CSE Issuer Stories, Magazine

Mindset Pharma: Pursuing breakthroughs in the psychedelics field with the help of “hard science”

Psychedelic drug researchers have moved mountains over the last 30 years, helping to show that these misunderstood substances have vast potential to benefit people, while being safe and non-addictive.

Today, psilocybin is in Phase 2b clinical trials, MDMA is in Phase 3, and the US Food & Drug Administration (FDA) has given both trials breakthrough therapy status. There is tremendous momentum behind getting psychedelic drugs approved against a backdrop of two frustrating trends in North America: the opioid crisis and the negative effect of COVID-19 on mental health.

Mindset Pharma (CSE:MSET) saw early on that there would be a wave of interest in using psychedelic drugs as medication, but that ultimately there would be even more interest in next-generation drugs delivering greater benefits as medication with full patent protection.

From the outset, the company’s goal was to apply drug design, behavioural pharmacology and medicinal chemistry, which are essentially the tools of modern pharmacy, to try to harness the power of psychedelic drugs. 

Chief Executive Officer James Lanthier joined Mindset in early 2020 and was sold not only on the calibre of the scientists involved, but the specific strategy the team had developed.

“We’re applying hard science to these substances to try to create the best possible medications for people – that’s it, full stop,” Lanthier explains. “There’s now tremendous evidence to suggest that psychedelics have a breakthrough role to play to treat psychiatric mood disorders, but in our view, the classic psychedelic drugs did have some shortcomings.”

Essentially, Mindset wants to create new drugs that deliver the same or superior benefit but will work more predictably for the widest possible patient set. The team selected a psilocybin-like compound known as MSP-1014 from its Family Number One of novel drugs. The group of compounds is structurally closer to psilocybin but has the potential to deliver a more pronounced psychedelic experience than psilocybin does at similar doses. Given its higher efficacy, the drug would boast an improved safety profile because, theoretically, a patient could take less of it in order to achieve the same effect.

When Mindset tested MSP-1014 in mice and compared it to psilocybin at a range of doses, the company found that psilocybin reduced body temperature by as much as nearly six degrees, which is hardly a nominal amount. MSP-1014, however, showed no effect on body temperature, an early indication of the compound’s safety profile.

Another interesting piece of data from the lab studies confirmed MSP-1014 was comparable to psilocybin after a drug discrimination assay. In the lab, rats were able to determine the distinction between MSP-1014 and saline, which gives even further credence to the drug’s efficacy. “When we take a drug into clinical trials, you want to have as much confidence as possible that the drug is going to be effective and safe,” Lanthier says. “It’s another strong data point that will help us move forward with more confidence.”

Psilocybin is showing promise in early trials, but its effects can last up to eight hours. Mindset is hoping to tackle that challenge with its Family Four group of DMT analogues, which could offer similar benefits in a therapeutic context but with a much shorter trip of between 15 to 30 minutes. Its lead candidate in that group is MSP-4018, which is being compared against a serotonin analogue known as 5-MEO-DMT found in plant species and toad venom.

Researchers think this could be useful for in-clinic psychedelic-assisted psychotherapy. Because 5-MEO-DMT results in a total duration of experience of between 10 minutes and two hours, it would mean less time to spend in a clinic and fewer resources needed to treat a patient. 

Mindset’s research uncovered meaningful safety improvements with MSP-4018. “We saw signs of serotonin syndrome at a whole range of doses with 5-MEO DMT, which is a really unpleasant basket of symptoms that can afflict people with high levels of serotonin in their bodies,” Lanthier says. “MSP-4018 showed no signs of serotonin syndrome, but we saw behaviour that suggested that it was just as psychedelic as 5-MEO DMT. It’s really encouraging because it looks like we’ve got a drug that is just as psychedelic but potentially quite a bit safer.”

All of this is a step toward proving the concept behind Mindset to make better drugs than the original psychedelic by applying science. The company is building its value on those tweaks and improvements.

“This is about creating new chemical designs that make changes to the structure of the original drug, and then testing them rigorously to see the effect of the changes,” Lanthier explains.

Essentially, Mindset is changing the underlying molecule, synthesizing the elements of the particular drug. It’s an important distinction from its peer group, as companies can patent protect this type of intellectual property to a much greater degree than a formulation of the original drug.

“If you’re not changing the active pharmaceutical ingredient, but just putting it in a different solution, the level of intellectual property rights is quite shallow,” Lanthier states. “Another group can come along with a slightly different formulation and compete against you.”

In Mindset’s case, they’re getting intellectual property rights on the composition of matter, which Lanthier calls the “gold standard.”

The group has also selected two indications for its lead therapy MSP-1014: treatment-resistant depression and end-of-life cancer anxiety. Both are tragic mood disorders with, sadly, large populations.

Nearly 30% of people who suffer from depression do not find relief from traditional antidepressants or therapy sessions. It’s a field where pharmaceutical companies haven’t brought many innovations in the past few decades, leaving it ripe for psychedelic drugs to fill the void. And potentially, very lucrative: by dollar value, antidepressants represent a $15 billion industry.

Now comes the hard part. Mindset is hoping to move out of the lab and into clinical trials in 2022, which does not come without risks. As all drug discovery companies know, success in the lab doesn’t always translate to success in clinical trials. It takes a while to do all the testing and work through regulatory requirements until the drug gets to a point where regulators are comfortable having them taken by humans. 

But psychedelic discovery is different than many other drug discovery efforts because there is so much data available on how existing psychedelics work.

“Based on all the data, we have a pretty high level of confidence that many of these drugs will have a role to play in treating neuropsychiatric and mood disorders,” Lanthier says. “We’re not reinventing the wheel – we’re simply trying to make changes to the chemical structures that will make them safer and more effective. So, it’s a bit different than a typical biotech venture that’s working on something that’s brand new.”

The goal for Mindset is to stick to what they’re good at: discovering and developing new psychedelic drugs. The firm is positioning itself to partner with other groups, be it pharmaceutical firms or psychedelic companies, that want to get into the space and have the expertise and infrastructure to run clinical trials. 

“We don’t think that we’re going to have to raise billions of dollars to become the next Pfizer and take these drugs through late-stage clinical trials,” Lanthier notes. “We think there will be lots of opportunities for Mindset because we were filing intellectual property early and developing data early.”

