- Early Weed Investors and Business Minds are Positioning Themselves in the World of Psychedelic Medicine as the Flow of Smart Money Hits the Market
- Canopy Growth Founder Bruce Linton and Billionaire “Mr. Wonderful” Kevin O’Leary from Shark Tank, Are Going All in on What They Think is a Much Bigger Opportunity Than the Cannabis Boom
- Investors Who Missed the Last Bull Market in Weed Stocks or Got in Too Late Should Start Researching the “Shroom Boom” Immediately
*Backed by popular demand, this article has been fully updated as of 05/22/20 to reflect the many significant developments that have occurred in the psychedelics industry since originally published on 03/28/20.
The psychedelics wave continues to sweep across North America, and each week brings new positive developments for the emerging sector. Despite psychedelic medicines such as LSD, MDMA, Ketamine and Psilocybin (Magic Mushrooms) still technically labelled as controlled substances, their use by medical professionals to treat a wide variety of mental health disorders continues to grow substantially.
Psychedelic medicine has shown such great promise that the U.S. FDA and Health Canada have fast-tracked Psilocybin, MDMA and Ketamine for R&D. With the federal government supporting medical research, rather than holding it back, it’s opened the door for the psychedelics industry to flourish.
Psilocybin, also known by many as Magic Mushrooms, has grabbed the lion’s share of headlines recently, thanks to many positive legislative developments. In 2019, major U.S. cities Denver and Oakland took an important first step by decriminalizing Psilocybin. Since then, the momentum behind the psychedelics reform movement has continued to accelerate.
New York entered the conversation a couple of weeks ago after a lawmaker introduced a new bill designed to decriminalize psychedelic mushrooms in The Empire State. If New York succeeds in its endeavour, it will become the first state to decriminalize Psilocybin. Activists are currently working to push legislation forward in more than 100 U.S. cities in addition to the state-wide efforts taking place in California, Oregon, Washington and now, New York.
The psychedelics reform movement came to life based on the positive results of many studies that successfully used substances such as Psilocybin to treat various afflictions like depression and addiction. Kevin Matthews, the campaign director for Denver for Psilocybin, described the movement, “We’re in the middle of the psychedelic renaissance. I think it’s becoming more common because the results—at least the initial results from these studies—are so powerful.”
While the psychedelics legalization movement is still in its infancy and there’s a lot of research yet to be done, it’s likely to follow a similar path as cannabis legalization: start local, expand state-wide and push for national acceptance. Much like cannabis, a new industry is forming around psychedelic substances like Psilocybin, Ketamine, MDMA and LSD.
However, that’s where the similarities between the two industries end. On the investment front, the psychedelics sector has taken a much stricter stance on regulations. By setting very high barriers to entry, it has prevented the market from being flooded with wannabe companies looking to jump on the bandwagon to make a quick buck. As we all witnessed with cannabis stocks, the sector was oversaturated with companies during the green rush, many of whom are now long gone.
On the other hand, the psychedelics industry is seeing a massive surge in investor demand. Still, because of the limited number of companies, it’s being concentrated into just a few psychedelic stocks. As the new industry continues to blossom, the aforementioned set of circumstances has created a situation for investors that has enormous potential upside.
As other companies inevitably attempt to enter the burgeoning space, investors would be wise to focus their investment dollars on the proven sector leaders such as Champignon Brands (CSE: SHRM) (OTC: SHRMF) (FRA: 496) and MindMed (NEO: MMED) (OTCQB: MMEDF) (FRA: BGHM). Champignon Brands, in particular, believes it has what it takes to dominate this upstart industry. After a series of significant acquisitions and announcements, it’s now in a position to solidify its place at the top of the emerging psychedelics sector.
Champignon Brands is Leading the Psychedelics Industry Forward
Champignon Brands (CSE: SHRM) (OTCQB: SHRMF) (FRA: 496) is a human optimization life sciences company focused on applying novel and natural treatment protocols to address a wide variety of medical disorders with a focus on psychedelic medicine. Champignon completed its IPO on February 28th of this year and officially began trading on the Canadian Securities Exchange (CSE) a few days later.
Champignon describes itself as “pursuing the development and commercialization of rapid onset treatments capable of improving health outcomes, such as depression and post-traumatic stress disorder (PTSD), as well as substance and alcohol use disorders.” The company intends to create the most compelling IP portfolio, clinical pipeline and drug development platform in the psychedelics space.
Champignon is guided by an international team of doctors and scientists on the principle of “practical research” under the umbrella of 3 divisions:
- Psychedelics-guided Therapy & Clinical Research
- Medical Devices & Pharmaceuticals
- Mushroom-based Superfoods & Beverages
The company’s ultimate goal is to utilize psychedelics, namely Psilocybin, Ketamine, MDMA and LSD, to bring to market scientifically proven medications for the treatment of depression, PTSD, addiction and a host of other mental disorders.
