Hier ist eine perfekte Darstellung von Braxia Scientific
von The_Three_Nuts
Preface
This assumes you follow the space a little. Ketamine, Psilocybin, and MDMA are "breakthrough therapies" that are changing the mental health landscape. This is more focused on how the company is operating within the space, rather than a justification of the space.
Shares
Total Shares: 177 million shares (fully diluted)
Price: ~0.24 / share
Market Cap: ~42mil
Financials (Most Recent Quarter)
Revenue: $347k (Q), generated by their four ketamine clinics
Gross Margin: 17% (QoQ), 14% (YoY)
Total Assets: $18.5mil
Cash: $11.1mil
Total Liabilities: $2.6mil
Comprehensive Loss: $2.6mil (Q)
I exclude the net loss. They did an RTO refiling that messes up net loss numbers. This effect washes out in the comprehensive loss.
EPS: (0.56)
Who they are
Braxia Scientific is leading the way in providing people who suffer from mental illness access to breakthrough treatments through our growing global network of multidisciplinary clinics while setting the standard of care. Braxia Scientific also aims to develop innovative ketamine and psychedelic drug formulations to provide high impact solutions for the future.
They are divided into several companies. They changed the name of the parent company since this image was filed in their amended listing statement. The parent company is now Braxia Scientific. This rebrand was planned over a year ago. Braxia's wholly owned clinic subsidiary is the Canadian Rapid Treatment Center of Excellence (CRTCE) which is where the drugs meet the patient.
I find it increasingly hard to conceptually distinguish the work of the Brain and Cognition Discovery Foundation (BCDF) and Braxia due to the comingling of the foundation and the clinics. The CEO Braxia is also the executive director of the foundation. BCDF seems to be used to run the non-IP trials that support Braxia's work with limited use of company funds, all through the CRTCE clinics. Take a look at the foundation and don't be surprised if their work leads to something profitable and suddenly Braxia is snapping the IP for it. While Braxia is psychedelic focused in terms of generating returns for investors, they do all sorts of depression related treatments and research by proxy of the foundation using their clinics.
Patents Pending
WIPO (PCT) Patent Appln No. CA2020/051040
CONTROLLED RELEASE FORMULATIONS OF MULTIPLE ACTIVE PHARMACEUTICAL AGENTS, AND PSILOCYBE-DERIVED AGENTS IN COMBINATION WITH CANNABIS-DERIVED AGENTS AND METHODS FOR THEIR USE
WIPO (PCT) Patent Appln No. CA2020/051371
CONTROLLED RELEASE FORMULATIONS OF PSILOCYBE-DERIVED AGENTS AND METHOD FOR THEIR USE, AND METHODS AND COMPOSITIONS FOR THREATING MILD TRAUMATIC BRAIN INJURY WITH POST TRAUMATIC STRESS DISORDER
Probably Esketamine derivatives (provisional patent)
They have research lines for this and in March said they would file mid 2021.
Probably Psilocybin derivatives (provisional patent)
They have research lines for this and in March said they would file mid 2021.
Expansion
Over the next twelve months Champignon anticipates the establishment or acquisition of between 5 and 10 new clinics in Canada and the United States. Champignon estimates the cash cost to establish or acquire between 5 and 10 clinics to be $3,500,000.
They have since narrowed it down to 5-7 clinics across America per the Psych Conference presentation. They currently have four clinics. Synthesizing various comments they made, I expect at least one in Florida. Other candidates they mentioned include California and the Eastern Seaboard.
Psilocybin
First center in Canada to conduct a randomized control trial with psilocybin vs placebo in adults with depression -CEO
I am going to dump a couple facts then discuss them in context of each other. To understand what is going on here takes some synthesis.
Compass Pathways is running a big psilocybin trial with an anticipated enrollment of N=216 for "The Safety and Efficacy of Psilocybin in Participants With Treatment Resistant Depression." This trial is a big deal and the results are highly anticipated. They will inform on dosages and efficacy for the biggest known application of psilocybin, depression. If you read the details, part of the trial is being conducted in the CRTCE clinics, which is owned by Braxia (1 of 25 locations). Start date was March 2019, estimated completion date was July 2021.