This story was featured in the Canadian Securities Exchange magazine.

Learn more about Mindset Pharma at https://www.mindsetpharma.com/

Podcasts, The Exchange for Entrepreneurs

Iris Bincovich on Exporting Ingenuity and the Importance of Milestones | The CSE Podcast Ep8-S2

Audio

CSE’s Barrington Miller is joined by Iris Bincovich, CEO of InnoCan Pharma (CSE:INNO) to discuss the company’s focus as a specialty pharmaceutical company including the development of products that harness the unique properties of Cannabinoids combined with smart delivery formulations. The conversation also highlights the importance – and impact – that achieving milestones has had on the company’s life as a public company.

Here’s an overview of what Barrington and Iris discuss in this edition of the “Exchange for Entrepreneurs” podcast:

0:00 – Re-introducing Iris Bincovich and Innocan Pharma
3:31 – Iris’ background in chemistry and the healthcare industry
5:22 – Exporting Israeli innovation across the globe
8:41 – Going public in Canada and the importance of meeting milestones
13:47 – Opportunities for growth in 2022
16:19 – Accessing Innocan’s products
18:35 – Iris’ favourite restaurant

About InnoCan Pharma Corporation
The Corporation’s business can be described as three distinct operating segments relating to the incorporation in products of CBD in their formulation: (i) research, development, marketing, distribution and sales of InnoCan-branded OTC pharmaceutical products; (ii) research and development of non-pharmaceutical products for third parties in exchange for fees and/or royalties; and (iii) research and development of hydrogels containing liposomes intended for licensing or sale to third party pharmaceutical corporations for manufacturing, distribution and sales.

Learn more about InnoCan Pharma at InnoCan Pharma Corporation | CSE – Canadian Securities Exchange (thecse.com)

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CSE Issuer Stories, Magazine

Wesana Health: Leveraging personal and professional experience to help patients achieve better mental health outcomes

Former Chicago Blackhawks enforcer Daniel Carcillo spent much of his NHL career getting inside the heads of opposing teams, making sure they knew that if they crossed a certain line, things could go sideways.

Today, Carcillo is an entrepreneur whose mission is, for all intents and purposes, the opposite of what he did on the ice. Instead of contributing to head injuries, he now seeks to heal them.

The transition from hard charging two-time Stanley Cup winner to source of hope for people with mental health challenges began in 2015 when a seventh diagnosed concussion forced Carcillo into early retirement. At age 30, he entered the most emotional and anguished time of his life.

Years of fierce competition, and having his body repeatedly slammed into the ice, the boards, and competing players, resulted in Carcillo suffering traumatic brain injury (TBI). The undercurrent of anxiety and depression during early retirement got so bad that Carcillo, a husband and father, contemplated suicide.

He spent five years trying different concussion treatments, spending hundreds of thousands of dollars in the process. But it was all for naught. Carcillo found he was no closer to improving his brain health and quality of life. He hit rock bottom.

Then in 2019, hallucinogenic mushrooms helped him begin to turn things around. The experience compelled him to start a new journey assisting others suffering TBI-related symptoms. Athletes, soldiers, domestic violence victims and people recovering from serious accidents are among the many types of patients in need.

Healthy once again and with a new team to lead, Carcillo is Co-Founder and Chief Executive Officer of Wesana Health Holdings (CSE:WESA). His mission with Wesana is to revolutionize the way neurological health and performance is treated through personalized medicine and bringing the promise of psychedelic drug-assisted therapy to the masses using psilocybin to treat TBI and migraines. His company is also working with ketamine through their Wesana Clinics and is in partnership discussions with the Multidisciplinary Association for Psychedelic Studies (MAPS) to explore the use of MDMA to treat TBI.

“Two and a half years ago, when I was suicidal and in my darkest moments, I used psilocybin in a really responsible setting,” Carcillo explains. “I was able to experience just an amazing recovery. And since then, we have found ways to establish Wesana with an outstanding team. We have this innovation that we think will help millions of people.”

Research suggests that psilocybin can create new neurons and new neural pathways in the brain, stimulating concussion-affected areas and reversing destructive, habitual thought processes. In Carcillo’s case, he started a regimen that includes occasional large doses of the hallucinogen and regular non-hallucinogenic doses, which are helping to produce normal brain scans and bloodwork. 

“You can rewire the brain, break up destructive thought patterns and then create new, positive ones,” explains Carcillo.

But he is realistic about the challenges Wesana faces in a new, undefined and increasingly crowded industry that must engage in a long dance with US Food & Drug Administration (FDA) and Health Canada regulators to eventually bring life-saving products to market.

“As it stands right now, there’s no approved pharmaceutical for TBI-related symptoms. And the number one cause of death is suicide. I know it all too well,” says Carcillo.

“I also know how fragmented everything is in this space, from treatment to research. And there are so many gaps and what makes it hard on the patients is getting a diagnosis. And then number two is finding the treatments. We’re here to make as big an impact as we can to positively influence this process for survivors and make it easier on them and their families and caregivers to understand what’s going on and then get them healing.”

Operationally, Wesana heads into the latter half of 2021 with a $21 million runway and plenty of media attention, stemming partly from Carcillo’s fame and passionate advocacy for psychedelic drug-assisted therapy.

In the product development pipeline, the company is advancing its SANA 0013 through the preclinical stage studying psilocybin to treat TBI-related major depressive disorder. Wesana is making headway with the FDA, as it has scheduled a pre-Investigational New Drug (IND) meeting with regulators around year’s end, to be followed by the opening of the IND in the third quarter of 2022.

While psilocybin remains the company’s focus, it recently staked its claim in the markets for ketamine and MDMA, two drugs far ahead in the regulatory approval process. Carcillo readily acknowledges that bringing psilocybin-based therapies to market will take years, as the drug remains illegal in the US, as does MDMA. The FDA approved ketamine as an anesthetic for humans in 1970.

To further its expansion, Wesana acquired Psychedelitech (known as PsyTech) in September 2021, gaining a chain of mental health clinics that can administer ketamine therapies.

Wesana also picked up a software platform that helps clinicians track patient outcomes in real time and supports a community forum of over 8,000 professionals, many of them respected resources for psychedelic therapy protocols and clinical best practices.

