The Medical Opportunity Flying Under Wall Street's Radar

LONDON, Dec. 4, 2020 /PRNewswire/ -- Depression is now the number one disability in the world. And it's costing the economy $1 trillion in lost production every single year. Yet, a classical compound that even the FDA has twice recently called a "breakthrough therapy" is shaping up to be the revolutionary treatment that big pharma has been waiting for. And it's being backed by what Forbes describes as Silicon Valley legends, billionaire financiers and patent attorneys.   Mentioned in today's commentary includes:  Aurora Cannabis Inc. (NYSE: ACB), Canopy Growth Corporation (NASDAQ: CGC), Tilray, Inc. (NASDAQ: TLRY), Cronos Group Inc. (NASDAQ: CRON), Aphria Inc. (NASDAQ: APHA).

Right on the leading edge of this trillion-dollar biotech transformation is Lobe Sciences (LOBE; GTSIF). The company is working in partnership with the University of Miami towards a revolutionary treatment for globally crippling depression. But this is a game of patents, with multi-billion-dollar IP at stake, and Lobe already has 5 provisional patent applications on their technology already. 

$16 Trillion in Mental Health Spending Is Demanding Better Treatments

Four classic compounds will "revolutionize the treatment of mental health diseases", says Lobe's chief scientist, Maghsoud Dariani. "With just one of these compounds we're already seeing significant decreases in symptoms and successful outcomes."

The four compounds are CBD, THC, MDMA and psilocybin. And they're all being fast-tracked for medical use right now. The first two compounds, CBD and THC already made tons of money for investors in the initial cannabis boom: 

  • 9,000% gains on Cronos Group
  • Over 2,300% gains on Aphria
  • Over 1,500% gains on Canopy Growth

But the fourth compound--psilocybin--is the next big push we're looking at. This is the potential treatment for a litany of global mental health issues that the world will spend $16 trillion on. 

  • More than 264 million people are suffering from depression at this very moment, according to the World Health Organization. 
  • 1 in 13 people will develop PTSD at some point in their life. 
  • During the global pandemic… 1 in 20 women… and 1 in 50 men were newly diagnosed.
  • Depression is now the No. 1 cause of disability in the world. 

The 'Miracle Compound' Now Has Science Behind It

The science is there. A ground-breaking Johns Hopkins study started it all off. The 2016 study concluded that psilocybin eased depression and anxiety in patients with life-threatening cancer.

That opened the scientific research floodgates:

 

  • A study in the Journal of Psychopharmacology demonstrated a single psilocybin dose that produced an antidepressant and anxiolytic response in cancer patients.

  • The University of South Florida found this compound to be highly effective because it binds to certain brain receptors and stimulates healing and growth.

 

  • According to Alan Davis, the author of the study and a faculty member at Johns Hopkins University and Ohio State University, psilocybin's effect was "more than four times greater". 

 

Lobe Sciences is focusing on the multi-billion-dollar PTSD, depression and anti-anxiety market, and it's working with pioneering scientists to create the first treatment that truly resets the brain for PTSD sufferers, before they show symptoms.

Lobe Sciences is hoping its psilocybin studies will achieve the 80% (or higher) success rate that we're now seeing published in medical journals. That's the same rate Johns Hopkins achieved with its cancer patients. 

The Golden Era of Brain Science

High-profile angel investor Tim Ferriss has so far given $2 million to Johns Hopkins' psychedelic research center, which he refers to as the "Silicon Valley of psychedelics" where they are rigorously studying psilocybin for a wide range of applications: 

Brad Loncar, a massively influential biotech investor, called this Big Pharma win the "ultimate sign for investors" to jump in on psilocybin. Loncar is not alone, either. Among a lengthening lineup we've already seen multi-billionaire and PayPal co-founder Peter Thiel and billionaire investor Mike Novogratz pile in. 

The industry has already been validated, and this space is heating up fast. And Lobe Sciences (LOBE; GTSIF) is extremely well-positioned. In addition to coming up with a concept for a transformational approach to PTSD treatment, it has a provisional patent application for a nasal mist transducer device that allows for specific doses of medicines to be sprayed into the nasal cavity and rapidly enter the bloodstream.

Massive 'Miracle Compound' Momentum

Smart money is definitely watching closely for new entrants.  They're eyeing it as one of the biggest opportunities of 2021. They like the science that's finally been let loose. They recognize the massive mental health problem. And they'll be looking for patents and targets for Big Pharma acquisitions. 

It's got the backing of Big Science, with Johns Hopkins pouring a massive amount of effort and money into R&D. It's already got Big Pharma. It's even got the FDA on its side. All of these catalysts put Lobe Sciences (LOBE; GTSIF) in the position to potentially be one of the first stocks to benefit from the massive news flow coming out of the sector. 

Cannabis Companies Have Experienced The Legalization Magic First Hand

Aurora Cannabis (ACB) is one of the biggest names in the burgeoning marijuana sector. With a market cap over $1.29 billion, Aurora has carved out its position as a leader in the industry. Over the past couple of years, Aurora has completed a number of high-profile takeovers, including the buyout of CanniMed and MedReleaf. And the company is still making moves.

Recently, Aurora closed a $173 million public offering to fund new growth opportunities in the sector, selling 23 million shares at $7.50 per unit. And the timing is perfect as a number of U.S. states have just approved new regulations surrounding medical and recreational cannabis use.

Contrary to Aurora, Canopy Growth Corporation (CGC) has had a pretty stellar year. Though the company posted a lost in year-over-year revenue, its stock price has remained resilient thanks to its big-name partnerships. In fact, just this year, beverage giant Constellation Brands, increased its stake in the cannabis producer to 38.6%

Bill Newlands, president and CEO of Constellation Brands explained, "While global legalization of cannabis is still in its infancy, we continue to believe the long-term opportunity in this evolving market is substantial."

Thanks to these strategic moves, Canopy has seen its share price jump from its March low of $10.37 to today's near-yearly high of $24.04, representing a 131% increase for investors who jumped in at the right time.

Tilray Inc. (TLRY) is another leader in Canada's cannabis industry. With a near-billion-dollar market cap, Tilray is well-positioned to benefit from the ongoing wave of legalization – both medicinal and recreational – in the United States. Following the recent elections, five more states voted to legalize medical or recreational cannabis, and Tilray is optimistic that other states will follow.

CEO Brendan Kennedy noted, "Adult-use legalization in New Jersey is likely to have a domino effect on the states of New York, Pennsylvania, and Connecticut, as elected officials are worried that their residents will go to New Jersey to purchase product and thereby not generate tax dollars in their home state."

Following its July slump, Cronos Group (CRON) has seen a surge in trading volume, with a renewed investor interest which has also been reflected in its share price. Since September, the company has seen its share price jump from $5.04 to a price of $7.23 today.

The Canadian firm, though primarily an equity investor, has made some major moves in recent years, wheeling and dealing with some of the hottest names in the sector. Because of its forward-thinking attitude, it has drawn the attention of many major mainstream players, including the company behind Marlboro, Altria Group, which purchased a 45% stake in the company in 2018 for a total of $2.4 billion.

Aphria Inc (APHA), currently valued at just over $1.9 billion, is a giant in the industry. Thanks to its big-picture approach to the industry, Aphria has been able to thrive while many of its peers have stumbled.

Recently, in anticipation of wider U.S. legalization, Aphria entered into a $300 million deal to aquire SweetWater Brewing, one of the biggest craft beer brewers in the United States. The purchase aims to help Aphria capitalize on the growing "lifestyle" market associated with both craft beer and high-end cannabis.

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