LOBE SCIENCES LTD. (OTC - GTSIF; CSE - LOBE) - Industry: BioPharma - Goldman Small Cap Research
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Investment and Company Research
Opportunity Research
COMPANY REPORT
February 24, 2021
LOBE SCIENCES LTD.
(OTC – GTSIF; CSE - LOBE)
Industry: BioPharma Price Target: $0.68
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Investment and Company Research
Opportunity Research
COMPANY REPORT
LOBE SCIENCES LTD.
Leading Innovation in Psychedelic Medicine and Drug Delivery
Rob Goldman February 24, 2021
rob@goldmanresearch.com
LOBE SCIENCES LTD. (OTC – GTSIF - $0.17; CSE – LOBE)
Industry: BioPharma Price Target: $0.68
COMPANY SNAPSHOT INVESTMENT HIGHLIGHTS
Lobe Sciences is a life sciences company focused Lobe Sciences appears poised to emerge as an
on psychedelic medicines. The Company, through innovative leader in the development of
collaborations with industry leading partners, is psychedelic medicines and drug delivery
engaged in drug research and development using devices to treat a variety of unmet needs,
psychedelic compounds and the development of representing multi-billion-dollar markets.
innovative devices and delivery mechanisms to Primary indications include mild traumatic brain
improve mental health and wellness. injury (mTBI) and post-traumatic stress disorder
(PTSD), using a psilocybin/N-Acetylcysteine (NAC)
KEY STATISTICS combination.
Price as of 2/23/21 $0.17 The Company is also developing a unique Nasal
$0.2193 - Mist device that could be used with its flagship
52 Week High – Low medicine under development or as a broad-
$0.0158
Est. Current Shares Out. 199.7M based delivery system. Going forward,
management will likely submit for FDA 510(k)
Market Capitalization $34M clearance for this device, broadening its reach and
Average Volume 1,727,426 generating revenue.
Exchange OTCPK
Leveraging its five submitted patents and
COMPANY INFORMATION unique approach, GTSIF is currently engaged in
a preclinical study at the University of Miami.
Lobe Sciences LTD Plus, the Nasal device is presently in the
422 Richards Street prototyping phase.
Suite 170
Vancouver BC V6B 2Z4 Management just completed an asset sale
CANADA through a subsidiary vendor that will provide
$32M in non-dilutive capital---an event and
Web: www.LobeSciences.com figure not reflected in the current stock price.
Email: info@lobesciences.com Thus, GTSIF can largely self-fund development,
Phone : 604.834.9499 M&A, and IP acquisition.
Based on the peer group valuations and the
value of upcoming milestones, we arrive at a
six-month target price of $0.68, a level 4x higher
than current prices.
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COMPANY OVERVIEW
The View from 30,000 Feet
Vancouver-based Lobe Sciences LTD (OTC –
GTSIF; CSE – LOBE) appears poised to emerge as
an innovative leader in the development of
psychedelic medicines and drug delivery devices to
treat a variety of unmet needs. The initial indications
for the Company’s psilocybin/N-Acetylcysteine
(NAC) combination are to treat patients suffering
from mTBI (mild Traumatic Brain Injury) and PTSD
(Post Traumatic Stress Disorder). GTSIF is also
developing a Nasal Mist Transducer Device, which
would serve as an efficient drug delivery unit for its
mTBI/PTSD drug under development as well as
other conditions. To date, the Company is engaged in an ongoing preclinical study with the University of Miami
for the treatment of PTSD and/or TBI with PTSD. Plus, GTSIF has commenced prototype engineering and
development of its Nasal Mist device.
Going forward, management is laser-focused on leveraging its portfolio of 5 patents pending, along with further
development of these flagship products. With the sale of an asset providing $32M in non-dilutive capital,
GTSIF is uniquely positioned to largely self-fund its R&D efforts and execute M&A or IP asset acquisition to
complement its current portfolio.
The proliferation of companies developing psychedelic-based approaches to mental health and wellness has
reached a feverish pace in the past couple of years as the benefits associated with such organic or inorganic
compounds have become universally accepted.
