Cannabinoid biotech company Enveric Biosciences Inc. (ENVB) recently decided to expand its product offering to its targeted patient group by bringing psychedelic medicine company MagicMed into its fold.
Enveric acquired privately held MagicMed recently in a deal valued at $30 million. Enveric's CEO David Johnson is moving into the Chairman role, while MagicMed's leader, Dr. Joseph Tucker, will be named the new CEO of the combined company.
I had the chance to speak with Dr. Tucker and find out why this cannabis biotech company felt the need to expand into psychedelics.
Dr. Joseph Tucker:
Enveric has been focusing on the clinical development capabilities, but they don't have a discovery unit and MagicMed has been a discovery engine that doesn't have its own clinical development arm. So there's a very powerful synergy right there, number one.
Number two. Yes, they've been working on cannabinoids, which are naturally sourced, obviously. Naturally sourced molecules that have positive effects, as David likes to say, on both the body and the mind. They have effects in both of those places. Now psychedelics, particularly the psychedelics that MagicMed is working on, can all be traced back again, to natural sources. Even things like LSD, you can trace back to the core molecule called ergoline. Whereas things like psilocybin, for example, are very obvious. And that's not just something we do because it makes you feel warm and fuzzy. It's because part of our process is to use enzymes from nature to modify the molecules.
The idea is, not only can we be the discovery unit for them, and they're our clinical arms, but we can now bring our capabilities that we have been applying to psychedelics, and we can also apply it to cannabinoids.
The same idea behind creating better molecules can also be applied to cannabinoids because they're plant-based; they're naturally based as well.
The third thing and this is really what brought us together, is the overlap. Their original main focus was about cancer, right? Using cannabinoids, but specifically to treat cancer-related indications, and the thing that brought them to us in the first place.
I think many people had seen, for example in Canada, the Minister of Health granting exemptions for terminal cancer patients' PTSD, for psilocybin. And they came to us saying, "Well, should we make a better novel psilocybin-related molecule for cancer-related PTSD?" We said, "Yeah, it's totally right within our wheelhouse." And so, that was the nexus point; we started to talk. We said, "But of course, you realize that while cancer-related PTSD is a great starting point, it can be much bigger than that. The PTSD itself is a much bigger indication." That's where the whole thing started. Our intention here is to have numerous molecules either coming from cannabinoids or coming from psychedelic sources and to be advancing them through clinical trials.
This is how Enveric describes itself -- as a patient-centric biotech company. Where you're addressing the patient issue by these various products.
Dr. Joseph Tucker:
Exactly. The whole mind and body part of it, I think, is really important too. We know there's a lot of support out there for the concept that psychedelics or psychedelic-derived molecules can help the patients.
One of the things about biotech companies, inherently is, you work and research for many months on end before you get any revenue, because you're doing this R and D, and it's a big investment. Any insight as to when you think you might have revenue-producing products?
Dr. Joseph Tucker:
I think that the ones that Enveric already has going, will soon be in the clinic. They are, I think, faster than your average molecule. They're faster clinical trial programs because of the patient population because of the route of administration. You're looking at a shorter than your typical process; it's something like seven to 10 years. For these programs, we're thinking, hopefully, less, because of the reasons I just gave. Now MagicMed had a completely different business model, which was, we're going to go straight for revenues, and we're not going to bother to develop any of these ourselves. Mostly because we don't have the in-house capability or access to capital. And now, we have solved both of those issues for MagicMed through this merger. So all of a sudden, it makes sense for us to take some of our molecules and develop them ourselves. But we have not abandoned our business model of partnering with others. So, I think we would probably be a bit more selective, in who we partner with now.
What about your funding? How far is your runway? Are you set? Do you think you're going to have to go back to the capital markets?
Dr. Joseph Tucker:
I think to take multiple molecules, which is the plan, all the way through clinical trials, we are going to have to go back to the markets at some point. We're not in any rush at this point; walking into this, MagicMed already had the money for its existing business plan for approximately two years. And Enveric also had money already in hand, for its business plan for a number of years. They have something like $25 million in the bank right now. So neither one of us is in any kind of a rush to raise additional dollars. But ultimately, yeah; to get multiple molecules to clinical trials, you will need more.
But it gives us the ability to be opportunistic. Now that we've gotten NASDAQ listed, I think if gives us, instantly, greater access to capital than the Canadian listing. And so, one can be again, more selective, more opportunistic. The thing is, now you can raise some money at a reasonable valuation.
One of the other things that MagicMed does bring to the table, is the Psybrary. Data is King. Information is very valuable in the marketplace now. Was that also a major component of the acquisition, the Psybrary?
Dr. Joseph Tucker:
Absolutely, absolutely. That was what brought Enveric to our door, to begin with. The recognition of what we're building, as you said. I think there's a very limited opportunity for companies that are working on psilocybins for a very close, natural relative.
The Psybrary is surprising, and I think more and more people are cluing into this. It's hugely valuable because we're capturing the novel molecules in the surrounding area, many of which should have the potential to be very high valued drug candidates. As good, if not significantly better, than the natural molecules that many companies are fighting over.
Let's make a larger, broader Psybrary, and let's test the molecules more extensively so that we have even more data on what molecular structure correlates to what biological system in the body, which then correlates to what outcome of the patient. So, absolutely. That's probably the biggest central piece of all of this, is this valuable asset. Which I believe is how we can make it even more valuable and more impactful, by investing in it aggressively.
Note: This interview was edited slightly from a conversation taped on May 24, 2021.
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