For MDMA, also known as the popular recreational drug “ecstasy” or “molly,” the company has developed a partnership with MAPS, which is mulling an MDMA-assisted therapy program to treat TBI. Wesana has committed to provide an initial US$1.5 million to assess the program’s viability and might establish a joint venture with MAPS.

MAPS’ research has primarily focused on MDMA-assisted therapy for post-traumatic stress disorder (PTSD), an affliction common among soldiers that causes similar mental health symptoms and outcomes as TBI. MAPS says current FDA-approved Phase 3 trials have demonstrated an 88% reduction in PTSD symptoms among participants.

“Using this medicine, MDMA can help alleviate that emotional spike during conversations, so it’s easier to deal with trauma,” says Carcillo, who envisions teaming with MAPS to create a “gold standard” of clinics. “Think of it in the context of why it worked so well for PTSD. And so for TBI, that journey is no different.” 

Laying the groundwork for an even deeper understanding of TBI, Carcillo says Wesana has formed partnerships with the World Boxing Council (WBC) and the University of South Carolina as it seeks methods to prevent, or at least minimize, TBI-related damage during boxing matches and other athletic competitions. Wesana will also be using the RESOLV lab to phenotype the TBI patient population that will be participating in the Phase 2 and 3 clinical trials. 

“What can we be doing as far as exercises and supplementation to better protect the brain?” Carcillo asks. “For example, when a WBC fighter knows they’re training for a fight, what can we do to better protect them? What can we implement, as far as supplements, to be neuroprotective before the fight to lessen the damage, and then train for processing speed, hand-eye coordination, reaction time, and neck strength that minimize TBI damage on the front end?”

At the university, the company plans to spend $1.5 million to establish the BrainStorm Lab, which will serve as a hub for neurological and cognitive improvement research, with an eye on developing compounds to enhance neural performance and act as neuroprotectants of the brain. The lab will also work with the US military – which has a large presence in South Carolina – on pre-battle protection and acute post-injury scenarios.

Looking ahead, Carcillo says Wesana plans to rapidly expand the acquisition of clinics and develop more partnerships while pushing along its drug development programs. Plans also include publishing two major white papers on TBI with a group of leading scientists, neuroscientists and pathologists. 

Carcillo, in the meantime, continues working to maintain his mental health while remaining busy growing Wesana with Co-Founder Chad Bronstein. But there is more at stake for him on his new personal journey – he is inspiring others through advocacy, action and education.

“It’s definitely a young space, but an exciting space to really impact people, and treat their traumas rather than putting on band aids and trying to manage symptomatology,” Carcillo concludes. “You have to kind of pinch yourself some days. It’s the most exciting thing to be a part of, trying to positively impact that.”

This story was featured in the Canadian Securities Exchange magazine.

Learn more about Wesana Health at https://www.wesanahealth.com/

CSE Performance

Year-End 2021 Interview With Richard Carleton Part 2

Earlier this month, CSE CEO Richard Carleton sat down for an interview to recap an eventful 2021 and what is shaping up to be the CSE’s biggest year ever in 2022.

It is fair to say that the CSE is moving to a new level in the global exchange ecosystem – it’s like the next generation of the CSE. A senior issuer designation is part of this evolution. Can you update us on its status and the importance of the new designation, both to CSE issuers and the Exchange itself?

I think I should start by explaining that there is no such thing as an exchange designation being senior or junior. The way securities regulation works in Canada is that it is the companies that are characterized as being senior or venture issuers.

On December 9, we formally announced a project in the form of a request for comment published by the BC and Ontario securities commissions. What this entails is a significant rewrite to the listings rules of the Canadian Securities Exchange.

There are two major facets to the project. The first one is that we are updating our requirements for junior companies, both at the entry level and to continue to be listed on the Exchange. We have worked with our regulators over the last couple of years to revise these rules.

The second part, which is grabbing all of the headlines, is that we are creating a senior tier of the exchange. This is not a new exchange or separate trading facility, but a designation for a certain number of our issuers who have achieved a certain size and maturity in terms of the development of their business. Do they have revenue? Do they have significant assets? Is their sales trajectory rising? Do they have a significant market capitalization?

We’ve identified some 60 to 80 companies that would qualify to list on similar exchanges in Canada, and we’ve also seen a move by companies to dually list with Nasdaq this year. So, we are creating a rule framework that will regulate these companies, in effect as senior issuers.

The new framework will require these companies to have larger boards, bring more prescription around corporate governance procedures, plus set shorter timeframes to complete quarterly and audited annual financial reporting. There are also a few other measures that the companies will have to abide by, including more supervision of their continuous disclosure to the market.

In return, we believe there are multiple benefits for issuers designated as members of the senior tier. The first is that we have been working with IIROC to ensure these companies will be included on IIROC’s list of securities that are eligible for reduced margin when in dealer inventory. Right now, when dealers are holding CSE issuers in inventory, they have to take a charge against their regulatory capital of 100 cents on the dollar. Companies trading at more than $5.00 per share will only have to have a charge against regulatory capital of 20 cents, which is equivalent to that on other exchanges in Canada that serve as a senior company marketplace. It sounds technical, but it will have a practical impact on reducing the cost of capital for these companies when they are raising money.

We’re also working with international index providers to ensure that these companies are eligible for inclusion in different indices. For example, the US multi-state operators, which in many cases have market capitalizations in the billions of dollars, could qualify for inclusion in one of the MSCI or FTSE US indices. We have companies operating in Israel that would qualify for inclusion in the Israeli indices. We have been working with the index companies to provide for this capability.

We’ll also have, as part of the senior designation, the ability to list SPACs (Special Purpose Acquisition Companies), exchange traded funds, and structured products. And that’s important because we know that there are a number of ETF manufacturers that would like to launch products that are US cannabis-oriented, and they could launch those products on the CSE. There may not be much room left to run in the SPAC space, but we also know that there are some interesting structured products that are being developed, and we think we are the logical home for those instruments.

That is all part of the Exchange competition to come, where we will be working with the creators of these products to provide an appropriate home for their new listings.

Read Richard’s latest blog post here to learn more about issuer designations and the request for comments on the CSE’s proposal to revise its listing policies.

