Love Pharma embodies the new era of a booming global wellness industry

2021.10.21

While the concept of wellness has been around for ages, it was not until Covid when consumers really started to take health and personal well-being seriously.

The global pandemic has completely reshaped how we perceive “wellness” and recalibrated our daily routines to fit personal needs.

Lockdowns and social restrictions have broadened our definition of this term, encompassing not just fitness and nutrition but also overall physical and mental health.

Wellness Market Boom

No longer placed on the ‘luxury’ side of the consumption scale, wellness has gradually moved towards the ‘necessity’ domain, as people continue to live under a cloud of economic uncertainty and health threats.

In a survey conducted by McKinsey & Company earlier this year, 79% of the approximate 7,500 consumers surveyed in six countries said they believe wellness is important, with nearly half of the respondents considering it to be a top priority.

McKinsey’s biggest finding, though, was that consumers in every market surveyed reported a substantial increase in the prioritization of wellness over the past two to three years, implying a Covid-induced acceleration of the global wellness market.

Overall, the firm estimates that the global wellness market currently stands at more than $1.5 trillion, with annual growth of 5-10%.

The same survey also found that compared to fitness or nutrition, better health appears to be the most important wellness dimension to consumers across every market. In fact, consumers are expected to spend more on health products than they do on any other wellness category (see below).

Looking ahead, a major part of consumers’ spending focus will be on products that have physiological benefits encompassing multiple wellness categories.

Due to various socio-economic factors that led to changes in consumer lifestyle, one market sector that has garnered increased attention over the years is nutraceuticals.

Nutraceuticals are defined as food products that impact positively on an individual’s health, physical performance or state of mind, in addition to their nutrition content. To the modern consumer, they are considered to be a vital link between health and food.

A study by KPMG once predicted that nutraceuticals will play a central role in preventative healthcare, calling these products the “future of intelligent food.”

Over the years, self-care trends across the world have driven up demand for nutraceuticals including superfoods, food and dietary supplements, sports nutrition, and functional foods and beverages. Now with the Covid crisis, the industry is about to blossom.

What was estimated to be a $278.8 billion market globally in 2020 is set to grow to $441.7 billion by 2026, according to data compiled by ReportLinker. The functional foods segment alone is projected to grow at a 7.8% CAGR to reach $217.2 billion by the end of the analysis period. Functional foods are those considered to be whole,  fortified or enriched.

The market is also experiencing strong demand for personalized approaches to wellness such as dietary supplements. This market segment is forecast to reach $74.8 billion by 2026, the report showed.

A separate report by consulting firm Grand View Research gave similar estimates for the global nutraceuticals market, including a projected compound annual growth rate (CAGR) of 8.9% from 2020 to 2028.

There’s also psychedelics, which emerged in some corners of the health sector as a potential treatment method for various mental health illnesses and disorders.

Psychedelics are defined as a class of psychoactive substances that produce changes in perception, mood and cognitive processes. There are many different kinds of psychedelics; some occur naturally (in trees, vines, seeds, fungi and leaves), while others are made in laboratories.

In recent years, the psychedelic wellness industry has received a much-welcomed boost as behavioral health clinicians and patients are becoming more willing to try alternative treatments, including psychedelic drugs such as ketamine, LSD and MDMA.

As such, the global psychedelic drug market is expected to grow rapidly, rising to $69 billion by 2026, according to new financial data from Research and Markets. This figure is also much higher compared with its previous estimate of $10.75 billion.

Data Bridge Market Research analyses that the market is growing at a CAGR of 13.3% from 2021 to 2028 during its early stages.

These forecast figures for various market sectors bring to light just how big the wellness industry is about to get in the coming years, especially with global health concerns continuing to invade our daily lives.

This presents tremendous opportunities for future-looking companies that are developing health products which can perfectly align with consumers’ psychological and physical needs in an ever-changing industry.

Love Pharma Inc.

One such company that we are keeping an eye on is Love Pharma Inc. (CSE: LUV) (FSE: G1Q0), whose mission is to bring to market innovative products that target mental and sexual health while improving quality of everyday life.

In particular, Love Pharma considers itself to be a “new age pharma” company; that is, a company committed to offering a fresh and trustworthy perspective to the world of pharmaceuticals. Its goal is to enhance both sides of the wellness coin by offering naturally occurring therapeutics backed by scientific research.

Products

Since its founding in 2020, the company has been on a rapid growth trajectory, having acquired as many as six licenses to produce, market, package, sell and distribute its patent-protected therapeutic and pharmaceutical products throughout Europe and North America.

