Become A Featured Company

3 Psychedelic Business Models (and What’s Best for Investors)

Ryan Allway

October 22nd, 2020

App, Psychedelics, Top News

The psychedelics industry has captured the interest of pharmaceutical companies seeking safer and more effective products to address unmet medical needs in mental health. While psychedelic molecules have shown promise, pharmaceutical manufacturers are likely to require that the molecules be improved through scientific engineering to meet specific therapeutic goals and reduce toxicities.

There are three different business models that psychedelic companies are employing to develop these promising drugs. While clinical development of drug candidates is the most prevalently employed model, some companies are focusing on creating and out-licensing molecules to other companies for development.  Still others hope to side-step the entire drug development process by shifting into the less regulated consumer packaged goods markets.

Let’s take a look at emerging psychedelic business models and why MagicMed Industries may be among the best positioned companies in the space.

Click here to learn about investing in the psychedelics space and receive corporate updates

In clinical development, typical early-stage pharmaceutical companies advance drug candidates through at least Phase I and Phase II clinical trials. If successful, these companies then often seek to partner with a larger pharmaceutical company with the resources and expertise needed to manage Phase III clinical trials and ultimately market the product.

#1: Clinical Development

Benefits

  • High Margins: Pharmaceuticals tend to be high-margin products since they enjoy patent protection and are often paid for by insurance companies rather than individuals.
  • Barriers to Entry: Pharmaceuticals tend to have high barriers to entry since they are typically patent protected and there’s a high cost to undergo clinical trials. Notable for the psychedelics industry, many of the companies are not able to secure strong patent protection for the legacy drugs they are developing.
  • Large Markets: When significant benefit is provided to unmet medical needs, the market opportunities for pharmaceuticals can rise into the billions of dollars.

Risks

  • High Cost: Clinical trials cost millions of dollars to run and take years to complete, which often results in high levels of dilution and increased capital risk for the company developing the drug.
  • Execution Risk: Most clinical trial programs are ultimately unsuccessful, which means that pharmaceutical companies attempting to develop only a single drug candidate are themselves often unsuccessful.

#2: Creation and Out-Licensing of New Molecules

Some biotech companies focus on drug discovery and out-licensing to help derisk the drug development process for themselves and their partners. Based on proprietary methods and patents, these companies synthesize and validate new molecules.  They then out-license the new molecules to partner companies who in turn shoulder the bulk of the development cost and risk.  In the psychedelics industry the existing, well-known molecules such as psilocybin, MDMA, LSD, and others are employed as the starting point from which the new molecules are created through derivatization.

Benefits

  • High Margins: Licensing-based business models are high margin since there are only modest capital expenditures required for the creation, patenting and validation processes.
  • Diverse & Scalable: Licensing-based business models are highly scalable and extremely diverse as they have the potential to work with multiple molecules and companies and in multiple medical indications.

Risks

  • Marketing: Licensing-based business models can be difficult to implement since licensees tend to take on most of the execution risk.

#3: Consumer Packaged Goods 

Consumer packaged goods, or CPG, companies focus on bringing near-term products to market. Without the need for regulatory approvals, these products open the door to nearer-term commercialization than clinical development or licensing business models. Some companies may also choose to operate in supportive jurisdictions outside of the U.S. or Canada.

Benefits

  • Immediate Revenue: The lack of regulatory requirements translates to a faster time to market and more opportunities for immediate revenue.
  • First-Mover Advantage: Early movers in consumer packaged goods can develop their early brands that become market leaders.

Risks

  • Lower Barriers: Consumer packaged goods aren’t typically protected by patents, which means that it’s easier for competitors to enter the market.
  • Lower Margins: Consumer packaged goods typically sell for much less than approved, regulated drugs, because of the lack of patent protection
  • Commoditization: Consumer goods can quickly become a commodity if successful, which may put even more pressure on profit margins.

MagicMed’s Unique Approach

MagicMed Industries is building a licensing-based business model to help partners develop a wide range of psychedelic drugs designed to meet specific requirements.