Champignon has been very active since it arrived on the scene, with the company announcing many transformational acquisitions and projects in 2020.
May 2020: A Month of Major Transformation
May has been a transformational month for Champignon Brands as it continues to execute on its business plan with speed and precision. To help bring investors up to speed, here’s a quick recap of the important and game-changing announcements the company made this month alone:
- Announced plans to acquire the California Wellness Clinic of Orange County, which owns and operates a state-of-the-art ketamine infusion treatment center. In addition to Ketamine infusion therapy, the clinic is also a certified Spravato treatment center. Spravato is a nasal version of ketamine (Esketamine) that has been approved by the FDA for treatment-resistant depression and can only be administered by a certified treatment center.
- Appointed the world’s top depression researcher, Dr. Roger McIntyre, as its new CEO. Dr. McIntyre is the founder and operator of the CRTCE clinic (Ketamine and Psilocybin), which Champignon recently purchased when it acquired AltMed.
- Added MediPharm Labs (TSX: LABS) Founder, Chairman and CEO Pat McCutcheon to its board of directors. McCutcheon was instrumental in creating one of the cannabis sector’s only profitable pot stocks.
- Announced a new deal with a major Canadian pharmacy chain to dispense the company’s ketamine treatment.
- Reported a new $10 million bought deal private placement, which will provide the company with plenty of cash to continue its impressive growth as well as accelerate its North American psychedelics clinic expansion.
- Assembled a task force to oversee the firm’s plans to open or acquire at least five new psychedelic clinics in 2020. Discussions are ongoing with revenue-generating clinics in New York, California, Florida, Pennsylvania, Texas and Missouri.
Psychedelics-Guided Therapy & Clinical Research
As mentioned, Champignon followed through on its previously reported definitive agreement to acquire 100% of AltMed, announcing in mid-April the successful closing of the acquisition. AltMed is a preeminent Canadian Ketamine clinic operator, psychedelic medicine IP aggregator and novel drug discoverer.
AltMed commercially operates the Canadian Rapid Treatment Centre of Excellence (CRTCE), the first and largest mood disorder focused Ketamine treatment clinic in Canada with the intention to aggressively expand throughout North America. Initial planning has the company operating five net-new Ketamine treatment centres by the second half of 2020.
The CRTCE clinic is led by one of the most decorated Doctors in his field, and the authority on mood disorders, Dr. Roger McIntyre Ph.D., FRCPC, Professor of Psychiatry at five Universities in four Countries, AltMed envisions a World where difficult-to-treat psychiatric disorders (depression, PTSD, OCD) are no longer a life sentence. Dr. McIntyre, who was recently appointed as Champignon’s new CEO, is regarded as the world’s top depression researcher, according to the professional research website Expertscape.
AltMed was also founded by Pat McCutcheon, President and CEO of MediPharm Labs (TSX: LABS) (OTCQX: MEDIF) (FRA: MLZ), one of the few profitable Canadian cannabis firms. In early May, it was announced that Pat McCutcheon was appointed to the company’s board of directors, adding a world-class business leader and capital raising expert to further solidify the Champignon Brands team.
The CRTCE clinic has been licensed by Health Canada to conduct human clinical trials with Psilocybin (Magic Mushrooms). It is also the only clinic in Canada able to perform Psilocybin doses under Health Canada approval. The company is conducting preclinical research trials at the University of Miami with the objective of demonstrating the physiological effectiveness of Psilocybin with CBD in the treatment of PTSD and OCD.
To help facilitate Champignon’s new clinic rollout, the company assembled a task force to oversee the initiative while also disclosing that discussions are ongoing with revenue-generating clinics in New York, California, Florida, Pennsylvania, Texas and Missouri. The company has a deal in place that will see it officially enter the lucrative U.S. psychedelics market after Champignon announced it would be acquiring the Ketamine Wellness Clinic of Orange County.
Medical Devices & Pharmaceuticals
Prior to the AltMed deal, Champignon acquired Novo Formulations Ltd., a leading biotechnology company that specializes in developing delivery systems for psychedelic drugs. Champignon intends to leverage Novo’s existing product development infrastructure and licensed affiliates to pursue Psilocybin and MDMA based formulations. The company’s goal is to develop and commercialize rapid onset treatments that are capable of improving health outcomes for individuals suffering from conditions such as depression, PTSD and addiction. The market in North American for pharmacologic DPS treatments currently exceeds $10 billion annually.
