2020 has been a challenging year for the global economy and the COVID pandemic has made an impact on the mental health market. We believe that the pandemic has served as a catalyst for the psychedelic therapy market as healthcare providers and researchers seek new ways to treat debilitating mental illnesses.
We believe that Numinus Wellness Inc. (TSXV: NUMI) represents a promising play on the psychedelic therapy market and is an attractive opportunity that we are excited about. The company has significant near and long-term catalysts for growth and is an opportunity with a favorable risk-reward profile.
A Psychedelic Therapy Company to be Aware Of
Numinus has achieved several key milestones in its first year and a half. While its recent stock has trended downwards, we believe the company is only going through a transitory phase as it continues to release positive and promising updates that underscore their substantial foundation. The company has an attractive operating structure with divisions that look like they will be able to play off one another to create great shareholder value, all in line with its end goal of delivering safe and regulated psychedelic-assisted psychotherapies. Those divisions are the following:
- Numinus Bioscience – owns and operates a 7,000 square foot research and testing laboratory; holds numerous Health Canada licenses, including the first-in-country to produce and extract psilocybin from mushrooms; is developing proprietary extraction methods and scientific protocols with their team of researchers
- Numinus R&D – is developing therapeutic protocols under leadership of their Chief Medical Officer and former Executive Director of the BC Centre on Substance Use, Dr. Evan Wood; averaging established relationships in the medical, policy and research communities to position the company for partnerships to host studies, develop protocols, and influence regulatory approval
- Numinus Health – the consumer-facing division, centred around the delivery of psychedelic-assisted psychotherapies as those are developed and put through regulatory approval pathways by the other divisions; already has one clinic that is prototyping delivery systems for efficiency and profitability, albeit currently without the psychedelic-assisted component until it is regulated.
Each business unit is focused on executing on synergistic growth initiatives to expedite and improve access to psychedelic-assisted therapy models in Canada. These initiatives are expected to position Numinus as an industry leader once psychedelic therapies pass regulation and become legal and available to the public, since the company is working so closely with the medical, research and regulatory communities.
An Execution Story That Is Raising Capital and Developing Protocols
Earlier this month, Numinus reported their filing of a final short form prospectus in connection with its previously announced best-efforts offering, with plans to raise up to $4 million by selling units at $0.25 each and Mackie Research Capital Corporation acting as lead agent and sole bookrunner for the offering. Numinus has since announced the closing of the oversubscribed round.
Numinus intends to use the net proceeds for MDMA and psilocybin Compassionate Access protocol development and implementation to make these drugs accessible to specific patient groups before they are available on the market. A portion of the proceeds will be used to secure therapy space and develop psychedelic integrative treatment models, support lab infrastructure upgrades, support its Health Canada licenses, and for general operating expenses.
The financing will significantly strengthen Numinus’ balance sheet, and we are favorable on the strategy in place to use the proceeds. Over the next year, we expect the company to announce key milestones for these initiatives.,
A Growth Story that is Flying Under the Radar
A few months ago, Numinus was granted an amendment to its Health Canada dealer’s license that allows it to produce and extract psilocybin from mushrooms. The license will enable Numinus to develop extraction IP and other scientific protocols, both for internal application within their business units and for licensing. Lookingforward, the company is positioned to supply the clinical trial market with naturally sourced, sustainable psilocybin as an alternative to the synthetic option available now. Both the supply and R&D opportunities look like promising routes for the establishment of partnerships with other research organizations; high-profile partnerships with some of the leading organizations aren’t out of the question, given the current market scarcity for research-grade supply and regulatory licenses, both of which Numinus would be able to contribute.
We are favorable on the structure of this psychedelic therapy company and believe that the leadership team is executing on a series of projects in order to create value for shareholders. Going forward, we expect to see the management team continue to execute on previously announced initiatives as it works to bring the business down a path to profitability.
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