What happened
Shares of Mind Medicine Inc. (MNMD +0.28%) climbed 13.4% on Wednesday. The clinical-stage biopharmaceutical company specializes in using psychedelic-based therapies to treat brain disorders. Its stock closed at $1.19 on Tuesday, opened slightly higher at $1.21 on Wednesday, and rose to a high of $1.35 after lunch. The company is still a lot closer to its 52-week low of $0.79 than its 52-week high of $5.77.
Image source: Getty Images.
So what
The stock's shares have fallen more than 61% over the past year. As a small cap with a market cap of $501 million, its shares are likely to be volatile. Prior to last May, it was an over-the-counter stock.
The reason why Mind Medicine jumped Wednesday had to do with association, as Cathie Wood's ARK Genomic Revolution ETF bought 83,278 shares of another psychedelic therapy company, Atai Life Sciences. Wood's move boosted the share prices of Atai and Compass Pathways, which is also developing treatments using psychedelic substances.
But Mind Medicine has been building momentum on its own.
On Jan. 25, the company announced that the Food and Drug Administration (FDA) had cleared MindMed's Investigational New Drug (IND) application for MM-120, so it can go ahead with its phase 2b trial to treat generalized anxiety disorder. Earlier in the month, the company said that it had completed its phase 1 clinical trial for 18-MC, a non-hallucinogenic derivative of ibogaine (a psychoactive substance derived from the root bark of the iboga tree) to treat patients with opioid-use disorder. The company said it expects results from the trial early this year, potentially leading to a proof-of-concept phase 2a trial of the drug.
Now what
To say the healthcare stock is risky is probably an understatement. The company doesn't have any revenue and in the third quarter, reported a loss of $24.3 million, along with a loss of $74.6 million for the first nine months of the year, compared to a loss of $8.6 million in the third quarter of 2020 and $21.4 million for the first nine months in 2020.
Mind Medicine is building a large pipeline of therapies using psychedelic substances that include psilocybin, LSD, MDMA, DMT, and 18-MC.
There are plenty of legal hurdles any company providing psychedelic therapies will have to take care of before it can bring a drug to market. Oregon is the only state where psychedelics are legal for therapy. At the federal level, possession of psychedelics is illegal if they contain Schedule I drugs psilocybin or psilocin.
