Diamond Equity Research, a leading equity research firm with a focus on small capitalization public companies has initiated coverage of Enveric Biosciences Inc. (NASDAQ: ENVB). The in-depth 23-page initiation report includes detailed information on the Enveric Bioscience’s business model, services, industry, valuation, management, and risks.
Enveric Biosciences differentiates itself by utilizing its unique AI platform PsyAI™ and a library of psychedelic compounds, Psybrary™, to discover promising drug candidates. The Psybrary™ contains three generations of more than 500 psychedelic molecules, the latter two of which are optimized versions of classic psychedelics or first-generation molecules created to enhance the therapeutic potential and minimize adverse effects.
The full research report is available here. Highlights from the report include:
- Second Wave of Psychedelics, Regulatory Tailwinds, and Potential Superiority: The 1950s and 1960s marked the period during which psychedelics gained popularity due to their promise to alter consciousness and treat mental illness. In the 1970s, psychedelics were classified as Schedule 1 drugs which hindered the use and research of these substances for the decades to come. However, the current resurgence is characterized by thorough scientific investigations, a medical paradigm, a shift in societal attitudes to lessen the stigma associated with the use of psychedelics, and, consequently, the easing of restrictions and the development of comprehensive regulatory structures. Breakthrough therapy status to MDMA and psilocybin, approval of esketamine for treatment-resistant depression, and the FDA’s recent guidance for clinical trials involving psilocybin are a few of the key milestones in the improving regulatory environment. Legislative shifts in U.S. states and local jurisdictions, such as Oregon and Colorado, have also led to reduced penalties and decriminalization of certain psychedelics. Globally, there’s a growing recognition of the need for more effective and safer therapeutic alternatives to conventional antidepressants for treating anxiety disorders. Psychedelics have demonstrated significant promise in this context. The initial scientific research has provided multiple evidence of psychedelics’ superiority when compared to conventional antidepressants such as SSRIs in terms of both efficacy and safety. Psychedelics have been found to potentially demonstrate fewer side effects, minimal toxicity and abuse potential, no significant long-term physiological or psychological consequences and rapid and lasting therapeutic effect especially when combined with psychotherapy.
- Psybrary™ and PsyAI™ Remain a Key Differentiator: Enveric Biosciences differentiates itself by utilizing its unique AI platform PsyAI™ and a library of psychedelic compounds, Psybrary™, to discover promising drug candidates. The Psybrary™ contains three generations of more than 500 psychedelic molecules, the latter two of which are optimized versions of classic psychedelics or first-generation molecules created to enhance the therapeutic potential and minimize adverse effects. The company’s PsyAI™ tool speeds up the pharmaceutical development process by using machine learning and computational technique to predict the drug potential of these compounds. It evaluates numerous factors, such as drug likeness, CNS exposure, and toxicity, to identify the most suitable drug candidates. These advancements result in potential new drugs (prodrugs and new chemical entities) targeting beneficial attributes such as precise dosing, a better safety profile, and a rapid therapeutic effect. The Psybrary™ is protected by a broad portfolio of 15 patent families with over a million potential variations and hundreds of synthesized molecules. The combination of PsyAI™ and Psybrary™ gives Enveric a significant competitive edge in the burgeoning field of psychedelic-inspired treatments.
- Valuation: We have valued Enveric Biosciences using risk adjusted DCF as our primary valuation methodology. We have assumed a discount rate of 12.5% and a probability of success at 10% for EB-373. Our valuation approach yielded a valuation of $21.47 million or $10.00 per share contingent on successful execution by the company.
- Tackling the Commercial and Therapeutics Constraints of Psychedelics: Even with a potentially robust efficacy and safety profile when compared to traditional antidepressants, psychedelics also face certain constraints that hinder its commercial or medical viability and scalability. Classical psychedelics are found within nature itself and are thus difficult to patent. Limited research on Psychedelics’ therapeutic application has also revealed certain drawbacks that include prolonged and inconsistent psychedelic experience and GI issues. Leveraging the synergistic potential of PsyAI™ and Psybrary™, Enveric has created the EVM201 series of second-generation psychedelics molecules (prodrug) and the EVM301 series of third-generation psychedelic molecules (new chemical entities) that addresses constraints and limitations of current anxiety pharmacologic treatments, i.e., traditional antidepressants and first gen psychedelics. Both the EVM201 and EVM301 series of drug overcomes the issue of patentability due to the unique nature of the resultant formulation. While the EVM201 series have potentially faster access to the target, quick onset of action, and lower side effects (GI, systemic) when compared to classic psychedelics, the EVM301 series goes far ahead with an optimized treatment regimen, no hallucinatory activity removing the need for observation, optimized psychoactive properties, and therapeutic action. With the EVM201 series, the company has nominated EB-373, a psilocin prodrug, as its lead therapeutic candidate for anxiety disorders. The drug has undergone preclinical trials confirming the desired attributes of EVM201, including reduced GI upset and vomiting, swift conversion to the active substance, and quick onset of action.
- General Anxiety Disorder, A Significant Unmeet Need: General Anxiety Disorder (GAD), a widespread and debilitating mental health issue, places a significant strain on society and the economy. It is estimated that each year around 2.9% of U.S. adults (aged 18-64) or roughly 6 million people struggle with the GAD. An estimated 6.2% of U.S. adults experience generalized anxiety disorder at some time in their lives. The first line of treatment includes the use of anxiolytics and antidepressants such as SSRIs and SNRIs. These drugs have been found to have limited efficacy, a high recurrence rate, risk of dependence and abuse, and a plethora of potential side effects, including sleep disturbances, weight changes, sexual dysfunction, and more. Moreover, these medications often require a long-term commitment, which can result in additional complications related to withdrawal symptoms upon discontinuation. It should also be noted that many of the first-line treatments were originally approved for depressive disorders and then later for anxiety disorders, with very few drugs being developed de novo for anxiety. The last FDA-approved drug to treat Generalized Anxiety Disorder was Cymbalta (Duloxetine), approved in 2004, nearly twenty years ago. There is an immense need for alternative treatments that can more effectively address the root cause of generalized anxiety disorder, offer more consistent results with fewer side effects, and ideally mitigate the risk of dependency and abuse.
About Enveric Biosciences Inc.
Enveric Biosciences is an innovative mental health company pioneering in the field of psychedelic medicine. Leveraging its unique AI platform, PsyAI™, and a library of novel derivative psychedelic molecules, known as Psybrary™, the company is committed to discovering and developing effective treatments for hard-to-treat mental health conditions.