New Wave Holdings (SPOR.C): Former miner/e-sports player looks to build legitimacy in shrooms

This time for sure!

Considering it was a mining company in September of last year, then an e-sports company, New Wave Holdings (SPOR.C) sure has been busy on the psychedelics front the last few months. In that time, there have been two rollbacks, three ticker symbols, and several acquisitions bought and subsequently sold.

What’s left is a group that REALLY wants to chase the hottest sectors but leaves a lot of questions regarding how serious they are.

They’re trying to see to that over the last few weeks with a new roster of advisors and executives, including Dr. Carolyn Myers, PhD, who will provide ‘business strategy and business development consulting services to the company.’

Dr. Myers is an accomplished senior executive with extensive experience creating, growing and leading health care businesses. She is currently principal of BioEnsemble Ltd., a business strategy consulting firm that advises C-suite executives of small and medium-sized life sciences companies on a comprehensive range of drug development, commercial and business development services.

Dr. Myers will be instrumental in shaping New Wave’s research and development (R&D) focus in the area of psychedelic compounds, including psilocybin, MDMA, LSD and ketamine.

As accomplished as Dr Myers may be, the market yawned at the news, with stock in the company dropping a few cents, so New Wave repeated it the next day.

“Under Dr. Myers’ leadership, New Wave will continue to advance our R&D portfolio with the goal of developing industry partnerships as well as developing and commercializing therapies using psychedelic compounds such as ketamine, psilocybin and MDMA,” said Trumbull Fisher, President of New Wave.

Company stock dropped another cent to $0.25 on the repeated news.

This is not new for SPOR (aka NWES, aka TRM), which has had little problem raising money while it’s chased hot sectors this past year, but has had a lot of problems raising awareness – and convincing folks of its legitimacy – while doing so.

The company made substantial purchases in the e-sports arena, including investments in teams, event producers, and more, much of which appears headed for quick flips or writedowns going forward.

There’s a lot of focus now on New Wave’s more recent acquisition, in a 50% stake in Anahit Therapeutics.

  • Anahit Therapeutics is developing a wholesale model, which includes psilocybin cultivation in emerging markets (for example, the Caribbean) that enables low-cost high-quality operations (that is, cultivation, extraction, formulation and packaging) for local and export markets;
  • Building infrastructure to grow and sell mushrooms locally in Jamaica and exporting products to other legal jurisdictions such as the Netherlands and Brazil;
  • Anahit Therapeutics is developing a product portfolio to include health care products that incorporate legal functioning mushrooms, as well as conducting research and development initiatives; Anahit Therapeutics’ product SKUs will include cordyceps, lion’s mane, chaga and reishi mushroom-based liquid cordyceps, concentrated mushroom powder, tea, chocolate, syrups, elixirs, cold beverages, and nasal spray;

That’s all fine as a stake driven into the sector, but legal revenues in psychedelics aren’t really a thing just yet, which means New Wave will need to cover the bills while waiting for lawsuits and regulatory changes to open things up. They can always go back to the market to raise money, but lost $4 million in their most recent quarter, according to financials, which is the same amount they’re trying to raise going into the new sector. At last report, the company had brought in roughly half of the intended amount, after a month of trying.

In addition, New Wave agreed to lend Anahit $350k going into their arrangement, which tells me that company isn’t banging out revenue just yet.

Going by its track record in e-sports, it would appear New Wave’s model isn’t to buy revenue in a sector, but rather involvement in a sector, as a means of convincing investors to buy in. That worked early on in the cannabis sector’s evolution, but today sees most players in that space writing down massive amounts.

My suggestion to New Wave, not that they’re contacting me asking my advice, would be to chill the fuck out for a bit and focus on developing a real business that can sustain in the short term, given the limitations that the psychedelics space currently works within.

Others are buying clinics as placeholders, or doing ‘research’ as placeholders, or announcing their intention to do something mushroom based ‘sometime’ in the future. Frankly, being the first one in isn’t a magic formula to long term success. Capital preservation, real moves that progress the business, and maybe even some public lobbying for regulatory change seem much better options.

— Chris Parry

FULL DISCLOSURE: New Wave Holdings has no commercial connection to our company or the author of this piece.

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