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December 07, 2022

Equity.Guru

Investment information for the new generation

Small cap psychedelics stocks – Today’s Idea

The psychedelics space is loaded with over-valued unicorns and also-rans, making it difficult for investors to find real growth opportunities. Here are some companies in the sector that have differentiated themselves, let’s examine them and their potential value:

Mind Cure Health (MCUR.C) is based in Vancouver, Canada and according to its website is a company which identifies, innovates, and commercializes new methods to promote Mental Wealth™ through psychedelic-assisted therapies.

Presentation: The website is simple, clean, engaging and speaks clearly to the lay investor. This is much different than the typical lab speak that leaves anyone other than doctors in an esoteric jargon-induced stupor.

Offering: Mind Cure currently runs with a three-pronged mandate that includes the development of synthetic ibogaine molecules that allow for clinical dose accuracy and reliable efficacy when treating conditions such as addiction, migraines, cluster headaches, neuropathic pain as well as treatment resistant mood disorders.

The company also has The Desire Project where it is developing MDMA-assisted psychotherapies to help women suffering from Hypoactive Sexual Desire Disorder (HSDD). HSDD’s persistent low sexual desire and emotional distress doesn’t stem from existing medical conditions or relationship issues and affects an estimated 9.5 million premenopausal women in the U.S. alone. Meeting the needs of this underserved segment shows great potential for both societal good and revenue generation and is unique in the sector.

Mind Cure’s technology platform iSTRYM, is an industry-first software application that provides data-driven support throughout the therapy process, generating optimal outcomes for patients. The platform assists practitioners onboard and monitor progress while providing patients with digital interventions and necessary recovery tools in between their sessions. The product is therapy agnostic and can be applied to many different scenarios.

Despite antiquated industry norms, Mind Cure has focused on commercializing iSTRYM before its drug candidates, giving it near-term revenues while other developers remain at the mercy of clinical trials and legislation. The coming year will be exciting as the company intends to broadly market its platform to clinics across the U.S. and Canada.

Leadership: Kelsey Ramsden serves as CEO. The award-winning entrepreneur has a proven track record and a clear vision. Her no nonsense approach to business is a much-needed addition to an industry that tends to be a spendthrift when it comes to capital. The company’s executive and board are loaded with industry veterans in medicine, finance, business development, psychedelics, psychotherapy, and applied technology.

Finances: Mind Cure is cashed up with approximately $18 million in the till and is expecting to generate increased revenues soon through licensing, sale, and white labelling its digital platform. This will further serve to cement the company in the sector as a formative member and when its drug candidates are ready to go, we could see some blue-sky potential.

MYND Life Sciences (MYND.C) is heavy on the R&D and seeks to identify novel phytochemicals and their analogs with higher therapeutic potential and fewer adverse effects when compared to traditional treatment approaches.

Presentation: The website is clean but falls victim to lab speak and may leave lay person investors without the necessary background knowledge to make an informed investment decision.

Offering: The company currently has two drug candidates in development MYND-604 and MYND-778. MYND-604 is being developed to treat Major Depression Disorder and MYND-778 is being developed as an oral dosage form of psilocybin for the treatment of Sepsis.

The company is also developing biomarker test kits to diagnose and monitor the treatment regime for patients with MDD and other diseases of inflammation such as Multiple Sclerosis, autoimmune conditions, cancer, etc.

MYND has four patents filed and beyond its drug and biomarket development, it is working to develop vaccines and has four initial clinical trials expected to launch in Q4 2021.

The company is carrying out ground-breaking research at the world-renowned Michael Smith Laboratories at the University of British Columbia. The research is led by MYND chief science officer, Dr. Wilfred Jefferies, and involves 38 licenses for the study of 38 different analogs of psilocybin to determine which one is most effective at modulating the Human Mycogene.

Leadership: MYND was co-founded by CEO, Dr. Lyle Oberg who is a political veteran in both finance and health. He is backed by an expert science team with a combined 50-plus years in research and development.

