The psychedelics sector has closed one of its largest M&As since its inception.
On Friday, Enveric Biosciences ENVB confirmed that its previously announced acquisition of MagicMed Industries has gone through.
Enveric is a biotech company working with cannabinoids and other molecules in the treatment of cancer-related disorders. It has welcomed MagicMed as a new subsidiary through an all-stock transaction.
MagicMed is a psychedelics drug development company creating a library of novel derivative molecules based on classic psychedelics such as psilocybin, DMT, mescaline, ibogaine, MDMA and LSD.
Enveric issued the shareholders of MagicMed approximately 9.5 million shares. Now, Enveric shareholders own approximately 68% of the combined company, while MagicMed shareholders own approximately 32%.
The new Enveric also received approximately CA$4 million ($3.1 million) in cash from the MagicMed treasury.
At a current stock price of $2.46 for Enveric shares, the transaction is valued at approximately $23 million.
New Management, New Horizons
As a result of the acquisition, Enveric will feature a new drug discovery and research arm with a strong focus on psychedelic drugs and cannabinoids.
"It's been in the works for a little while," said Dr. Joseph Tucker, founder of MagicMed. As a result of the transaction, Tucker has become CEO of Enveric.
The executive views Enveric's Nasdaq-listed status as a potential gateway to raising significantly more capital for MagicMed’s endeavors.
"It's a really exclusive group listed on the Nasdaq, and that access to capital is going to be a game-changer for everybody," Tucker said.
David Johnson, Enveric's former CEO, is being appointed executive chairman of the company.
"It is my pleasure to welcome Dr. Tucker as Chief Executive Officer of Enveric,” Johnson said
“From the onset of meeting Dr. Tucker and the MagicMed team, I have been impressed by what they have accomplished, most notably their library of Intellectual Property for Next Generation psychedelic molecules.”
Johnson went on to say that these assets, combined with Enveric’s existing pipeline, open the door for multiple treatment opportunities to a large patient population.
‘Like Two Halves Of One Company’
Enveric went public on the Nasdaq in December 2020 through a reverse take-over. The company has been focusing on developing a pipeline of cannabinoids and other natural compounds as palliative treatments for cancer and other medical conditions.
Currently, Enveric is pushing preclinical work on CBD for radiation dermatitis and glioblastoma and is also researching a compound in the treatment of chemotherapy-induced pain.
With the acquisition of MagicMed, development-focused Enveric will feature a new R&D side.
"The way that we see this is very complementary,” Tucker said. “We've got this whole drug development and early-discovery side which makes a lot of great potential drug candidates, but we don't have this later stage clinical trial capability.”
"We're kind of like two halves of one company," he added.
Combining To Multiply Possibilities
MagicMed is currently studying novel molecules derived from psilocybin, also known as the active compound in “magic mushrooms” and DMT, which is the active ingredient in ayahuasca.
Before the purchase, MagicMed planned to partner with other entities that could push their discoveries through the clinical trial pipeline. Now, the company is gaining the possibility of advancing clinical research on its own internally developed molecules. Enveric, on the other hand, adds a research team that can bring new molecules to life to ride its clinical trial pipeline.
"Ultimately, you're going to see a handful of molecules from them and a handful from us," Tucker noted.
MagicMed is also importing its chief technology officer and chief science officer to Enveric, two positions that the latter had not covered so far.
The new Enveric will be advancing a molecule discovered by MagicMed for the treatment of PTSD in cancer patients, with the possibility of eventually applying it to ongoing research around military veterans suffering from PTSD.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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