After the results of the 2020 general election in the US were announced, the market became aware of two key trends. The first trend is related to positive legislation for the cannabis industry as it relates to the number of states that have legalized medical and recreational cannabis. The second trend is related to the decriminalization of psychedelics and this is a trend that is just getting started.
Oregon played an important role in the growth of psychedelic market and is the first state to decriminalize psychedelics. From a legislation standpoint, there are a number of similarities between the cannabis and the psychedelic industry. This is an industry that we are highly focused on and continue to work to identify companies that are going to benefit from the trend towards legalization.
Psyched Wellness Ltd. (PSYC.CN) (DCNPF) is an opportunity that caught our attention and is a Canadian life sciences company that is laser focused on the production and distribution of psychedelic mushrooms and associated consumer packaged goods. We are favorable on the structure of the business and leverage that Psyched has to the functional mushroom market.
According to Modor Intelligence, the global functional mushroom market is forecasted to be a $34.3 billion (USD) industry by 2024. We are favorable on Psyched’s opportunity to capitalize on a burgeoning market and will monitor how the management team is able to develop and launch a premium suite of health and wellness products
Psyched is Putting the Necessary Infrastructure in Place
From a distribution standpoint, Psyched has been focused on establishing strategic sales distribution channels in the US and the European Union (EU). We believe the focus on putting the necessary infrastructure in place will play an important role in how the product line generates traction.
In the near future, Psyched plans to commences pre-clinical studies on its product line in Canada and in Asia. By accomplishing this, the company will able to submit the product to be reviewed in the US and Canada. We expect a positive outcome to serve as a significant growth catalyst and are favorable on the potential upside that is associated with this.
Over the next year, Psyched expects to increase the number of mushroom-derived consumer packaged goods that fall under its portfolio and we are favorable on the focus on innovation. The company’s product portfolio is expected to be led by Amanita Muscaria infused tinctures which is its flagship mushroom extract product.
Capitalizing on an Emerging Growth Market
During the last year, we have seen a large increase in the number of health-conscious consumers that are consuming functional mushrooms. We expect this trend to continue and believe that the COVID pandemic has been a catalyst as new consumers turn to functional mushrooms to support mental and physical health.
Although we have seen a substantial increase in the amount of companies that are focused on the functional mushroom market, we have not seen a rapid increase in the number of companies that are selling Amanita Muscaria tinctures.
As part of the growth strategy, Psyched plans to sell tinctures that are filled with oil that is derived from dried and ground Amanita Muscaria caps as well as other well-known functional mushrooms. We are favorable on how Psyched has been able to differentiate itself from its peers and expect to see the products gain traction.
Favorable on the Diversity and Strength of the Leadership Team
One of the reasons we are excited about Psyched is related to the strength of the management team. The company has been highly focused on hiring strategic human capital and we are favorable on this aspect of the story. Last month, Psyched announced that Brian Towncany has joined the advisory board to support the management team on the scientific side as the business progresses through the pre-clinical trials for Amanita Muscaria with its contract research organization (CRO) partner.
With more than 25 years of experience in research and development with government, academic and private sector partners, we are favorable on the experience that he brings to the team. Currently, Brian is a quality-assurance manager that has an in-depth understanding of the challenges that are associated with start-up companies as it relates to regulatory procedures and policies.
Another key member of the team is Michael Nederhoff who is the Chairman of Psyched. Currently, he serves as the President of JUUL Labs in Canada and we are favorable on the experience that he brings to the team. The e-cigarette market has come under heavy regulatory scrutiny and we expect his experience to play an important role in the launch and success of the products.
Another important member of the team is Professor David Nutt who is a member of the advisory board. Currently, he is the Chair of the Scientific Advisory Board for COMPASS Pathways and the Chair of the Scientific Advisory Board for AWAKN Life Sciences. Previously, he was the president of the European Brain Council, the British Association of Psychopharmacology, the British Neuroscience Association, and the European College of Neuropsychopharmacology. We are favorable on the expertise that Professor Nutt has and expect him to have an important impact on the success of the business.
To round out the board, Psyched have brought on Terry Booth. He is one of the best-known executives from the cannabis sector and was the founder of Aurora Cannabis Inc. (ACB.TO) (ACB). Terry is known as a trailblazer in the cannabis sector and we are favorable on the experience and the relationships that he brings to Psyched.
An Emerging Opportunity
During the last year, Psyched has been focused on raising capital and plans to use the resources to execute on key growth initiatives. We believe that Psyched Wellness has visible growth prospects and will monitor how the story continues to gain traction.
When compared to other operators in the functional mushroom and the psychedelic market, Psyched Wellness is trading at a substantial discount and we find the valuation to be compelling. At current levels, we believe the business has a favorable risk-reward profile and will monitor how the management team is able to execute.
The timing of Psyched Wellness’ listing is strategic and comes after several high-profile psychedelic therapy companies commenced trading. If you are interested in learning more about the opportunity, please send an email to firstname.lastname@example.org with the subject “Psyched Wellness” to be added to our distribution list.
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