This is one of the most ambitious pharmaceutical discovery opportunities of our lifetime. It’s not hype. The wealth of blockbuster targets and the sheer scope of what MYCO is playing with leave nearly every other biotech or pharma startup on my screen in the shade.
It’s all about Fungi. People have sought out various species since ancient times. Off the top of my head I can point to shiitake, cordyceps, reishi and on and on. There are whole medical journals dedicated to this stuff.
But here’s the thing. Some of the most promising compounds have been legally forbidden fruit for generations. Banned in 1968, only decriminalized in Denver last year. Now that the FDA and DEA are loosening up on clinical research, legitimate developers like MYCO can finally figure out what the science behind what these molecules actually do and how to refine them into reliable prescription medicines.
Think of how far pharmacology has come in the last 60+ years while this mushroom was off limits even in the lab. Back then, now standard techniques like chromatography and protein synthesis were barely getting started. Nobody got a chance to deploy them before the wall went up.
DNA science was in its infancy. Antiviral drugs and modern vaccines were the hottest things around. Biotech as we know it was still hypothetical stuff. As all these incredibly powerful discovery tools built the Big Pharma empires of today, the most magic of all mushrooms remained untouched.
Everyone knew these compounds have a chemical effect on the nervous system. It’s why they were banned in the first place. But until science fills the gap, we don’t really know how many medical conditions can be treated with modern derivatives. In theory, MYCO can indeed rock the world to the foundations and build it up from there.
You might be familiar with formal research on another forbidden food, a plant (distinctive green leaves, funky odor, mood-altering smoke) that has already sown the seeds of a $4 billion company. That’s what GW Pharmaceuticals, the first and only prescription CBD therapy with FDA approval, is worth now.
And that drug “only” brings in about $600 million a year in sales. Small stakes in pharma terms . . . but it just shows what Wall Street will pay when you have a head start on a green field opportunity. Other people are trying to catch up to GW Pharma, but until they do, that company has the whole commercial space all to itself.
Of course GW Pharma is already $4 billion into its journey. Shareholders have already reaped big rewards for their insight, conviction and raw perseverance in long stretches when the market said CBD and the FDA would never mix.
MYCO, on the other hand, is still fresh. With 137 million shares available (as of the last annual report released June 2), we’re still only looking at maybe a $60 million enterprise at this stage. Tiny in a world of Big Pharma behemoths.
Most of the adventure here is in the future . . . after all, this company has really only existed in its current form since June 6. Baby steps, bonanza potential.
SECRET ORIGINS OF A STEALTH STOCK
Before June 6, the company that would become MYCO had a robust and expansive presence in medicinal and recreational products markets: enhanced water, botanical tea, cultivation, clinical research. There are a lot of moving parts on that side and more coming all the time.
Listing them all at this point would only bog down this discussion because, let’s face it, while the “green” revolution is generating plenty of cash for people in the right spots, you already have plenty of companies to choose from there. In fact MYCO has hired from some of the giants you probably know . . . industry legends like Ebbo, giants like Canopy Growth Corp.
The executive summary is that management knows how the business of what they call “naturally sourced therapies” works. They’re enthusiastic and even aggressive when it comes to putting together the platform they need to stay ahead of the giants. And that’s given them a broad base of assets and expertise to work with as they hunt the magic mushroom prize.
Reading between the lines, MYCO might have even been content to stay focused on its existing operations before the opportunity to leap to leadership in the mushroom space showed up. The letter of intent was signed April 7. The definitive deal followed 3 weeks later.
Just 3 weeks after that, a plan to change the name of the whole company to align with the mushroom message was already on the table. The board approved it. They move FAST. Here we are now: a new world.
Maybe you missed a few of these developments because the corona crisis and what’s been going on in the market around that consumed your attention. I don’t blame you. A lot of people missed out on what was going on inside MYCO over the last few months. Or if they saw the headlines, they didn’t put it all together.
That’s all right. Now’s our chance to catch up with what’s been going on here behind the scenes and get this little stock on screen before everyone else.
MY MEDICINE, MY MYCOLOGY
MYCO uses the word “fungtional” to describe its approach to mushrooms in particular. It’s a combination of fungus and functional, as in “functional food.” Functional food is a bona fide global phenomenon . . . 436 MILLION organic search hits. According to the one from the Mayo Clinic, it’s really just things people eat that have positive health impacts.
That can mean vitamins, nutriceuticals, antioxidants, all those “traditional herbal benefits” that drove mushroom medicine for centuries. Plants and fungi provide chemicals that increase the body’s performance. Eat the right things and you’re on the right track.
But until someone steps up with the clinical trials, you’re really just “self medicating,” even in places where those foods are legal. So you need someone like MYCO with the willpower to accelerate the development path and the vision to avoid the pitfalls.
