“I became a very early investor in MindMed (NEO: MMED, OTC: MNMD, FRA: MMQ), I became an advocate for the whole sector. It's the best investment I've made in decades. I think it's just the beginning of the game” says Kevin O’Leary. 2 years later, where is one of the leading companies at? If you invested last year, would the stock have made you content? 

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Sector Overview

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Psychedelic drugs involve various chemical substances, including lysergic acid diethylamide (LSD) and chemicals extracted from plants. These drugs can change or enhance sensory perceptions, thought processes, and energy levels and have also been reported to facilitate spiritual experiences. Although psychedelics receive positive attention from scientists, research institutes have long been interested in these drugs. The exploration of psychedelic chemicals on a scientific and cultural level peaked in the 1950s and 1960s. But, research was stopped as public opinion turned against all types of "recreational" substances. The renewed interest in psychedelics now aims to improve our knowledge of the biological processes that result in their mind-altering effects so that they can be lawfully incorporated into society.

The global Psychedelic Drugs market size was valued at USD 2800.0 million in 2021 and is expected to expand at a CAGR of 14.47% during the forecast period, reaching USD 6300.0 million by 2027.

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Company Overview

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MindMed (NEO: MMED, OTC: MNMD, FRA: MMQ) is a biopharmaceutical company developing new products to address conditions affecting the brain's health at the clinical stage. The company aims to lead the world in creating and distributing medical solutions that offer fresh possibilities for bettering patient outcomes. With and without acute perceptual effects, MindMed is developing a pipeline of cutting-edge product candidates that target neurotransmitter pathways that are important in disorders of the brain's health. The company advances several product candidates, such as the MM-120 treating anxiety disorders. After several studies, data showed testers had their anxiety and depression symptoms reduced after 16 weeks of treatment. None of them had instances of suicidal ideation with intent attributed to the therapy, proving MindMed holds something there. Several pathways to commerce the product could occur: 

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Submit Marketing Applications

-Seek approval for drug product candidates in significant markets globally 

-Collaborate with healthcare authorities to seek targeted labeling 

-Strategic plans for long-term product life cycle management and market preservation

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Rescheduling

-Review rescheduling processes of preceding products 

-Advance conversations with national, federal, and state authorities 

-Propose rescheduling marketing applications

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Reimbursement

Engage payers to develop a comprehensive market access strategy 

-Generate HEOR evidence to maximize reimbursability of drug and dosing sessions 

-Develop provider tools to enhance the reliability of reimbursement

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Real-World Adaptability

-Employ a precedent-based development strategy that bridges the novelty of the therapeutic class with the existing care delivery landscape 

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I became a very early investor in MindMed, I became an advocate for the whole sector. I'm a spokesperson for it, I'm a big believer in these medicines, and lo and behold, JR's company is now a $2 billion market cap. I'm one of the early seed investors. It's the best investment I've made in decades. I think it's just the beginning of the game. When you invest in biotech, you want the largest number of molecules and the most trials because you don't know the outcome in any of it. Either it's binary, either it's a loser, it's a zero, or it's a spectacular outcome. That's the nature of biotech investment.

Kevin O’Leary

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Share Structure / Financials

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The company had its latest financial statements for the period ending September 30, 2022. The company had $154M in cash ($133M for December 31, 2021) for no debt. MindMed believes its available cash and cash equivalents will be enough to meet its operating requirements into the first half of 2025. $7.8M was used in R&D, $9.2M in G&A expenses, and a $16.5M net loss was registered. 

Since its IPO, the stock has had massive fluctuations starting with its 1-15 reverse split to meet Nasdaq minimum bid price requirement. Considering the reverse split, the stock price first opened at $7.95 at its IPO to reach an all-time high of $76 (2021/02/07). Since then, it has been a downward spiral as the stock lowered to an all-time low of $2.88 (December 28, 2022), and the stock now trades around $5.

A potential reason because of the downtrend is the company isn’t selling products and still have to raise capital to “survive.” MindMed has most of its developments in Phase 2 and has to go through another Phase before being in “Registration” mode. Another issue the company encountered was a significant shareholder demanding a federal investigation that could result in serious misconduct allegations. FCM MM Holding filed a complaint focusing on self-dealing, lack of material disclosure, false statements/public statement fraud, and potentially criminal activities with CEO Rober Barrow under Sarbanes-Oxley. 

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Bottom Line

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Did Mr. O’Leary overhype the company? Will the story repeat itself the same way it did with FTX?  Did the potential federal investigation and possible misconduct put even more oil on fire? We don’t know what is going on backstage, and nothing seems clear despite having probing technology. The future will tell us what is going on, adding more risk to this investment. 

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