Easing Regulations Place Psychedelic Medical Products on the Path to Growth

FinancialBuzz.com News Commentary

NEW YORK, June 11, 2020 /PRNewswire/ -- In just a few years, the perception about psychedelics and their possible uses has started to shift from a potentially dangerous party drug to an approachable medicinal product. For example, earlier in 2019, the U.S. Food and Drug Administration (FDA) approved the Spravato (esketamine) nasal spray, in conjunction with an oral antidepressant, for the treatment of depression in adults who have tried other antidepressant medicines but have not benefited from them (treatment-resistant depression). There are some caveats, as the patient who self-administer Spravato nasal spray must do so under the supervision of a health care provider in a certified doctor's office or clinic, and the spray cannot be taken home. Nevertheless, such an approval is crucial to the developing psychedelics market. According to The Verge, Steve Levine, the Founder of Actify Neurotherapies, which runs 10 ketamine clinics around the country explained that "We deliver an off-label treatment that has the baggage of being known as a club drug… Now we've moved from 'we deliver horse tranquilizer off-label' to 'we deliver FDA-approved Spravato' and it's just easier to talk to people about that." Numinus Wellness Inc. (TSX-V: NUMI) (OTC: LKYSD), 22nd Century Group, Inc. (NYSE: XXII), Cronos Group Inc. (NASDAQ: CRON), Green Thumb Industries Inc. (OTC: GTBIF), Charlottes Web Hldgs Inc. (OTC: CWBHF).

There are many similarities between psychedelics' path to legalization and that of the cannabis industry. Medical cannabis can already be found in many regions around the world such as parts of the U.S., Australia, Canada, France, Germany, Thailand, and South Korea. Predominantly, the overall CBD market is driven by the medical sector. Unlike cannabis, which has to deal with federal research restrictions, psychedelic substances, including ketamine, psilocybin and ibogaine, have been granted FDA approval for clinical trials. As Forbes has reported, in 2018 and 2019, the FDA designated psilocybin, the psychoactive compound found in mushrooms, as a "Breakthrough Therapy" to treat clinical depression. This coveted classification allows the developers of the drug to conduct clinical trials with more regulatory support and fast-tracks the development and review of final treatments.

Numinus Wellness Inc. (TSX-V: NUMI) (OTC: LKYSD) announced breaking news that it, "has received Health Canada approval to amend the Company's existing Licence under the Controlled Drug and Substances Act to allow Numinus researchers to conduct research to standardize the extraction of psilocybin from mushrooms." The amendment means Numinus is the first publicly traded company in Canada to be granted a licence by Health Canada to conduct research of this kind.

With this regulatory approval, Numinus is able to proceed with the production of naturally sourced, sustainable psilocybin for research purposes that will support the emerging field of psychedelic assisted therapy and research, at lower costs to currently produced synthetic psilocybin. The licence also allows Numinus to develop and licence its own exclusive IP for further product development in partnership with leading research organizations — something the research community has been seeking to secure. The work will be eligible for the Government of Canada's Scientific Research and Experimental Development (SR&ED) tax incentive program and will lay a foundation for grant applications.

"We are proud to be at the forefront of a new therapeutic category by advancing evidence-based science focused on wellness and personal connection at its core," says Numinus CEO Payton Nyquvest. "Numinus is the only publicly traded company in Canada approved to develop a consistent psilocybin extraction method from naturally-produced mushrooms at a time when alternative therapeutic methods are increasingly being investigated and demand from clinical research is growing."

Working from the 7,000 square-foot Numinus Bioscience research facility and laboratory, senior research scientists Dr. Kristina Grotzinger and Dr. Bernd Keller will focus on developing a proprietary extraction method from mushrooms to allow for consistent dosing and application of naturally produced psilocybin. Once a proprietary method has been developed, the Company intends to explore supply agreements with leading research organizations to make use of the product in their clinical and therapeutic work.

Researchers at Johns Hopkins University, the Multidisciplinary Association for Psychedelic Substances (MAPS) and other leading researchers have published studies showing the benefits of psilocybin in treating Post-Traumatic Stress Disorder (PTSD) and other mental health issues. Further, the US Food and Drug Administration has granted breakthrough therapy status for psilocybin for the treatment of PTSD — illustrating the growing demand for therapeutic access to psilocybin.

