CPH further derisks acquisition as Halucenex adds to its psychedelics supply

By Jonathan Jackson. Published at May 14, 2021, in ASX Biotechs

Creso Pharma Limited (ASX:CPH, FRA:1X8) target acquisition company Halucenex Life Sciences has nearly doubled its supply of synthetic psilocybin.

Halucenex has secured an additional 10 grams of synthetic psilocybin from its manufacturing partner – Canada’s only pharmaceutical grade synthetic psilocybin producer.

The additional supply makes Halucenex one of the largest holders of single batch GMP grade synthetic psilocybin in Canada.

In fact, Halucenex is just one of 11 companies to secure supply in Canada and its existing relationships with manufacturing partners and bolstered inventory considerably derisks its clinical trial timelines.

The additional grammage takes Halucenex’s total inventory to 22.3 grams, giving it a generous runway to progress and expedite clinical trial and R&D initiatives.

It also brings it in-line with peers including MindMed (NASADAQ: MNMD, NEO: MMED), which recently became just the second company of its kind to list on the NASDAQ and Compass.

MindMed is connected to CPH via its advisor Bruce Linton, who is also a member of the MindMed Board and who also founded Canopy Growth Corp, which went from a penny stock to a $15BN market cap at its peak. Former CEO and founder of CPH Dr Miri Wernli remains a significant shareholder of CPH and is the Executive President and Director of MindMed.

While it is unclear how large MindMed’s supply of psilocybin is, the company’s value continues to rise on the back of its current trials. MindMed has a market cap of CA$1.155BN, cash on hand of CA$205.2M and an enterprise value (EV) of CA$0.95BN.

It is currently in the midst of:

  • LSD Experiential Therapy to treat Anxiety (Project Lucy) - commencing phase 2b
  • Opioid Withdrawal/SUD - Project Layla - commencing phase 2a
  • LSD Microdosing - Adult ADHD - Project Flow - commencing phase 2a

The $1.4BN capped Compass is also in Clinical Trial Phase and is developing COMP360 psilocybin therapy for Treatment Resistant Depression (TRD). It is currently working on:

  • COMP360 designated a FDA Breakthrough Therapy for TRD
  • Completed Phase I healthy volunteers trial, largest psilocybin therapy clinical trial to date
  • Phase IIb ongoing, with 216 patients expected to have completed the trial by late 2021
  • Planned expansion into additional indications.

Compass has cash on hand of US$190M as of 30 Dec 2020 and an EV of US$1.21BN.

You can read more about the Compass and MindMed trials in our previous Finfeed article: Halucenex forms important partnership as psychedelics space heats up

In comparison, CPH has a market cap of AU$200M, cash on hand of $18.6M and an EV of $181.4M, suggesting that once its acquisition of Halucenex is complete, there is enormous upside for the company.

CPH’s position will be further strengthened when it lists on the US OTC stock exchange, which is now imminent. DTC eligibility to allow real time electronic settlement is expected to be granted to CPH in the near term.

Trials imminent

Halucenex is about to begin a Phase II clinical trial that will test the efficacy of psilocybin on the treatment of PTSD.

Certainly, the increased supply of psilocybin is a major de-risking event ahead of the Halucenex acquisition.

Halucenex Founder and CEO Mr Bill Fleming made clear how important this extra supply is as well as the company’s intentions moving forward.

“There is strong competition and a bottleneck in the current psilocybin supply chain, so to nearly double our inventory is a major derisking event,” Fleming said.

“Securing additional inventory also highlights the strength of our relationship with Canada’s only synthetic psilocybin manufacturer.

“The additional supply will unlock a number of benefits. Importantly, it comes from the same batch as our previous inventory, which provides essential latitude. We have a number of research and development initiatives planned over the coming months including new delivery integrations for faster onset and potentially enhanced efficacy, as well and the integration of our compounds in collaboration with clinical partners and we look forward to updating shareholders progressively.”

Importantly, the extra supply gives Halucenex the option to increase the total number of clinical trial participants in its pending phase II clinical trial.

This would ensure all participants in future phase II and phase III trials are treated with the same consistent GMP batch for tracking and traceability purposes.

With the additional supply of psilocybin, Halucenex now also has the ability to conduct GMP formulations in future delivery methods for faster onset and integrate other beneficial compounds including those in CPH’s current product range to create tailor made solutions for new drug development.

“Halucenex is now one of, if not the largest holder of single batch GMP grade synthetic psilocybin in Canada. This is a major development and opens a number of doors for the Company in medium and long term,” CPH Non-executive Chairman Adam Blumenthal said.

“The Company now has the freedom to progress a number of R&D initiatives, which have the potential to unlock new drug delivery methods and combinations, potentially leading to a higher level of care through alternative treatment methods. We look forward to working with Halucenex and its existing partners to progress these research initiatives.”

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