18th Jun 2021
Cybin, a Toronto-based biotechnology company, is a pioneer in the field of psychedelics for the treatment of a variety of psychiatric and neurological conditions. The company develops pharmaceutical and nutraceutical products made of psilocybin, a hallucinogenic substance found in certain types of mushrooms. The company offers its products in various forms, such as capsules, powders, and effervescent tablets. Cybin recently announced that it has completed its twentieth pre-clinical study and is progressing the CYB003 and CYB004 psychedelic molecules into Investigational New Drug (“IND”)-enabling studies. They are part of a pipeline of nearly 50 different proprietary psychedelic molecules developed by Cybin for the treatment of serious psychiatric conditions that do not respond to existing treatments.
The initial target indication for CYB003, Cybin’s proprietary psychedelic compound, will be Alcohol Use Disorder (“AUD”). AUD has reached endemic proportions, affecting approximately 5.8 percent or 14.4 million adults in the United States ages 18 and over1. In fact, alcohol is the third-leading preventable cause of death in the United States, causing 95,000 deaths annually. Globally, AUD caused 3 million deaths in 2016 alone. 2 Although there are other, FDA-approved medications for AUD such as acamprosate, disulfiram, and naltrexone, their effects are only modest and can be quite inconsistent3.
Cybin’s announcement follows a number of developments indicating changing attitudes towards medicinal psychedelics. Once considered purely as dangerous narcotics, numerous studies have now indicated that, unlike opioids, psychedelics like LSD and psilocybins are not addictive4 and do not cause organ damage. In fact, they have been shown to have significant therapeutic effects on hard-to-treat disorders including substance abuse, obsessive-compulsive disorder, phobias, eating disorders, depression, end-of-life anxiety, and social anxiety in autistic adults. They have been shown to have particular effectiveness when combined with talk therapy. Therefore, many mental health professionals now see mind-altering drugs as a potential way to help people suffering from these conditions. Changing perceptions are also impacting regulation. In November 2020, Oregon became the first state to decriminalize psilocybin and legalize it for therapeutic use5. Other states are advancing similar legislation and several municipalities have passed decriminalization bills.
Driving the change is the dire need for new methods of treatment for mental illness. The overall suicide rate in the US has increased by 35% since 1999 and suicide is now the tenth leading cause of death in the US6. Even more shocking, it is the second leading cause of death among people aged 10-34 in the United States. With a growing epidemic of addiction, mental illness and suicide and current treatments failing many, psychedelics offer a ray of hope. In a recent article, the New York times claimed that “After decades of demonization and criminalization, psychedelic drugs are on the cusp of entering mainstream psychiatry, with profound implications for a field that in recent decades has seen few pharmacological advancements for the treatment of mental disorders and addiction.”7
New research has been conducted quietly for years, but is now accelerating and becoming more public. Top universities are opening psychedelic research institutes, including John Hopkins, New York University, the University of California at Berkeley, and Yale. The research has already begun to produce significant results. A new study indicates that MDMA, the club drug popularly known as Ecstasy, when paired with counseling can bring relief to patients with severe post-traumatic stress disorder8. The Multidisciplinary Association for Psychedelic Studies, has raised tens of millions of dollars for research and advocacy to lay the groundwork for a future psychedelics revolution. It is focused primarily on receiving approval for drug-assisted therapies and promoting them around the globe, but it is also pushing for the legalization of medical psychedelics at the federal level,
Advances in research have drawn attention to the business opportunity. Some believe that psychedelics have the potential to disrupt the $70 billion market for mental health treatment and become an alternative to the pharmaceutical industry for some diseases. Several companies developing psychedelic therapeutics went public in 2020, and more are expected to follow suit in 2021. In fact, a recent report by Research and Markets estimated that the Psychedelic Drugs Market size will reach a value of $10.75 billion by 2027, up from $4.75 billion in 20209. Cybin is one of the leading companies in the field. Its intellectual property-driven strategy focuses on the discovery of New Chemical Entities (“NCE”s) derived from parent molecules with the potential to be faster acting and more commercially viable with an optimized duration of action. The company also has a provisional patent application for an orally-dissolving film for the delivery of pharmaceutical-grade psilocybin and other psychedelic molecules. The mechanism is projected to have a similar efficacy to oral capsules but at a reduced dosage and cost. The company has a total of ten patent filings to date, and more in the pipeline.