The senior designation is obviously going to be a very important development. Considering this, the impressive financing activity, the consistent growth in both institutional and retail investor participation, and other factors we have discussed, can you talk to us more about your views on the CSE’s evolving position within the broader global financial marketplace.

It is very much an evolution. We have been at this for 20 years and have the benefit of a very experienced team, whether it’s on the trading, market information, or listings regulation side, who understand at a very deep level what it takes to provide successful exchange services to the issuer, investor, and trading communities.

What it has really been is a series of efforts by us to eliminate all of the barriers and friction points for our issuers in the provision of those services. If I think back some years ago, we weren’t accessible by the online discount brokers in Canada. That was a huge issue that we devoted a great deal of time and energy to, and then five or six years ago, we managed to overcome that hurdle. Of course, that had a big impact on turnover, accessibility, and the appeal of a listing on the Canadian Securities Exchange.

Now that we have a cohort of larger, highly successful companies that have achieved a significant level of development in their lifecycle, we are looking at the friction points there. I talked about membership in international indices. We also need to improve access for international investors, one example being brokers who provide access to Canada for accounts in Europe, Asia, the Middle East, and other regions. We have to ensure they have access to these names.

There are institutional investors who claim they won’t invest in the small-cap space and have concluded that anything listed on the CSE is small-cap in nature. We have to work with these institutional investors to educate them about the success that many of our issuers have had, and the fact that they have attained market capitalizations in excess of a billion dollars in a number of cases.

At the end of the day, it’s a case of keeping our nose to the grindstone. It’s doing the hard work, making the trips, representing the issuers, identifying the hurdles, and developing plans to overcome those challenges.

It really sounds like 2022 is going to be one of the most important years in the CSE’s history. Let’s conclude with your thoughts on what companies listed on the CSE can anticipate in terms of service enhancements in the new year.

In the first part of the year, we are going to be working with the industry on completing the comment period for the new listings manual project. And in conjunction with that, we are going to be quite vocal across a variety of channels, explaining to people that we have succeeded with a number of very large companies, so the marketplace can expect some promotion and information related to that.

As our customer base grows and our regulatory obligations and connection with the framework for the senior issuers grows, we will be enhancing the teams who work with our issuers and their advisors, in our Toronto and Vancouver offices in particular. It is incredibly important that we continue to maintain our service levels, which is a really important part of what we do. I have received tremendous feedback over the years regarding both the personal service levels people feel they get at the Canadian Securities Exchange and the very positive problem-solving culture within our group. And we are certainly looking to maintain that as we continue to build out the team in order to provide high levels of service.

And I know we have talked about it for some years now, but we will see settlement and clearing services from the Canadian Securities Exchange in 2022. In fact, I have just come from a demonstration of the real, live system which is up and running in our testing environment. So, that is something I think will give us a significant advantage, in particular when we are working with the industry on listing structured products and taking advantage of the benefits of tokenizing their securities.

Obviously, there is lots going on. As we know, there is also motion in the global securities world. We’ve got Cboe Global Markets, which has acquired the NEO Exchange locally, and they will be closing that transaction at some point next year. And so that really leaves us as the only Canadian listing venue, along with the TMX Group, being locally owned and operated. That is an advantage we will be continuing to present to the industry in 2022.

Check out Part 1 of the interview here.

CSE Performance

Year-End 2021 Interview With Richard Carleton

Anyone keeping an eye on developments at the CSE over the past several years has watched the Exchange go from strength to strength, with the number of listed securities, capital raised by CSE-listed issuers, trading volume, and other performance measures climbing sequentially without interruption.

As exciting as the growth in CSE performance and services has been to date, the Exchange is preparing to take things to an entirely new level in 2022. Key to this is a senior designation for larger issuers who meet certain criteria. The new designation, and the regulatory framework that comes with it, also means that ETFs, SPACs, and structured products will be able to list on the CSE for the first time.

In an interview conducted in mid-December, CSE Chief Executive Officer Richard Carleton discussed these topics and more, giving issuers and investors a preview of what is shaping up to be the CSE’s biggest year ever.

Companies listed on the CSE have enjoyed an excellent response to their capital raising efforts in 2021, with a total of $7.74 billion in financings completed in the 12 months to the end of November. We have seen equity raises of all sizes, and debt is becoming more prominent as well; in October, Trulieve Cannabis successfully marketed US$350 million in senior notes. The listing environment at the CSE is designed to facilitate a low cost of capital for the Exchange’s issuers. As larger fundraisings take place, is that advantage being maintained?

There is a lot of ground to cover there, but I’d begin by saying that the Exchange exists to remove as much regulatory friction from the capital formation process as possible, so there are advantages for CSE-listed issuers generally when they are raising capital. As an example, we don’t charge issuers a percentage fee of the amount raised each and every time they do a secondary offering.

In large measure, the decrease in capital costs we’ve seen is also a function of changing dynamics, in that capital is being provided to large and successful companies, particularly in the US cannabis space. For instance, some of these companies were able to launch debt offerings because they now have substantial revenues to secure the debt against. As a result, they have seen the cost of capital from a debt perspective drop to levels which begin to reflect companies of similar size and growth trajectory in the consumer-packaged goods sector.

It’s thus a function of how we operate as an exchange, but also an indication of how capital providers view many of the companies listed on the CSE.

At the end of November, there were 736 listed securities on the CSE, which is 17% higher than at the same time last year. Talk to us about some of the trends you have observed in companies coming to market in 2021.

The first thing is that we are likely to achieve a record in terms of the number of new companies that join the Exchange this year. Right there, that tells you that the market is very robust for companies looking to raise capital to go public. One of the interesting things is that it has been very broadly based. We have many new themes that people have been interested in.

The sustainable food movement is a good example of a sector where a number of companies have tapped the public markets this year. Obviously, the psychedelics industry has also captured a good deal of investor attention. And then there are long-standing industries, such as mining, which is back in a big way, not only because of the robust nature of precious metals prices but also because investments are being made in various industries to advance the electrification of the economy, or decarbonization if you want to call it that. This has a significant impact on the mining space because the demand for the minerals used to produce batteries is extensive. And, of course, companies are also looking to shorten their supply chains, so investments in projects located within North America, for example, have been accelerated.