Braxia is licensed by Health Canada to administer psilocybin under trials / section 56 exemptions. Based on the 3/26/2021 filing statement, they probably have a phase 2 psilocybin trial ongoing. This is something, in the previous DD, I incorrectly stated was expected to start in Fall.
Assuming receipt of the applicable Health Canada approvals, including the no objection letter and a Section 56 exemption under the CDSA on this timeline, Champignon expects to commence the Psilocybin Trial by June 2021.
The trial will evaluate the efficacy, safety, and tolerability of psilocybin in adults with treatment-resistant depression.
Partnered with Braxia CEO’s nonprofit, the “Brain and Cognition Discovery Foundation.” This will be using the CRTCE clinics. Braxia has started a program training others in administering psilocybin. Since the original description, they have started enrollment.
CRTCE is planning to implement an academy (the “CRTCE Academy”) to train healthcare providers on the implementation of ketamine and related psychedelics for adults with common mental health conditions. Once implemented, the CRTCE Academy is expected to train healthcare providers on pharmacology and integrated psychosocial/psychotherapeutic interventions that are evidence-based and, where required, approved by regulators. The CRTCE Academy is expected to certify healthcare providers and provide ongoing continuing medical.
We need some synthesis on what is going on here. Compass was running a trial and Braxia knows how it is going because they are involved. They stated in their 3/26/21 filing that:
While psilocybin is not currently administered at the CRTCE Clinics, the CRTCE is the only clinic in Canada that has previously been involved in randomized controlled trials of psilocybin for the treatment of depression.
This tells us that as of March their part in the Compass trial has been completed. In the same document, Braxia announces that they plan on running a phase 2 psilocybin trial for depression in June. Their training program opened enrollment at the end of June and starts in Sept. Therefore I presume that the trial has started and their clinicians are working on it. They will be using this experience to train more clinicians come fall. So why no announcement of the trial and posting of the approval? I suspect their approval (if it was granted) was based off the results of the Compass trial, and they can't announce until the results of the trial are formally published. On July 5th their medical director, Dr. Joshua D. Rosenblat, gave a talk through BCDF where he mentions (22mins in).
We are very excited to be starting our own psilocybin assisted therapy trial for treatment-resistant depression where we will have no upper limit on on the degree of treatment resistance.
Which tells me they are using the results of the very-similar Compass trial. If I am wrong and they don't have approval yet, it should be coming very soon. Either way, I am curious exactly what the angle of Braxia's trial will be and how it will innovate on the Compass Trial. My hypothesis is they will be doing / are doing a phase 2a with a small group. They have two patents on psilocybin that are sitting around waiting for trials, these are sitting catalysts, and have a high likelihood of being the target of their trial.
Ketamine
They are leveraging a shitload of research out of these clinics. Now if you want to know who is going to be leading the bleeding edge on psilocybin research, look what this company is doing with ketamine patients in their clinics:
Phase 1B – Novo Ketamine Cream Study – Approved 12/20, ongoing at two Hamilton area clinics. Phase 2 is expected to occur entirely within the Company’s clinic system. (source from march filing statement)
Phase 1B – Novo IN Ketamine Study – Finishing chemical analysis and stability work. Expected to start before end of 2021 (source from march filing statement)
A chart review spanning multiple years of treatment at their clinics. N=260 (end dec 2021)
Pharmacogenetics Associated With IV Ketamine N=150 (end august 2021)
Real-world effectiveness of repeated ketamine infusions for treatment resistant depression during the COVID-19 pandemic N=267 (complete, published)
Efficacy of ketamine and esketamine on functional outcomes in treatment-resistant depression: A systematic review
Does pre-treatment functioning influence response to intravenous ketamine in adults with treatment-resistant depression? N=326
Do sleep changes mediate the anti-depressive and anti-suicidal response of intravenous ketamine in treatment-resistant depression? N=323
The effect of repeated doses of intravenous ketamine on measures of workplace attendance and productivity in adults with major depressive and bipolar disorder: Results from the canadian rapid treatment center of excellence N=171
The list goes on and on. If you want to look at all of Dr. Roger McIntyre's publications check this out. The foundation is doing a lot of research and is intertwined with Braxia's clinics. When comparing Braxia to other clinics seeking IP, think Braxia has a strong edge in the intellectual skill of their leadership which will translates into efficiency in bringing useful and marketable drugs through phase 2 trials. I make my case by showing that after this onslaught of studies and trials for ketamine, they obtained a unique series of grants for two fully funded trials by the Canadian Government and direct billing of Medavie Blue Cross:
First of its kind Ketamine clinical trial for Bipolar Depression, fully funded by government, $500k.
