Alt-Pharma VC adds 7% Stake in Testing Strip Firm

Safe Supply Streaming Co. Ltd (SPLY:CSE; SSPLF:OTCQB; QM4:FSE) is an umbrella corporation investing in the legal and regulated supply of drugs. This Canadian company's focus is incubating companies across the medical ecosystem to address the physical, financial, and emotional damage drug abuse causes with products and tech that provide human solutions.

The firm's existing portfolio, before the new acquisition, consisted of CannaLabs and the Safe Supply Licensing Co. CannaLabs holds a Health Canada license to engage in conducting cutting-edge research on methylenedioxymethamphetamine (MDMA), cocaine, dimethyltryptamine, ketamine and other psychoactive compounds that will be foundational to the development of the safe supply ecosystem. It's also engaged in conducting analytics and testing of compounds.

Safe Supply Licensing Co. is in the application process for a dealers' license under the Controlled Drugs and Substances Act (CDSA) to import and test controlled substances and connect investee companies to federal permits for Schedule 1, 2, and 3 compounds.

The Catalyst: 7% Stake in Safety Strips

On February 8, Safe Supply Streaming announced its recent acquisition of a 7% interest in Safety Strips Tech Corp., a novel harm reduction company. Safety Strips specializes in proprietary medical testing technologies, aiming to become the consumer-targeted packaged goods brand of choice for medical testing.

Safety Strips CEO Geoff Benic, who previously propelled Aleafia to an almost half-billion dollar valuation and earned it the title of 'TSX-V Company of the Year,' has steered the firm to a leadership position in harm reduction by developing a market-leading fentanyl test strip, among other simple testing innovations. Safe Supply Licensing's investment aims to capitalize on addressing the escalating overdose crisis.

According to CEO Panagiotakopoulos, "Safe Supply is the first venture capital firm actively deploying capital in the third wave of drug reform. As jurisdictions around the world wake up to the fact that the war on drugs has been a failed policy, new policy initiatives are underway, creating massive new opportunities."

Safety Strips is developing inroads with blue-chip retailers to become the go-to brand for off-the-shelf medical testing solutions. "With the Biden administration's recent regulatory changes reclassifying fentanyl test strips, we are at a pivotal moment in public health," CEO Benic explains. "Our mission is to commercialize our business effectively, making our life-saving technologies as ubiquitous as condoms were during the AIDS crisis."

"This partnership with Safe Supply Streaming will amplify our reach and impact, bringing critical harm reduction tools to a wider audience," he anticipates.

Bill Panagiotakopoulos, CEO of Safe Supply Streaming, shared Benic's enthusiasm, highlighting the acquisition's strategic importance. "Our investment in Safety Strips represents a key component of our value chain, delivering on the promise we made to our investors. We are not only looking at near-term revenue opportunities with Safety Strips' existing product line but are also excited about the growth potential in the medical testing field."

Panagiotakopoulos paints a picture of ongoing and synergistic integrations. "Our plans for Safe Supply Streaming extend into medium-term projects like CannaLabs and other deals that are currently in the pipeline. Safety Strips' work, especially in the field of harm reduction and medical testing with products like Xylozen and 'date rape straws,' is perfectly aligned with our vision."

Why This Market? Growing and Underserved

Safety Strips is well-positioned to lead in the development of harm reduction technologies as the fentanyl crisis worsens. The market for fentanyl test strips is ripe for expansion, with potential applications in diverse venues, including music festivals, retail space, and schools. According to the company, the global market for test strips is expected to grow from US$6.1 billion in 2023 to US$12.6 billion by 2030.

According to a recent report by The Insight Partners, "Technological advancements in test strips are expected to introduce new trends in the market during 2022-2030. Based on product type, the global test strip market is bifurcated into blood test strips and urine test strips. The blood test strips segment held a larger market share in 2022, and the same segment is anticipated to register a higher CAGR during the forecast period."

"Based on end users, the global test strip market is segregated into hospitals & clinics, home care, and diagnostic laboratories. The hospitals & clinics segment is expected to account for a maximum share of the global test strip market during 2022-2030."

This research indicates that consumer-targeted test strips for non-diabetic medical and hazard testing enjoy an untapped and widely underserved market.

Why This Company? Shrewd Investing

According to CEO Panagiotakopoulos, "Safe Supply is the first venture capital firm actively deploying capital in the third wave of drug reform. As jurisdictions around the world wake up to the fact that the war on drugs has been a failed policy, new policy initiatives are underway, creating massive new opportunities."

He notes that the company's executive management team comprises pioneers in legal cannabis and psychedelics and "is the first mover in deploying capital in these emerging industries. From drug testing technologies to nutraceutical and pharmaceutical development of the coca plant to addiction and recovery centers," he boasts, "the opportunity is massive, and almost no one else is active in the sector, leaving us with the pick of opportunities."

