Title: My Thoughts on FSD Pharma Inc

Executive Summary

FSD Pharma company was established in 1994 in Canada, and it grows cannabis to extract ultra-micronized PEA, which is known to cure inflammation.

The company has invested in research and development programs to find how the compound can be used to treat multiple diseases that cause inflammation of body tissues or cells.  It was authorized by the FDA to investigate if ultra-micronized could be used to cure Covid-19 since it causes inflammation of respiratory tissues and membranes. This approval by the FDA increased the company's stock (shares) demand by about 131%.

The company has a strong management team and Board of Directors with extensive knowledge and experience in the growth of medical cannabis and the development of medicines through clinical trials and research.

As part of protecting its intellectual property, the company sought a patent to safeguard another company from growing cannabis for medical purposes. It also obtained a license under the Canadian Cannabis Act to grow cannabis in Canada. The company had about 25,000 square feet of land where cannabis was grown under intense care to avoid compromising the quality of the cannabis.

Currently, the FSD stock price per share is $1.34 in Nov 2020. On average, the company made a profit of $193 088 in 2019, while in 2020, it managed to generate $260000 sales by November. It has also accumulated total assets equivalent to $70 million by 2020 November 2020. The company made a surprisingly high return of 670% ($7.7million) after selling its 12% share invested for two years in Cannara.

Notably, the company is competitive enough and has secured enough ground and protection rights to promote its business's sustainability. FSD can become a global brand within the next five years if it maintains the same performance, innovation, management, strategic partnership and planning. Potential investors should take this company as a gold mine.

Company History and Overview

FSD Pharma Inc. is a pharmaceutical company established in 1994, which manufactures and supplies indoor hydroponic cannabis in Canada. It was formerly known as a century financial capital group before the name was changed to FSD in 1998. The publicly-traded company holds an exclusive Access to Cannabis for Medical Purposes Regulation patent rights to grow cannabis because it produces safe medical cannabis that treats various inflammatory disorders. Its physical office address is 520 Williams Street Cobourg, ON K9A 3A5 Canada, while FSD Pharma's online presence is facilitated by its strong website www.fsdpharma.com (see Figure 1).

Figure 1: Contact Information and Location of FSD

It operates in consumer staples' sectors, within consumer staple products, under the sub-industry of tobacco and cannabis.

Management

FSD has a highly skilled and talented workforce comprising of 18 to 20 employees. The availability of workers with the right talent enables the company to perform well in research, innovation, and prescriptive drugs production. The company's management team also comprises a passionate team of competent managers with comprehensive industry knowledge that makes them inspire scientific innovations that lead to the discovery and development of therapeutic drugs. 

The management team comprise of Raza Bokhari (CEO), Sandra Lottes (Head of Clinical Research), Zeeshan Saeed (Founder and Director), Donal Carroll (Chief Financial Officer), Sara May (Vice-President), Sandy Huard (Communications and Investor Relations), Maryann Adesso (Chief of Staff), and Edward Brennan (FSD BioSciences President). There is also a highly competent Board of Directors with the adequate breadth and the depth of expertise required to help steer its strategic vision.  The board members include Gerald Goldberg (Directors), Antony Durkacz (Founder and Director), James A. Datin (Director) Hon Stephen Buyer (Director), Robert J. Ciaruffoli (Director), Larry Kaiser (Director), Zeeshan Saeed (Founder and Director), and Raza Bokhari (CEO and chairman of the Board). This list demonstrates that the company has a rich leadership and management profile, which steers the company on well to make feasible investments.

Notably, the company has strengthened its leadership team by gathering managers and directors from different cultures, nationalities and gender to build a world-class experience. It ensures that the company can deliver stable and positive shareholder value to its stakeholders.

Leadership and management team are inspired by the forward-looking statements which provide future directions. The statements make assumptions and give expectations that create a strategic path that rallies crucial stakeholders to work towards the same goal to realize the set objectives. Leaders and employees have the right motivation to remain fixed on the core goal and avoid distractions and fears that could prevent the successful actualization of the set objectives or goals. Therefore, an excellent management team is one of the critical strengths of FSD, which makes it stand tall in the domestic and international market.