We have also had a continuing robust marketplace in the cannabis space. We have seen some new issuers in this sector join the Exchange this year and significant amounts of capital have been raised.

In addition, there has been tremendous investment in technology, which provides us with esports, gaming, and the decentralized finance companies related to blockchain. From my 30 odd years of experience in the capital markets, this is really one of the few times I can recall when virtually every industry sector is firing on all cylinders.

There is potential to challenge another listings record in 2022 and surpass this year’s total. This is a very exciting prospect for me, as it shows there is a high demand for our services.

Explain the role of retail investors in the market in 2021. What impact did they have on trading and liquidity?

In a word, huge. The junior capital markets in Canada are traditionally dominated by retail investors. Retail participants have always constituted an extremely important part of the investing and trading community that supports the work of the Canadian Securities Exchange.

It’s no secret that there was an absolute explosion of retail trading activity, particularly in the first quarter of 2021. We’ve set records in terms of daily number of shares traded, transactions, and value traded. By any measure, we are significantly above any kind of activity levels seen previously. And that growth has been principally driven by the expansion of activity from the retail space.

When we talk to our colleagues, and particularly those in the discount brokerage sector, we’re hearing that a whole new generation of investors has joined the marketplace, and really just since the beginning of the pandemic. These newcomers skew significantly younger than the traditional retail investor population who were in the 55 and up category in the past. We have seen lots of new accounts opened with significant participation from people in their 20s and 30s. These are people who are investing in the markets for the first time, and they bring a different viewpoint. They were enormously important in providing capital to the cannabis industry. They are very focused on issues around sustainability and environmental impact, diversity, and helping create a better world. They want to invest in company stories they believe in and that are helping to shape that better world.

There are a number of longer-term outcomes we will see because of this. Things such as ESG (Environmental, Social and Governance) reporting from companies, as well as companies having to pay a significant amount of attention when presenting their stories to where they sit in the world of impact investing. I think it is healthy, it’s positive, and it’s going to introduce some important changes to the way in which companies raise capital and communicate with their shareholders.

Check out Part 2 of the interview here.

Podcasts, The Exchange for Entrepreneurs

Mehran Ehsan on Powering the Future with Oil and Natural Gas | The CSE Podcast Ep7-S2

Audio

CSE’s James Black is joined by Mehran Ehsan, CEO of Permex Petroleum (CSE:OIL) to discuss the company’s operations in the Permian Basin in Texas and New Mexico and why Mehran envisions a future where oil and natural gas contribute to world powered by “clean” energy.

Here’s an overview of what James and Mehran discuss in this edition of the “Exchange for Entrepreneurs” podcast:

0:00 – Introducing Mehran Ehsan and Permex Petroleum
0:45 – Why the Oil and Natural Gas Industry?
1:58 – What is impacting gas prices?
3:50 – The impact of Omicron on price
5:50 – What is Permex’s business model?
7:30 – The role of a junior in the Permian Basin
10:20 – Generating royalty interests
11:45 – JP Bryan’s impact on Permex
13:35 – Addressing “dirty oil”

About Permex Petroleum Corporation
Permex Petroleum is a uniquely positioned junior Oil & Gas company with assets and operations across the Permian Basin of west Texas and the Delaware Sub-Basin of south east New Mexico. Permex  has a current focus on identifying, evaluating and acquiring oil and natural gas assets in North America and enhancing and developing its currently held oil and natural gas assets in Texas and New Mexico. Permex owns and operates on Private, State and Federal land.

Learn more about Permex Petroleum at Permex Petroleum Corporation | CSE – Canadian Securities Exchange (thecse.com)

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CSE Issuer Stories, Magazine

Bright Minds Biosciences: A vision for “next generation” psychedelic medicines to treat neurological conditions

With the COVID-19 pandemic upending life in every corner of the world and putting unwelcome pressure on people vulnerable to depression, suicide and addiction, there has never been a better time to consider new treatments for mental health challenges. One field gaining particularly rapid traction is psychedelics.

Of course, substances such as LSD and magic mushrooms have been around for years. They are known for their “mind-altering” qualities, both positive and negative, but in many ways the chemical properties of these compounds and their potential to benefit the brain are only just beginning to be understood.

Bright Minds Biosciences (CSE:DRUG) is a biotech company at the vanguard of this movement. Bright Minds is developing the “next generation” of non-addictive psychedelic medicines to treat depression and other neurological conditions and aims to offer an alternative to today’s standard treatments such as selective serotonin reuptake inhibitors (SSRIs), of which the widely known Prozac and Citalopram are but two examples.

“There haven’t really been any new ideas in the last 30 years or so,” says Bright Minds Chief Executive Officer Ian McDonald, who added that while revolutionary when they emerged in the 1990s, SSRIs have not always been best for patient outcomes, as side effects can include weight gain and sexual dysfunction.

SSRIs, he noted, might not work at all, or can even be problematic, for patients suffering from the most severe forms of depression, or people struggling with post-traumatic stress disorder (PTSD).

McDonald is convinced that psychedelics is the most promising field for making progress over the next 20 or 30 years in psychiatric medicine, and that related treatments will help the people most deeply affected by such disorders.

With this in mind, Bright Minds has a portfolio of three patented mechanisms based on serotonin (5-HT) receptors that are being assessed for indications ranging from depression to chronic pain. And with $30 million raised to date, the company is fully funded for Phase 1 trials for two of its drugs, which are due to begin next year.

McDonald is a former investment banker who started getting interested in psychedelics in 2014. He read all he could on the subject and concluded that while the efficacy of such drugs was not in question, they lacked the characteristics needed for the medical establishment and Big Pharma to embrace them.

Bright Minds aims to refine what could be seen as “coarse” substances and repurpose them. To do so, McDonald has assembled a top-notch team of scientists and researchers with extensive backgrounds in pharma and drug development.

Bright Minds Co-Founder Dr. Gideon Shapiro, for example, has over 100 patents to his name and is a leading commercial scientist creating novel psychedelics. He served as head of the Alzheimer chemistry group at Sandoz, the company first responsible for discovering LSD and marketing psilocybin, while Bright Minds’ Chief Scientific Officer and organic chemist Dr. Alan Kozikowski is world-renowned for his work with psychoactive substances.