By investing in Safety Strips, Safe Supply Streaming is expanding into a comprehensive range of medical testing and committing to diversifying its business by addressing a broad spectrum of public health challenges. Safety Strips can manufacture 100 million test strips annually at competitive prices and targets market penetrations of 3-4% in 2024 and 5-8% in 2025 across the United States, Canada, Mexico, the EU, and other markets.

Panagiotakopoulos says the company expects to announce more investments in the coming weeks. "These investments will be relatively small cash value but will have significant torque as the companies are well-positioned for explosive growth and because, as an advisor, in addition to our invested capital, we are likely to earn a fee for service equity at an attractive valuation as well."

The company also aims to forge distribution partnerships with universities, sports stadiums, concert promoters, and venues, using heavy visibility in these high-risk environments to promote its strips as a vital harm reduction tool.

Also on February 8, Safety Strips itself announced its own acquisition of a 7% stake in Hero Brands, a top-tier distributor in the United States known for its robust network and influential connections with ubiquitous retailers nationwide. This strategic alliance marks a pivotal moment for the medical testing firm, enhancing its distribution capabilities and putting its products on store shelves nationwide.

Solidifying its commitment to broadening its retail footprint, Safety Strips expressed in a press release that its "CEO is in advanced discussions with several blue-chip retailers to stock its life-saving products," adding that "These conversations underscore the growing recognition and demand for effective harm reduction tools in mainstream retail outlets."

By partnering with retail giants, Safety Strips aims to make its tech available to a broader audience and contribute significantly to the public health effort to combat the overdose crisis.

"Safe Supply Streaming and Safety Strips are united in their mission to combat the overdose crisis and improve public health outcomes through innovative harm reduction technologies. This partnership represents an important milestone in the journey toward safer, healthier communities," the release concludes.

Why Now? New Acquisition, New Board Member

In addition to its new investment, Safe Supply Streaming has added Jack Bensimon, LL.M., CAMS, CFSA, CIMA, to its Board of Directors. Bensimon has 30 years of capital markets experience negotiating the tricky waters of Canadian and U.S. regulatory and risk compliance, corporate governance, and securities law.

He is a project who has successfully led many teams in the technology space focused on identifying, achieving, and tracking critical milestones within budget constraints. In addition to experience advising various digital asset exchanges, issuers, and platforms globally and registering new regulatory structures while developing all required compliance manuals for them, he also led the project management of subject matter expert compliance teams under OSC, IIROC, SEC, FINRA, FinCEN, and FINTRAC.

Bensimon has been a Managing Director at Black Swan Diagnostics Inc., which focuses on regulatory compliance for broker-dealers, asset managers, and exchanges since 2008, where he has developed expertise in independent risk assessment, securities law, and regulatory reporting for private and public companies.

The company also announced the February 1 departure of Director Setti Coscarella, who left to pursue other opportunities after helping shepherd the company through the IPO process.

Panagiotakopoulos says the company expects to announce more investments in the coming weeks. "These investments will be relatively small cash value but will have significant torque as the companies are well-positioned for explosive growth and because, as an advisor, in addition to our invested capital, we are likely to earn a fee for service equity at an attractive valuation as well."

The boisterous CEO concluded that Safe Supply Streaming's "current valuation is only slightly higher than [its] cash value, which basically puts zero value on the optionality that [it has] as a company. Our planned initial investments have significant near-term upside potential with accelerated liquidity paths."

Ownership and Share Structure

The firm has a market cap of CA$9.92 million, covering 73.92 million shares outstanding, a 71.23 million free float, and 8.8 million options. It would not disclose current liquidity but confirmed a monthly burn rate of CA$100,000 to CA$150,000. It also opined that all shareholders of origin looking for fast exits are likely already out.

There's no warrants overhang, and the company is working with investment relations firm KCSA as well as the influencers Shad Dales and Rich TV. Currently, no analysts or newsletters are following Safe Supply Streaming.

According to Reuters, management and insiders own approximately 3.66% of the company. Director Jonathan Goldman owns 1.60% (1.18 million shares), Chairman and CEO Vasislios (Bill) Panagiotakopoulos owns 1.19% (~880,000 shares), Director Alexander Somjen owns 0.27% (~200,000 shares), Director Kelvin Wah Chin Lee owns 0.20% (150,000 shares), Director Michael Galego owns 0.18% (140,000 shares).

President Ronan Levy owns 0.14%(~100,000 shares), Director Brianna Davies owns 0.07% ~50,000 shares), and Vice President of Corporate Development Settimio Coscarella owns 0.01% (<10,000 shares). The remaining ownership is retail, trading in a 52-week range between CA$0.07 and CA$0.37.

Important Disclosures:

1. Safe Supply Streaming Co. Ltd has a consulting relationship with an affiliate of Streetwise Reports, and pays a monthly consulting fee between US$8,000 and US$20,000.
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Safe Supply Streaming Co. Ltd.
3. Owen Ferguson wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
4.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 
5. This article does not constitute medical advice. Officers, employees and contributors to Streetwise Reports are not licensed medical professionals. Readers should always contact their healthcare professionals for medical advice.

For additional disclosures, please click here.