In February of that year, Love Pharma successfully closed an initial funding of $2.6 million after signing initial licensing agreements for novel products.

Two products, both scientifically proven and made with psychedelics and nutraceuticals to aid in mental and sexual health, have been launched since and are available for purchase in the US:

1. Auralief — A discreet cannabis-infused oral strip that speeds up and enhances the desired effects of THC and CBD.
2. BLOOM — A topical gel that increases blood circulation and sensitivity. Future versions will be hemp-infused, further improving blood circulation and sensitivity.

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A third product about to launch soon is a muco-adhesive sublingual strip, for use as a psilocybin delivery system, that Love Pharma is developing with its US pharmaceutical company partner.  

Having gained increased legitimacy in the field of mental health care following the FDA’s 2018 “breakthrough” designation allowing the fast-tracking of drug trials, companies like Love Pharma are developing new products that deliver accurate doses of psilocybin to the recipient. 

Prominent research facilities in the US and the UK have been studying the efficacy of psilocybin in treating a number of debilitating conditions. They include a recent study at Imperial College London which found that psilocybin performed as well as Lexapro, a widely used antidepressant; and a 2020 clinical trial at Johns Hopkins University’s Center for Psychedelic & Consciousness Research that suggested psilocybin with therapy is effective in treating Major Depressive Disorder (MDD).

At Johns Hopkins, research has already demonstrated the therapeutic effects of psilocybin in people dealing with addictions, stress caused by life-threatening diseases, and treatment-resistant depression.

Johns Hopkins is currently studying the effectiveness of psilocybin as a therapy for opioid addiction, Alzheimer’s disease, post-traumatic stress disorder (PTSD), post-treatment Lyme disease syndrome, anorexia nervosa and alcohol use in people with major depression.

“Considering the incredible advancement of psychedelics (most notably, psilocybin) in the health and wellness market, LOVE Pharma’s excitement about partnering with a US-based pharmaceutical company —developing the technology behind this muco-adhesive strip as a delivery system for psilocybin — is palpable. We recognize the need for discreet, consumer-friendly applications, and with its delivery of consistent dosing, this sublingual strip hits all the marks,” said LOVE Pharma COO Joshua Maurice in the Oct. 20 news release.

Clinical Validation

To provide the best quality on the market, Love Pharma has integrated as much clinical data and research as possible into its product development.

Auralief is supported by a recent human trial that demonstrated a greater than 30% increase in efficacy and speed to performance of THC and CBD.

BLOOM is also clinically proven to increase the number, intensity, and speed to orgasm for women. 98% of women reported an overall improvement in sexual experience.

Another product currently under development is the FSD supplement, which is backed by a clinical trial demonstrating an overall reported increase in desire, satisfaction and orgasm within women and is clinically proven to increase sexual satisfaction by 25%.

FSD, along with other products such as the psilocybin-infused oral strip, are expected to hit the markets very soon, further bolstering the Love Pharma product line.

Sales Growth

Due to growing market demand, the company is forecasting a “healthy” revenue boost from its existing and future products.

The CBD mucoadhesive strip product itself is expected to reach upwards of $30 million in sales over the next three years, and the imminent launch of the psychedelic psilocybin strip would add another $20 million over that period.

Other “coming soon” products like the male enhancement gel and the ToConcieve gel have sales projections of $50 million and $7.5 million, respectively. Overall, Love Pharma’s arousal gel patented technology is estimated at a value of $150 million.

Market Comparables

For Love Pharma, the ultimate goal is to establish itself among the top companies in the global health and wellness market. Comparables include:

• Canopy Growth ($9 billion market cap) — A world-leading cannabis company based in Smiths Falls, Ontario, has an established partnership with Fortune 500 leader Constellation Brands, and a revenue of $440 million.
• MindMed ($1.28 billion market cap) — A psychedelics company focused on the healing power of the mind that has raised close to $200 million since 2019.
• Ro ($308 million market cap) — A wellness company based in Basel, Switzerland and founded on sexual health.

Experienced Management

Given its strong lineup of proven products, technologies and established sales performance, combined with significant near and medium-term growth catalysts (i.e. 7.2% CAGR in nutraceuticals over the next 10 years), Love Pharma could be well on its way towards market leader status.

