TSX-listed GreenStar Biosciences (CSE: GSTR) has recently acquired the entirety of Eleusian Biosciences for around $3 million via a scrip issue.
The acquisition will see Greenstar delve into the rapidly evolving field of psychedelic mushrooms, and more specifically, work towards developing psilocybin treatments for various ailments.
As part of the transaction, GreenStar is undertaking a capital raise to issue a minimum of CAD$2-4 million in new shares at C$0.08 per share with a 1:2 tradeable warrant, with Melbourne-based boutique Peak Asset Management acting as lead manager and conduit to the deal for Australian investors.
Toronto-based Eleusian develops therapeutics for multiple pathological psychological diseases based on psilocybin plus N-Acetylycsteine (NAC) compounds.
The company is collaborating with a multidisciplinary team of scientists and physicians at the Miller School of Medicine at the University of Miami to develop effective therapeutics for the treatment of mild traumatic brain injury/concussion (mTBI) with post-traumatic stress disorder (PTSD), or PTSD alone, using psilocybin and NAC.
Psilocybin is a naturally occurring psychedelic compound produced by more than 200 species of mushrooms, collectively known as psilocybin mushrooms, or “shrooms”. The decriminalisation and legalisation of cannabis in several nations has accelerated regulatory adjustment and further research into psychedelics.
In an exclusive interview with Small Caps, GreenStar Biosciences director Jonathan Gilbert explained that his company wants to leverage the new partnership to create a “best in class management and scientific team, develop our IP portfolio, and develop our medical devices and therapeutics to treat certain brain diseases and promote mental wellness.”
“The research and use of psychedelic mushrooms, specifically psilocybin, for the treatment of brain injury, has been gaining significant traction and support recently. With our in-house expertise and collaboration partners at the Miller School of Medicine, we believe our development efforts can result in a ground-breaking treatment for mTBI with PTSD or PTSD alone,” he said.
“The scientists at the University of Miami feel that our drug compound will be applicable and hopefully solve a worldwide problem; 20% of the US army and 12% of the Australian army suffer from PTSD. Those are staggering statistics.”
“In terms of concussion, there is currently no drug regimen on the market for concussion sufferers. There are around 3 million new concussions in the US every year – with so many contact sports being played – it’s a tremendous, and, an unmet problem.”
“Studies show that children that have suffered three instances of concussion are 70% more likely to suffer from mental illness later in life,” Mr Gilbert added.
Psychedelic target market
According to the Productivity Commission of Mental Health, mental health costs the Australian economy around A$180 billion every year with the global expenditure on mental health set to rise to a staggering US$16 trillion (A$22 trillion) by 2030.
Possibly as an indicator of things to come, the US Food and Drug Administration (FDA) has granted “breakthrough therapy” status to several clinical trials using psilocybin and methylenedioxymethamphetamine (MDMA) to treat PTSD and depression.
In October 2018, Compass Pathways received the designation to test psilocybin-based therapies for treating depression, while the Usona Institute received the designation in November 2019 for treating depressive disorders.
Betting on psychedelics
The rationale behind the deal is to make developmental, and ultimately, commercial progress towards developing marketable treatments based on naturally occurring psychedelics such as shrooms.
As part of the transaction, GreenStar will obtain two provisional patents, a collaborate research agreement related to Eleusian’s combination therapy of NAC and psilocybin for the treatment of mTBI with PTSD, and a cash balance of approximately $225,000, net of all liabilities.
Eleusian currently owns a provisional US patent application titled Device and Method for the Treatment of Traumatic Brain Injuries and Post-Traumatic Stress Disorder and a further provisional patent application titled Methods and Compositions for Treating Post Traumatic Stress Disorder or Mild Traumatic Brain Injury with Post Traumatic Stress Disorder, both filed in April this year.
According to Mr Gilbert, Eleusian’s pending patents include using psilocybin with NAC, and also with MDMA, as part of two concurrent pre-clinical trials to see which method is more efficacious.
Possibly the most important factor behind the acquisition was Eleusian’s current management team, which includes seasoned life sciences professionals.
Current CEO and director Jonathan Gilbert successfully managed Scythian Biosciences within the space, a research and development company focusing on the prevention and treatment of concussions and traumatic brain injury using a proprietary cannabinoid combination.
Another key figure in GreenStar’s future development work is Eleusian chief science officer Maghsoud Dariani, who brings several years of expertise with life sciences companies. Mr Dariani was vice president for $50 billion biopharma company Celgene and was responsible for bringing a number of their drugs to market.
He currently serves as president and CEO of Semorex, a privately held company focused on the discovery and development of novel therapeutics for cancer. After the transaction, Mr Dariani is expected to join GreenStar’s executive team as chief science officer.
Before joining Semorex, Mr Dariani presided over Focus Pharmaceuticals, where he managed the development and approval of drug products, achieving one FDA approval and bringing another to the clinical evaluation stage.
It is hoped that Mr Dariani can shepherd GreenStar’s research and development efforts to a successful commercial application once the full set of clinical trials have been conducted.
The psychedelics drug space is currently attracting strong investor interest with PayPal founder Peter Thiel recently investing $40 million in British biopharma company Compass, which is currently developing a novel antidepressant with psychedelics.
In parallel, Canadian cannabis giant Canopy Growth’s founder Bruce Linton is backing MindMed, a company currently developing a means of extracting the cognitive benefits of psychedelics without the accompanying psychoactive effects. More specifically, MindMed is currently focused on turning a drug inspired by the psychedelic ibogaine into a treatment for opioid addiction.