Psyence receives MHRA approval for Phase 2 trial

Psyence receives MHRA approval for Phase 2 trial

Psyence Group (“Psyence”) has announced formal approval from the UK’s Medicines and Healthcare Regulatory Agency (MHRA) to commence their highly anticipated Phase 2 trial.

Date Posted:

September 21, 2022

GICS sector
Ticker
Market cap (20-Sep-22)
Share price (20-Sep-22)
Target price (30-Jun-23)
Materials
CNSX: PSYG
C$m: 8.6
C$: 0.10
C$: 0.55

Psyence receives MHRA approval for Phase 2 trial

Psyence Group
(CNSX:PSYG)

Psyence Group (“Psyence”) has announced formal approval from the UK’s Medicines and Healthcare Regulatory Agency (MHRA) to commence their highly anticipated Phase 2 trial. The trial will assess the safety and efficacy of psilocybin-assisted psychotherapy versus psychotherapy alone for the treatment of adjustment disorder due to an incurable cancer diagnosis in a palliative care context. The trial approval marks an important milestone for Psyence, one of the few companies exploring the therapeutic potential of psilocybin in larger Phase 2 studies for the treatment of neuropsychiatric diseases with high unmet need. We believe the MHRA’s approval underpins our strong conviction in Psyence’s Rx portfolio, with the trial expected to commence before year end and the primary endpoint available in Q2 2024. Further upcoming catalysts include UK rollout of GOODMIND products expected in October 2022.

Approval allows Psyence to commence Phase 2 trials before year end

MHRA trial approval allows Psyence to proceed with the Phase 2 trial, with first patients expected to be screened in Q4 2022. Trial approval now gives Psyence the chance to create a paradigm shift in the treatment of patients suffering from terminal illness and drive significant quality-of-life improvements in this patient population. The opportunity appears compelling and urgent – current management of adjustment disorder in palliative care has a low rate of success, as existing pharmacological treatments such as antidepressants are ineffective or have a poor safety profile. Furthermore, the trial will allow Psyence to advance psilocybin research, particularly in the UK, and put further credence into the therapeutic utility of psilocybin to treat mental health illnesses with large disease burden. Interest in psilocybin research has also been supported by the FDA, who granted Breakthrough Therapy designation in 2018 for psilocybin-assisted psychotherapy for treatment-resistant depression. Global palliative care diagnoses are estimated to be ~40 million annually, with 34% of those suffering from cancer-related diseases according to the World Health Organisation (WHO), and 75% of those exhibiting symptoms of depression and/or anxiety post-diagnosis. We conservatively assume 20% of that population will be eligible for treatment, based on life expectancy, tolerability and access to palliative care, providing an estimated target market of 2 million patients for Psyence’s treatment.

Psyence continues to advance aggressive Rx commercialisation strategy

A unique aspect of Psyence’s aggressive Rx commercialisation strategy is the Company’s strong partnerships. Delivery of the Phase 2 trial will be accelerated by Clerkenwell Health, a leading psychedelic Contract Research Organisation (CRO) with extensive experience in both conducting psychedelic research and designing psychedelic clinical trials. Filament Health, who are leaders in botanical psychedelic drug processing, have also licensed their natural psilocybin drug and associated IP for use in Psyence’s upcoming Phase 2 trial in order to expedite its clinical use as the Company gears towards using their own natural psilocybin in future trials. Psyence plans to complete the trial by the end of Q3 2024 and generate important data sets ahead of a future Phase 3 pivotal trial expected to start in H2 2024 before expected regulatory submissions in Q3 2026.

Valuation: C$0.55/sh target price offers 450% upside as catalysts approach

MHRA approval of Psyence’s psilocybin-based Phase 2 trial, which is set to commence in Q4 2022, gives us further confidence in our valuation which we leave unchanged. We construct a risked C$62.4m NPV12% for Psyence’s palliative care asset alone, offering additional upside as the remaining line-up matures. This is based upon H&Pe peak sales of ~US$1.1bn combined with a modelled 23.6% probability of regulatory approvals. Adjusting for net cash and outstanding options, we derive a fully diluted C$0.55/sh target price, offering 450% upside from the current price. Psyence also offers a compelling valuation vs. psychedelic peers, a gap we believe will narrow as the Phase 2 trial begins shortly.

Roger Bell
Director, Research
rb@hannam.partners
+44 (0) 207 907 8534
Ryan Hampton
Analyst, Research
rh@hannam.partners
+44 (0) 207 907 8500