The company is led by an experienced and specialized team with backgrounds in pharmaceuticals, nutraceuticals, capital markets and global distribution:

• Zachary Stadnyk, Director and CEO —A corporate finance and advisory professional specializing in taking companies public in emerging markets. Mr. Stadnyk served as the head of corporate finance for The Supreme Cannabis Company from 2014-2018, which raised over $300 million and was later acquired by Canopy Growth in 2021 for $435 million. Additionally, he was the founder, director and chief executive officer of DC Acquisition Corp., a capital pool company (CPC) that raised an initial $3 million on its IPO and listed on the TSXV. The issuer completed its qualifying transaction with Kiaro Brands, a leading cannabis retailer, in October 2020, which is targeting $50 million in revenue in fiscal 2022. Mr. Stadnyk also serves on the board of Health Logic Interactive (TSXV: CHIP), an early-stage medical device company.
• Douglas Taylor, Director — Over 30 years of extensive experience in managing projects, services and facilities in the public sector. His previous work included community engagement, strategic planning, business planning, and implementation for a wide range of recreational facilities and services. Mr. Taylor has served on the Glenbriar board as CEO for three years and as president for the past two and a half years.
• Mark Tommasi, Director — A senior officer, director, financier and consultant with over 25 years of experience in corporate development, equity, private equity and venture capital financing, IPOs and private placements, marketing, investor relations, and board and committee activities for numerous public and private companies in both the US and Canada. Mr. Tommasi has been noted for his ability to help young companies get to the next level.
• Tatiana Kovaleva, CFO — A finance executive with international and trans-border expertise and credentials as a CPA. Ms. Kovaleva has extensive experience in capital markets, where for over 20 years she served in multiple capacities including chief financial officer for publicly traded companies such as M Pharmaceutical Inc. and 360 Blockchain Inc. She has utilized her specialized executive management experience in public company financial planning and demonstrated a successful track record.
• Joshua Maurice, COO —  Has 20 years of experience in consumer goods with a focus on OTC drug and nutraceutical development that includes regulatory clinical research, branding, marketing, advertising and retail distribution on a global basis. Mr. Maurice has successfully launched retail brands from concept to retail distribution with direct-to-consumer campaigns as well as brick-and-mortar clients like Walmart, CVS, Target, Walgreens and others. His background in operations, sales and marketing spans across sectors focusing on profitability and revenue growth.

Previous Successes

Love Pharma’s growth outlook is particularly bright considering CEO Stadnyk’s track record in funding public companies with a similar business model in the past. Past success stories are detailed below:

• Kushco ($87.7 million market cap) — Pioneers in the legal cannabis space, Kushco provides ancillary products and services to the legal CBD and cannabis industries. KushCo has sold more than one billion units across North America, South America and Europe.
• Eupraxia ($49.85 million market cap) — A clinical-stage biotechnology company leveraging proprietary and innovative delivery technology with the goal of addressing safe durable relief of pain.
• The Supreme Cannabis Co. ($205 million market cap) — Recently acquired by Canopy Growth with a transaction value of $435 million, Supreme operates across 450,000 sq. feet of licensed facilities across Canada.

Seeing the successful growth of these companies, Love Pharma’s current share price of $0.06 (market cap of $18.9 million) represents a low-risk, high-reward entry point for investors that are bullish on this market space.

Conclusion

Soon after its initial listing on the Canadian Securities Exchange in September, the company was quickly able to secure its second listing on the Frankfurt Stock Exchange, greatly expanding its market reach.

“Becoming listed on the Frankfurt Stock Exchange is an important milestone for the company and one we have been focused on achieving; this will provide investors with immediate access to trading in the company’s common shares,” CEO and director Zachary Stadnyk commented in the October 12 news release.

As quoted in the McKinsey report, there is “a rise in both consumer interest and purchasing power presents tremendous opportunities for companies, particularly as spending on personal wellness rebounds after stagnating or even declining during the Covid-19 crisis.”

For a future-looking company offering innovative products through disruptive technologies, Love Pharma is on the verge of seeing its revenues explode as it continues to stay one step ahead of the biggest consumer trends.

Furthermore, the global market for its products is still considered to be in the early stages, with the psychedelic drug industry alone set to double from a $3.8 billion value last year to $7.58 billion by 2026.

At AOTH, we are very intrigued by Love Pharma and what it has in store in the future. The company is continuously growing its portfolio, with more product launches to be announced soon. It is also seeking mergers and acquisitions to expand further.

Love Pharma Inc.
CSE: LUV; FSE: G1Q0
Cdn$0.06, 2021.10.18
Shares Outstanding 312.17m
Market cap Cdn$18.9m
LUV website

Richard (Rick) Mills
aheadoftheherd.com
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Richard owns shares of Love Pharma Inc. (CSE: LUV). LUV is a paid advertiser on his site aheadoftheherd.com.