As a result, a number of preclinical and clinical studies and trials have commenced in universities and sites
across the globe. In our view, GTSIF is uniquely positioned to succeed and emerge as one of the leading
players in this segment. Moreover, at current prices, we believe that GTSIF’s existing and prospective value
have been overlooked by the market and these shares are grossly undervalued. As milestones are achieved,
we project that the valuation differential between the larger market cap players and GTSIF will narrow
markedly in the coming months.
As a result, our price target of $0.68, essentially 4x its recent closing price, could be achieved in the next six
months. It should be noted that even at this price level, GTSIF’s shares would likely remain behind the small
number of segment leaders, but could still represent at the top of what might be considered the second tier,
pending moves higher.
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PSYCHEDELIC THERAPY: NO, YOU’RE NOT
HALLUCINATING
Historically, psychedelics were found to have a strong application in the
mental health space, particularly in depression, anxiety and PTSD as they
have the ability to alter the perception and the mood of an individual and
impact various cognitive processes. Research has shown that many of
these are safe to consume from a physiological standpoint (in small
quantities) and do not lead to dependence or addiction.
The treatment of depression, PTSD. TBI, and other mental health and
wellness disorders with psychedelics is dramatically different from
cannabis, which holds much promise as a treatment for various
conditions, but a weak history of deep research. Conversely, a recent US
News and World Report feature story notes that:
“Decades of research have demonstrated that psychedelics, which are hallucinogenic drugs, are effective in
treating mental disorders such as depression, suicidal thoughts, PTSD and anxiety. The Food and Drug
Administration has approved and fast-tracked several clinical research trials. The burgeoning psychedelic
sector is attracting attention from investors as more companies have gone public, and research has increased
rapidly due to greater mainstream and government acceptance and decriminalization.”
This theme is bolstered by a late 2020 industry report on the space. A recent study of the U.S. psychedelic
drug space suggests that the market is projected to grow at a CAGR of 16.3% from 2019 to 2027, largely
driven by the increasing prevalence of depression, PTSD, TBI, and other disorders. The Data Bridge Market
Research report notes that the market is expected to total approximately $6.8 billion by 2027, up from $2
billion in 2019. It should be noted that the US News and World Report story cites a potential market reaching
$100B, with the bar lowered in some cases for approval, thanks Breakthrough Therapy designations.
Hundreds of studies have been conducted over the past 10 to 20 years at highly respected institutions such
as Johns Hopkins University, New York University, the Multidisciplinary Association for Psychedelic Studies,
and the Toronto Center for Psychedelic Science and many institutions have launched centers specifically
charged with R&D with psychedelics. Plus, nearly two dozen clinical trials are underway in the US and dozens
of preclinical studies have commenced around the globe.
Against this backdrop, a couple of dozen firms (most based in Canada) have gone public and are attracting
capital, and investors. There is even an ETF where opportunistic can buy a basket of stocks and participate in
its growth. Meanwhile these firms are also on the prowl for assets and IP—which is a key differentiator in this
segment.
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The Hurdles
Many psychedelic drugs in the U.S. are categorized as Schedule 1, including MDMA (ecstasy), LSD (Lysergic
Acid Diethylemide), psilocybin (mushrooms), mescaline, heroin, and cannabis. Similar to cannabis, drugs like
psilocybin can be legalized by states or municipalities, which has occurred in Oakland and Santa Cruz,
California, as well as in the state of Oregon. With many states facing large budget deficits and the drug
decriminalization efforts appearing in bills on more and more state legislatures, we expect more states to follow
suit. Still, the regulatory environment remains a hurdle.
The Players
While we identified nearly two dozen firms in this arena, we have elected to highlight a handful which represent
the closest peers to GTSIF, and thereby excluded companies researching and developing products featuring
the efficacy of ketamine, for example.
COMPASS Pathways PLC (NASDAQ – CMPS) operates as a mental health care company in the United
Kingdom and the United States. It develops COMP360, a psilocybin formulation, which is in Phase IIb clinical
trial to treat patients with treatment-resistant depression. CMPS has the largest market cap by far (as noted on
Table I below), buoyed by a patent award relating to “methods of treating drug-resistant depression with a
psilocybin formulation.”
