into several supply agreements and are favorable on the growth potential that is associated with it.
Havn Life has a defined growth strategy and we are favorable on the direction the management team is bringing the business. We are favorable on the company’s opportunity to supply standardized, quality-controlled compounds to researchers and believe that it is focused on a vertical that is not saturated.
A Company with Catalysts for Growth
One of the reasons we are bullish on Havn Life is related the amount of potential catalysts that it has for growth. The most significant near-term catalyst for the business is the granting of a Dealer’s License from Health Canada.
Last month, Havn Life submitted its Licensed Dealer application to Health Canada and we expect the company to hear back from the agency before the end of the year. The agreement with Revive is the first contract that Havn Life has received for the sale of psychedelic compounds and is contingent on being granted a Controlled Drugs, and Substances Dealers License from Health Canada.
Another reason for our bullish view is related to the level of conviction that we have in Havn Life’s ability to be granted the necessary licenses. The company’s leadership team has an extensive history and a proven track record with Health Canada in the cannabis industry and we expect this experience to shorten the amount of time it takes Havn Life to get licensed.
Announces Significant Additions to the Team
Last month, Havn Life announced that Vic Neufeld has been appointed as the Chairman of the Board of Directors and we consider the addition to be strategic. He adds a wealth of knowledge and experience in the Natural Health Food industry, having served as the Chief Executive Officer of Jamieson Laboratories, Canada’s largest manufacturer and distributor of natural vitamins, minerals, concentrated food supplements, herbs and botanical medicines.
While working at Jamieson for more than 20 years, Neufeld played an important role with how sales went from $20 million per year to more than approx. $250 million per year and expanded its distribution network to 40+ countries/ Neufeld was part of the team responsible for building Jamieson to a globally recognized brand name and we are favorable on the success that he has also had in the cannabis sector.
Many psychedelics therapy companies have tried to get Neufeld involved with the business and we believe that him choosing Havn Life speaks volumes to the quality of the deal. According to Neufeld, he selected Havn Life due to how the business is positioned with the right operational team, vision and business model to establish itself as a leader in this psychedelics sector.
As executives with track records that are as proven as Neufeld enter the psychedelics sector, we believe that the industry becomes more credible. This is a trend that is just getting started and we expect to see additional high-profile executives from the biotech and cannabis industries enter the psychedelic sector.
Another reason that helps explain why Neufeld selected Havn Life is related to the type of work its conducting to create a leading nutraceutical wellness brand through the Havn Retail division as well as the type of cutting-edge research and development that is being conducted by the Havn Labs division.
Concurrent with the addition of Vic Neufeld, Havn Life also announced the appointment of Rick Brar as the Vice Chairman of the Board. He is an experienced business leader in the cannabis, nutraceutical, beverage, consumer packaged goods (CPG), agriculture, land development and construction sectors. We are favorable the type of expertise that he adds to the team and will monitor the impact he has on the business.
Brar has international expertise in emerging market sectors and we are favorable on how this background will help Havn Life. He is experienced in sales and marketing, with a track record of success in corporate sales growth, new market penetration, new product development, and long-range planning.
We expect Brar to play an important role in the success of Havn Life. He is also experienced in team building, strategic planning, new market development and the implementation of tactical sales and marketing initiatives. Currently. He is the Chief Executive Officer and Chairman of Brains Bioceutical, a global manufacturer and distributor of cannabinoid active pharmaceutical ingredients (API) and we are favorable on his involvement.
Forms Strategic Partnership to Advance the Industry
A few days before these two appointments were announced, Havn Life reported to have joined the Drug Science Medical Psychedelics Working Group consortium. The working group was launched by a leading independent scientific committee that is based in the United Kingdom. The working group provides evidence-based research and creates a foundation for sensible and effective drug laws by reviewing and investigating scientific evidence that is related to psychoactive drugs.
The development falls in-line with Havn Life’s commitment to advancing research in psychedelics, as well as collaborating with organizations and academic institutions around the world to tap into world-class, quality research. The companies have come together to support the development of sensible drug policy reform and we are favorable on how the relationship further differentiates the opportunity from its peers
One of the reasons we are excited about the relationship is due to the amount and the quality of human capital that is involved. The team is comprised of drug science experts, industry partners, patient representatives, and policymakers. The group’s mission is to break the barriers of 50 years of medical censorship by creating an approach to psychedelic research and clinical treatment.
Some of the key players on the team include:
- David Nutt – serves as Chair of the Scientific Committee and is also a professor of Neuropsychopharmacology at Imperial College London.
- Colonel Rakesh Jetly – served in the Canadian military and spent time as a senior psychiatrist and a mental health clinical advisor to the CF Surgeon General ]
- Joanna Neil – a professor of Psychopharmacology at the University of Manchester that has been conducting research on the development of preclinical models of psychiatric disorders in psychopharmacology for almost 30 years
Supporting a Leading Psychedelic Therapy Study in Germany
A few weeks ago, Havn Life announced that it would support ground-breaking research with the MIND Foundation on a study on depression and psilocybin. The study will be the first psilocybin depression study in Germany since the 1970s and we are favorable on Havn Life’s involvement with it.
These are the types of studies that are needed to support the advancement of the psychedelic therapy market. The study is being led by principal investigator Prof. Dr. Gerhard Gründer at the Central Institute of Mental Health Mannheim and aims to investigate the safety and efficacy of psilocybin that is administered under supportive conditions in a controlled, randomized, double-blind design.
We are favorable on Prof. Dr. Gründer involvement with the study and believe that it adds credibility to it. Currently, he is the only scientist in Germany that is planning clinical research with psychedelics and find this to be significant. Prof. Dr. Gründer is consided to be a leading expert in his field, having conducted 30 years of psychiatric research on mental health disorders and addiction.
For the study, Prof. Dr. Gründer will be working with groups from the Charité Universitätsmedizin Berlin, Central Institute of Mental Health Mannheim, and the MIND Foundation, which has a team of over 20 scientists from around the world on its advisory board. A successful outcome could pave the way for future phase III studies and we will monitor how it progresses.
In the near future, the study is expected to be approved by the ethics committee and the Federal Institute for Drugs and Medical Devices in Germany. Following this approval, we expect to learn more about the potential that is associated with psychedelic therapies and will keep an eye on this aspect of the story.
An Opportunity to be Aware of
During the last month, we have seen a significant increase in the amount of interest in psychedelic therapy companies. We believe that Havn Life will be a beneficiary of the increased interest and are favorable on how the story has advanced.
After Havn Life commenced trading on the CSE, the market responded favorably to the listing and this is a trend that has not been seen at most psychedelic focused companies. We believe the market finds the strength of the management team to be an important aspect of the story and we are favorable on how Havn Life has made this a priority for the business.
In the coming months, we expect to receive updates on Havn Life’s multi-faceted growth strategy and are favorable on the amount of potential upside that is associated with the opportunity. We believe Havn Life has been flying under the radar and are going to be closely following the story from here.
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