Hot off its 1-for-15 reverse stock split on August 26, Mind Medicine (MNMD 0.24%) shares are hovering near $11.50, and the market's reaction to the move has been muted at best. The psychedelic therapy developer's stock is still down by more than 72.7% in the last 12 months thanks to an incipient bear market and widespread pessimism about the prospects of risky growth stocks.

What's wild is that the company hasn't exactly been peppered by bad financial news in that period, though it has had a major management shakeup. Since late December of last year, its CEO, chief financial officer (CFO), chief technology officer (CTO), chief legal officer (CLO), and chief scientific officer (CSO) have changed, along with a few board members. Can the newly emplaced leaders keep the business stable enough to continue advancing its pipeline programs and eventually foster it to success, or should investors run away from this stock?

Why you might want to think twice about investing

In case you're not up to speed on Mind Medicine, in a nutshell, it's a biotech that's developing therapies for mental illnesses like treatment-resistant depression, opioid use disorder, and anxiety. Those therapies are based on psychedelic molecules like LSD and MDMA, which are still illegal in the U.S. So investors should recognize that any investing thesis about Mind Medicine should take into account the risk that any medicines it does end up developing might not be marketable in many places without a significant change in the prevailing policies. That makes it even riskier than a normal pre-product biotech stock, as it's also exposed to the risk of its clinical trials going sideways if its candidates aren't safe or effective for their intended purpose.

With that being said, there haven't been any setbacks in its clinical trials that would imply the company's future is in jeopardy. But there is another issue that investors should know about, specifically the CEO's sale of shares on August 16. The sale was only worth $13,838, and it's entirely plausible that insiders simply need spending money when they sell shares, so this isn't a signal that the sky is falling. Still, it does beg the question of why a leader might sell their shares if they have an outsize ability to influence a company's operations to ensure that those shares will be more valuable in the future than they are today.

Why now is a great time to start a position

Regardless of the insider sale, for risk-tolerant investors eager to get exposure to significant upside in the future, Mind Medicine has a few things to offer.

Right now, it has five programs in phase 2 of clinical trials, which means that it has plenty of chances to hit a home run within the next few years. Its lead candidate in phase 2, MM-120, is a molecule based on LSD, and so far, it looks to be both safe and significantly more effective than the existing therapies for anxiety. That's critical, because if the therapy is confirmed to be effective in later-stage trials, it'll have an advantage over the anxiety therapies currently on the market, and the stock could shoot upward, as it has done in the past.

The biotech's other programs have similarly appealing propositions relative to the standards of care, though plenty of work remains to be done to prove their merit rigorously.

Per its Q2 update, the company has around $105.7 million in cash that it can lean on to get those programs out the door, and management thinks that'll be enough to sustain the company until sometime in 2024. It has only spent $28 million in the first two quarters of this year, so that estimate looks fairly accurate.

Furthermore, its cash hoard is currently among the largest in the psychedelics industry, with only Compass Pathways having more as of Q2. And for biotechs without a product on the market, cash is king; revenue-bearing collaborations with other drug developers can often be hard to come by, and pre-product drugmakers rarely have other ways of making money.

Finally, now is a good time to buy Mind Medicine stock specifically because psychedelics companies, like most biotechs, are growth stocks that are out of the market's favor at the moment. Though there's no telling when that might change, investors can at least have a measure of confidence that they aren't going to be paying the hype tax for their shares. For risky purchases like this stock, that's a bonus.