Tim Boreham: Mind-blowing new trip for ASX investors
It’s been a trippy time, with psychedelic drugs given the green (and red, and purple and orange) light – and ASX firms getting in to the groove.
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How’s this for exquisite timing?
In the wake of the Therapeutics Goods Administration’s surprise decision to allow psychiatrists to prescribe mild-altering substances in limited circumstances, the first pure-play psychedelic drug exposures are slated to list on the ASX.
The nascent listed sector blasted into the cosmos this week after the TGA re-categorised psilocybin and MMDA from schedule nine (a prohibited substance) to schedule eight (a controlled medicine).
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The TGA decision means authorised psychiatrists can prescribe these substances for treatment-resistant depression and post-traumatic stress disorder (PTSD).
The drugs can, of course, still be used in approved trials.
Psilocybin is the active element of magic mushrooms, while MMDA is better known as the party drug ecstasy (ask your teenage kids – or don’t).
In pushing the shares as much as 88 per cent higher, investors were happy to forget that the stocks in question primarily are cannabis plays that have expanded tangentially into the mind-expanding stuff (yep – dope is a gateway drug).
But this year we should see the listing of the pure-play Woke Therapeutics (see below) and the demerger of Little Green Pharma’s psychedelics arm.
In December 2021, the TGA refused the down scheduling, citing the “high danger for both acute and long-term effects if abused or misused … due to diversion for illicit purposes”.
The agency now is convinced that it’s at least worth a go for difficult-to-treat patients. Globally there’s been no shortage of research, at least before the Nixon era war on drugs (read: trippy hippies) stymied these efforts.
And the US Food and Drug Administration already has designated both MDMA and psilocybin as breakthrough therapies.
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But back to Woke, which plans to raise $5m in a pre-IPO round early in the year, followed by a $10m-15m IPO and listing around September.
Among other trials, Woke is launching the world’s biggest psilocybin study in conjunction with Swinburne University, to evaluate psilocybin to treat treatment-resistant depression.
Costing $5m, the 160-patient trial will be randomised and controlled – read “kosher” – with patients receiving either two or three doses or a placebo.
Founded by Nick Woolf, the former head of cannabis stock Auscann, Woke has partnerships with several august institutions to develop synthetic psilocybin treatments.
Woke also has an interest in researching LSD – synonymous with 1960s counter culture but a promising potential treatment for PTSD and substance abuse.
Elsewhere, Creso Pharma (ASX:CPH) has had a convoluted listed history – to put it politely – including an aborted proposal to merge with the Ontario-based “magic truffle” purveyor Red Light Holland.
Creso then acquired Canada’s Halucenex Life Sciences, focused on using synthetic psilocybin to treat PSTD, depression and anxiety.
A 20-patient PTSD trial was launched in December.
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Not to miss an opportunity, Creso is “exploring opportunities” to register its synthetic psilocybin formulation here.
The Perth-based, Gina Rinehart-backed Little Green Pharma (ASX:LGP) supplies cannabis oil and flowers to the European market.
Along the way it created the psychedelics subsidiary Reset Mind Sciences, which it plans to demerge by way of an in-specie distribution to LGP holders.
Similarly, Incannex Healthcare (ASX:IHL) is cannabis-focused but is carrying out a placebo-controlled anxiety trial using psilocybin, with 45 patients enrolled to date.
The owner of a chain of medicinal cannabis clinics, Emyria (ASX:EMD) is carrying out early research work on MDMA with the University of Western Australia.
Investors this week have enjoyed a rewarding trip – so to speak – but there’s a long way to go until a psychedelic therapy is approved – if ever.
Meanwhile, we await the first psychedelic exchange traded fund (ETF) to be available on the ASX. Given they exist elsewhere, it’s only a matter of time.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
For more Tim Boreham wisdom, head to stockhead.com.au
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Originally published as Tim Boreham: Mind-blowing new trip for ASX investors
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