The company’s Psybrary™ is a library of new derivative molecules that it hopes to license to third-parties to develop into patentable commercial products. These partners stand to gain an edge against competitors with molecules that are fully-patented and validated to offer unique pharmacological characteristics specific to the partner’s objectives.

With the goal of onboarding its first partner by the end of the year, MagicMed could begin generating revenue as early as late 2020 or early 2021, with additional revenues from milestone payments beginning in 2022 as the partner companies pursue clinical trials. The company plans on charging customers for research costs and milestone payments, along with long-term product royalties that could pave the way for blue sky potential.

Click here to learn about investing in the psychedelics space and receive corporate updates

In addition to pharmaceutical partners, MagicMed would be well positioned to diversify into consumer goods in 2022 should regulatory opening up permit it. The move could help a growing number of functional mushroom companies develop patented products to differentiate themselves in a market that will likely experience some level of commoditization.

Looking Ahead

There are many different psychedelic business models out there, but MagicMed Industries has adopted one of the most promising—a licensing model targeting both pharmaceutical and potentially consumer goods companies. With an experienced management team at the helm, the company is well positioned to generate near-term high margin revenue.

For more information, visit the company’s website or download their investor presentation.

Disclaimer

The above article is sponsored content. CannabisFN.com and CFN Media, have been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: https://cannabisfn.com/legal-disclaimer/

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

Network Partners

Follow Us on Social Media

LinkedIn

About CFN Media Group

CFN Enterprises Inc. (OTCQB: CNFN) owns and operates CFN Media Group, the premier agency and financial media network reaching executives, entrepreneurs and consumers worldwide. Through its proprietary content creation, video library, and distribution via www.CannabisFN.com, CFN has built an extensive database of cannabis interest, assisting many of the world’s largest cannabis firms and CBD brands to build awareness and thrive. For more information, please visit www.cfnenterprisesinc.com.

Disclaimer: Matters discussed on this website contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time-to-time have a position in the securities mentioned herein and will increase or decrease such positions without notice. The Information contains forward-looking statements, i.e. statements or discussions that constitute predictions, expectations, beliefs, plans, estimates, or projections as indicated by such words as "expects", "will", "anticipates", and "estimates"; therefore, you should proceed with extreme caution in relying upon such statements and conduct a full investigation of the Information and the Profiled Issuer as well as any such forward-looking statements. Any forward looking statements we make in the Information are limited to the time period in which they are made, and we do not undertake to update forward looking statements that may change at any time; The Information is presented only as a brief "snapshot" of the Profiled Issuer and should only be used, at most, and if at all, as a starting point for you to conduct a thorough investigation of the Profiled Issuer and its securities and to consult your financial, legal or other adviser(s) and avail yourself of the filings and information that may be accessed at www.sec.gov, www.pinksheets.com, www.otcmarkets.com or other electronic sources, including: (a) reviewing SEC periodic reports (Forms 10-Q and 10-K), reports of material events (Form 8-K), insider reports (Forms 3, 4, 5 and Schedule 13D); (b) reviewing Information and Disclosure Statements and unaudited financial reports filed with the Pink Sheets or www.otcmarkets.com; (c) obtaining and reviewing publicly available information contained in commonlyknown search engines such as Google; and (d) consulting investment guides at www.sec.gov and www.finra.com. You should always be cognizant that the Profiled Issuers may not be current in their reporting obligations with the SEC and OTCMarkets and/or have negative signs at www.otcmarkets.com (See section below titled "Risks Related to the Profiled Issuers, which provides additional information pertaining thereto). For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity-based compensation in the companies it writes about, or a combination of the two. For full disclosure, please visit: https://www.cannabisfn.com/legal-disclaimer/. A short time after we acquire the securities of the foregoing company, we may publish the (favorable) information about the issuer referenced above advising others, including you, to purchase; and while doing so, we may sell the securities we acquired. In addition, a third-party shareholder compensating us may sell his or her shares of the issuer while we are publishing favorable information about the issuer. Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.

Copyright © Accelerize Inc. · All Rights Reserved · Privacy Policy · Legal Disclaimer

loading