"In most cases, the creation of synthetic compounds are less pure than those found in nature, which is the case with psilocybin," says Dr. Grotzinger. "There is risk of contamination from solvents, gases and other chemicals, which makes them less safe to work with and requires added safety and processing expense. By working directly with the mushroom in its natural state, these risks are reduced, as is the cost to extract the psilocybin." Grotzinger added that standardized plant or fungi extracts are accepted by European standards and are a common dosage form in Europe.

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22nd Century Group, Inc. (NYSE: XXII) announced last year, the initial closing of an investment in Panacea Life Sciences, Inc. (Panacea), a rapidly-growing, vertically-integrated, consumer-facing company operating exclusively in the legal, hemp-derived, CBD product space. 22nd Century's investments in Panacea over the next twelve to eighteen months are expected to total $24 million, in a combination of cash and 22nd Century stock in exchange for Panacea-issued debt and preferred equity. 22nd Century has also received a warrant to purchase preferred stock of Panacea, which upon full exercise will provide 22nd Century with a controlling equity position in Panacea. "After a disciplined and thorough review of the opportunities available to 22nd Century to maximize shareholder value creation, we are pleased to announce the Company's first investment in the legal, hemp/cannabis, consumer packaged goods space," said Cliff Fleet, President and Chief Executive Officer of 22nd Century Group. "This investment is a major milestone in 22nd Century's on-going execution of our hemp/cannabis strategic growth plan and offers the opportunity for strong projected shareholder returns.

Cronos Group Inc. (NASDAQ: CRON) announced last September that it had closed its previously announced acquisition of four Redwood Holding Group, LLC operating subsidiaries. The transaction provides Cronos Group with a leading U.S. hemp-based products platform, including hemp-derived cannabidiol infused skincare and other consumer products that are sold online and through retail and hospitality partner channels in the United States under the brand, Lord Jones™. Mike Gorenstein, Cronos Group's Chairman, President and Chief Executive Officer, said, "This acquisition is one of a number of new growth opportunities that is differentiating our company and our strategic direction. We are pleased to have completed this acquisition and look forward to working closely with Rob and Cindy to further build on their record of innovation and fully capitalize on the platform they have created."

Green Thumb Industries Inc. (OTCQX: GTBIF) announced recently that it will open Rise Chambersburg, its 46th retail location, on June 8.  Profits from the first day of sales will be donated to Last Prisoner Project,  a nonprofit coalition of cannabis industry leaders, executives, and artists dedicated to bringing restorative justice to the cannabis industry. "We are grateful to open another Rise™ location in Pennsylvania and to continue to create jobs during the ongoing COVID-19 crisis," said Green Thumb Founder and Chief Executive Officer Ben Kovler. "Rise Chambersburg is our seventh store opening this year and fifth since the crisis began. We are also honored to donate our first day's profit to the Last Prisoner Project and to support their important work through our ongoing partnership." Mary Bailey, Managing Director of Last Prisoner Project, said: "We are both humbled and grateful for partners like Green Thumb Industries who support our mission to help those negatively and disproportionately affected by the criminalization of cannabis."

Charlottes Web Hldgs Inc. (OTCQX: CWBHF) announced yesterday its sponsorship, with six other CBD brands, of ValidCare's scientific study, to address the Food and Drug Administration's (FDA) prior public questions about CBD products.  ValidCare will be conducting a human trial study to ascertain if daily use of full spectrum hemp-derived CBD or CBD isolate has any impact on the human liver. In its report to Congress dated March 5, 2020, the FDA requested additional science-based data from the CBD industry. The ValidCare study will provide third-party scientific data intended to directly address some of the FDA specific requests. "As the market share leader, anchored in science, sponsoring ValidCare's study made strategic sense for us," said Deanie Elsner, Chief Executive Officer for Charlotte's Web. "This research will provide important clinical data to guide our entire industry while also showing the FDA we've heard their requests and are answering their questions with precise data."

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