MagicMed Closes Oversubscribed $1.6M Private Placement to Build Out Its Psybrary™
Ryan Allway
September 21st, 2020
App, Psychedelics, Top Story
The burgeoning psychedelics sector in many ways resembles the cannabis industry of a decade ago. With rising interest in psychedelic medicine, analysts project that the market could grow at a 16.3% compound annual growth rate to $6.85 billion by 2027.
There are a growing number of companies participating in the industry, most of which are pursuing pharmaceutical development paths that will require significant funding and lengthy commercialization timelines—with the exception of a handful of innovative companies.
Let’s take a look at MagicMed Industries’ recent oversubscribed private placement and its plans to use the proceeds to build out its unique psychedelic-derived drug discovery platform.
Strong Interest in Capital Raise
MagicMed Industries recently closed an oversubscribed private placement for gross proceeds of $1,642,880 in conjunction with Mackie Research Capital. Following the transaction, the company has 20,111,520 common shares held by 186 shareholders.
Management intends to use the proceeds, in part, to expand its scientific team and expedite the development of its psychedelic drug discovery platform—the Psybrary™. In developing the library, the company is opening the door to near-term drug development partnerships.
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CEO Dr. Joseph Tucker on MagicMed’s recent capital raise
In addition to expanding its scientific team, the company hopes to establish a university partnership, file multiple patents and onboard its first partner in 2020. These efforts will continue in 2021 when the company hopes to reach a positive cash flow and ultimately go public.
Powering Psychedelic Drug Discovery
The Psybrary™ is a portfolio of patented derivative molecules that offer an accelerated pathway for partners to develop psychedelics-based medicines. Each derivative molecule is a potential patented drug development candidate for biotech and pharmaceutical partners.
While the compositions of natural and traditional synthetic psychedelic molecules aren’t patentable, the compositions of new derivative molecules that comprise the Psybrary™ are patentable as are the company’s novel manufacturing methods.
The company’s business model is to license these patented molecules to biotech or pharmaceutical companies that would take them through clinical trials. In addition to an upfront licensing fee and milestone payments, the company could generate royalties on commercialized products.
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Why Investors Should Take Note
The Psybrary™ will initially focus on developing derivatives to psilocybin (magic mushrooms) before expanding into other psychedelic substances, such as MDMA, ketamine, ibogaine, mescaline and ayahuasca. Investors may be interested in a couple of unique features of the business model.
CEO Dr. Joseph Tucker explains the unique opportunity for investors in the psychedelics space
The licensing model could generate high margin, recurring revenue. By avoiding the costs associated with clinical trials, the company maintains low overhead and generates fees by out-licensing intellectual property. Commercial products could generate recurring royalty revenue, too.
With many proprietary molecules and partners, the company’s shareholders could benefit from a highly diversified revenue stream. Pharmaceutical compounds could span multiple conditions and the diversified partnership base serves to derisk revenue source considerations.
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What’s Next?
MagicMed Industries is well-positioned after having raised over $1.6 million to expand its scientific team and build out its Psybrary™. Investors may want to take a closer look at the stock as it gears up to build partnerships and ultimately commercialize its derivatives portfolio.
The company hopes to reach positive cash flow and go public during the first or second quarter of 2021. In the following year, it hopes to begin receiving multiple milestone payments and diversify into consumer goods categories over time.
For more information, visit the company’s website at www.magicmedindustries.com or download the company’s investor presentation.
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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.
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