“We’re not trying to reinvent the wheel,” says McDonald. “We’re taking compounds that already work and making them better. We’re sanding down the rough edges and polishing them up. I’d say it’s a much less risky approach than a lot of other biotechs who are doing a completely novel mechanism and where there are questions on efficacy.”

It is also worth highlighting that Bright Minds already has “composition of matter” patents covering all of its new chemical entity (NCE) portfolio, giving it a full monopoly over its drugs for 20 years. This approach is more akin to Big Pharma companies, which patent the molecules they invent.

Older drugs such as LSD and MDMA cannot be patented, and some companies simply pursue weaker patent strategies, according to McDonald. For example, they attempt to patent a method of production or the source of a compound. But these can easily be worked around by skilled chemists and may only offer an exclusivity period for five years, after which they become so-called generic drugs.

A drug maker’s profitability is at stake here. McDonald points out that potential revenue for a patented drug for depression, for example, could be between US$10,000 and $30,000 per patient per year compared to around $400 per year for a generic drug.

Indeed, the global market potentially open to Bright Minds is enormous. Antidepressants alone are expected to be worth $16 billion a year by 2025. And McDonald says this figure was based on generic depression drugs. For a patented one, based on the number of patients multiplied by $20,000 a year, the figure reaches an eye-watering $600 billion.

People who do well taking SSRIs will likely stick with them, McDonald concedes, but for that third of the patient population who do not, there is a potential market for alternatives of $200 billion.

The Bright Minds portfolio is already garnering attention. The company is partnering with the US government’s National Institutes of Health to test its drugs for epilepsy and chronic pain, not least to offer an alternative to opioid drugs in the latter case. McDonald says early findings have been encouraging.

In August of this year, the company reported positive pre-clinical data for its BMB-101 candidate (invented by Dr. Kozikowski) in treating the rare form of childhood epilepsy called Dravet Syndrome. This non-psychedelic drug is also being indicated as an antipsychotic for Alzheimer’s and to treat addiction disorders.

BMB-101 will be heading into Phase 1 trials early in 2022, with two Phase 2 studies potentially following in the second half. The company also aims to run a Phase 2 trial for its psychedelic candidate (5-HT2A) for depression and PTSD in 2022, says McDonald.

“We are entering a very catalyst-rich period. We have a number of clinical trials in 2022 coming up within the next year,” he adds.

Bright Minds appears to be a front-runner in this exciting new medical space and McDonald has the resources and team to see his plan through.

“We are really the leaders in this next generation of psychedelics, looking a step further I think than the other companies, and we have the team to do it – they’ve done it before, and we’re all very excited to get these drugs in the clinic and closer to patients.”

This story was featured in the Canadian Securities Exchange magazine.

Learn more about Bright Minds Biosciences at https://brightmindsbio.com

CSE Performance, Industry Insights

Promoting a Level Playing Field for All Publicly Traded Companies in Canada

By Richard Carleton, CEO of the Canadian Securities Exchange

One of the very best aspects of the Canadian capital markets is our ability to provide funding to early-stage companies. With a successful history of financing mining and oil and gas exploration, the industry has applied its skills in more recent years to support innovation in a broad range of sectors such as technology and life sciences. This has resulted in notable recent success for companies in the legal cannabis sector. 

Canada is a world leader in the provision of capital to companies from around the world in these fast-growing new industries. Recent investment themes include the development of medical applications for the treatment of mental health issues with psychedelic compounds, and backing for the rise of cryptocurrencies and supporting technologies that are driving efficiencies in the payments sphere and the provision of financial services.  

As with any industry, competition in the provision of stock exchange services in Canada have benefited issuer companies and investors alike. 

The Canadian Securities Exchange (CSE) launched 18 years ago with a mission to provide public issuers with a streamlined, lower-cost alternative to the Toronto Stock Exchange and TSX Venture Exchange. We succeeded. The CSE is now home to more than 700 active listings and has attracted more global issuers of greater size and maturity over the last few years than at any other point in its history. 

Greater competition, including other new exchanges launched after the CSE, has clearly benefited Canada’s investment community, as well as the companies and investors that it serves.

That said, we can and should be doing a much better job of enabling competition in the provision of exchange services to companies, brokers, and investors. Here are a few examples of the challenges faced by new entrants, and some potential solutions. 

Market Data

In the United States, an industry consortium collects and processes real-time market information from the stock exchanges and then provides access to the data for all the securities listed on each exchange (Nasdaq, NYSE and NYSE American) for a single fee. In other words, regardless of where a particular security trades, and at last count there were 16 venues, an interested investor can “see” every trade and current quotation. 

This is not the case in Canada. In an environment where almost half of the trading in TSX and TSX Venture Exchange stocks occurs on different marketplaces, investors are forced to deal with the venues individually to see the full picture. Many people, who either don’t understand our convoluted market structure, or do not want to pay these separate fees, opt to take the data from the incumbent exchange only. This leads to a series of issues:  

  • When trading is disrupted for any reason on the TMX Group exchanges, Canadian liquidity dries up precipitously. In the United States, when the major exchanges have technical issues, the other markets pick up the slack without missing a beat. Canadian markets are not nearly as resilient as they could be.
  • With large segments of the industry not having access to meaningful market data, and this group includes the professional retail advisors at the national investment dealers, the lack of transparency does little to enhance confidence in the functioning of Canada’s stock markets. People naturally assume that if they can’t see trading activity, that something unwholesome is going on. This lack of transparency breeds a lack of confidence in the operation of the markets.               

Index Membership

I again refer to the experience of exchange competition in the United States. The tech giants we now know so well were essentially forced to go public on Nasdaq, because NYSE’s listings qualification rules during the 1970s and 80s required a company to have significant tangible assets. In other words, the exchange didn’t give credit to the important intellectual property assets held by the rising technology sector. 

This subtle form of discrimination extended to membership in the benchmark US indices such as the S&P 500 and the Dow Jones Industrial Average: companies were required to be listed on the NYSE to be eligible for inclusion in these indices. It took many years of pressure from users of the indices to spur the index providers into changing their criteria. 

