Why You Should Invest in Psychedelic ‘Platform Plays’
August 25th, 2020
App, Exclusive, Psychedelics, Top Story
The psychedelics industry has experienced tremendous growth over the past year. In addition to regulatory support and decriminalization, many companies have either gone public or raised capital and investors have a growing number of options when it comes to building exposure into their portfolio—including both product and platform opportunities.
Let’s take a look at why you may want to invest in platforms instead of products and how MagicMed Industries is building a promising drug discovery platform for the nascent psychedelics industry.
Why Invest in Platforms?
Many psychedelic companies have focused on developing products, such as functional mushrooms, or undergoing clinical trials to develop therapeutics targeting specific indications. While these companies could see some success, the bigger opportunities often come from companies building diverse platforms that power entire industries.
Ecommerce businesses illustrate the differences between product versus platform business models. Most ecommerce businesses sell their own products, which target a specific customer demographic, but platforms like Amazon.com or Ebay.com have become much larger by providing the underlying marketplace where anyone can sell their products.
Platforms typically generate predictable recurring revenue from licensing or other sale-based fees while diversifying risk across many different markets and products. Since platforms aren’t responsible for actually building any products, they also tend to generate higher profit margins than product-based businesses that have a lot more overhead.
Even better, platforms can still launch their own in-house brands with much higher odds of success. Amazon’s Amazon Basics products are launched based on the success and margins of existing products sold within its marketplace. The company can pick and choose what product verticals to target with a high degree of predictability.
MagicMed Industries intends to build a platform, called the Psybrary™, to assist psychedelic companies in the drug discovery process. The molecular derivatives library will be an essential building block from which industry partners can develop new patented products targeting a wide range of indications within the nascent psychedelics industry.
Learn how to become an early-stage investor in MagicMed Industries as it seeks to go public during the first half of next year.
The process starts by taking a natural psychedelic molecule, such as psilocybin, and modifying its structure to create many new derivative molecules. While natural molecules cannot be patented as molecular composition, these new derivative molecules are patentable, making them indispensable when commercializing therapeutics.
Like other platforms, MagicMed’s focus is on providing the building blocks that others can use to be successful in their business. The company will generate high-margin revenue from licensing fees and royalties while benefiting from diversification across a wide range of partners that are each targeting different markets and indications.
MagicMed’s uniquely qualified team includes Dr. Peter Facchini, who has served as Chief Science Officer at several biotech firms, both public and private. He has published more than 160 scientific papers and holds 20 patents in the field, making him a recognized leader in the development of new molecular derivatives.
The psychedelics industry is experiencing tremendous growth, creating new opportunities for investors interested in the space. While many companies are focused on developing products or pursuing clinical trials, investors may want to take a closer look at platform plays as an opportunity for higher margin revenue, diversified risk and larger opportunities.
MagicMed Industries has raised $600,000 and plans on a public listing during the first or second quarter of 2021. Management intends to use the proceeds from the public listing to build out its partner base and potentially diversify into consumer goods. If you’re interested in becoming an early stage investor, sign up to learn more with the company’s investor presentation.
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