Thousands of years ago, ancient Aztecs may have held the key to the next biotech breakthrough.
During ceremonial rituals, they used a special compound they called “the flesh of the gods”…
And today, researchers are discovering that this same compound could transform how we approach mental health moving forward…
Sparking an explosion of interest in what some experts project could be a $6.9 billion market by 2027.
It’s already being studied in some of the top medical facilities in the United States, including Johns Hopkins University…
Where it was found that this chemical was up to 4x more effective in treating depression than typical antidepressants.
Now, the media is taking the story mainstream as it continues to gain steam by the day.
CNN reported “One use of [this compound] reduces anxiety and depression in cancer patients.”
Fortune Magazine reported “Psychedelic drugs may revolutionize mental health care.”
This could become one of the greatest transformations in mental health care we’ve seen in decades, with the potential to treat chronic conditions much faster than typical treatments.
Earlier this year, they acquired Eleusian Biosciences Corp., another growing biotech company with several provisional patents to their name.
Between the treatments they’ve identified and devices they’re in the process of developing, they have the potential to own a significant share of this booming market.
And at a market cap of just C$12.5 million, this could be a major boom for early investors as news continues to break in this fascinating field.
#1 – The Massive Mental Health Market
In 2019, it was estimated that 1 in every 5 Americans lives with a mental illness, according to the National Institute of Mental Health.
And that was before the stress and uncertainty of living through a global pandemic
That’s why the market for treating mental health and neurodegenerative disorders is projected to reach a whopping $240 billion by 2026.
But the transformative medicine movement could be poised to grab a huge share of that market based on early results.
These chemical compounds work in a completely different way than standard medications used today.
While most treatment approaches for mental health tend to focus on treating the symptoms, these compounds take a different approach.
They work by addressing the root cause of the issue by giving you a transformational experience that can help “reset” the brain.
Interrupting the thought patterns and habit loops in the brain that can get people stuck for months or years in many cases.
A study from Johns Hopkins showed that when treating terminal cancer patients with psychedelics to reduce anxiety and depression…
They showed an incredible 80% success rate upon administering large doses of Psylocibin.
The number of treatments in psychiatry that can boast that kind of success rate is almost non-existent.
Which is why psilocybin and other special compounds like it are now being studied to treat everything from depression and anxiety to addictions and trauma, and much, much more.
And the FDA has even granted “Breakthrough Therapy” status to various psychedelic clinical trials looking to address treatment-resistant depression.
But successfully treating trauma has been a longstanding issue in psychiatry.
Each year, an estimated 8 million Americans suffer from PTSD. That’s more than the population of the entire state of Washington.
And with about 1 in every 13 people experiencing post-traumatic stress disorder (PTSD) at some point throughout their lifetime, this is a major priority in the mental health field.
But at this point, there are very few treatments in psychiatry that have been proven to help treat PTSD and relieve people of past trauma.
Plus, there’s another issue that often goes hand-in-hand with trauma that has gained mainstream attention.
Each year, millions of people sustain concussions, mild brain injuries that can be caused by anything from falls to car accidents to sports-related injuries.
But the current protocol given by the CDC tends to be little more than providing some education and telling folks to stay home, rest, and drink water.
Clearly this all leads to a massive market opportunity, with the alternatives on the market leaving many people continuing to struggle.
And as they look to play a major role in treating these issues with their solutions, they could stand to grab a huge part of this multi-billion dollar market.
#2 – Building A Giant Moat in This Booming Industry
As this industry continues to grow, Lobe is planting its flag and staking its corner of the market.
With its recent acquisition of the biotech company Eleusian Biosciences in July, Lobe now has 5 provisional patents to its name and counting.
3 of these provisional patents are for the chemical compounds themselves, and the other 2 are for their innovative devices.
The treatments are each focused around pairing these revolutionary substances with an over-the-counter drug…
Addressing both the head trauma and emotional trauma when experiencing concussions.
This could be incredibly promising news for the millions of people who experience a concussion each year – whether that was due to a fall, accident, military service, or any other head injury.
In short, the over-the-counter drug N-acetylcysteine (NAC) has already been shown to be effective in treating the head injury portion, according to studies published by the National Institute of Health (NIH).
And these special compounds would work in combination with NAC, potentially preventing patients from experiencing the emotional trauma that often comes after the injury.
The devices Lobe is in the process of developing show incredible promise as well.
The first would spray a specific dose of the compound through the nasal cavity using extremely small droplets.
And the second is a virtual reality mask that could be used while receiving the treatment nasally.
With these breakthrough technologies, it would be possible to perform therapy using virtual reality while you receive the compound through the nasal spray.
This would be an opportunity unlike any on the market to help shift how patients experience past trauma.
Many other companies in the industry seem to be stretching themselves thin, trying to be everything to everyone…
Buying up treatment centers… developing the treatments… running clinical trials… and much more.
But Lobe plans to become the go-to name in a more focused area, by delivering top-notch treatments along with the innovative devices to deliver them.
And it becomes even more exciting when you see the caliber of the team and relationships they’ve built already.
#3 – World-Class Team and Connections
Lobe is pushing forward quickly to move its patented therapies through the 5 stages of research and development.
But when you consider that very few of these competitors have relationships with universities like Lobe does, it’s plain to see why Lobe is the biotech company to watch in the weeks and months ahead.
At the moment, Lobe has already started pre-clinical studies at the University of Miami for its treatment of concussions and PTSD with psilocybin and NAC .
But it’s not just the relationships outside of the organization that give this opportunity so much promise.
