Medical Mushroom Companies Expand as People Seek New Mental Health Treatments

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Mar 31, 2020, 08:30 ET

NEW YORK, March 31, 2020 /PRNewswire/ -- The search for ways to improve mental health is driving expansion for a variety of companies looking to offer effective solutions, including treatments that are tapping into the power of psychedelic mushrooms.

Champignon Brands Inc. (CSE: SHRM) (SHRM Profile) is one of the innovators in this field, expanding through acquisitions and outside funding to support R&D and a growing product line focused on artisanal medical mushroom formulations and mushroom-infused functional beverage CPGs. It's a range of products set to appeal to markets similar to Herbalife Nutrition Ltd. (NYSE: HLF), which provides nature-based products for physical and mental health. Biopharmaceutical company Axsome Therapeutics Inc. (NASDAQ: AXSM) is also tackling serious depression, with a new drug currently undergoing trials. Allergan (NYSE: AGN) recently announced a new drug to tackle bipolar disorder, with a single treatment for both manic and depressive phases. Meanwhile Johnson & Johnson (NYSE: JNJ) is showing the power of previously scorned drugs with a ketamine-based depression treatment.

Psilocybin, the active ingredient in psychedelic mushrooms, has the potential to treat serious illnesses such as depression.
R&D work, supported by prominent investors, is quickly pushing forward understanding of the chemical's potential.
This has allowed mushroom-focused companies to bring both products and shares to market.

To view an infographic of this editorial, click here.

Companies Rise Through Mushroom Boom

The expansion of the functional food and drinks sector has created a new opportunity. While cannabis and CBD have taken these consumables beyond the traditional active ingredients of alcohol and caffeine, this diversification of the market has opened up consumers to new possibilities. Among those possibilities is the use of natural ingredients found in mushrooms.

For decades, these mushrooms have played a part in alternative culture, a hidden consumable for those looking to expand their minds. But with a better understanding of the mushrooms and safe techniques to process them, other options are becoming available. Researchers are exploring how the psycho-active ingredient derived from mushrooms, psilocybin, could be safely used in health products and associated delivery platforms. Companies are emerging to take those promising new products to market.

An Emerging Mushroom Company

One of the leaders in the move to bring mushroom-infused wellness products to market is Champignon Brands Inc. (CSE: SHRM). A rare public company built around a mushroom-to-market strategy, Champignon is leveraging the growing functional beverages market as well as breakthrough medicinal therapy involving psilocybin and MDMA-based delivery platforms. Champignon's Vitality Teas brand offers a range of teas infused with ingredients derived from the most desirable artisanal medical mushrooms – Reishi, Chaga and Lion's Mane. This unique line of teas offers an entry point both for consumers and investors, providing an ideal opportunity for people to experience the health effect of mushrooms in a safe, familiar product, while allowing investors to participate in the mushroom market.

This is new territory, perfect for the flexibility and innovation that come with a young company. Champignon's strategy involves cultivating and distributing artisanal medical mushrooms and products derived from them, while maintaining control of its whole product chain. The company is laying the groundwork for what could become a significant new industry.

As a step toward both funding and legitimizing its work, Champignon is working its way onto the world's stock markets. SHRM began trading in Canada in February and is now in the process of securing listings in the United States and Germany, which would give the company access to significant new markets and investor bases.

Psilocybin – the Magical Ingredient in Mushrooms

The health-bringing potential of mushrooms stems from one chemical — psilocybin. The psychedelic molecule found in most psychoactive mushrooms, psilocybin is a naturally occurring, mind-altering substance that humans have made use of in religious and cultural ceremonies for centuries. While the effect of this specific chemical has been known for decades, its medical potential is only now starting to be recognized and explored.

A main possibility for the products of companies such as Champignon lies in treating challenging mental-health issues. Post-traumatic stress disorder (PTSD) and treatment-resistant depression (TRD) are widely recognized as serious issues affecting thousands of people on a daily basis. Depression costs an estimated $210.5 billion per year, and this has created an antidepressant drugs market valued at $13.69 billion in 2018, which is expected to expand to $15.88 billion by 2025. An article in The Journal of Clinical Psychiatry estimates the cost to employers of TRD alone at $48 billion per year.

Treatment of these illnesses can be challenging, and any medicine with potential to help will be welcomed by a huge raft of patients and practitioners. Research shows that psilocybin has potential to help with these disorders, and now both the medical profession and the markets are responding.

High-profile investors such as Peter Thiel, Tim Ferriss, Kevin O'Leary and Canopy Growth's ex-CEO Bruce Linton are all taking an interest. Linton and O'Leary have become seed investors in MindMed, which develops medicines based on psychedelics. Thiel is an early investor in mental health care Compass Pathways, which makes use of psilocybin. Ferriss has been a leader in fundraising for the new Johns Hopkins psychedelic research center.

With mental health high on the world's agenda and more companies opening the door to psilocybin, the likes of Champignon have a legitimacy and level of investor interest that would have been unimaginable a decade ago.

