– Psyence Group Inc. raised $10 million through issuing senior secured convertible notes and closed a deal with Newcourt Acquisition Corp, receiving $2.5 million.
– The influx of capital will support Psyence’s research into psilocybin-based medical treatments and maintain their mushroom cultivation facility in Lesotho.
Psyence Group Inc., a company that’s put all its chips on the psychedelic medicine roulette table, celebrated a bit of a windfall recently. Despite being in the pre-revenue stage – which is a polite way of saying they haven’t made a dime yet – Psyence has managed to raise a cool $10 million by issuing four senior secured convertible notes through its subsidiary, Psyence Biomedical Ltd. The company’s CEO, Dr. Neil Maresky, was understandably tickled pink. He sees the investment as a major step towards listing the company’s clinical trial business on Nasdaq. I mean, who needs revenue when you’ve got investor confidence, right?
Now, Psyence didn’t stop at just borrowing money. They’ve also closed a deal with Newcourt Acquisition Corp, a special purpose acquisition company (SPAC). As part of this deal, the new combined company will receive $2.5 million. SPACs, for those in the cheap seats, are essentially shell corporations designed to take companies public without going through the traditional IPO process. It’s a little bit like marrying into money instead of earning it yourself. Not that there’s anything wrong with that.
This news comes hot on the tails of Psyence’s announcement last November where they revealed plans to merge with Newcourt Acquisition Corp, valuing Psyence Biomed at a hearty $50 million. You may find it interesting that a company, which is yet to turn a profit, and spent around $34,000 on research and development in the most recent quarter, is valued at such a figure. But who am I to argue with the wisdom of Wall Street?
The good news is this influx of capital will keep the lights on at Psyence, letting them continue their research into psilocybin-based medical treatments and maintain their mushroom cultivation facility in Lesotho. It’s a brave new world in medicine when magic mushrooms are seen as a viable area of research and not just a way to make Pink Floyd albums more interesting. But hey, if there’s money to be made in ‘shrooms, more power to them.
In terms of the finances, Psyence stated the $10 million will be provided in four equal tranches of roughly $2.5 million in principal in exchange for about $2 million in proceeds. The first chunk of change is expected to close immediately with the merger. The second tranche will depend on whether the SEC has declared effective a resale registration statement registering for resale the shares of the new company’s common stock. The last two tranches are at the complete discretion of the purchaser. I don’t know about you, but I’m feeling a little light-headed from all these impressive financial acrobatics. There you have it folks, the magical world of psychedelic medicine and SPACs intertwined. Let’s hope the trip is worth the ride.