Champignon CEO Gareth Birdsall commented on the transformational Novo Formulations deal: “The addition of Novo Formulations allows Champignon to deliver medications in a safer, more effective and more expeditious manner than our peers, from benchtop in the laboratory to preclinical and clinical trials. We are intent on the commercialization of products throughout North America, as rapidly as is safely and effectively practicable.”
Mushroom-Based Superfoods & Beverages
In mid-March of this year, Champignon announced the acquisition of Artisan Growers Ltd., a premium craft mushroom cultivator. Artisan has extensive facilities tailor-made for growing a wide variety of mushrooms. The Artisan acquisition will allow Champignon to bring production of mushrooms for its CPG products in house, saving on costs and improving the company’s R&D abilities.
Within the existing Artisan Growers facility, Champignon has allocated a dedicated laboratory area that will be used for R&D activities and fungi profile analysis. Among its other objectives, Champignon intends to cultivate fungi varietals, which will include Psilocybin.
Two weeks after acquiring Artisan Growers, Champignon reported that it agreed to buy Tassili Life Sciences, a research company that is partnering with the University of Miami to conduct clinical trials using Psilocybin to treat PTSD and traumatic brain injuries. The acquisition of Tassili Life will provide Champignon with the intellectual property (IP) and scientific team required to develop novel medications.
In collaboration with the University of Miami’s Miller School of Medicine, Tassili will conduct preclinical studies and, eventually, human clinical trials. The objective of the studies is to demonstrate the safety and efficacy of the combination of Psilocybin and Cannabidiol (CBD) in treating PTSD and Mild Traumatic Brain Injury (mTBI) with PTSD. It is anticipated that the study’s final results will be available in 2021.
The collaborative studies will be led by Dr. Michael Hoffer, professor of otolaryngology and neurological surgery at the University of Miami’s Miller School of Medicine. Tassili will retain the exclusive rights to all resulting IP discovery, data and inventions.
Tassili Life has also filed four provisional patents, with one patent related to its collaboration with the University of Miami. Tassili’s objective is to demonstrate “that the clinical and physiological effectiveness in PTSD and obsessive-compulsive disorder (OCD) are enhanced by timely measured dosages of psilocybin and cannabidiol, with superior clinical results as measured by objective outcomes.”
2020: A Year of Transformation and Creating Shareholder Value
Moving forward in 2020, Champignon Brands has a long list of ambitious plans designed to increase shareholder value substantially.
On March 20, 2020, Champignon declared its intention to leverage the current undervalued financial markets by conducting a stock buyback. The company announced that it plans to move forward with a Normal Course Issuer Bid, which is a term used in Canada for a type of stock buyback. Champignon’s stock buyback program will look to buy back up to 2.41 million SHRM shares over the next year. All shares purchased during the stock buyback will be cancelled and removed from the company’s outstanding share count. Stock buyback programs can have positive implications for a company’s shareholders. Current shareholders of Champignon Brands stand to see their ownership stake in the company increase each time additional shares are cancelled.
Additionally, Champignon has stated that it expects to successfully biosynthesize Psilocybin within its first three months of laboratory experiments. From here, Champignon will look to optimize and scale its production of pharmaceutical-grade Psilocybin, which the company can utilize in clinical settings. Beginning in Q3 2020, Champignon expects to commence its development of medicinal psychedelics through clinical trials. The company plans to develop non-hallucinogenic therapies using microdoses of Psilocybin, MDMA and LSD as well as hallucinogenic therapies using high doses of Psilocybin and LSD.
In addition to the income from psychedelic clinics, Champignon can generate revenue from its non-psychedelic, mushroom-infused health and wellness products. To go along with the company’s psychedelic therapies, Champignon has broadened its scope to include beverages and edibles infused with natural ingredients found in mushrooms.
The functional food market is already established and growing and is expected to reach $34 billion in annual sales by 2030. The market for psychedelic medicine is in its infancy, and analysts are already placing a market value of $5 billion on the new industry, which some think might actually be too low.
Comparison to Peers: MindMed
MindMed (NEO: MMED) (OTC: MMEDF) (FRA: BGHM) is another company looking to capitalize on the medicinal psychedelic movement. MindMed went public the day after Champignon Brands with both companies’ stocks performing very well out of the gate. The company made headlines earlier this year when it was revealed that Kevin O’Leary, of ABC’s hit show Shark Tank, and former Canopy Growth (TSX: WEED) (NYSE: CGC) CEO Bruce Linton, were investors in MindMed.
Unlike Champignon Brands, MindMed is primarily focused on using ibogaine and LSD to treat disorders such as opioid addiction and attention deficit hyperactivity disorder (ADHD). Since MindMed is focusing on slightly different issues, using different drugs, they’re not a direct competitor to Champignon, but they’re about as close as you can find. That’s especially true, considering there’s only a handful of publicly-traded psychedelics firms at this point in time.