Cybin Inc. (OTC – CLXPF) focuses on developing psychedelic therapeutics to treat various psychiatric and
neurological conditions. The company operates through two segments, Serenity Life and Natures Journey. The
Serenity Life segment engages in the research and development of pharmaceutical and nutraceutical
psilocybin products. The Natures Journey segment focuses on non-psychedelic medical mushroom
nutraceutical products.
Mind Medicine Inc. (OTC – MMEDF) is a psychedelic medicine biotech company, discovers, develops, and
deploys psychedelic inspired medicines and therapies to address addiction and mental illness. The company is
assembling a compelling drug development pipeline of innovative treatments based on psychedelic
substances, including Psilocybin, LSD, MDMA,
Revive Therapeutics Ltd (OTC – RVVTF) recently acquired assets of PharmaTher Inc. for the development
of psilocybin-based formulations.
Silo Pharma Inc. (OTC – SILO) is a developmental stage biopharmaceutical company focused on merging
traditional therapeutics with psychedelic research.
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THE LOBE SCIENCES DIFFERENCE
The Big Picture
Lobe Sciences is a life sciences company focused on psychedelic medicines. The Company, through
collaborations with industry leading partners, is engaged in drug research and development using psychedelic
compounds and the development of innovative devices and delivery mechanisms to improve mental health and
wellness. GTSIF focuses on the clinical development of devices and medicines to treat specific medical
conditions and brain traumas. Additionally, management is actively seeking opportunities to generate ongoing
cash flow from licensing and other agreements.
On the development side, the Company is focused on the research and the clinical development of psilocybin-
based therapeutics for the treatment of mild traumatic brain injuries (mTBIs) and post-traumatic stress disorder
(PTSD). The markets for these indications are vast. The global PTSD therapeutics market is expected to
reach a market size of $10.7 billion as per Credence Research. The TBI segment is forecasted by Energias
Market Research to reach $156.8B in 2024.
According to the CDC, mTBI accounts for 75% of all TBI instances in the US. Given that these injuries can
cause long-term or permanent impairments and disabilities, mTBI costs the US and estimated $17B each year.
As evidenced by the statistics below, PTSD and mTBI far more common than one may realize. (Analyst’s note:
Two of my children have suffered from mTBI and one had a severe bout due to concussions. Therefore, the
analyst is uniquely aware of the therapeutic efficacy challenge from existing methods.)
▪ 10% of all adults experience PTSD at least once during their lifetime
▪ 40% of people suffering from mTBI also suffer from PTSD
▪ 8M people suffer from PTSD each year---which has been exacerbated by the COVID pandemic
▪ 20% of combat veterans suffer from PTSD
The Offerings
The Company has launched a preclinical research study using psilocybin
(mushrooms) and N-Acetylcysteine (“NAC”) for the treatment of mTBIs
including various forms of concussion as well as PTSD. NAC is a dietary
supplement derived from the amino acid L-cysteine that has strong
applications as an antioxidant for reduction of DNA damage, as an
antidote for acetaminophen overdose, and for its liver-protective
properties and to support a healthy functioning of the immune system.
NAC has been used in multiple studies to treat mTBI, which is an
inherent advantage for GTSIF.
Apart from combining NAC with psilocybin, GTSIF is also working on patents associated with the combination
of MDMA (commonly known as Ecstasy) and NAC for achieving a similar purpose. Preclinical studies with
respect to these combinations are being conducted by the Company along with the scientists at University of
Miami’s Miller School of Medicine under the leadership of Michael E. Hoffer, M.D., professor of otolaryngology
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and neurological surgery. Engineering and prototyping for the Nasal Mist Drug Delivery device is being led by
Visionworks Engineering.
Going forward, management plans to leverage the results of the study to move forward with animal studies and
a future human Phase I clinical trial to determine safety, dosage and efficacy. Interestingly, one of the
Company’s unique approaches is the use of micro-dosing of the active ingredients via its Nasal Spray device.