We find ourselves in the same situation in Canada years later. The S&P/TSX indices, with hundreds of billions of investment dollars measured against these benchmarks, require a listing on one of the TMX Group exchanges for a company to be eligible for inclusion. 

This has distorted the market in a variety of ways: companies that have grown to a size warranting consideration for inclusion in one of the S&P/TSX indices have left, unwillingly, a competitor exchange to move to the Toronto Stock Exchange. Make no mistake, the possibility of index membership is attractive to prospective listed companies. 

Eliminating the requirement that a company be listed on a TMX Group exchange in order to be included in one of Canada’s benchmark indices will enhance competition in our space.        

The Peculiar Meaning of “Venture Issuer”

This issue is perhaps the most subtle, yet wide ranging barrier to better competition in the stock exchange industry. Let me start with a bit of background. To promote a framework where it is cost effective for small companies to go public, regulators have created two sets of requirements for public companies: those set out in the provincial securities acts with rules for governance and reporting for larger, more mature companies, and a less prescriptive set of rules designed for so-called “Venture Issuers.” 

Unfortunately, instead of identifying which public companies are “Venture Issuers” based on objective measures like market capitalization, revenues, assets or other objective measures, the framework instead defines them as issuers listed on the TSX Venture Exchange and the Canadian Securities Exchange. 

This system worked reasonably well during the early stages of exchange competition in Canada. When smaller public companies reached a certain level of success on the TSX-V or CSE, they would typically move their listing to the TSX or a US exchange. At that point, they would shed the “Venture” label and be re-classified as “Issuers” for the purposes of their disclosure and governance rules. 

This labelling is extremely important because “Issuers” and “Venture Issuers” are not treated equally in the investment ecosystem:

  • CSE-listed “Venture Issuers” are not eligible for margin relief under the rules of the Investment Industry Regulatory Organization of Canada. This means that CSE-listed companies are not permissible in client margin accounts; securities of these issuers in dealer inventory are carried at full value against the firm’s regulatory capital. This measure increases the cost of financing for these issuers and can keep some dealers out of the space altogether.
  • Investment mandates from institutional investors may not permit these asset managers to purchase the securities of “Venture Issuers,” narrowing the range of capital available for promising early-stage companies and even some larger issuers listed on the “wrong” exchange.
  • Some international index providers will not consider “Venture Issuers” for inclusion in their indices, denying companies exposure to investors and frustrating a company’s attempts to increase the range of investors in their company’s securities.

Thanks to the CSE’s recent success in attracting and retaining larger issuers, particularly in the global cannabis sector, the “normal” evolution of successful companies jumping from the CSE to the TSX has broken down. The CSE is now established as a credible home for larger, more advanced companies, which are using their CSE listings to raise serious amounts of money. The total capital raised by CSE issuers last year exceeded $6 billion, compared to about $0.5 billion in 2016. Last year’s total has already been exceeded this year. Liquidity measures also show the CSE in a superior light to the TSX-V and NEO exchanges and have exceeded the measures produced by the TSX itself for significant periods of time over the last few years.

While we are delighted that larger issuers are choosing to make the CSE their home over the longer term, the “Venture Issuer” status has become a real problem. These larger CSE-listed companies, some of which have market capitalizations in the billions of dollars, are at a significant disadvantage to comparable companies on rival exchanges that are eligible for margin relief and the other benefits I outlined above.

We could wait for the various regulators to address the competitive imbalance, but true to our nature as disruptors in the marketplace, we are tackling these problems head on. 

We are in the long process of rewriting our listing policies to create two tracks for companies listed on the CSE: one for “Venture Issuers” and another for more mature companies. Under the new rules most companies will remain “Venture Issuers.” The larger and more advanced companies will, however, get reclassified, allowing them to (hopefully) enjoy the same benefits as “Issuers” on the TSX. Accordingly, they will be formally subject to a more prescriptive corporate governance regime that mirrors the policies set out for existing “Issuers” under securities law and related exchange rules.

We have worked hard with regulators to formulate this revision of our listing policies and have published the proposed changes for public comment here: https://thecse.com/en/about/publications/notices/notice-2021-005-request-for-comments-proposed-policy-amendments 

The entire investment community should support our proposal. It is simply a matter of fairness and common sense. By addressing regulations that should have been dealt with years ago, we can enhance the competitive landscape for issuers and investors in Canada and ensure a strong and vibrant capital formation ecosystem well into the future.

CSE Issuer Stories, Magazine

Entheon Biomedical: Data and DMT among the keys to creating safe and effective treatments for patients battling addiction

Entheon Biomedical (CSE:ENBI) Chief Executive Officer Timothy Ko speaks passionately about his company and its objectives within the burgeoning psychedelics industry, not only because he heads one of the most dynamic teams in the space, but also because he credits psychedelics with saving his life.

Following a childhood of challenges that continued into his adult years, Ko ultimately found peace of mind after psychedelic intervention enabled him to look at life differently than he had been, repair important relationships and, as he puts it, “learn to love again.”

Ko’s experience defined what is now a life mission for him. This shined through in an eloquent and authoritative discussion with Canadian Securities Exchange Magazine in mid-September.

It would be difficult to come out of a conversation with Ko not believing that there is something to psychedelic treatments for those working to overcome mental illness. It’s no longer about masking or dulling symptoms, but rather probing the drivers of problematic behaviour and replacing closely held, harm-inducing beliefs with new, healthier ones.

The specifics are best conveyed in Ko’s own words.

Entheon is researching and developing products to help treat addiction. There are already products on the market that are used for this purpose. What are you trying to achieve with your treatments that existing alternatives do not?

I think before I answer that directly, we first have to look at the treatment landscape for addiction as it currently stands. When we assess treatment options available for various addictions – be it tobacco, alcohol, or things like opiates – we see a rather bleak landscape where many of the treatments, though widely available, are not particularly efficacious.

And looking at the population, it is estimated that, globally, over 2% of the population struggles with an alcohol or illicit drug addiction. In spite of the options currently available for addiction recovery we still see hundreds of thousands, if not millions, of people die every year as a result of tobacco, alcohol and opioid use disorder. The reality is that many people are rendered treatment-resistant over the course of multiple failed attempts to address their condition.