First thing MYCO did in this space was start building out a dedicated 7,500 square foot mycology research lab in Denver. They moved into it a few weeks ago. The space is configured for FDA-compliant food testing so it’s ready for Big Science . . . Dr. Mali Reddy is on the team and he’s already been nominated for seven Nobel prizes.
Rob Roscow is the chief scientific officer. You might have heard of him as the guy who ran the world’s first cannabinoid gene lab for Ebbu, which got bought out for $330 million (CAN$ 429 million) a few years ago. It’s a blue-ribbon pedigree in the alternative chemistry world.
He built a new field of genomic research at Ebbu. After that, he got deep into mushroom science. MYCO’s Chief Operating Officer Damon Michaels calls him an incredible geneticist, compares him to Isaac Newton and Nikola Tesla.
For our purposes, the detail that matters is that he knows how to take a forgotten plant into the modern world of chemical assays and genomic maps, plugging previously unknown molecules into all those drug discovery models that smart people have created since the mid-1960s.
And his reputation has earned him fans in key places like the University of Alberta’s pharmaceutical research institute, one of the top drug development centers on the planet. MYCO will be working with them to see how to tap the fungus pharma universe most effectively.
It’s an elite partnership that would be hard for would-be competitors to duplicate . . . genius recognizes genius and ignores everyone else. As the dean of the pharma school says, there are already plenty of “novel molecule leads for unique mycological medications” on their radar. I suspect we’re going to see a LOT of news come out of this relationship over the next few years.
A COMMANDING HEAD START
I can’t talk about this University of Alberta angle enough. For one thing, that school has an extremely rare license to deal with Schedule 1 substances. That means import, export, R&D and manufacturing, all the way up to commercial scale.
You need that kind of capability if you want to run clinical trials, much less one day take your discoveries to the mass market. And the university doesn’t open its doors to everybody who comes in off the street. They’re extremely choosy.
Even if someone else were to talk the university into a similar mushroom research deal, it could easily take 6-12 months for the negotiations and due diligence. By that point, who knows how far ahead MYCO will be?
Remember, billions of dollars are won and lost in Big Pharma depending on who moves through the clinical trials fastest and hits the FDA first. When you’re the only drug on the market that works, you get first pick of patient prescriptions. When you’re No. 2, you get scraps at best.
We might not see MYCO reach the FDA review stage for a few years. This will be the kind of story that requires patience. But whenever MYCO hits the finish line, I have a feeling the runners-up will still be 6-12 months behind . . . even if they have the University of Alberta on their side. Drug development isn’t about instant gratification as much as simply getting there first. Just ask GW Pharma shareholders!
So what targets will MYCO chase? The FDA is relatively open toward mushroom antidepressants, even handing out a coveted fast-track breakthrough designation a few years back. If that program fizzles, there’s room for someone else to try again. And even if it succeeds, it opens the door wide to every other mood therapy we can imagine.
One type of mushroom inhibits serotonin uptake in the brain. Another whole genus makes the mood chemical organically. Pain relief, sleep, anxiety . . . even Alzheimer’s, an enormous and crucial development target Big Pharma has chased without success.
MYCO isn’t just playing with one mushroom. It has the entire fungal kingdom (144,000 species, give or take) on its radar and the artificial intelligence lab of the University of Alberta to screen the prospects fast and efficiently.
You know penicillin came out of a mold. That’s a fungus. MYCO can hunt a whole new generation of antibiotics ($45 billion now) and antiviral drugs ($70 billion by mid-decade, thanks to corona and friends). Finding even one new winner in that garden of 144,000 species can be big enough to birth not just a company but a whole industry, a way of doing medicine.
That’s the kind of opportunity MYCO is looking at. After all, GW Pharma’s drug only targets a rare form of epilepsy, but that $600 million sales cycle translates into $4 billion for shareholders.
Remember, I’ve barely talked about the legacy business. MYCO has what it takes to deliver its discoveries via vape pens, soft gel capsules, tea, bottled water and other beverages.
Existing cultivation facilities in Jamaica can supply the Canadian researchers. Then there’s the Colorado manufacturing lab and distribution is run out of Texas. The company can already reach 30,000 retail outlets like Costco, Kroger and Whole Foods.
Magic plant or magic mushroom, wherever the products come from, this is shaping up to become a full-fledged medical system for tomorrow. MYCO management calls their take on vertical integration “spore-to-sale.” They’ve even copyrighted the phrase.
They dream big and in technicolor. Most of us do that. But they also have the tools and relationships to make the dream come true. That’s what investing is all about, right? Take a little dream, nourish it with time and hard work . . . and rock the world.