Cybin Inc (NYSEAMERICAN: CYBN) (FRA: R7E) has secured a monumental financing to propel its psychoactive therapeutic development endeavours.
The convertible debenture deal, valued at up to US$500,000, represents the largest fundraising agreement in the psychedelics sector to date. However, the vast majority of the sum is yet to be obtained.
These securities will be issued to the investment firm High Trail Special Situations LLC. Cybin provided High Trail with US$50 million worth of the notes on Jun. 30 and will collect the additional funds in future tranches. They have a two-year maturity term and bear 5.5 per cent interest.
“Grateful for the tireless efforts of our team, our trusted advisors, and dedicated outside counsel who worked around the clock to bring this across the finish line,” said Robert M., General Counsel and IP Counsel at the company, in a popular social media post.
Chief Executive Officer Doug Drysdale described the capital raise as a “major inflection point” that positioned Cybin as a leader in the industry.
Funding will be utilized to propel late stage clinical trials on the company’s lead drug candidates: CYB003 and CYB004. The former is a psilocin or magic mushroom analogue used to treat depression and the latter is a DMT drug designed to combat generalized anxiety disorder.
Therapeutic efficacy demonstrated by CYB003, the more advanced pipeline item, is particularly notable. Patients who took the therapeutic reported a 71 per cent reduction in depression symptoms after one year from only two doses. It has received an FDA breakthrough drug designation.
The questionable efficacy of traditional antidepressants and complications associated with them have made finding worthwhile alternatives a key focus for Cybin and others in the sector.
A convertible debenture financing’s most negative aspects are equity dilution, investor risk and debt burden for the company should the holder not convert the notes into stock after the specified term.
Read more: One dose of psilocybin can alleviate depression for 5 years, U.S. researchers find
Cybin prepares to boost production
The new financing will enable Cybin to scale up manufacturing of these drugs in preparation for a market launch, as specified in a press release on the matter.
Cybin partnered with the American biotech company Thermo Fisher Scientific in May to help enhance production capabilities. Thermo Fisher will provide Cybin with the capsules it needs.
Although the neuropsychiatry operator now has more capital at its disposal, the current Schedule I status of the drugs Cybin is working with in the U.S. is a major roadblock hindering progress at the moment.
“Every site that touches the compound, whether it’s a lab manufacturing it or whether it’s a clinical site, they all have to have Schedule 1 DEA licenses,” Drysdale explained in a recent interview, adding that obtaining a license from the agency is a lengthy process.
For the fiscal year ended Mar. 31, Cybin’s net losses increased by US$35 million. Cash flow used for operating activities also increased by US$31 million to US$101 million during the period, driven by hefty R&D costs associated with the Phase 3 study for CYB003 and Phase 2 trial on CYB004.
Read more: Colorado governor pardons citizens convicted of psilocybin possession
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