Entheon believes that we can provide better outcomes for people who have not been helped by previous types of treatment. In our estimation, the treatment-resistant form of addiction is more common than generally thought, and Entheon treatments are designed for people for whom other forms of treatment have failed.

Entheon focuses on a fast-acting hallucinogenic known widely as DMT. Does DMT have advantages over other psychedelics for addiction treatment?

It’s important to demystify what psychedelics do. A really important observation of ours with DMT is that there is a feature that is present in other psychedelic molecules called entropy. Psilocybin, LSD and DMT can induce a state of heightened entropy, or randomness.

That might sound like a bad thing, but when you look at people with pathological conditions, there is often a degree of tunnel vision. These pathologies make it such that a severely depressed person, or an addicted person, is unable to look outside their normal frame of reference. Their reactions to stimulus or experiences are pre-determined, so you have this immobile state where they cannot envision a life outside of the one they have already experienced.

What DMT and other psychedelics do is to promote a state of hyper-connectedness. They allow individuals undergoing psychedelic treatment to enter a highly neuroplastic state that enables them to have entirely new experiences. In combination with therapy, they are able to experience old traumas, belief systems and memories, and rather than go to their pre-defined pathological reaction set, they are able to have perceptions that reshape their experience in a more positive way.

Where DMT is different is that it is very well metabolized by the body, which means the experience is short. Psilocybin is a bit of an unwieldy type of molecule to work with, as it is very powerful and the length of engagement is six to eight hours or longer. That window of engagement is commercially difficult to manage. And because these are such powerful experiences and the individual is often dealing with inherently difficult subject matter, the risk of an overwhelming experience is amplified.

With DMT, we can still facilitate powerful transformational experiences, but you have the benefit of being able to limit them to 30, 60 or 90 minutes. If we need to, we can stop the experience altogether and that person can return to a functional baseline in 10 to 15 minutes. If a person is having a difficult time with psilocybin, however, they are on that rocket ship for as long as the rocket has fuel.

In a recent news release, you discussed treatment algorithms through the Entheon IQ program. What is a treatment algorithm exactly, and what work is required to make the technology widely available?

The way Entheon sees the industry evolving is that there is a broad array of psychiatric conditions, as well as a broad spectrum of individuals appropriate for psychedelic use.

Not everyone will respond the same to different drugs. Different phenotypes will respond differently to different therapies.

What we are doing with Entheon IQ is taking a data-focused approach to look at what individual factors make different drugs and different treatment types appropriate for different individuals. We have acquired a company that has a genetic test that looks at a variety of mental health risk factors based on genetics, as well as a function of metabolic factors that dictate whether a person is more or less likely to have a strong or weak response to drugs. We believe genetics is a very strong component of ensuring that appropriate treatments are prescribed to the right people.

We are also on the verge of launching a study with a partner in Texas looking at different biomarkers associated with the ketamine experience, and we’re also looking at biomarkers associated with DMT.

Without generalizing too much, Entheon IQ and Entheon DNA are working to create biomarkers to help predict and direct appropriate treatments for individuals across a broad spectrum of psychedelic molecules and psychiatric disorders.

Talk to us about your business model. At what point does monetization become a reality, and how do you scale the business?

I think that’s a question that the entirety of the psychedelic drug industry is looking at. The reality is that, as promising as the research is, in the interest of patient safety these development processes are bound to regulatory processes of governing bodies where we seek to commercialize.

We will need to make it through various stages of clinical validation, then have conversations with regulators and ensure our research is done in such a way that the data is irrefutable and highly understandable to the authorities that ensure these products are safe and effective.

The development timeline as it pertains to this approval process is five to 10 years, and we believe that we can have a timeline on the lower end of that range.

But in an earlier time frame, we think the development of tools to service the ketamine space should commercialize sooner.

You have a strong and growing advisory board of accomplished professionals in the addiction treatment space. Tell us how you choose new members for your team.

Our advisory board is among the best in the industry. It is populated by some of the most prominent and well-researched members in the psychedelic research space.

The psychedelic industry is under the general umbrella of science, yet it is highly specialized and the pioneers are limited to a very core group. When we started Entheon, we wanted to make sure we worked with minds that understood the unique properties of psychedelics better than other scientists.

Unlike other medicines that work in respect to brain chemistry, psychedelics take into account poorly understood features of the human psyche that are only now beginning to be characterized. We really wanted to select advisors with the most comprehensive understanding of the features of psychedelic medicine.

Let’s close with a look at the industry in general. Do you come across misconceptions in the broader audience that you feel need to be cleared up?

The stigma associated with psychedelics often unfairly highlights radicalism or esoteric belief systems. There was a comprehensive anti-drug policy in the 1960s and 1970s that sought to vilify psychedelic drugs as potentially catastrophic to society and having no therapeutic value.

Rather than us having to dispel these myths, I think the research is truly bearing out a rebuttal to the notion that there is no therapeutic value to psychedelics. With each passing month, we see more research that shows huge transformational capacity to help people with end-of-life anxiety, nicotine addiction, as well as major depressive disorders.

We exist within a very interesting moment where on a purely scientific basis, not only are these substances not addictive, harmful or detrimental, but they may actually be the molecules with the therapeutic potential to disrupt a system that has seen very little innovation in the past few decades.

This story was featured in the Canadian Securities Exchange magazine.

Learn more about Entheon Biomedical at https://entheonbiomedical.com/

Market Open

The Fresh Factory B.C. Ltd. (CSE:FRSH) Joins the CSE for a Virtual Market Open

The CSE warmly welcomed The Fresh Factory B.C. Ltd. (CSE:FRSH) for a virtual Market Open on December 3, 2021. 

The Fresh Factory is a vertically integrated company focused on accelerating the growth of the plant-based, clean-label food and beverage brands of tomorrow. They own or partner with these brands to develop, manufacture, and sell products made from fresh produce and recognizable ingredients. As a B Corporation, The Fresh Factory is ESG-focused, and driven to make a lighter, greener impact on the environment and a stronger, positive impact on local communities and the food supply system as a whole.

CEO Bill Besenhofer and other members of the amazing team from The Fresh Factory kicked off the day’s trading at the virtual Market Open. 

For more details about the CSE, including information on other Market Opens, please visit the CSE website or follow us on social media.