Kevin O’Leary Betting on New Emerging Industry

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Midas Letter

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Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

Kevin O’Leary, the Canadian businessman, author, politician, and television personality, joins James West to discuss teaming up with Bruce Linton, co-founder of Canopy Growth Corp (NYSE:CGC) (TSX:WEED) and betting on a new emerging industry. That new market being psychedelic’s. Not recreational drugs but compounds with real medical properties and applications. Certain psychedelic’s have been shown to help patients suffering from depression, anxiety, alcohol and opioid addictions. Mr. Wonderful made a strategic investment in MindMed (NEO:MMED) in its $24.2 million funding round before going public on the NEO Exchange. The company’s main priority is to address opioid addiction by developing a non-hallucinogenic version of the psychedelic ibogaine. Mr. O’Leary has bet on MindMed because of its management team, the patients they can help using psychedelics and their disassociation with recreational drugs. Watch the full interview to find out all the reasons behind Mr. O’Leary next big investment into the psychedelic space.

Transcript

James West: I’m joined now by a man who really needs no introduction: Mr. Kevin O’Leary is my guest today. Kevin, welcome.

Kevin O’Leary: Great to be here. Thank you. 

James West: Kevin, we’re here today to talk about MindMed, a company in which you’ve made an investment. What can you tell me about MindMed?

Kevin O’Leary: So there’s been a really interesting development. These are compounds and drugs from the 60s, for example, LSD or psilocybin from mushrooms. These are psychedelic drugs that were, at that time, misused or overdosed by people and became Schedule 1 narcotics. Even in those times, though, there was some nascent research being done, because it looked like these as medicines could help some really difficult afflictions people suffer, for example, depression or alcohol addiction or, now, opioid addiction.

So if you can solve for alcoholism or just opioids, just take opioids in the United States right now as an affliction costs the country billions of dollars and all kinds of costs to society and business. So all of a sudden, a new industry is emerging: psychedelics as medicine.

Now, when I was approached with this investment, I said, Wait a second: this sounds like cannabis Part 2, and I want nothing to do with it. I never invested in cannabis, because it was a Schedule 1 narcotic; it still is. There’s RICO statutes across state lines. But the more I heard about it, the more I got intrigued, because if you can solve, from a medical basis, any of the afflictions I just detailed, those are huge opportunities.

When I finally met the CEO, J.R., I asked him, look: are you ever getting into recreational drugs here? Because if you are, tell me now. I don’t want to waste my time or my team’s time doing due diligence. They’re not interested in that market at all. So all of a sudden, now I can invest at an early stage in a company that I think, this is my own speculation, there’s going to be tremendous institutional interest in.

I work in the indexing business, in ETFs, so I speak to sovereign funds, pension plans, who never participated in cannabis and never will. The industry tried to promote the fact that they were going to get institutions involved; they never did. This industry, it’s different. There’s a tremendous interest, and that’s why I’m interested, because to bring new medicines to market requires a tremendous amount of capital. But if you’re right, the returns are extraordinary.

James West: So then, is MindMed in the process of developing what will be FDA-pathway drugs for full medical prescription?

Kevin O’Leary: They have multiple trials going on, FDA-approved trials, in multiple jurisdictions and geographies. They have a wide range of scientists they’re working with. They have an incredible story about already the advancements they’ve made in trials. It’s a really intriguing situation. The anecdotal evidence – and I’m not endorsing this at all when I say this, though – but when I was doing due diligence, I was hearing these stories about engineers on the West Coast of the United States micro-dosing and getting extraordinarily good outcomes. Not hallucinating, but getting a tremendous productivity out of it.

Now, I’m not endorsing that; it’s illegal. But when you hear that kind of thing, that anecdotal information intrigues you to explore the use of these drugs as medicines. And so that’s what MindMed is doing, and that’s why I’m an early investor in it.

James West: So specifically, is it LSD and psilocybin and mescaline and ayahuasca, all of those?

