Over the past year, the world of psychedelics has been taking over as the hot area for investors as the need for alternative medicines grows at an expediential rate.
There has been a sizable increase in psychedelic companies flocking to stock markets to raise capital in the interest of developing their products and one that was looking to pursue that path was MagicMed Industries Inc.
The privately-held biotechnology company, which is focused on creating a library of novel derivative molecules based on classic psychedelics such as psilocybin, DMT and MDMA, had been looking to undertake a float on the Canadian Stock Exchange in 2021, and had even been allocated the MAGIC stock ticker.
However, on May 24, those plans looked to have been paused after NASDAQ-listed Enveric Biosciences Inc. (NASDAQ:ENVB) unveiled a definitive agreement for an all-stock acquisition of MagicMed, valued at $30 million. Enveric noted that the deal will expand and complement its current pipeline of naturally occurring compounds, primarily focused on cannabinoids, to now include a robust portfolio of psychedelic-derived molecules.
Upon the close of the acquisition, MagicMed CEO, Dr. Joseph Tucker will be appointed chief executive officer of the newly amalgamated company, while the current chairman and CEO of Enveric, David Johnson, will be appointed its executive chairman.
Proactive sat down with Dr. Tucker to find out more about his plans for the new entity.
So what prompted the decision to agree to the acquisition by Nasdaq-listed Enveric Bioscience rather than pursue a separate CSE listing?
So many things. The synergy with the companies, first off. They have clinical development expertise and we are a discovery arm, so we're kind of like two halves. If you want to go from discovery in your molecules all the way through to clinical trials and commercialization, we sort of bring the two halves together, which means one plus one is easily three. So first off the synergies.
Secondly, I think it is really transformative for our business. Rather than needing to partner with other companies so that the molecules we create could be advanced, we can now, in the combined entity, develop a new drug candidate molecule from the beginning, through the pipeline and potentially all the way to approval. The real value in a company is the ability to develop the late-stage clinical asset yourself. That's where you really drive the value.
The final reason is what we've seen in the capital markets, that the world is starting to wake up to psychedelic medicines as being a true pharmaceutical opportunity. The investors that can fund that kind of work will fund a NASDAQ listed entity, but not so much a Canadian listed entity. There is a larger opportunity in terms of access to a much more robust group of sophisticated life science investors and capital by being a NASDAQ-listed company.
You will be CEO of the amalgamated company, what challenges and rewards do you see from the merger?
Well, of course, it's going to be a much bigger entity with a lot more work that we will need to do, so it's a much grander scope. You already have that tag that you are going to require more really high-value, high-quality people. Additionally, it's going to require longer timeframes and greater resources. Ultimately, we can build a company that's worth so much more and become much bigger than what MagicMed was originally planning on doing.
What do you see as the potential for MagicMed’s psychedelics molecular derivatives library, Psybrary?
I am very excited by this because with the greater access to capital that we will have, we will be able to make a larger internal investment into the expansion of our Psybrary. We can then make more molecules, file more patents, and do more work to advance them through the process to confirm that they are high-quality drug candidates. So the Psybrary itself will be bigger, faster, stronger, all of those things.
Furthermore, we will now have the opportunity to select our very best molecules, which are our biggest assets, and develop them ourselves. But the main thing is we'll really be able to maximize the value from the synergy of having our own development arm and having far greater access to capital.
How might this change with the takeover given that Enveric’s current focus is primarily on cannabinoids?
So that’s another interesting synergy that was almost a bonus. You're right their lead molecules are derived from or based on cannabinoids. And so one advantage is that we're going to move more quickly into clinical trials than if we were dependent entirely on our psychedelic molecules. Which is a great thing for investors to see, the company moving into the clinic sooner than they otherwise would have anticipated.
But the other bonus synergy if you will, is that the core of our technology is synthetic biology, at least on the Discovery arm. What that means in this context is using enzymes from nature to modify these molecules, which originally come from nature themselves, to make them better in order for there to be an enzyme that exists that you can then use for the synthetic biology.
Cannabinoids, like psychedelics, come from nature, and we can modify them using enzymes from nature. Through further R&D we will be able to assess which molecule, classic or derivative, we will move to the next development stage. So we definitely still think that cannabinoids have a lot of value to them.
You've already built several publicly traded biotechnology companies. So what qualities do you bring to this latest venture?
I come from a hardcore science background - writing papers, inventing molecules, and getting patents. But at the same time, for the last 20 years, I've been on the business side, quite a bit, generally, as a CEO, and, as you mentioned, have built several companies, raised cash, and taken companies public. So I have that understanding of how to operate within the capital markets and how to communicate with scientists with a great idea.
The professionals in the investment industry and the scientists speak completely different languages and don’t normally understand each other at all. But I speak both languages, and I've been in the middle of the two worlds for more than 20 years, so I really do have a facility for bringing things together. Thus I can both identify opportunities and then find ways to get them funded. That's my whole career, bridging that language barrier which can be a cultural barrier as well.
So what should investors expect in the medium and long term from the new company?
What I would expect to see emerge out of the combined entity is an exciting pipeline of new drug candidates. On top of the ones that Enveric has already indicated that are moving into clinical trials, I would expect to see another handful of drug candidates come on, and really diversify and fill up the pipeline.
This pipeline is all focused on the mind and the body, treating both. There is, of course, a very strong connection between mind and body and that's what our pipeline is going to be all about. Different agents, sourced from nature, impacting patients minds and bodies, using synthetic biology occasionally to improve upon them, but an entire portfolio of these molecules advancing through clinical trials.
I like to think five years from now, we're going to have five to seven different drugs in clinical trials, all at different stages, then, in the longer term, I'd expect to see some of those drugs become commercialized. I'd expect to see some real validating relationships emerging between the new company and Innovation, or Big, Pharma.
I think it's going to take a little while before Big Pharma gets really comfortable with the psychedelic space, but I think that our approach is going to probably be one of the leading approaches that gets them comfortable. So I'd expect to see some validating relationships between this company and Big Pharma as that's when you can really start to see the molecules you have created being developed into drugs that are going to have the greatest possible impact on patients. Big Pharma can really help products get approved and also get access to the patient, who will trust a drug coming from them. Big Pharma has so much more firepower.
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