Monetizable Assets
At present, the Company has five patents pending. Should one or more be awarded, it would be a boon to the
Company from the operational, development, and valuation perspectives. A patent award would likely result in
prospective licensing arrangements with Big Pharma, even prior to broad changes in state regulations
regarding the classification of psychedelics. The patent submissions include:
▪ Psilocybin combined with NAC for the treatment of mTBI and PTSD and other conditions
▪ MDMA combined with NAC for the treatment of mTBI and PTSD and other conditions
▪ Addition of compounds to create memory odor imprint pairing.
▪ Nasal Mist Transducer Device for delivery of medicines directly to the Olfactory Bulb
▪ Virtual Reality Headset combined with the Nasal Mist Device
The Latest
GTSIF sold certain assets held by Lobe's subsidiary vendor relating to Washington-based Cowlitz County
Cannabis Cultivation Inc. to Ionic Brands for total consideration valued at approximately $32M, based on the
cash value in respect of the cash portion of the consideration and the previous closing price of the common
shares of Ionic Brands on the Canadian Securities Exchange in respect of the share-based consideration.
A case can be made that based on yesterday’s news, GTSIF is in a strong financial position relative to many of
its peers. The Company can execute now external R&D such as IP acquisition, M&A, or operational funding,
on a non-dilutive basis, which is a huge bonus for GTSIF and its shareholders. Plus, as an equity owner,
GTSIF has the opportunity to participate in the growth of Ionic Brands, going forward.
Upcoming Milestones
We view prospective future milestones, which play a key role in future valuation, in three categories:
Development, Assets, Expansion. On the development side, the next six months or so should see an evolution
of the Nasal Device from prototyping to the commencement of a production design, along with the filing with
the FDA for a 510(k) medical device clearance, and related trial protocol design submission. Other
development includes the achievement of safety, dosage, and efficacy goals in the current pre-clinical trial,
which can lead to future trials and study designs and launches. In our view, this is the most important
development milestone sub-category.
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On the asset side, it is possible GTSUF could be awarded provisional patents which would be a major event
for the Company, vis-à-vis its peers. While many firms are targeting the depression indication, for which CMPS
is already awarded a patent, GTSIF would gain an early mover advantage for mTBI and PTSD. Furthermore, a
patent related to the device would be almost equally as valuable given its potential broad use.
Expansion is related to the execution of M&A, IP assets, etc., to enhance and broaden the Company’s product
portfolio and increase its shot on goal via new trials.
Valuation
As evidenced by their outsized market values, COMPASS and MindMed are the 800-pound gorillas in this
category, owing to their patents, portfolio size, number of trials/studies, etc. In our view, GTSIF’s shares are
grossly undervalued at current levels. The Company is not getting its due for its innovative approach to mTBI
and PTSD treatment, as well as its broad device potential. In addition, with 5 submitted patents, and a very
seasoned management team with a history of success in health care, GTSIF has hidden assets poised to
enable it to achieve its objectives. Finally, the $32M non-dilutive capital provision from the asset sale
announced yesterday is not reflected in the share price. Even if we took a roughly 33% haircut ($10M) to the
value of the equity, roughly two-thirds of GTSIF’s current market cap are comprised of this transaction alone.
Thus, opportunistic investors are essentially getting the underlying core GTSIF for a song, at a ridiculous $12M
valuation. Therefore, it could be proffered that GTSIF is worth at least $0.28 today (current market cap plus
$22M).
Looking ahead, as a series of the aforementioned milestones occur, and the hidden value of self-funding of
development and M&A enhances GTSIF’s positioning, we believe that the Company could be in a similar level
in which CYBN is today. As a result, our target of $0.68, while 4x the current price, is a 26% discount to
CYBN’s current market value. Separately, we are fans of the space and believe many of the companies have
bright futures ahead.