Kevin O’Leary: All of the opportunities those present, because they’re all different, and they all have different attributes. But the whole idea here is to make a medicine. You take out the psychedelic experience, because people want to be able to work and drive and everything else, and you want it FDA approved, so it’s not illegal. And if we get there, let’s just pick one market, and I detailed it earlier: opioid addiction, which is such a wicked affliction to the United States and Canada and Mexico.

We’re working on that. We’re working on depression, we’re working on alcoholism, all of these things, and they all have promise. So there’s no guarantees when you’re developing medicine, but when you can solve problems…take, for example, ADD in children. All the drugs we pump them full of! Imagine if this works towards that affliction?

James West: Sure.

Kevin O’Leary: So that’s why I’d like to think it’s wide open. All the companies involved in this area are doing a lot of research in a lot of different afflictions. It’s not just MindMed; it’s a nascent industry emerging, here. I’m making my bets, because I want to know that the company I invest in will never touch recreational drugs. I can’t participate in that, for a whole bunch of institutional reasons. But I’m happy this one is doing it for medicine, and that’s a great enterprise.

James West: Sure. So from your understanding, what is the timeline until we actually see these medicines make their way into the pharmacopeia?

Kevin O’Leary: Well, I’m an investor in other medicines, too; there is no point in talking timeline.

James West: Right.

Kevin O’Leary: I mean, you can set goals, but there’s so many things out of your control. What you’re looking for is encouraging results in the trials, as you keep moving towards approval as a medicine. So the way we value these companies in an industry, and you pick any one that develops medicine is, if you keep moving forward, you become more valuable. Not knowing the outcome; you don’t know.

But you know, I’ve been involved in one called NoNO, which is a stroke medicine here in Canada, very promising, it’s going into its 11th year still in the trials. But the information looks encouraging, so I stay the course and I keep participating and adding more to my position. The same thing will occur here with MindMed.

James West: Fascinating. I’m curious as to what roadblocks might exist to the actual successful evolution of this fully through the regulatory process.

Kevin O’Leary: Well first of all, because we’re not pursuing any legal recreational drugs, we’re not going to get stuck with lobby groups like Mothers Against Drunk Driving. They endorse developing medicines that are FDA-approved; we’re pursuing an FDA approved path, so our risks are timing, bad outcomes of trials, you know, side effects if any. All of the things that you run into when you’re doing medicines.

But the fact that we’re not going to have to fight and lobby to say that you have to change the laws to bring this forward – and I’d argue, and again, this is a personal opinion, but one of the reasons I invested personally was, if the trials show positive outcomes on opioid addiction, just opioid addiction, my guess is regulators fast-track those medicines. It is such a horrific problem right now, all around the world.

You know, opioid addiction brings tragedy almost wherever it touches a family. And if there was a resolution to that or a medicine that could assist it, I think regulators would want to accelerate that process to get it turned into a legal medicine.

James West: So there could be a really short timeline – 

Kevin O’Leary: There could be, and I’m speculating when I say that. But you talk about an affliction like that, a multi-billion-dollar affliction – there’s a tremendous interest to solve it.

James West: Sure. So what – how does a company like MindMed source the actual inputs for these chemical compounds in this early research stage?

Kevin O’Leary: A lot of work, a lot of work. They’ve got to go – there’s research going on all around the world, so if you’re going to be a MindMed, you’re going to have to work with scientists in multiple jurisdictions, in Switzerland, in South America, in the United States, in Canada. You want to find the best teams, and you want to find the best places to put the trials forward. You can have an FDA-approved trial in Switzerland, if you want. I mean, these rules are set internationally, so the company’s job is to take the capital they raised today – it went public on the NEO exchange today, they’ve done very, very well – is to put it to work all around the world and accelerate trials that are FDA approved trials.

I think they’re going to do just that. They’ve got a fantastic management team, because I had a chance to meet the scientists and the CEO and the Board, and the Chairman of the Board – all people that have a motivation to help solve some of man’s worst affliction.

James West: Kevin, that’s an amazing story. We’re going to leave it there for now, but I really appreciate you joining me.

Kevin O’Leary: Thank you.

James West: Thank you.

Kevin O’Leary: Take care.

James West: You bet.

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.