Production, Innovation, and Achievements

Specialized personnel and knowledge in the cannabis business and Biosciences are innovative practices that make the company maintain its completeness in the market. Growing cannabis requires extensive agricultural and technological expertise since it is produced just like other agricultural products. 

Humidity, temporary, water, air, and application of fertilizer and pesticides are controlled effectively to produce consistent products and minimize contamination. The company invests heavily in research and farm management during the growth and production process to avoid pests' agricultural risks, whether delays, plant design errors, pollution, and other related threats. Upon maturity, cannabis is cut, sorted, dried, refined, and packed well to sustain its purity. Each bunch is tested for quality to ensure it has the required medicinal value, especially the ultra-micronized PEA.

Sara May, the President and a member of the management team, has a doctorate degree in plant breeding and crop genetics. She has substantial 10-year experience in designing, managing, and implementing large-scale greenhouse and lab projects. Dr. Sara May is a critical is the excellent human resource for the company since she has extensive knowledge of medical cannabis. This makes it easy for the company to implement strategic quality control and quality assurance by ensuring that standard procedures are followed throughout the growth of the cannabis and the processing period. Before joining FSD, May had successfully managed to grow and clone cannabis in California. It is evident that the company has the right set of leaders and employees required to improve the company's performance and boost its competitiveness.

The company has invested in extensive biotech pharmaceutical research and development to maximize the multiple usages of its core product FSD20 ultra-micronized palmitoylethanolamide (PEA). Ultra-micronized PEA consists of naturally occurring fatty acids extracted from cannabis. This compound targets the endocannabinoid system's CB2 receptors to reduce pro-inflammatory cytokines to initiate an anti-inflammatory response. FSD completed Phase 1 of the first-in-human tolerability clinical study for FSD201 that had an acceptable safety level and with no or less severe side effects. The study was considered scientific literature and approved and published in the European Union that approves the safety and tolerability of Micro-PEA. Since 2004, ultra-micro PEA is dispensed in Spain and Italy as a prescription medical food supplement.

FSD Pharma’s research and innovation prowess is unmatched. For instance, it was authorized by Food and Drug Administration (FDA) on 1^st June 2020 to submit an investigative report or New Drug Application (IND) regarding the application of FSD2O1 to treat Covid-19. Severe SARS-CoV-2 virus attack is characterized by extreme inflammation of the respiratory system, which causes cytokine storm and death. FSD was dedicated to refine and leverage the anti-inflammatory properties of FSD201 that can prevent cytokine storm that causes severe lung injury among the Covid-19 patients in critical conditions. It is believed that cannabis-derived products like CBD oil could be used in Covid-19 treatment. FSD is still striving to find another compound used along with the ultra-micronized PEA to cure Covid-19 disease.  

Moreover, the company elevates its global competitiveness in the worldwide pharma industry through innovation and research dedicated to making individuals' lives better while at the same funding the company's growth. FSD BioScience strives to discover, develop, and bring to the pharma market innovative prescription drugs aligned with its micro-PEA proprietary. The company conducts several studies to find new Micro-PEA-based prescription drugs that could be used to treat multiple medical conditions. FSD BioSciences has various research areas in which it holds exclusive patent rights globally, except in Spain and Italy, to investigate micro-PEA application in the treatment of several conditions. It has a robust intellectual property (IP) portfolio protecting its ultra-micronized product between 2029 to 2034 in US. The core target areas include osteoarthritis of the knee, opioid replacement, chronic pain, endometriosis, and women's health. 

After several clinical trials and research, Ultra-Micronized PEA has been discovered to have extensive usages aligned with its analgesic and anti-inflammatory actions. Firstly, it enhances the potency and efficacy of the analgesic and anti-inflammatory therapeutic capabilities. Secondly, it can "entourage" some drugs that can significantly impact the endocannabinoid system. Thirdly, it offers clinically meaningful anti-inflammatory properly. Finally, it has substantial bioavailability and absorption clinical and preclinical efficacy and a more significant safety profile. Such properties make ultra-micronized PEA a highly marketable product because it can be used extensively to treat multiple diseases. 

