This Pharma Stock Has Some Investors 'Beyond Excited'
Contributed Opinion

Over 15 million people suffer strokes every year, leaving 85% of them with some form of disability and costing more than $45 billion annually in the United States, according to health officials.

There are limited treatment options — such as clot-busting drugs, blood thinners, and surgery — making the finding of a new, effective therapy an important area of medical research.

Vancouver-based Algernon Pharmaceuticals Inc. (AGN:CSE; AGNPF:OTCQB; AGN0:XFRA) already has a different take on developing new drugs, it repurposes ones already approved for one indication to use for other conditions.

But in this case, Algernon had to think outside of the box. The psychedelic compound N,N-dimethyltryptamine (DMT) has never been approved as a drug, but it has been in use for centuries in religious ceremonies as a traditional spiritual medicine and has already been involved in some Phase 1 studies.

It's possible use to help stroke patients has some, like independent investor PennyQueen, "beyond excited."

"Research into hallucinogens has become popular lately, and while it is a bit of a departure from the general Algernon model, the potential is too good to ignore," she wrote for Streetwise Reports.

Algernon plans to be the first company in the world to investigate DMT as a potential treatment for ischemic stroke patients. Several preclinical stroke studies have demonstrated that the drug helps reduce brain tissue damage and promote the growth of new neurons and structural and functional neural recovery following a brain injury, the company said.

“Rats from an animal stroke study that were given DMT had a smaller area of damaged brain cells and showed an almost full recovery of motor function after 30 days, when compared to the control group," Algernon Chief Executive Officer Christopher J. Moreau said.

No Hallucinations With Microdoses

While most of the current research on DMT targets treatments for PTSD, depression, and addiction using the hallucinogenic qualities of the molecule, Algernon is taking a different approach.

"Algernon will be investigating DMT at sub-psychedelic doses, meaning we are not creating the psychoactive experience in patients," Moreau said. "The preclinical data has shown that a microdose of DMT still causes the growth in the neurons, which means patients who have suffered a stroke could be given a small enough dose of DMT to not cause hallucinations. The preclinical data suggests that with DMT, a person may not need the hallucinogenic experience for the drug to potentially help the brain repair itself."

Algernon has retained globally recognized leaders in the area of psychedelic drug research as consultants, including Dr. David Nutt from the Imperial College of London's Centre for Psychedelic Research, and Dr. Rick Strassman, author of the book "DMT: The Spirit Molecule." The company has also brought in two leading clinical stroke experts from the UK to help guide its human studies.

The next stage is to conduct a Phase 1 clinical trial, to be followed by a Phase 2 trial, where the drug will be tested on patients who have suffered a stroke. The company is expecting to complete the Phase 1 study by the end of 2022 and begin the Phase 2 study in Q1 2023.

A Good Buy Point?

PennyQueen said she has always found Algernon's business model to be "simply brilliant." The company's stock ran as high as CA$11.90 on Jan. 18. She said it was at a good buy point at CA$6.24 per share on April 5.

"The benefit of (Algernon's) strategy is that it shortens the timeframe of the trials, because they can generally skip the Phase 1, because they already know that the drug is safe, and they can get right into Phase 2 to identify whether it works or not."

—AlphaNorth Asset Management cofounder Steven Palmer

"I'm currently adding to my holdings at this pricing," she told Streetwise.

The company said its drug repurposing strategy saves time, capital, and accelerates the traditional timeline for advancing a new drug to market. Moreau said it can save years of early research and development work, and millions in research and development costs.

"The benefit of this strategy is that it shortens the timeframe of the trials, because they can generally skip the Phase 1, because they already know that the drug is safe, and they can get right into Phase 2 to identify whether it works or not," AlphaNorth Asset Management cofounder Steven Palmer told Streetwise.

The failure rate for a drug in the preclinical stage can be as high as 90%, Moreau said.

Approach Saves 'Millions,' Company Says

Algernon's strategy with DMT isn't a pure repurposing play, as the drug hasn't been approved in the past, but it has been around for centuries as a psychoactive compound. There have also been a number of Phase 1 studies of DMT, and as a result, the company believes it doesn't need to conduct the required preclinical research necessary for a new drug.

"By pretty much bypassing the Phase 1 portion of the trials, Algernon saves years and millions," wrote Bob Moriarty, founder of 321gold.com.

Algernon is also advancing other clinical research programs based on repurposing already approved drugs, including a Phase 2 human study of a drug for idiopathic pulmonary fibrosis (IPF) and chronic cough, with results expected in Q2, 2022, and a new program looking at chronic kidney disease.

There are other companies in the pharma space currently developing new types of therapeutics for stroke and chronic cough patients, including DiaMedica Therapeutics Inc. (DMAC:NASDAQ), currently in a Phase 2 study for stroke, and BELLUS Health Inc. (BLU:TSX; BLUSF:OTCPK), currently planning a Phase 3 study for chronic cough. Moreau said even though Algernon is slightly behind these companies in the development process, they may end up with positive Phase 2 study results. "It all depends on how strong our Phase 2 data is, and that can be the real game-changer," said Moreau.

Some analysts and writers who watch Algernon agree. "The fundamentals of the company are believed to be positive," analyst Clive Maund wrote.

Moreau said he takes great pride in working in an industry that is about helping people. "One of the most rewarding things about working in pharmaceutical development is knowing that on the one hand you're working hard to make the business a success and, on the other, is the knowledge that you're helping to either reduce mortality or reduce people's suffering," he said.

Disclosures
1) Steve Sobek compiled this article for Streetwise Reports LLC. He or members of his household own securities of the following companies mentioned in the article: None. He and members of his household are paid by the following companies mentioned in this article: None. His company has a financial relationship with the following companies referred to in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Algernon Pharmaceuticals Inc. Click here for important disclosures about sponsor fees. An affiliate of Streetwise Reports is conducting a digital media marketing campaign for this article on behalf of Algernon Pharmaceuticals Inc. Please click here for more information.
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5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Algernon Pharmaceuticals Inc., a company mentioned in this article.
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