Cybin has raised 90 million Canadian dollars in several funding rounds to date, funds that will be used for clinical trials as well as mergers and acquisitions. The company went public in November 2020 and acquired the Boston-based pharmaceutical company Adelia Therapeutics in December for $15.75 million in an all-stock transaction. The company’s CEO, Doug Drysdale, says that Cybin could acquire additional companies in 2021 in order to enhance its science team and intellectual property. Roth Capital analyst Elemer Piros recently initiated coverage on the stock with a buy recommendation and a price target of $10, which is more than six times Cybin’s current share price10.
Drysdale had this to say about the company’s IPO: “I am very proud of the CYBIN team for closing Canada’s largest go-public financing in the psychedelic sector, raising C$45,000,000. Further, the list of blue-chip US biotech funds that have put their confidence in CYBIN is very humbling. This capital raise provides the resources we need to progress our clinical programs and expand our IP [intellectual property] portfolio, moving us closer to helping patients with mental illness.”11 The interest in Cybin Corp has been so significant that the company was able to surpass its original capital-raising goals. Investors included Stifel GMP and Eight Capital, who served as co-lead agents, and also included Canaccord Genuity Corp., Haywood Securities Inc. and Echelon Wealth Partners Inc.
Despite the enormous potential, there is still significant risk in investing in the sector—there is no guarantee that any company or single product will become commercially viable. The PSY ETF, an exchange-traded fund (ETF) for psychedelic-drug companies, launched in May 2021. As the first psychedelic ETF to trade on the US stock exchange, it tracks an index of publicly traded, North American-listed companies to help retail and institutional investors gain exposure to potential growth in new mental health treatments using the drugs. PSY allows investors the potential to mitigate some of the risk, rather than betting on a single early-stage company or drug trial. The ETF spreads the investment across a number of what we believe are the most promising psychedelics stocks, including Cybin.
2 “Harmful use of alcohol kills more than 3 million people each year, most of them men,” World Health Organization, 21 September 2018. https://www.who.int/news/item/21-09-2018-harmful-use-of-alcohol-kills-more-than-3-million-people-each-year–most-of-them-men
3 Winslow and Herbert, “Medications for Alcohol Use Disorder”, March, 2016, https://www.aafp.org/afp/2016/0315/p457.html
5 “VanderHart (OPB), “Lawmakers prep tweaks to Oregon’s voter-approved drug decriminalization effort”, April 14, 2021 https://www.opb.org/article/2021/04/13/lawmakers-prep-tweaks-to-oregon-drug-decriminalization-effort/
8 Global Healthcare Data, “Long-term efficacy data shows MDMA is effective for treating PTSD”, June 15, 2020 https://www.clinicaltrialsarena.com/comment/mdma-ptsd-treatment/
9 Psychedelic Drugs Market, By Drugs (LSD, Ecstasy, Phencyclidine, GHB, Ketamine, Ayahuasca, Psilocybin), Route of Administration (Oral, Injectable, Inhalation), Distribution Channel, End-Users, Application and Geography – Global Forecast to 2026 https://www.researchandmarkets.com/reports/5240207/psychedelic-drugs-market-by-drugs-lsd-ecstasy?utm_source=GNOM&utm_medium=PressRelease&utm_code=894w6r&utm_campaign=1513085+-+Global+Psychedelic+Drugs+Market+Report+2020%3a+Market+Size+is+Projected+to+Reach+%2410.75+Billion+by+2027&utm_exec=chdo54prd
11 “Cybin Corp: Canada’s Largest Go-Public Financing In The Psychedelics Sector”, October 27, 2020
https://www.benzinga.com/markets/cannabis/20/10/18063670/cybin-corp-canadas-largest-go-public-financing-in-the-psychedelics-sector. There is no guarantee that a target will be realized. Projections are based on estimates and subject to change.