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Psychedelic Bulletin #133: Ketamine Clinics Close with Potential Repercussions for PAT Roll-Out; Psychedelics at SXSW; Could MDMA Be Among First Beneficiaries of Faster UK Drug Approvals?

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If we use data from the most recent quarter (Q3 2022), we can infer that the clinics have approximately 10,500 appointments per year. With thirteen open clinics at the time of reporting, that’s around 800 appointments per clinic per year; or three per day per location (their clinics are generally open Monday-Friday). On average, an appointment brings in around $500.

Simple math like this call into question some of the claims made in the company’s investor presentation. Take, for example, the claim that one of the company’s clinics will break even in “~6 months”, assuming a $250,000 start-up cost. Based on the ‘clinic operational metrics’ disclosed in the MD&A, this is exceedingly unlikely.

The company’s current investor presentation, retrieved via its website, claims that Delic expects MDMA to be “legalized” in 2022, and psilocybin in 2023. Perhaps this is why the company’s financial projections and growth strategy were so off.

The company’s stock is down over 98% since November 2020, and the company has a market cap of around $350,000.

The day after Field Trip and Delic announced clinic closures, Irwin Naturals announced that it had terminated an LOI with Braxia Scientific Corp. (formerly Champignon Brands) that would have seen Irwin acquire the chain of clinics. Braxia also acquired KetaMD in an attempt to build out an at-home ketamine program.

Last month, Irwin Naturals announced that it has secured a $40m credit facility to support its roll-up of ketamine clinics, with the intention of positioning them as sites for psychedelic-assisted therapies, if and when approved. The terminated Braxia deal was valued at $30m.

Back in September 2022, Wesana Health announced the sale of its clinics business, for a total consideration of $2.1m.

Taken together, these developments suggest a pessimistic picture for the commercial viability of ketamine clinic companies; especially those looking to find profitability via telemedicine and/or aggressive scaling.

Other Interventional Psychiatry Facilities Feel the Crunch

But, it’s not only ketamine clinics that are making cutbacks: other interventional psychiatry treatment facilities appear to be, too.

Last week, one of the largest providers of transcranial magnetic stimulation (TMS)—Greenbrook TMS—announced restructuring plans “aimed at focusing operations to the Company’s most profitable treatment centers”.

In concrete terms, the plan will see around a quarter of the company’s staff laid off, and just over a quarter of the company’s 183 treatment centres closed. The remaining 133 centres will continue to offer TMS, while a growing number of centres will offer Spravato (esketamine), the company explained. Greenbrook added that it “expect[s] that these remaining centers will provide a strong foundation to innovate and develop new product lines.”

This alludes to a broader point on the potential ramifications these closures could have on the infrastructure for any forthcoming psychedelic-assisted therapies (PATs)…

Repercussions for PATs?

At the close of our 2022 Year in Review, we shared some predictions and themes to watch in 2023. A prominent theme we expect to see—and encourage—in 2023 is a focus on commercialisation-related discussions, as MDMA-assisted therapy (MDMA-AT) faces a potential approval as early as next year. Given the novelty of PAT protocols, integrating them into the prevailing healthcare system will be a challenge. In many cases, the infrastructure for PAT will have to be built from scratch.

This focus on infrastructure, which has been emerging over the past two years, will only heighten in 2023 as we approach the convergence of the period where it’s ‘too early’ to begin building the ‘rails’ for PATs in the medical model and the period where it’s ‘too late’: i.e., a situation where the post-approval roll-out of MDMA-AT, for example, is severely stymied by a lack of infrastructure (such as appropriate clinic space, trained therapists, etc.).

From our Looking Ahead to a Psychedelic 2023 piece.

Of course, the most obvious part of this infrastructure is the physical spaces at and in which PATs will take place.

Many are expecting existing interventional psychiatry facilities, such as those that offer Spravato and TMS, to include MDMA-AT, psilocybin-AT and other PATs if and when they are approved. Indeed, many of the companies mentioned above were, to some extent, banking on this projection (the likes of Field Trip and Delic, for example) while others will simply see it as a potential new business line (as in the case of Greenbrook, as alluded to in the aforementioned quote).

On the other side of the coin, psychedelic drug developers themselves are, at least to some extent, relying on these types of facilities to offer their treatment protocols if and when approved: protocols that are likely to be very labour intensive and regulated.

Take COMPASS Pathways, for example. As we alluded to in our From Approvals to Access reporting, drug developers like COMPASS do not intend to be in the business of establishing networks of COMP360 therapy clinics. Rather, the company will rely on “delivery partners”.

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