Table I. GTSIF Publicly-Traded Peer Group (Trading in US and Canada)
Price Mkt Cap
Company Name Symbol (2/23/21) (mil) Development Stage/Approach
COMPASS CMPS $53.11 $1,908 Leader in space with patent to use psilocybin for depression; in Phase 2 trials
Cybin CLXPF $1.34 $186 Developer of psychedelics to treat psychiatric and neurological conditions
MindMed MMEDF $3.48 $1,127 Broadest pipeline of psycadelics; multiple trials in varied geographies
Revive RVVTF $0.40 $95 Just entered space with asset purchase; will continue studies/trials
Silo Pharma SILO $0.36 $31 Licensor and funder of assets in space for multiple indications
Average $669
GTSIF: Today $0.17 $34 Innovative therapy and delivery device developer in psychadelics space
GTSIF: 6 Mo Tgt $0.68 $136
Sources: www.Yahoo!Finance.com, OTC Markets, Company websites, Goldman Small Cap Research
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LOBE SCIENCES LEADERSHIP TEAM
Corporate Executives
Philip J. Young, Chief Executive Officer
Mr. Young is an analytical and results driven life sciences executive who has successfully managed public and
private companies through product development, international growth, commercialization and M&A
transactions. He has served as a Director and Chief Executive Officer for public companies for the past 20
years where has had created significant shareholder value, built integrated scientific, manufacturing and
commercial operations, directed successful M&A transactions and was responsible for generating more the
$900M through acquisitions and equity financings. Mr. Young started his management career in the
biopharmaceutical industry at Genentech Inc. where he was responsible for their cardiovascular and endocrine
product launches sales and marketing.
Brian Zasitko, Chief Financial Officer
Brian has over 13 years of experience across a variety of private and public sector companies in the cannabis,
agriculture, manufacturing, and utility industries. He has extensive experience in financial reporting and
corporate governance, as well as in the capital markets. Previously, Brian was a manager at Ernst & Young
LLP, where he obtained his CPA, CA designation.
Maghsoud Dariani, Chief Science Officer
Concurrent to leading science and technology efforts at LOBE, Maghsoud is also President and CEO of
Semorex Inc. – a privately held company focused on the discovery and development of novel therapeutics for
cancer. Prior to joining Semorex, Dariani was President of Focus Pharmaceuticals, Inc., where he managed
the development and approval of drug products, achieving one FDA approval and bringing another to the
clinical evaluation stage, then successfully negotiated the sale of the company in February 2003. Prior to
Focus, Maghsoud was Vice President of the chiral pharmaceutical business unit at Celgene Corporation.
During his twelve years at Celgene, he was responsible for the successful development and FDA approval of
the pure versions of Ritalin, which are currently marketed by Novartis under the Focalin and Focalin XR trade
names.
Dr. Mark A. Geyer, PhD., Science Advisor
Dr. Geyer is Distinguished Professor of Psychiatry and Neurosciences Emeritus at the University of California
San Diego (UCSD) and directs the Neuropsychopharmacology Unit of the VISN 22 Veterans Administration
Mental Illness Research, Clinical, and Education Center. Since receiving his doctorate in Psychology in 1972,
he has focused on basic research addressing the behavioral and neurobiological effects of psychedelics and
other psychoactive drugs. Dr. Geyer is respected internationally for his research. He has published over 470
peer-reviewed papers, including many addressing the mechanisms subserving the effects of psychostimulants,
psychedelics, and entactogens. Dr. Geyer’s broad experience as a researcher, grant reviewer, journal editor,
and teacher lends invaluable scientific and professional expertise to our Company.
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Board of Directors
Jonathan Gilbert, Executive Chairman
Most recently, Jonathan was the founder and CEO at Tassili LifeSciences, Corp., a biotech firm conducting
research utilizing Psilocybin. Tassili was successfully acquired by a public company in March of 2020. He was
also the founder and CEO of Scythian Biosciences, Inc. from December of 2014 through May of 2018.
Scythian was a publicly traded research and development company in Canada focusing on the prevention and
treatment of concussions and traumatic brain injury with its proprietary Cannabinoid combination, as well as
strategic investments and partnerships across cultivation, distribution and retail of legal Cannabis. Prior to
founding Scythian Biosciences, from January 2013 to December 2014, Gilbert was Marketing Officer for
Commonwealth Opportunity Capital, GP, a hedge fund based in Greenwich, Connecticut. From October of
1995 until December of 2012, Jonathan was the owner and operator of Gilbert Capital Management, Corp., a
full-service private wealth management firm.