The team that Lobe has built includes some world-class talent, showing they’re serious about moving their plans forward with the best at the helm.
Their CEO, Tom Baird, for example, has led engineering design, strategy, and product management for several companies over his career.
That includes his background working for TRW Inc., now Northrop Grumman, a $52 billion company.
This experience in engineering and product management will be invaluable in bringing not only Lobe’s treatments to market successfully, but its devices as well.
They’ve also picked up a valuable asset in Maghsoud Dariani, their new Chief Science Officer.
Dariani is the best of both worlds, with both the science smarts and the business savvy…
Making for a perfect combination for creating a quality product then developing a strategy to grow the business behind it.
He’s also currently the CEO of Semorex, a private company developing therapeutics for cancer.
And in his past roles as president and vice president of other impressive biotechs, he’s built an incredible list of achievements.
That includes bringing multiple drugs to FDA approval, helping another treatment reach the clinical evaluation stage, and assisting in negotiating the sale of one of these companies.
This includes Focalin and Focalin XR, a derivative of the popular ADHD medication Ritalin, which continues to be widely prescribed years later.
With his experience both bringing treatments to FDA approval and negotiating high-level business deals, this makes the potential of Lobe look even more promising.
But there’s another ace in the hole that could prove to be a major catalyst for shares to jump in the near future…
#4 – The “Triple Play” Asset Potentially Worth Tens of Millions
On top of the promising treatment developments and the plans for their proprietary delivery devices…
As one of the first states to legalize recreational marijuana, Washington has among the strongest sales of any state in America.
Sales were projected to reach an eye-popping $2.1 billion in 2020…
But they’ve actually exceeded expectations since that projection, with sales increasing during the pandemic.
And Cowlitz has become a prominent player in the massive Washington market over the last several years.
Based on filings with the state, they’re currently on pace to reach $20 million in revenue this year.
Revenue has continued to grow over the past several years, all while many industries have been crumbling around them recently.
And now, Lobe could exercise this option to acquire an asset producing $20 million in annual sales for just a modest $50,000 USD.
This unique situation could help Lobe be a winner in almost any scenario imaginable.
But three scenarios seem most likely at this point.
First, a landmark legal case is underway that may loosen Washington’s stringent rules on foreign cannabis ownership.
A change in state and federal regulations could allow Lobe to exercise their option and buy the multi-million dollar cannabis company outright.
Because this valuable asset isn’t shown on their balance sheet right now, that would mean an immediate boost to Lobe’s numbers, which could send shares soaring.
Second, they could choose to sell their option to another Washington State Operator.
And with Cowlitz’s growth rate over the last few years, it’s not hard to imagine how this could bring an offer with a serious price tag.
Generally, these kinds of assets can sell for 1x their revenue at the minimum, with many deals bringing back 3x valuations or more.
For Lobe, that means they could potentially bring in an additional $20 million or more with very little work.
Again, if this brought in a major flood of cash in the event of a sale, it could mean a jump in Lobe’s share prices once a deal is completed.
It could also deliver more shares for early investors, all without diluting the ones they’re already holding, which is a great situation for both the company and shareholders.
Finally, they could remain a winner with this option by doing nothing at all.
As it stands, Lobe receives monthly revenue through Cowlitz’s brand licensing and leasing to the firm.
In fact, that monthly revenue is enough to cover most of Lobe’s general and administrative costs at this point, making it even more profitable as a result.
So even if Lobe doesn’t exercise or sell the option, it will continue to receive a revenue boost each and every month, which has helped it remain funded with additional cash flow.
The Bottom Line
- Psychedelics are showing results 4X better than current treatments.
- Promising results have already been shown for certain psychedelic compounds in treating depression, anxiety, trauma, and substance use issues, with many other conditions being studied.
- Lobe Sciences (CSE:LOBE; OTC:GTSIF) has already assembled pieces and begun pre-clinical studies ahead of this growing wave.
- With 5 patents pending, Lobe is planting their flag and setting themselves up to own a significant corner of this growing industry.
- They’ve established an important relationship with the University of Miami, which will help test and validate their treatments and devices.
- Plus, they own a valuable asset in a booming recreational cannabis company, which could potentially be sold for a large sum or kept for the consistent monthly revenue boost it provides now.
Here are a few more companies to watch out for during the biotech boom:
Compass Pathways (NASDAQ:CMPS)
Compass Pathways is a major player in the transformative medicine space, with backing from big names like billionaire Peter Thiel.
They were recently granted FDA Breakthrough Therapy designation for their psilocybin treatment for treatment-resistant depression, which is an amazing accomplishment that helps validate others in the industry as well.
With over 100 million people suffering from depression with 2 or more failed treatments, their treatments could deliver hope to those feeling like they’ve run out of options.
Field Trip Health (CSE:FTRP)
Field Trip Health, based out of Toronto, takes a three-pronged approach in their work in transformative medicine.
Not only are they involved in drug development, but they’re also involved in manufacturing and run a number of treatment clinics.
With clinics currently operating in Toronto, Los Angeles, and New York, they have plans to ramp up to 75 clinics – providing psychotherapy along with psychedelic treatments.
Mind Medicine (MindMed) Inc. (NEO: MMED) (OTCMKTS:MMEDF)
MindMed is not just another competitor in this growing industry – they were the first publicly traded company in it.
But their pipeline spans several other conditions affecting millions, including anxiety, chemical dependence, and adult ADHD.
They currently have multiple trials in Phase II, and they’re moving quickly, which could help explain why shares have more than tripled over the last 2 months.
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