Integrating Ketamine with Cognitive Behavioural Therapy to Reduce Suicidality, fully funded by government, $900k
This support from Blue Cross will allow members of the Canadian Armed Forces and Royal Canadian Mounted Police (RCMP), as well as their family members, to receive fully funded [ketamine] treatment without any concern over out-of-pocket expenses.
I expect a similar future for their work in psilocybin.
MDMA (tentative)
They have expressed interest in MDMA in past presentations as well as with their contract with Dalriada Drug Discovery Inc.
“It is with great pleasure to the welcome the Dalriada group to Champignon,” commented Dr Joseph Gabriele, Special Advisor, Champignon. “Dalriada’s expertise in medicinal chemistry will be a monumental addition to Champignon’s innovative diverse formulation platforms by their expertise in the synthesis of molecules, including existing psychedelics (ketamine, psilocybin and MDMA), as well as novel new psychedelic-like molecules.
With the recent collaboration agreement of NUMI and MAPS signaling the progression of MDMA toward treatment in clinics, it is likely Braxia will be getting into it relatively soon. After staying quiet on the topic for a year, they started mentioning it again. In a recent presentation at the PSYCH conference they mention their clinics are focus on Ketamine, Psilocybin and MDMA. This marks a deliberate addition of MDMA to their focus. Furthermore, that presentation by their medical director I linked earlier also talks a bit about MDMA. As of yet, I don't know the extent of their commitment to MDMA, or if it is just corporate posturing.
If they move on MDMA, I expect the CRTCE Academy will be expanded to include MDMA training. I don't consider them an MDMA clinic yet, but don't be surprised if they announce working with MDMA in the near future. It is something I am keeping an eye on, but may or may not materialize.
Risks
Any DD that doesn't cover risks is shit. FFS go look at my last DD, skip to the risks regarding the proposed class actions. This company is insanely undervalued relative to peers for what it is doing, but that is because of the proposed class actions. Go fucking read (PDF warning). Regulators didn't file fraud charges after combing the books and actions. At least on the US side, the firms will need to show:
the plaintiff must, "with respect to each act or omission alleged to violate this chapter, state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind." 15 U.S.C. § 78u-4(b)(2). This requirement allows defendants to obtain dismissal of cases where the plaintiff merely points to a false statement and declares that the defendant "must have known" that the statement was false, based upon his position within the company.
Unless they show the misstatement was made intentionally to mislead before pretrial, the lawsuits are probably dead in the water. I also find it improbable they will be able to show that investors relied on that information when the stock was trading at over 10x book based on the speculated synergy of the acquisitions and IP lines. Those increases in value happened before the misstatement signaling investors were content with the acquisitions and that was not based on the misstatement. Ultimately, they still have this IP, just booked differently. Investors didn't actually lose value. It isn't like they lied about trial approval or profits. Furthermore, despite being filed in the US courts as well, Braxia hasn't actually been served any papers for the US side of this.
The government awarded more than a million for multi year trials using their clinics. I find it implausible that the funding was awarded without the government consulting legal regarding the risks with these class actions. The actions of government appear to side with stability for this company and lack of basis for fraud. The possibility of class actions is still a risk.