Leighton Bocking, Director
Leighton has been working in the capital markets for over 15 years. His primary role has been as an
independent corporate development consultant in addition to holding various directorship positions. Leighton
has been particularly focused on financing and structuring companies. An active investor, he started in the
industry at Canaccord before moving to the public company side of the business.
Michael Petter, Director
Michael is an accomplished leader and entrepreneur in the psychedelics and cannabis industry, co-founding
and acting as a director of several companies that successfully completed M&A transactions. He holds a
Bachelor’s in Computer Science from London University, is a Chartered Engineer and private pilot. Since
January 2009, he has been the Managing Director of Eyvo eProcurement Solutions, a US-based private
company that is a leading eProcurement provider in the SaaS space. He also runs a business mentoring
program that assists businesses and individuals with change management. Mike was co- founder and director
of Eleusian Biosciences Corp., which the Company acquired in July 2020. He also co-founded and was a
director of Tassili Life Sciences Corp. which was acquired by CSE-listed Champignon Brands Inc. in March
2020. Mr. Petter has independent board experience being chairman of a compensation committee and as a
member of an audit committee. His executive advisory skills focus on providing guidance on strategy,
operations, finance and logistics.
FINANCIALS SNAPSHOT
As a pre-revenue R&D company there is little relative financial data aside from the present $300,000 monthly
burn rate, which is in line with companies at this stage. In our view, the most important aspect of the
Company’s current and future financial standing relating to its most recent divestiture. A case can be made that
based on yesterday’s news, GTSIF is in a strong financial position relative to many of its peers. The Company
can execute now external R&D such as IP acquisition, M&A, or operational funding, on a non-dilutive basis,
which is a huge bonus for GTSIF and its shareholders.
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Deal Highlights
GTSIF sold certain assets held by Lobe's subsidiary vendor relating to Washington-based Cowlitz County
Cannabis Cultivation Inc. to Ionic Brands for total consideration valued at approximately $32M, based on the
cash value in respect of the cash portion of the consideration and the previous closing price of the common
shares of Ionic Brands on the Canadian Securities Exchange in respect of the share-based consideration.
The $32M in total sale proceeds to be received including a combination of cash, secured promissory note, and
preferred shares of Ionic Brands Corp. This structure provides the Company with non-dilutive capital which is
critical to management’s M&A objectives. Plus, as an equity owner, GTSIF has the opportunity to participate in
the growth of Ionic Brands, going forward.
Lobe's subsidiary vendor will receive consideration payable through a combination of:
• the payment of Cdn$1,750,000 in cash
• the issuance 100,406,701 series E non-voting preferred shares of Ionic Brands
• Each Ionic Brands Pref Share is exchangeable into one Ionic Brands Share on a one-for-one basis
(subject to adjustment)
• Each Pref Share carries an annual dividend equal to 13% for a period of two years with Ionic Brands
Pref Shares automatically converting to Ionic Brands Shares four years from the issuance date
• Lobe's subsidiary vendor shall, immediately upon receipt of the Ionic Brands Pref Shares, convert the
lesser of: (a) 9.99% of the total number of Ionic Brands Pref Shares; and (b) that number of Ionic
Brands Pref Shares that would, upon conversion, result in Lobe's subsidiary vendor holding not more
than 9.99% of the outstanding Ionic Brands Share, on a post-closing basis
• the issuance of 4,000,000 Ionic Brands warrants with each Ionic Brands Warrant exercisable into one
Ionic Brands Share at a price of $0.30 per Ionic Brands Share for a period of five (5) years
• a secured promissory note in the principal amount of USD$50,000 maturing two (2) years from the date
of issue and bearing interest at a rate of 7%, secured by defined Assets
RISK FACTORS
In our view, the Company’s biggest risks are related to the Company’s R&D efforts, including efficacy and
timing of its trials and studies for its nasal delivery device and treatment of mTBI and PTSD with micro-dosed
psilocybin. Given the likely favorable safety profile for its offerings, and even modest demonstration of efficacy
should foster further FDA submissions for additional studies and trials. A separate risk could be in the form of
access to complementary IP or prospective acquisitions to broaden the Company’s portfolio. We believe that
given GTSIF’s high-profile, innovative approach, and its unique availability of non-dilutive capital for the
acquisition of related assets, GTSIF stands to emerge as the firm sellers would wish to partner. Looking further
down the road, a key risk would relate to FDA approval or clearance of its offerings or the potential need to be
first to market. Still, even with such clearance, potential hurdles exist in the form of timing and magnitude of the
sales and marketing ramp, due to a likely requirement to educate both clinicians and patients on the merits of
using psychedelic medicine to treat the aforementioned conditions.