Despite the lack of public companies in the booming psychedelics sector, investor demand continues to rise, and it’s being concentrated into stocks like Champignon Brands and MindMed. As it relates to supply and demand, Champignon Brands holds a big advantage over MindMed when it comes to the number of shares in its tradable float. A company’s float is the number of shares that are actually available for trading in the public market. Currently, MindMed has around 10x the number of shares in its float at roughly 250 million, compared to Champignon Brands’s float of only 24 million. It’s essential to be aware of this crucial stat, especially in an investment sector where demand is expected to far outpace supply. During a bull market, low float stocks tend to rise in price much quicker compared to stocks with larger floats.
Psychedelic Investment Opportunity
With the potential to treat many widespread and debilitating mental disorders, psychedelics stand to become stalwarts in the medical field. Leading the new sector forward will be substances such as Psilocybin (Magic Mushrooms), Ketamine, MDMA and LSD. The potential market for these psychedelic drugs could be worth many billions of dollars, which already has big pharma companies worried.
Champignon Brands has the management team, business plan, and infrastructure to capitalize on that rapidly expanding market while establishing itself as the leader of the highly promising new psychedelics industry. As Champignon continues to execute its vision, the company’s low valuation relative to its peers could present investors with an excellent opportunity to achieve an extraordinary ROI.
The psychedelics industry resembles the cannabis sector in certain ways before it began its meteoric rise but is very different in key areas. It appears that the hard lessons learned from the green rush have been used to create a better environment for investors by raising the bar and limiting the number of companies operating in the space. While the number of firms may be low currently, demand for investment opportunities is soaring, and as mentioned, it’s been concentrated into a handful of Psychedelic Stocks.
For those that missed out on the cannabis boom or bought in too late, the psychedelics industry is in its infancy and is still presenting investors with an opportunity to get in on the ground floor, before Wall Street and the mainstream media blow the flood gates wide open.
Recent Price Action and SHRM Stock Chart
Since commencing trading on March 2, 2020, shares of Champignon Brands (CSE: SHRM) have risen as much as 1,130.77% while hitting an all-time high of $2.40 recently. Following such an incredible breakout, it was only a matter of time until the stock experienced a healthy pullback. SHRM currently in the final stages of a much-needed correction. Pullbacks are an important and necessary part of any bull run.
Essentially, a pullback allows the stock to reset after a significant rally and is usually a time when traders lock in their gains. New investors can also take the opportunity to enter the stock at a more attractive price and psychologically feel satisfied with the entry point rather than if they had rushed in while chasing the stock on the upswing. Corrections can be a win-win situation for investors that play their cards right.
A tool investors can use to help determine when it’s a good time to enter or exit a stock is the Relative Strength Index, also known as the RSI. The RSI is a technical momentum indicator that is used by investors to identify when a stock is ‘Oversold’ or ‘Overbought.’ Typically, an RSI reading above 70 means the stock could be in overbought territory, while a reading below 30 could indicate the stock is oversold.
With bullish uptrends like we see with SHRM, MMED and the psychedelics sector as a whole, it may be wise to slightly adjust these levels to avoid getting out too soon or missing good entry points. During strong uptrends, stocks can stay in the overbought range for extended periods of time and even reach levels of 90+ as we saw on SHRM’s most recent breakout. Investors that sold as the stock reach an RSI of 70 would have missed out on nearly the entire breakout and the profits that could have come with it. For that reason, 80 might be a better number to use with hot sectors such as psychedelic stocks. On the flip side, it’s unlikely that any of these dynamic stocks will pull back enough to reach an RSI of 30. An RSI oversold level of 40 or even 50 would make more sense and prevent you from missing out on great entry points.
It has become clear, Champignon Brands has emerged as a leader in the psychedelics sector, and because the new industry is in its infancy, SHRM’s run has likely only begun. As the story continues to unfold, investors should expect more upside from here with healthy pullbacks along the way.
Investors that are interested in how to get involved in the market can find some good resources below:
- Champignon Brands CSE: SHRM | OTCQB: SHRMF | FRA: 496
- SHRM Website | SHRM Investor Deck
- 🇨🇦Canada | Best Online Brokers
- 🇺🇸United States | Best Online Brokers
- 🇩🇪Germany | Best Online Brokers
- How to Start Investing in Stocks: A Beginner’s Guide
Chart Source: Barchart (View Interactive SHRM Chart)
Champignon Brands is a paid client of The Cannabis Investor. The Cannabis Investor holds a position in Champignon Brands.
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