Numinus Wellness is emerging as a clear leader in the booming psychedelics sector

Warren Buffett popularized the concept of economic moats, though the idea pre-dates its articulation by the Sage of Omaha. The theory goes that the best businesses are those with a competitive advantage that helps protect the long-term investment potential of said companies. After talking to Payton Nyquvest, the chairman and chief executive of Numinus Wellness Inc (CVE:NUMI) (OTCMKTS:LKYSF), and Dr Evan Wood, its chief medical officer, it is easy to see why they believe they have a well ‘moated’ operation.  DEEP DIVE: Numinus Wellness looking to position itself at the forefront of psychedelics for healing and wellness Numinus is one of the leaders of Canada’s flourishing psychedelics industry. In Wood it has one of its key opinion leaders, as well as some impressive partnerships. Providing a further edge is the fact that it is the only Canadian public company licensed to work with the full range of psychedelics and to produce and extract psilocybin from mushrooms.   None of the above can be replicated overnight, which puts some clear blue water between it and the emerging competition. “We’ve got lots of horsepower that’s going to be difficult to emulate,” says Wood. Three prongs There are three prongs to the business: Health, Bioscience and R&D (research & development). The health operation is buoyed by the acquisition of two Montreal clinics already offering ketamine-assisted psychotherapy, and a Vancouver-based centre providing non-psychedelic treatments. It has designed a full range of therapy programs using psilocybin, ketamine and MDMA, with protocols and the active staff training required to support this sort of cutting-edge drug-plus-therapy approach. At this point, it is worth noting Numinus’ tie-up with MAPS, or the Multi-Disciplinary Association for Psychedelic Studies.  MAPS’ remit is to research and educate on developments medical, legal, and cultural. Not only has it supplied Numinus with support, help and advice, but the two are also working on key projects together. They are in the areas of MDMA-assisted psychotherapy for post-traumatic stress, which is being offered on a compassionate basis, and psilocybin for substance use disorder. “MAPS is the reason why psychedelics are where they are today,” says Nyquvest. Normalizing therapeutic psychedelics Turning to the R&D arm, the Numinus CEO describes it as “essentially the jet fuel” propelling forward efforts to normalize the therapeutic use of psychedelics. By that he means the operation is developing psychedelic-assisted therapeutic protocols to embed in mainstream healthcare, bolstered by Numinus’ medical leadership, research and policy reform experience. Finally, the bioscience division of the business is the revenue-generating portion.  If you think about it, the operation also sits at the hub of the psychedelics industry with its ability to supply the full gamut of drugs, and, in the case of psilocybin, cultivate and extract it. Thus far we’ve looked at Numinus the company and barely touched on the sector, which on some estimates could ultimately morph into a US$100 billion a year industry as former recreational drugs such as MDMA, psilocybin, psilocin, DMT, and mescaline are rolled out to treat addiction, PTSD and depression.  Driving mainstream acceptance Parallels with cannabis are considered by those in the psychedelics space as spurious. The green gold rush has been and gone and left Canada cultivating far more weed than it can actually consume.  In following the blueprint developed over decades by the life sciences industry, psychedelics are not only joining the mainstream, but they will also in time overcome reputational issues and concerns over efficacy and safety.  It is hoped the work by companies such as Numinus and groups such as MAPS will support the work of physicians and psychiatrists who need to wholeheartedly embrace new uses for these well-known psychoactive drugs for the industry to take off. Wood is hopeful this will happen. “Much like Canada was one of the first countries to legalize the adult use of cannabis, I expect that Canada will be one of the pioneering countries when it comes to allowing for psychedelic-assisted psychotherapy. “The medications themselves we know are safe, and there's studies to show that the risk comes with the lack of trained health professionals not adhering to therapeutic protocols. So, there's a whole host of things we are putting in place to protect patient safety, but they need to be the industry standard.”  Recognized team The appointment of Wood as chief medical officer last May underlines the approach taken by Numinus in aligning itself with very credible, well-respected scientists.  Over a 20-year career, Wood has gained international recognition for his work on addiction, most recently as the executive director of the British Columbia Centre on Substance Use. He has – and he is modest about this – been influential in shaping Canada’s considered and world-leading approach to the therapeutic use of psychedelics, says Nyquvest, particularly around the issue of special access drug programs. “He has a deep relationship with a lot of the policy people,” the Numinus CEO adds. And so back to our moats. In each of the operations – health, biotech and R&D - a number exist. In R&D for, example, there are a limited number of qualified researchers and facilities; in biotech, the complex and time-consuming licensing process acts as a barrier, while regulation and access to drugs are two more significant roadblocks. As Nyquvest points out: “We are not trying to figure this out at the 11th hour; we know what we are doing.” As mentioned, the business is already generating revenue and has $30 million in the treasury, which provides it with a significant runway.  Its last fundraiser was a $17 million bought deal. So, what did Numinus’ new base of investors like about the business? “They saw the industry-leading partnerships and the robustness of the business, and the revenue lines are already there,” says Nyquvest. “They certainly liked the people, and I would argue we have the best-suited team in the space – from a scientific perspective, definitely; but also in implementation and operations.” Angela Harmantas contributed to this report Contact Angela at angela@proactiveinvestors.com Follow her on Twitter @AHarmantas