Extensive knowledge in FSD BioSciences has made the company excel in the development of medical cannabis. Dr. Kaiser and Dr. Bokhari have served for a long time in the pharmaceutical industry. They have accumulated the relevant resources, skills, and experiences that would make the company excel in developing cannabis prescription drugs. These and other leaders within the BioSciences department offer the company the right pool of technicians, medical researchers, innovators, and designers who conduct medical research to determine whether or not their drugs can treat specific diseases in the society. As a result, FSD can develop, monitor, coordinate, oversee, and assess internal and external clinical trials and other practices. The company has diverse competencies and capacity management in various therapeutic areas.

Alliances, Market, and Competition

FSD has established multiple strategic alliances with other companies such as Solarvest BioEnergy, High Tide Inc., World Class Extractions Inc., Huge Shops and Aura Health Inc., Cannara Biotech, and Canntab Therapeutics Ltd, and SciCann Therapeutics. These partnerships have further elevated the innovation and research capacity of FSD, thereby giving it global competitiveness. Such partners make innovation a bit easier through shared knowledge, collaboration, technological facilities, and other resources or practices that promote value co-creation and delivery. Partnership plays a critical role in cushioning the weaknesses of a business while sustaining its strengths. Also, it mitigates possible threats and creates more opportunities.

The company secured its production cannabis and sale for medical purposes by acquiring Canada’s Cannabis Act and Regulations license in 2017 gave FSD sole privilege to grow cannabis over a vast area spanning to about 25 000 square feet in Cobourg. Moreover, the company expanded this land by fully acquiring Kraft Foods with an extensive land of about 70 acres with 40 acres set aside for development. This was a significant move that increased the production capacity of FSD Pharma since it could grow twice as much cannabis it would have grown in the previous areas. It also gave the company more land that could be used for developmental activities, such as expanding the company. This is a considerably large area that ensures the company has a constant supply of the cannabis materials required when manufacturing prescription drugs.

Moreover, the company employs different strategies to minimize competition and elevate its competitiveness in Canada and globally. The strategic acquisition of Prismic Pharmaceuticals reduced competition and increased FSD’s competitive advantage. The company uses the most advanced technology to cultivate cannabis to ensure that it has all the chemical elements and compounds required to produce micro-PEA. The ongoing R&D to discover the applicability of cannabinoid-based medical interventions to address the unmet medical needs among diverse populations worldwide. This shows that the company has a huge potential of growing into a multinational organization with a colossal holding and large global market share due to its ability to strategically align its competitiveness and management capacity with the help of the experienced advisory Board and proficient executives of leading researchers to provide medical solutions using products extracted from the cannabis plant.

Furthermore, the FSD company partnered with World-Class Extractions as a strategy to diversify its revenue stream. The company also increased the pool of its visionary leadership through the addition of  Stephen Buyer (former US Congressman) to the Board of Directors. This strengthened the Board's image and independence due to broad leadership from individuals with extensive knowledge and experience in the pharma industry. These initiatives significantly transformed the company, mainly through increased sales, more strategic acquisitions, and investments, which boosted the expansion of the company’s biosciences. Making such a strategic partnership increased company visibility among the Canadian and US institutional and individual investors. 

The company has excellent expansion plans because it seeks to use strategic partnerships to increase its global market footprint. The 220000 acres acquired during phase 1 strategic planning aim to build expansion capacity by assessing different opportunities through strategic collaboration, monetization of with constriction and research companies to create value and build global competitiveness. The partnership remains one of the crucial opportunities that FSD uses alongside R&D to promote biosynthetic and synthetic cannabinoids to increase the number of drugs approved by the FDA globally.

The strong team of managers and directors is confident and focused on actualizing the company's strategic corporate intent. Therefore, the company's determination can access and utilize good opportunities through a strategic alliance that enables it to explore other medical areas that could facilitate the development of medicines that could help cure diseases associated with the central nervous system, skin diseases, and sleep disorders.  