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The risks outlined above could come from larger competitors, existing firms, or new entrants. Still, these future
concerns are consistent with firms of GTSIFs size and standing. Moreover, we believe that GTSIF’s seasoned
management team is prepared to overcome these hurdles and emerge as a leader in the space.
An industry-specific risk is related to the regulatory environment. Many psychedelic drugs in the U.S. are
categorized as Schedule 1, including MDMA (ecstasy), LSD (Lysergic Acid Diethylemide), psilocybin
(mushrooms), mescaline, heroin, and cannabis which could inhibit growth or development in the industry as a
whole. We believe that restrictions would be lifted rather than enforced but that is merely our opinion.
Volatility and liquidity are typical concerns for microcap stocks that trade on the over the counter (OTC) stock
market. While competing firms may have to go to market and execute dilutive or unfavorable funding
parameters to achieve its goals, it is unlikely that GTSIF would be required to seek this path in the near term. If
a large deal presents itself, however, we believe that such corporate expansion could be executed with
favorable terms, given GTSIF’s assets, An overriding financial benefit as a public company is the favorable
access to and the availability of capital to execute M&A, fund product development or launches, and other
initiatives. Since the proceeds of any future funding would be used in large part to advance major business
development and sales, we believe that any dilutive effect from such a funding could be offset by related
increases in market value.
CONCLUSION
Lobe Sciences appears poised to emerge as an innovative leader in the development of psychedelic
medicines and drug delivery devices to treat a variety of unmet needs, representing multi-billion-dollar markets.
Primary indications include mild traumatic brain injury (mTBI) and post-traumatic stress disorder (PTSD), using
a psilocybin/N-Acetylcysteine (NAC) combination. Leveraging its five submitted patents and unique approach,
GTSIF is currently engaged in a preclinical study at the University of Miami. Plus, the Nasal device is presently
in the prototyping phase.
The Company is also developing a unique Nasal Mist device that could be used with its flagship medicine
under development or as a broad-based delivery system. Going forward, management will likely submit for
FDA 510(k) clearance for this device, broadening its reach and generating revenue.
Management just completed an asset sale through a subsidiary vendor that will provide $32M in non-dilutive
capital---an event and figure not reflected in the current stock price. Thus, GTSIF can largely self-fund
development, M&A, and IP acquisition. Based on the peer group valuations and the value of upcoming
milestones, we arrive at a six-month target price of $0.68, a level 4x higher than current prices.
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RECENT TRADING HISTORY FOR GTSIF
(Source: www.StockCharts.com)
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SENIOR ANALYST: ROBERT GOLDMAN
Rob Goldman founded Goldman Small Cap Research in 2009 and has over 25 years of investment and
company research experience as a senior research analyst and as a portfolio and mutual fund manager.
During his tenure as a sell side analyst, Rob was a senior member of Piper Jaffray's Technology and
Communications teams. Prior to joining Piper, Rob led Josephthal & Co.'s Washington-based Emerging
Growth Research Group. In addition to his sell-side experience Rob served as Chief Investment Officer of a
boutique investment management firm and Blue and White Investment Management, where he managed
Small Cap Growth portfolios and The Blue and White Fund.
ANALYST CERTIFICATION
I, Robert Goldman, hereby certify that the view expressed in this research report accurately reflect my personal
views about the subject securities and issuers. I also certify that no part of my compensation was, is, or will be,
directly or indirectly, related to the recommendations or views expressed in this research report.
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This Opportunity Research report was prepared for informational purposes only.
Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two
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