Finances: The company has a relatively tight share count of 37.18 million shares trading at $0.53 CAD per share. The company reported a net loss of $868,477 for the quarter ending July 31, 2021. The mandate of the company will probably not lead to revenue in the short term and is heavily dependant on successful clinical trials and favorable governmental legislation.

PharmaTher Holdings (PHRM.C) is a clinical stage psychedelics biotech company developing ketamine drug candidates for the treatment of such conditions as Parkinson’s, Depression and ALS.

Offering: PharmaTher pursues novel uses, formulation and delivery forms of ketamine and psychedelics for FDA approval. The company’s ketamine for the treatment of Parkinson’s is in Phase 2 clinical trials. Its KETABET™ drug for depression is in Phase 1 clinical trials and its ketamine treatment for ALS has completed pre-clinical trials and readying for clinical studies.

PharmaTher also has a Microneedle Patch technology for multiple indications that is making its way through pre-clinical trials and meant for the subdermal dispensing of ketamine, psilocybin, LSD, MDMA and DMT.

The patch gives depth to the company’s portfolio but also presents its own set of rather complicated challenges including cleanliness, safety and durability.

The company has a strong IP portfolio with 18 granted patents, PCT and provisional patents in over 150 countries.

Leadership: Fabio Chianelli is chairman and CEO of PharmaTher. He was the past founder, CEO and president of Revive Therapeutics (RVV.V). The VP of Pharmaceutical Development, Owen Van Cauwenberghe, PhD, was a principal research scientist and director at Eli Lilly Canada. The advisory team and board have a combined 70-plus industry experience in psychiatry, pharmaceutical technology, capital markets and clinical research.

Finances: As of October 27, 2021, the company had approximately $14.5 million in cash and short-term securities with a monthly burn rate of $500,000. The stock count isn’t crazy at 86.48 million outstanding and issued shares, and insiders own approximately 19% of the float.

NeonMind Biosciences (NEON.C) is pursuing the development of the first and only novel psilocybin-based drug candidates targeting obesity.

Offering: NeonMind has a psychedelics research division as well as a medical services division. Engaged in drug development research, the company is advancing two candidates, NEO-001 and NEO-002, both targeting obesity and weight management. NeonMind has extensive U.S. and international patent applications pending covering the spectrum of weight management conditions.

The company’s medical services division is expected to announce initial NeonMind-branded specialty mental health clinics in Canada in Q4 2021. It has an integrated services platform it intends to deliver currently approved interventional psychiatry treatments for mental health.

Even though NeonMind is alone in the psilocybin-based obesity treatment space, the company has a history of unsuccessful focus pivots and seems to be latching on to whatever may be in vogue or bump share price in the short term. This may not be the case this time, so I will cut them some slack.

Leadership: Company president and CEO, Robert Tessarolo has over 25 years experience in the pharmaceutical industry and his VP of Corporate Development, Ernie Ho, Ph.D., has over 15 years in development and commercialization in leading Canadian biopharma and diagnostic companies from pre-clinical studies to product management.

Founder, executive chairman and director, Penny White, is well known to the investment community with over two decades of experience building companies. She was recently listed in PROFIT magazine’s W100 and was a former director of Merus Labs (MSL.T).

Finances: NeonMind is on the high side of share counts with 126.867 million issued and outstanding shares. It only has $420,000 of cash, cash equivalents and short-term investments as of October 30, 2021. It will likely have to raise cash soon to continue operations and there isn’t a clear path to profitability yet.

Mind Cure is a favorite of mine but do your own due diligence and consult an investment professional before making any changes to your portfolio. Be good, pick your winners and change the world. Good luck to all!

Check out Vishal’s Chart Attack on the psychedelics sector and the companies mentioned above here.

Here is our Investor Roundtable video opinion.

Our own Reza Golzadeh digs into the sector and the companies in this piece in his regular To Invest or Not video series.

–Gaalen Engen

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