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Trading in shares of Creso Pharma (ASX:CPH) has been halted as the market awaits detail on a new capital raise from the Australian-listed cannabis play. Further detail on the capital raise is expected before the end of the week.

Shares were trading at 23 cents prior to the suspension of trading. At this stage there is no further detail on how much the company is planning to raise.

Creso Pharma is aiming to enter the growing psychedelics market

Creso Pharma is currently in the process of acquiring Halucenex Life Sciences, a Canadian psychedelics research company. It is on the quest for a license to conduct research into psychedelics like LSD, MDMA and psilocybin.

Creso is proposing to acquire Halucenex for a mixture of cash and shares. Halucenex operates a medical treatment facility and controlled substances lab in Canada’s Nova Scotia. We understand an agreement to acquire Halucenex has been signed. The acquisition gives Creso significant access to the US$100bn psychedelics medicines market. It would be the first company of this nature to be listed in Australia.

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Halucenex works on the development of new treatments for mental illnesses such as post-traumatic stress disorder (PTSD) and depression. Once it gets it license, Halucenex will be able to possess and carry out research on psychedelic molecules. The company is especially focused on research around the properties of synthetic psilocybin, the active ingredient in magic mushrooms.

As it stands, the deal will be paid for with $500,000 cash and 29.2 million shares in Creso Pharma, with another 17.5 million shares issued once the key regulatory license is granted.

Creso is a pioneer in medicinal hemp and cannabis

Creso has traditionally worked in the cannabis space, developing cannabis and hemp-derived products for the medical market. It was the first company to import medical cannabis into Australia and also launched broad spectrum hemp oil extract into Switzerland for humans and animals. It worked on the launch of anibidiol, the first hemp-based complementary feed for companion animals, in conjunction with Virbac Switzerland.

The Halucenex deal would not be Creso’s first in the Canadian market – it has also acquired Mernova, a Nova Scotia-based cannabis growing operation.

The move looks like a sound one for Creso, as the North American psychedelics market is poised to increase in scope and value. Having been relegated to the margins of sincere scientific examination for the best part of 50+ years, the surge in mental health issues is causing scientists to re-examine solutions in this area.

North American psychedelics market poised to expand quickly

According to Data Bridge Market Research, the North America psychedelics market is forecast to grow at a CAGR of over 15% between now and 2027. A number of listed US companies are already very active in this space, including Johnson & Johnson, MindMed and COMPASS Pathways.

Growing acceptance of psychedelic drugs for treating depression is increasing market value as these treatments have repetitively proven their high rates of effectiveness for treatment for nicotine dependence, alcohol dependence, anxiety associated terminal illness and chronic PTSD as compared to other antidepressants.

Johnson & Johnson, for example, received approval for Spravato. the first antidepressant for actively suicidal people. Approved by the US Food & Drug Administration, it has been used by over 6000 Americans since March 2019. It is being targeted by medical practitioners at patients with treatment-resistant depression.


Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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