Alp Ergin
Research
ae@hannam.partners
+44 (0) 207 907 8500

Andy Crispin
Director, Sales
andy.crispin@hannam.partners
+44 (0) 207 907 2025

Disclaimer
This Document has been prepared by H&P Advisory Limited (“H&P”). It is protected by international copyright laws and is for the recipient’s use in connection with considering a potential business relationship with H&P only. This Document and any related materials are confidential and may not be distributed or reproduced (in whole or in part) in any form without H&P’s prior written permission
By accepting or accessing this Document or any related materials you agree to be bound by the limitations and conditions set out herein and, in particular, will be taken to have represented, warranted and undertaken that you have read and agree to comply with the contents of this disclaimer including, without limitation, the obligation to keep information contained in this Document and any related materials confidential.
This Document does not represent investment research for the purposes of the rules of the Financial Conduct Authority (“FCA Rules”). To the extent it constitutes a research recommendation, it takes the form of NON-INDEPENDENT research for the purposes of the FCA Rules. As such it constitutes a MARKETING COMMUNICATION, has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of dissemination of investment research.
The information contained herein does not constitute an offer or solicitation to sell or acquire any security or fund the acquisition of any security by anyone in any jurisdiction, nor should it be regarded as a contractual document. Under no circumstances should the information provided in this Document or any other written or oral information made available in connection with it be considered as investment advice, or as a sufficient basis on which to make investment decisions. This Document is being provided to you for information purposes only.
The distribution of this Document or any information contained in it and any related materials may be restricted by law in certain jurisdictions, and any person into whose possession this Document or any part of it comes should inform themselves about, and observe, any such restrictions.
The information in this Document does not purport to be comprehensive and has been provided by H&P (and, in certain cases, third party sources) and has not been independently verified. No reliance may be placed for any purposes whatsoever on the information contained in this Document or related materials or in the completeness of such information.
The information set out herein and in any related materials reflects prevailing conditions and our views as at this date and is subject to updating, completion, revision, verification and amendment, and such information may change materially. H&P is under no obligation to provide the recipient with access to any additional information or to update this Document or any related materials or to correct any inaccuracies in it which may become apparent.
Whilst this Document has been prepared in good faith, neither H&P nor any of its group undertakings, nor any of its or their respective directors, members, advisers, representatives, officers, agents, consultants or employees makes, or is authorised to make any representation, warranty or undertaking, express or implied, with respect to the information or opinions contained in it and no responsibility or liability is accepted by any of them as to the accuracy, completeness or reasonableness of such information or opinions or any other written or oral information made available to any party or its advisers. Without prejudice to the foregoing, neither H&P nor any of its group undertakings, nor any of its or their respective directors, members, advisers, representatives, officers, agents, consultants or employees accepts any liability whatsoever for any loss howsoever arising, directly or indirectly, from use of this Document and/or related materials or their contents or otherwise arising in connection therewith. This Document shall not exclude any liability for, or remedy in respect of, fraudulent misrepresentation.
All statements of opinion and/or belief contained in this Document and all views expressed and all projections, forecasts or statements regarding future events or possible future performance represent H&P’s own assessment and interpretation of information available to it as at the date of this Document. This Document and any related materials may include certain forward-looking statements, beliefs or opinions. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There can be no assurance that any of the results and events contemplated by the forward-looking statements contained in the information can be achieved or will, in fact, occur. No representation is made or any assurance, undertaking or indemnity given to you that such forward looking statements are correct or that they can be achieved. Past performance cannot be relied on as a guide to future performance.
This Document is directed at persons having professional experience in matters relating to investments to whom Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (“FPO”) applies, or high net worth organisations to whom Article 49 of the FPO applies. The investment or investment activity to which this communication relates is available only to such persons and other persons to whom this communication may lawfully be made (“relevant persons”) and will be engaged in only with such persons. This Document must not be acted upon or relied upon by persons who are not relevant persons.
This Document is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. In particular, the information contained in this Document is not for publication, release or distribution, and may not be taken or transmitted into: (i) the United States or its territories or possessions, or distributed, directly or indirectly, in the United States, its territories or possessions or to any U.S. person as such term is defined in Regulation S of the Securities Act; or (ii) Australia, Canada, Japan, New Zealand or the Republic of South Africa. Any failure to comply with this restriction may constitute a violation of United States, Canadian, Japanese, New Zealand or South African securities law. Further, the distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession this Document comes are required to inform themselves about, and observe, any such restrictions.
H&P may from time to time have a broking, corporate finance advisory or other relationship with a company which is the subject of or referred to in the Document.
This Document may contain information obtained from third parties, including ratings from credit ratings agencies such as Standard & Poor’s. Reproduction and distribution of third party content in any form is prohibited except with the prior written permission of the related third party. Third party content providers do not guarantee the accuracy, completeness, timeliness or availability of any information, including ratings, and are not responsible for any errors or omission (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such content. Third party content providers give no express or implied warranties, including, but not limited to, any warranties of merchantability or fitness for a particular purpose or use. Third party content providers shall not be liable for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees or losses (including lost income or profits and opportunity costs or losses caused by negligence) in connection with any use of their content including ratings. Credit ratings are statements of opinions and are not statements of fact or recommendations to purchase, hold or sell securities. They do not address the suitability of securities or the suitability of securities for investment purposes, and should not be relied on as investment advice.
In H&P’s view this material is considered as “acceptable minor non-monetary benefit” under MiFID II as it is either: (i) “non-substantive short-term market commentary”; and/or (ii) making a brief reference to existing H&P research and, as such, is in-and-of-itself non-substantive; and/or (iii) paid for by a corporate issuer or potential corporate issuer as part of a contractual engagement with H&P.
H&P Advisory Ltd is registered in England No.11120795. Registered Office: 3rd Floor, 7-10 Chandos Street, London W1G 9DQ. H&P Advisory Ltd is authorised and regulated by the Financial Conduct Authority (Firm Reference Number 805667).

post contents