My Thoughts
Predatory lawsuits are a thing that happens, it might succeed, it might not. Read my previous DD risks, read the pdf I linked here. Make your own assessment. It's a risk but I don't think their existence comments on the quality of management due to the changing of the guard to an amazing team who is now running the company well. It presents an interesting scenario imo, absent the lawsuit they are absurdly undervalue. Take a look at market cap relative to the sector, also check out the some YTD changes. Compared to other IP seeking clinic systems like Cybin and Numi, Braxia is trading way below fair value. I think Braxia has a management team with the best experience needed to deliver on their IP lines. The CEO has treated over 100k patients in his career, and has deep technical understanding of their work. To quote:
Dr. McIntyre was named by Clarivate Analytics/Thomson Reuters in 2014, 2015, 2016, and 2017 as one of "The World’s Most Influential Scientific Minds". This distinction is given by publishing the largest number of articles that rank among those most frequently cited by researchers globally in 21 broad fields of science and social science during the previous decade. Dr. McIntyre is involved in multiple research endeavors which primarily aim to characterize the association between mood disorders, notably cognitive function and medical comorbidity.
This sector is currently placing high value on IP lines, which Braxia has. The problem is, they tend to move in silence. It takes digging and work to see what their IP is up to. I think there are several milestones regarding their trials, IP lines, and expansions that will be coming up this Fall that will serve as strong catalysts the sector is looking to see.
I think that the way Braxia is leveraging the BCDF foundation is smart. Their ability to keep their ketamine studies quiet until a rapid series of publications followed by obtaining grants shows strong business acumen. I foresee their work with psilocybin following this same pattern.
The company plans on selling their IP to big pharma after completion of phase 2. They claim that integration with their clinics shortens that development time to 1-2 years. Their CEO has consulted for various big pharma companies in the past, and in recent talks mentioned that they are working with these companies to design trials in a way that "moves the needle" on these drugs. It isn't just enough to bring a shiny toy through phase 2. It has to be designed in a way that large pharma will have confidence that it can be implemented via acceptance by insurance companies and in practice by clinicians. I think Braxia is uniquely positioned in industry to deliver on this. If they come out saying they are running on phase 2b for psilocybin IP, we might be seeing a fast acquisition of non-dilutive cash within the next year.
[SPECULATION] It isn't worth diving into evidence too hard on this speculation, but I suspect they may have a clinic acquired in America already, with 4 more underway. This would place them at a total of 5 additional clinics by year end. They quoted 5-7 clinics by end of 2021. I am wondering if the other 2 may be over in Europe, as they have expressed interest in opening over there. I think Europe would be an extremely strong expansion target for them after their America expansion. They want to target creation of highly desirable trial data coming out of phase 2. To do this, they will need to expand to multiple geographic locations. An addition of European clinics will be a highly strategic expansion. Keep an eye on where their expansions are, and keep it in context of their desire to sell IP coming out of phase 2. My anticipation is that the psilocybin trial is a phase 2a, and will have a phase 2b starting next year across their Canadian and American clinics to achieve some needed geographical diversity.
TLDR: This is a mid to long term hold for me. Management has continued to produce quality deliverables that justify their cash burn. Their publication record is stellar and shows they are milking their clinics for every drop of data. Announcement of working with MDMA is a catalyst that might happen. I think the next big catalyst will be related to their psilocybin trial timed closely to the release of the Compass trial. I expect a lot of sector-wide interest surrounding that Compass trial. Absent the legal issues, they are highly undervalue relative to peers. I think the risks due to the proposed class actions are overblown. To me, this presents an interesting scenario where upside potential is asymmetric to downside risk.
Possible Upcoming Catalysts
Clinic Expansions, 5-7 more by year end. Likely in Fall
Psilocybin phase 2 trial details time with Compass trial results. Likely in Fall
Information on progression of their Ketamine IP trials. Likely by December
Announcement of work with MDMA. Likely within the next year.
Position: 173,600 shares |
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