MindMeds Systematic Biotech Approach With New FDA Therapy Designation, 12-Week Clinical Data, Plus Expected $175M Proceeds

Shortly following the news on FDA's "breakthrough therapy" designation and the 12-week clinical durability data on its LSD therapy for generalized anxiety, psychedelics biotech MindMed MNMD announced the pricing of an underwritten offering of 16,666,667 common shares, no par value per share, at an offering price of $6.00 each. 

The company has also entered into share purchase agreements for a concurrent private placement of 12,500,000 common shares, at an individual price of $6.00. All these shares are being sold by MindMed to new investors Deep Track Capital and Commodore Capital.

Meanwhile, the underwritten offering reportedly includes participation from new investors Ally Bridge Group, Driehaus Capital Management and Great Point Partners LLC, among several others.

Leerink Partners and Cantor are acting as joint bookrunning managers for the underwritten offering and placement agents for the private placement. RBC Capital Markets is acting as lead manager for the underwritten offering and placement agent for the private placement.

Total gross proceeds, from the underwritten offering and the concurrent private placement are expected to be around $175 million. Both non-contingent transactions are expected to close on or about March 11, 2024. The shares' distribution excludes Canada and Canadian residents.

Equity Research Analysis

In light of the latest favorable 12-week outcomes recently unveiled by MindMed on its Phase 2b clinical trial assessing the company's proprietary LSD drug for treating Generalized Anxiety Disorder (GAD,) senior analysts at Oppenheimer Equity Research have delivered a company update. 

Results indicate a positive outlook for the company, with an outperform on stock rating; specifically pointing at:

• 12-18 month price target set at $29.00 ($9.00 when the report was released, Thurs. 7, March 2024;)
• Market capitalization of $522.3 million; 
• 38 million shares outstanding;
• 25 million float;
• 52-week range between $11.10 and $2.41;
• Average daily trading volume of 781,032; 
• Book value of $4.38; 
• Long-term debt of $14 million; 
• Common equity of a total $152 million.

Oppenheimer analysts said they are "impressed" by the sustained improvement in anxiety symptoms at Week 12 and, given the successful Phase 2b trial, "consider the upcoming two Phase 3 trials derisked as key design elements are expected to be consistent." 

These elements include the primary endpoint (HAM-A at Week 4), minimal adjustments to inclusion/exclusion criteria, and unchanged patient-monitoring procedures. Phase 3 development is still expected to initiate in the second half of 2024. 

The research team also highlighted MindMed's LSD compound MM120 Orally Dissolving Tablet (ODT)s’ "encouraging product profile" including the company's plans for use in Phase 3 trials. 

"We are encouraged by its differentiated performance – compared to the capsule, MM120 ODT showed 50% quicker onset (faster absorption, shorter time to reach target concentrations), 17% increase in bioavailability, 23% higher AUC [total drug exposure over time] at the target concentration, and fewer GI [gastrointestinal] side effects," the report reads. 

The team said that, commercially the Spravato model "charts a promising path forward" for MM120, encouraged by market research reportedly indicating that 92% of Spravato providers are likely to refer patients for MM120, and 84% are likely to prescribe and administer it.

In conclusion, the analysts say that, while many companies have emerged in the psychedelic field, they see MindMed as a leader, using "a very systematic biotech approach and benefits from extensive encouraging data related to the use of LSD." 

They advise investors that, beyond the recent positive Phase 2b readout and 12-week durability of MM-120 in GAD, while "difficult to overstate the market opportunity in GAD alone," they should also "keep a close eye on the rest of the [company's] pipeline."

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