Financial Analysis

Currently, FSD Pharma Inc. has a stock price per share of 1.91 CAD (US $1.34), which marks a 9.14% increase, showing that it is doing considerably well. Generally, the company has a huge market cap of about $25.6 million with a total share of about 19.2million. These statistics indicate that the stock performance of FSD pharma is considerably good for any potential investors wishing to find a company that offers a guaranteed return on investments. The company has increased its total asset base from $10 878 in 2017 to $38 478 in 2018 to about $43 978 in 2019. Similarly, net income increased from $2,715 in 2017, to $17, 517, and $39, 184 in 2018.

Generally, by the end of 2019, the company had non-asset amounting to $62.8 million, cash assets equivalent to $7.3 million. The increase in the capital base and net revenue for the last three years shows that the company is increasing, and so is its global market share, competitiveness, and profits. This data indicates that an increase in the asset volume has a significant impact on the rise in the net income. I am sure the company would perform better than it is performing if the current asset volume is increased. This is a real gold mine for potential investors willing to grow along with the company. 

The company raised about $4.59 million at $20.10 per share to fund Phase 1 of the first-in-human safety and tolerability trials as a lead candidate during 1Q20 with PP 101 micro-PEA. Founders and members also added another $2.5 million, which increased its visibility among high potent investors after successfully completing Phase 1. It was a significant milestone that made the company be listed among the major publicly traded companies in the US stock exchange after being   This enabled the company to elevate its financial prowess, which attracted several investors since it seemed feasible to invest in such a company because there are higher chances of getting a good return on investments.

The mission of FSD has been very influential in facilitating its financial strength. Its mission is to engage in comprehensive research to develop FDA-approved prescription drugs that deliver the best treatment outcomes. Research and innovations are dedicated to developing medical drugs that produce sustainable and positive shareholder value. Commitment to medical research made the company to receive approval from the FDA to conduct a study proving how its PEA compound can treat Covid-19 increased its shares by 131% since most investors believed in the company and wanted to support its mission and achieve goals together. The company secured sole patent rights from Epitech Group for ultra-micronized PEA in the whole world except Spain and Italy at the cost of $17.5 million. It gave the company global competitiveness since it had secured the patent for more than ten years to solely maintain the right to produce and process cannabis to create medical products that could be used to treat various inflammatory diseases.

The company has a considerably huge income from multiple sources. In 2019, it generated a profit of about 251229.69 CAD (US $193,088) from the sale of its medical products. Through strategic alliances, the company managed to generate a revenue of about $260 000 from the sale of cannabis-based medicines and managed to accumulate total assets valued at more than $70 million. Such an increase in revenue and from sales can be attributed to the increased competitiveness. This is a significant indicator to potential investors that the company is growing rapidly in sales volume, operating cash, total assets and the general holding. 

Moreover, it is expected to generate $7.7 million in revenue after selling 12% of its equity interest in Cannara, a 670% return on investment. The investment was made barely two years after investing in the Cannara holding. This marked a fantastic milestone for FSD Pharma's stakeholders and shareholders, who managed to get almost seven times, return on investment. According to Raza Bokhari, the company CEO, the share sale transaction marked the first strategic investments because several others were underway seeking to raise about $$50 million cash by monetizing non-cash assets, which will be supplemented with the new capital raised from an institution and institutional grade investors within and outside America.

On 21^st Oct 2020, FSD announced the sale of about 4,318 179 class B subordinate voting shares and 3,454,543 shares at the cost of US $2.20 with a time frame of five years.  The shares are sold at a relatively lower price that can be afforded by people from almost all socio-economic classes. Also, the company strives to develop positive and sustainable shareholder value. This makes FSD a suitable company for investing in because its operation pays more regarding stakeholders' input and expected returns.

Conclusion

I hope that you found this collection of thoughts and research about FSD Pharm resourceful. This article offers a thicket of competitive advantages and capacity management, which FSD has managed to build to build over the past two and a half decades. I am happy that the company has leveraged its strengths in leadership, management, strategic partnership, patent protection rights, R&D to overcome potential challenges in the external environment. The company is doing well, and I am sure it can leverage its competitiveness to actualize its bright future. It is a promoting investment opportunity for potential investors.

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