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Enveric Bio’s Acquisition of MagicMed Accentuates Strengths of Each Company

Robin Lefferts

July 8th, 2021

Psychedelics, Top Story

 

When two companies merge, or one is acquired by another, the reasoning behind the deal often falls into one of two categories. Either the companies are competitors with the merged entity grabbing a larger portion of their shared market, or they are complementary and perhaps working in adjacent fields. In either case, the strengths of one company should be additive to those of the other, creating a stronger and more capable organization going forward.

Enveric Biosciences (NASDAQ: ENVB) recently announced a definitive agreement to acquire MagicMed Industries Inc. The deal will essentially make MagicMed a wholly owned subsidiary of Enveric. In terms of the types of acquisitions noted above, this definitely falls into the complementary/adjacent category, and a review of each company points to the creation of a much stronger and more diverse organization as a result of the acquisition.

The Background

Enveric is focused on the clinical development of cannabidiol (CBD) and other naturally occurring compounds as potential treatments for a variety of conditions. The company is initially focused on cancer patients dealing with Glioblastoma Multiforme (GBM), radiation dermatitis, and chemotherapy-induced peripheral neuropathy (CIPN).

The market potential for cannabinoid-based treatments has been aptly demonstrated by industry pioneer GW Pharma, which turned approved treatments for rare forms of childhood epilepsy into an approximately $5.5 billion market cap. It should be noted that these forms of epilepsy are truly rare, and the market miniscule compared to some of the cancer indications being pursued by Enveric.

Enveric is run by a management team and board pulled from the ranks of pharma giants like Bristol Myers Squibb, Baxter Healthcare, and Abbott Laboratories. The company has assembled an impressive team of international oncology experts to advise on its clinical programs, hailing from organizations like Memorial Sloan Kettering Cancer Center, Cedars-Sinai Cancer Center, and Sunnybrook Research Institute.

Enveric’s specialty is clinical research and development of nature-originated therapies. MagicMed with its own R&D capabilities, however, is more focused on creating and patenting a library of novel compounds based on or derived from psychedelic molecules such as psilocybin and DMT. That library is called the Psybrary™, and the company had plans to offer its compounds to pharmaceutical development companies like Enveric.

Think of MagicMed as a supplier of raw materials for the pharmaceutical industry. The company’s expertise lies in identifying and creating molecules that exhibit certain properties with therapeutic potential, but not in conducting clinical trial programs or in the commercialization of approved drugs. Though the original naturally occurring molecules like psilocybin are not patentable, MagicMed creates novel drug candidates which can be patented. These compounds are structurally related to the natural substance but with vastly improved pharmaceutical characteristics and commercial potential.

Psychedelics are being studied as treatments for conditions such as depression, PTSD, anxiety, and addiction. These are some of the largest patient populations still in search of effective therapies for their increasingly common diagnoses. For example, Johns Hopkins recently published a study showing that two doses of psilocybin in conjunction with supportive psychotherapy “produced rapid and large reductions in depressive symptoms, with most participants showing improvement and half of study participants achieving remission through the four-week follow-up.”

MagicMed is led by a management team with deep scientific and entrepreneurial expertise and is based in the Life Sciences Innovation Hub at the University of Calgary. Following the acquisition, MagicMed CEO Dr. Joseph Tucker will become CEO of the newly constituted Enveric Biosciences, while Enveric’s current CEO, David Johnson, will become Executive Chairman.

Two other MagicMed senior managers, CSO Dr. Peter Facchini and CTO Dr. Jillian Hagel, will also assume their current positions with the new Enveric Biosciences. As a recognized leader in the development of new molecular derivatives, Dr. Facchini is the Canada Research Chair in Plant Metabolic Processes Biotechnology and has published more than 160 scientific papers and holds 40 patents in the field. Dr. Hagel has extensive experience in the biotechnology industry with a focus on the coordination of scientific teams and patent filings. She previously held management roles at a Canadian-publicly traded entity focused on optimizing the manufacturing of active pharmaceutical ingredients from plants.

The Mutual Benefits

The two companies are merging their specialties into a much more well-rounded entity with greatly expanded capabilities. Under one roof, the new Enveric will be able to develop and patent novel drug candidates and then take them through the gauntlet of clinical research and trials to potential approval. There is no handoff or commercial transaction in the middle, just a seamless process from idea through realization. Each company’s strengths are accentuated by, and additive to, the others.

Don’t think of the cannabinoid and psychedelic businesses as mutually exclusive either. It’s not just that Enveric is getting into psychedelics or adding a psychedelic division. It’s more like Enveric is adding capabilities and expertise (novel molecule identification and development) that it might otherwise outsource. The MagicMed scientific team also features a history of cannabinoid research in addition to its focus on psychedelics, adding another layer of synergy to the new entity.

Overall, the newly envisioned Enveric Biosciences looks like a pioneer in the quickly expanding cannabis and psychedelic science sectors. The merging companies are addressing unmet needs in very large indications, like cancer, anxiety, and depression, and doing so with novel compounds that may offer first-mover advantage with years of patent protection should they prove beneficial.

It is unique for a public company on a senior exchange, like the NASDAQ-listed Enveric, to be involved in cannabis and psychedelic science. Investors looking for regulated and transparent access to these emerging sectors may want to keep an eye on the company as the transaction is finalized and Enveric embarks on its expanded mission.

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About Robin Lefferts

Robin Lefferts has been involved in the legal cannabis industry since 2012, sometimes as an active participant and always as an interested observer.

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