What happened

A volatile stock even by the standards of the ever-seesawing biotech sector, Mind Medicine (MNMD -2.14%) -- also known as MindMed -- had a good session on the market Tuesday. On some good news from the lab, the clinical-stage company's stock rocketed to a nearly 6% gain on the day. 

So what

MindMed, which aims to use psychedelic compounds to treat brain disorders, said it has launched a phase 1 clinical trial to gauge the effects of MDMA on healthy human volunteers.

Used as an illegal drug, MDMA stimulates the central nervous system of the user to produce pleasant effects on the user. The tablet form of the drug is better known by its nickname, ecstasy.

According to MindMed, the acute effects of two of the substances in the trial -- R-MDMA and S-MDMA -- have not previously been evaluated in any studies on human subjects. The company added that pre-trial research indicated that R-MDMA produces "acute prosocial effects," like empathy.

The phase 1 trial will be a randomized, placebo-controlled, double-blind study. The company plans to enroll 24 participants, some of whom will be administered the placebo.

Now what

The timing of MindMed's announcement is fortuitous, since it follows the company's discouraging announcement that it aims to float a rather dilutive share and warrant issue. This latest news shows that the biotech is about to walk the walk as a researcher with this study on a well-known psychedelic and stimulant.