- U.S. depression/anxiety treatment is a $16 billion market
- Ketamine-assisted psychotherapy clinics provide immediate market opportunity
- Field Trip aiming for 75 clinics within 3 - 4 years
The psychedelics space has caught fire since new IPO Compass Pathways (US:CMPS) commenced public trading on September 18th.
Compass itself took off quickly, more than doubling from its initial IPO pricing. It has become the first psychedelics unicorn.
Valuations for other public companies have also jumped higher, most noticeably MindMed Inc (CAN:MMED / US:MMEDF), the other industry leader in this space. MindMed’s stock also doubled, boosted by its announcement of an application to up-list on the NASDAQ.
Most impressively, after a quiet summer of trading, volume has exploded with most psychedelic stocks, in some cases hitting all-time highs.
The sector has cooled off a little since, not unexpectedly. Buyers are taking a breather and investors are taking some profits.
Field Trip Psychedelics RTO
After feasting on two new public companies, psychedelics investors will now get a new item on the menu: Field Trip Psychedelics.
Field Trip announced its RTO date after market close on Friday. It is preparing to merge with shell company, Newton Energy Corporation (CAN:NTN.H).
The definitive agreement to go public has now been closed and Field Trip is expected to commence public trading on October 7, 2020.
The company also announced it has upsized the financing on its qualifying transaction to CAD $12.6 million, from the previously announced CAD $11.0 million. Altogether, Field Trip has now raised ~CAD$24 million.
Field Trip will trade on Canada’s Venture Exchange, the home to many cannabis and (now) psychedelics companies, under the symbol “FTRP”.
Strong commitment to psychedelic medicine
When speaking to Psychedelic Stock Watch, Executive Chairman Ronan Levy made no attempt to hide his enthusiasm for the opportunity in psychedelic drugs.
Levy says he expects psychedelic drug therapy will make “an incredible impact” going forward. Investors familiar with the psychedelics story understand that this is really two statements rolled into one.
Psychedelic drugs can make an incredible impact in healthcare.
We have a Mental Health Crisis, which is rapidly worsening due to the fallout from the COVID-19 pandemic. Over 1 billion people are afflicted with conditions like depression, anxiety, addiction and PTSD.
Clinical trials for drugs like psilocybin, LSD, MDMA and others show amazing promise. Clinical work, using ketamine-assisted psychotherapy is already producing impressive results.
Psychedelic drugs can also make an incredible impact from an economic standpoint.
Mental health services is a $225 billion treatment market, just in the U.S. This is the immediate target of Field Trip Psychedelics.
Field Trip’s operational focus is ketamine-assisted psychotherapy clinics.
Mental health clinics + psychedelics R&D
Levy explained the company’s business strategy to Psychedelic Stock Watch.
Why ketamine-assisted psychotherapy? He described this as “the low-hanging fruit” in the psychedelic drug industry.
Unlike most psychedelic substances, ketamine has always been legal – chiefly used as an anaesthesia. But ketamine is versatile. It has been used off-label for many years as a depression therapy.
It also has potent analgesic qualities. More recently, ketamine therapy has been introduced as a treatment option for PTSD.
Field Trip already has a nucleus of ketamine clinics servicing major markets: New York, Los Angeles and Toronto. A fourth clinic for Chicago is under construction. Field Trip is on track to have a total of six clinics by the end of 2020.
The company’s medium-term objective is to have at least 75 clinics in operation within a 3 – 4 year time horizon. Field Trip sees this as a viable goal. Certainly, the demand for services is there.
According to Levy, the primary limitation in clinic expansion is purely logistical: the time (and effort) required to select and acquire a site, and then prepare and license a facility for operation.
Field Trip is able to provide in-house training in conducting ketamine-assisted psychotherapy. The company is having no difficulty finding medical personnel who are eager to become involved with psychedelic medicine.
Field Trip is backstopping these clinics operations with psychedelic drug R&D.
It recently announced the synthesis of FT-104. Preliminary testing shows it interacting with the desired neurotransmitter. This synthetic molecule has been designed to be a commercially-viable alternative to naturally derived psychedelic substances like psilocybin and DMT.
Levy told Psychedelic Stock Watch that clinics operations represented more than an immediate (and potentially enormous) revenue stream. They are an integral component of Field Trip’s R&D strategy as well.
These clinics will provide a rich source of empirical data on psychedelic (ketamine) therapy. Not only can Field Trip utilize the data itself, it establishes the company as an attractive R&D partner for other psychedelics companies.
Field Trip is also active in developing psychedelics-related technology, such as its Portal and Trip psychedelics apps. The company sees the potential to generate subscription/licensing revenues both here and elsewhere in its operations.
As Field Trip matures, Levy expects its non-clinic operations to become increasingly prominent.
Experienced management team
Field Trip’s business strategy is not a new concept to this management team.
The core group, including CEO Joseph del Moral, has worked together on previous startup ventures. They are ‘graduates’ of the Cannabis School of Hard Knocks. The group operated CanvasRx, a network of medicinal cannabis clinics in Canada.
They ultimately sold CanvasRx to Aurora Cannabis (US:ACB / CAN:ACB). At the time of sale, it was the largest cannabis medical outreach service in Canada.
While legalized cannabis has been a tremendous consumer success, the industry has not been a commercial success (yet).
Ronan Levy sees the psychedelic drug industry as being much better positioned for commercial success and a thriving industry – especially ketamine therapy.
To start with, the market already exists. Within the $225 billion U.S. mental health services market, Levy identified depression & anxiety treatment (the focus of Field Trip) as a $16 billion market niche alone.
As Psychedelic Stock Watch has explained before, mainstream medicine’s existing treatments for depression (in particular) have been totally inadequate. It is a market ripe for capture.
Ketamine-assisted psychotherapy is one of the (superior) psychedelics options for depression treatment. And it’s already legal.
After a tepid summer, the psychedelics space is once again hot. It has been ignited by a couple of IPOs, with investor enthusiasm also spilling over into other psychedelic stocks.
Now Field Trip Psychedelics is about to take its own company (and business model) public.
A rich market to tap – immediately. An experienced management team to execute on this opportunity.
DISCLOSURE: The writer holds shares in MindMed Inc.