The Need for Mushroom R&D

There are no safe shortcuts when dealing with psychoactive chemicals, and so a great deal of R&D work is needed to bring mushroom-derived health products to market. That's reflected in the focus of companies entering this market as well as the academic institutions taking an interest.

Champignon has established a dedicated R&D laboratory. The facility will work on three distinct but connected issues around psilocybin and mushrooms:

How to integrate mushroom extracts as an alternative-medicine delivery system
Formulating bioactive compounds extracted from plants and fungi
Isolating and synthesizing certain plant and fungi extracts

The overall goal of this work is to research and distribute premium, medicinal, mushrooms-infused products that can be used to target high-margin markets as well as consumers open to the health and wellness benefits of mushrooms.

Getting this work right takes specialist expertise and oversight. To this end, Champignon is forming a special advisory committee to oversee its R&D. With members drawn from fields such as medicine, psychology, mycology, and pharmacology, the board will carefully evaluate the potential effects of its medicinal-mushroom formulations and the accompanying benefits in treating disorders such as depression, PTSD, and substance and alcohol abuse. Through these skilled and experienced specialists, the company will bolster the effectiveness and scientific validity of its work, providing reassurance to both customers and investors.

Beyond R&D

While R&D will provide mushroom companies with powerful new products, that alone isn't enough to ensure their viability. For that, they'll need to pair innovative products with sound business strategy.

Which strategies each company follows will depend upon their individual circumstances and leadership. For Champignon, acquisitions are playing a part. The company recently announced that it has entered into an agreement to acquire Artisan Growers Ltd., a craft-mushroom cultivator and supplier. Artisan Growers operates a mushroom facility cultivating a variety of organic craft mushrooms. This facility will be integrated into Champignon's mushroom manufacturing, formulation and distribution infrastructure to expand and strengthen SHRM's supply chain.

In taking this supply chain to consumers, Champignon has developed a retail strategy that aims to revolutionize the $200 billion functional foods and beverages sector by introducing exceptionally formulated mushroom-infused products. A combination of brick and mortar distribution, e-commerce sales and online influencer marketing is being used to quickly develop a retail base for the company's novel products.

To further expand its alternative medicine product range, Champignon recently announced the acquisition of Novo Formulations Ltd., whose manufacturing partner is capable of processing proprietary delivery systems in its 40,000-square-foot, GMP-certified, Health Canada-approved and Federal Drug Administration-approved manufacturing facility..

According to the announcement, Champignon plans to leverage Novoformulations' existing product development infrastructure and licensed affiliates to pursue psilocybin and MDMA-based formulations, with the objective of developing and commercializing rapid onset treatments capable of improving health outcomes, including depression, PTSD, and substance and alcohol use disorders. The current marketplace for pharmacologic DPS treatments in North America exceeds $10 billion annually.

Providing Healthy Products

Of course, deriving healthy foods, drinks and supplements from nature is nothing new. For Herbalife Nutrition Ltd. (NYSE: HLF), that approach has been the foundation stone of a business for 40 years. Like the active mushroom companies, Herbalife uses science to create healthy products, including vitamin supplements and protein powders to deliver physical health, as well as stress-management products for mental health. In an increasingly health-conscious society, this has been a huge success, giving the company some of its best sales yet in 2019.

Axsome Therapeutics Inc. (NASDAQ: AXSM), a biopharmaceutical company specializing in treatments for central nervous system disorders, also offers help for those struggling to achieve mental health. The company's treatments cover ailments including narcolepsy, migraines and treatment-resistant depression. TRD covers any major depressive disorder that doesn't respond to two or more therapies, leaving the patient struggling for help. Axsome is developing a drug aimed at TRED treatment and is currently undertaking randomized trials to assess the effectiveness of the drug.

Irish pharmaceutical company Allergan (NYSE: AGN) is another innovator in the health field, with its R&D department working on a steady stream of treatments for physical and mental health. This includes a new treatment announced last year for the treatment of bipolar disorder. This treatment can be used to tackle manic, depressive and mixed episodes, making it easier for patients to manage their mental health and maintain a stable lifestyle.

Mushrooms aren't the only previously scorned drug being turned into a tool of improved mental health. Johnson & Johnson (NYSE: JNJ) received approval from the FDA last year for a nasal spray derived from the anesthetic ketamine. Ketamine has been best known in recent years because of its abuse as a party drug, more often featured in crime dramas than medical procedurals. Doctors have known for years that ketamine could be helpful in treating depression, but treatment was administered through intravenous delivery, without the financial support of insurance companies. Johnson & Johnson's product could be one of the most radical changes in depression treatment for years.

As research reveals the potential of new and innovative mental-health treatments, including artisanal medical mushrooms, a raft of new treatments could soon be on their way.

For more information about Champignon Brands Inc., please visit Champignon Brands Inc. (CSE: SHRM).

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