Mind Medicine: Focusing on Treatments, Not Revenue

Canada-headquartered Mind Medicine (MNMD), sometimes also known as MindMed, is a clinical-stage biopharmaceutical company that develops alternative treatments for mental health disorders. I am bullish on the stock.

When it comes to brain-health disorders, Mind Medicine doesn’t beat around the bush. The company declares outright that there’s a need for better treatments for conditions like anxiety, opioid addiction, and chronic pain.

When traditional therapy modalities fail to help patients, can psychedelic medicine succeed? It’s an interesting question, and if you believe that the answer is yes, then you might consider a stake in Mind Medicine stock.

However, if you’re going to apply old-school financial metrics to Mind Medicine, the results may be disappointing. Keep in mind that Mind Medicine is a future-thinking type of business, meaning a single breakthrough could lead to bumper-crop profits.

Clearly, there are risks involved with investing in the future of psychedelic medicine. There are regulatory hurdles to clear, and the issue of mainstream acceptance needs to be resolved. After all is said and done, however, a small position in Mind Medicine stock could produce multi-bagger returns in the long run.

A Tough Pill to Swallow

The first thing you’ll want to know about Mind Medicine stock is that it’s quite affordable – less than a dollar per share, in fact. The stock was as high as $4 during the past 12 months, though that might have been the result of meme-stock mania.

Mind Medicine stock isn’t a meme stock anymore, so it’s all about the company’s shareholder value now. The investors want to see results, and Mind Medicine does have results to share, but they’re mostly clinical instead of financial.

In a recently issued Form 10-Q, Mind Medicine admitted outright, “we have not earned any revenue or reached successful commercialization of our products.” This statement might be a tough pill for some investors to swallow, especially those with a strong focus on financials.

In addition, Mind Medicine sustained an $18.45 million net earnings loss during 2022’s first quarter. On the other hand, the company ended the quarter with $120.47 million in cash – and Mind Medicine claims to have “cash runway through key clinical readouts in 2023 and into 2024,” so this should offer the shareholders some comfort.

Beyond the financials, though, Mind Medicine has made progress this year. As CEO and Director Robert Barrow emphasized, Mind Medicine “continued to advance and de-risk” the company’s three lead product candidates. These are MM-120 for generalized anxiety disorder, MM-402 for autism spectrum disorder, and MM-110 for opioid use disorder (these are all proposed symptom treatments, not cures).

A Phase 1 clinical trial is anticipated for MM-402 in Q3 2022, while a Phase 2a trial is expected to commence during the current quarter. Meanwhile, MM-120 looks particularly promising. This drug candidate could potentially use lysergic acid diethylamide (LSD) to treat generalized anxiety disorder, adult attention deficit hyperactivity disorder (ADHD), and/or chronic pain.

Top-of-Mind Results

MM-120 could prove to be a versatile treatment for multiple mental/brain-health disorders. A Phase 2a trial of this drug candidate for a chronic pain condition is expected to start in this year’s fourth quarter.

Plus, Mind Medicine was proud to announce recent progress in the clinical development of MM-120 for the treatment of generalized anxiety disorder. Specifically, the company released positive top-line data from a Phase 2 trial, which was conducted at the University Hospital Basel.

Reportedly, the data demonstrated the “significant, rapid, durable, and beneficial effects of LSD and potential to safely mitigate symptoms of anxiety and depression.” It was also observed that LSD was well tolerated in the clinical trial.

Mind Medicine Executive President Miri Halperin Wernli provided further details about the results of the clinical trial, stating that the symptomatic relief lasted “up to 16 weeks post-treatment compared with a placebo.” Moreover, Halperin Wernli opined that the results “represent the highest quality research ever conducted with LSD in anxiety disorders.”

As you might expect, Mind Medicine intends to use these positive results to advance the company’s MM-120 program for the treatment of generalized anxiety disorder. There’s no way to predict what the program’s final results will be, but it’s encouraging to know that long-lasting symptomatic relief has already been demonstrated in a clinical setting.

Wall Street’s Take

Turning to Wall Street, MNMD earns a Strong Buy consensus rating based on four Buy ratings assigned in the past three months. The average Mind Medicine price target is $5.82, implying 703.3% upside potential.

The Takeaway

The best way to describe Mind Medicine – both the company and the stock – is “experimental.” The risks are great, but the rewards of success could be huge.

Mind Medicine stock is affordable and seems to have lots of room to run. Positive clinical-trial results this year could provide a catalyst for share-price appreciation. At the same time, you’ll want to be aware of Mind Medicine’s financials, which some traditional investors might consider less than ideal.

Therefore, Mind Medicine stock should appeal to non-traditional, risk-tolerant investors. If you believe in the future of psychedelic medicine, this could be an investment to consider now.

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