Tryp Therapeuatics (TRYPF) Coverage Report

Biotechnology Initiating Coverage - Institutional Accounts Only August 26, 2021 BUY Michael Higgins; mhiggins@ladenburg.com 212.409.2074 Disclosures and Analyst Certifications can be found in Appendix A. 640 Fifth Avenue 4th Floor • New York, New York 10019 • Telephone: 212-409-2000 • 800-LAD-THAL Member: NYSE, NYSE American, NYSE Arca, FINRA, all other principal exchanges and SIPC Tryp Therapeutics, Inc. Tryp to Reset the Treatment of Brain Disorders; Initiate at Buy, $2.00 PT TRYPF (OTC BB) Company & Market Data Closing Price (as of 08/25/2021): $0.37 Rating: BUY Price Target: $2.00 52 Week Range: $0.32 - $1.04 Shares Outstanding (MM): 66.3 Market Capitalization (MM): $24 Cash (MM): $5.6 Fiscal Year End: Aug *Fiscal year-end August 31. No financial data available before 8/31/20 quarter; company IPO'd December, 2020. Financials are in Canadian dollars. Estimates EPS 2020A 2021E 2022E 1Q — $(0.01)A $(0.05) 2Q — $(0.05)A $(0.04) 3Q — $(0.04)A $(0.05) 4Q — $(0.03) $(0.08) Full Year — $(0.13) $(0.22) Revenue (MM) — $0.0 $0.0 Ratios P/E NA NA Tryp Therapeutics is a San Diego-based pharmaceutical company focused on developing psychedelic compounds with known activity and/ or safety profiles for the treatment of diseases with high unmet medical needs. Under its Psilocybin- For-Neuropsychiatric Disorders (PFN) program, Tryp’s most advanced drug development programs are designed to treat neuropsychiatric disorders through the novel dosing of formulations of synthetic psilocybin. The primary indications for its PFN programs include binge eating and hypothalamic obesity, as well as inadequately addressed chronic pain conditions: phantom limb pain (PLP); fibromyalgia; and complex regional pain syndrome. We are initiating coverage on Tryp Therapeutics with a Buy rating and $2.00 price target based on our research into its psychedelic-based pipeline, which is leveraging psilocybin’s potential to treat patients with inadequately addressed neurological disorders. The company is on track to test 25mg psilocybin capsules in six Phase 2a, proof-of-concept trials, beginning in 2H’21, with data readouts from three programs in 1H’22. Over a dozen secondary endpoints are to be collected from each study as Tryp and its advisors, led by Dr. Robin Carhart-Harris running its Scientific Advisory Board, are to assess the ability of psilocybin to benefit weekly psychotherapy sessions in patients suffering from chronic pain conditions (fibromyalgia, phantom limb pain, complex regional pain syndrome) and eating disorders (binge eating, hypothalamic obesity, Prader-Willi syndrome). We find these are appropriate neurologically based conditions to test psilocybin’s ability to reset the neurological connections between memory and emotion. As psychedelics have recently outperformed approved prescription treatments for major depressive disorder and posttraumatic stress disorder, we believe psilocybin-assisted psychotherapy sessions will allow chronic pain patients and those with eating disorders to benefit from a disconnect of the brain’s neural connections, allowing for new connections and behaviors distinct from current memories and feelings. While research into psychedelics in the 1960’s provided anecdotal evidence of strong hallucinogenic experiences, recent advances in neural identification of processes affected by psychedelics have provided explanations for the hallucinogen experiences that can partnered with psychotherapy sessions. In this report, we describe the evidence of psilocybin’s effect on V pyramidal neurons, its cortex-wide distribution across 5HT2A receptors, its impact on the claustrum and amygdala, as well as the cortical desynchronization and increased entropy necessary to delink experiences from subjective responses. So far, psilocybin’s effects appear durable, with a reasonable safety profile. However, Tryp is working to improve the variability of psilocybin with its development of TRP-8803, a novel formulation of psilocybin. Ahead of Phase 2b testing with TRP-8803, Tryp is generating proof-of-concept data with TRP-8802. To advance its pipeline, Tryp has reached various agreements with the FDA, study sites, principal investigators, manufacturers, formulation scientists, patent attorneys, psychotherapy trainers and key opinion leaders in psychedelics. As a public company, we believe Tryp has been largely under the radar of most investors, considering it has been focused on its development activities since its December 2020 IPO. We believe investor attention on Tryp and TRP-8802/03 will increase as the company begins its Phase 2a trials and turns the corner towards 1H’22 data. Tryp held ~$5.6M in cash at the end of May, sufficient to reach into 2Q’22 by our estimates.