- 🚀 MindMed Gains ‘Meme Stock’ Status
- 🚧 Mydecine Looks Set to Cease Operations
- 💊 atai Becomes Latest Psychedelics Company to ‘Streamline’ Pipeline
- ⚖️ California’s Decrim. Bill Gutted by Lawmakers, Withdrawn by Sen. Wiener
- 🍄 Thai Government to Sponsor Research into Psilocybin, with Mind to Rescheduling
Psychedelic Sector News
MindMed Gains ‘Meme Stock’ Status
In last week’s Bulletin we provided you with a deep dive into the activist shareholders that are pushing MindMed to accept a value enhancement proposition. The group is fronted by 20-year old Jake Freeman and his uncle Scott Freeman: former CMO of MindMed.
Prior to market open on Thursday the Financial Times published an article titled, University student makes $110mn trading meme stock favourite Bed Bath & Beyond. That student is, of course, Jake Freeman.
Jake’s initial stake in the homeware retailer was around $25m, which Financial Times reports was “mostly raised from friends and family”. We assume a large portion of this came from uncle Scott.
Buried in the midriff of the article was this mention of the Freemans’ activist stake in MindMed:
“The two recently built an activist stake in a publicly traded pharmaceutical company called Mind Medicine.”
That’s all it takes to start a meme stock frenzy, apparently. Freeman’s new-found following on forums like Reddit’s r/BBBY and trading signals accounts assumed that MindMed would be the next opportunity to piggyback on a path to Bed Bath & Beyond-esque returns.
Pre-market trading of MindMed saw the price soar by up to 80%, with MNMD ultimately closing two cents over a dollar. On Wednesday, the stock had closed at $0.75.
But, in a Twitter Spaces session on Thursday evening, both of the Freemans sought to distance their activist stake in MindMed from the younger Freeman’s Bed Bath & Beyond scheme. Scott Freeman, in particular, was at pains to explain that he is not seeking to realise short-term gains like those seen by his nephew. It also became apparent that almost all of the stake that the group holds in MindMed is Scott’s.
While those who bought MindMed recently may have realised gains this week, a large portion of investors in the company remain down on the deal: the company’s stock price has slipped over 60% over the past year, even inclusive of Thursday’s bump.
Bright Minds Biosciences, another psychedelics drug developer with a much smaller market cap than MindMed, also saw its stock price pump. Its low float made it a natural candidate for those looking to drive the price up, such as trading signals Twitter accounts and Telegram groups.
At one point the company, which has the ticker symbol DRUG, was trading at around +200%. The price action was so eye-watering and spontaneous that the Investment Industry Regulatory Organization of Canada, IIROC, asked the company to comment on it. The company said that it wasn’t aware of any “material, undisclosed corporate developments and has no material change in its business or affairs that has not been publicly disclosed that would account for the recent increase in volume or price”.
In a snap poll of psychedelic investors, we found that a majority were turned off by this ‘meme stock’ attention.
Analysis: Mydecine Looks Set to Cease Operations
It looks like time, and money, has run out for Denver-based Mydecine Innovations Group. The company’s latest filings show that it’s down to around $300k in cash, which won’t even cover its management’s compensation.
Below, we recap some of our coverage of the company. Before we dig in, let’s briefly discuss our motivations for doing so, lest we be accused of gloating or schadenfreude.
Just like the psychedelic experience, while every psychedelics company and its management are unique, there are commonalities among them. As such, a look at Mydecine’s ongoing demise might help us in our observations of other psychedelic companies. Themes like iIl-informed trial design and drug development pipeline strategy, high levels of management compensation versus cash on hand, and rapidly-diminishing cash runways are examples of these more generalisable trends that we observe across a number of psychedelics companies.
It’s also worth pointing out that Mydecine hasn’t shuttered; no time of death has been pronounced. The company could have a successful and substantial financing up its sleeve, in which case they could continue operations and leave this author with an egg on his face.
With that said, let’s take a brief look at some of our reporting on Mydecine’s progress over the past year…
In September 2021 we took a look at the company’s MYCO-001 (“99.9% pure” naturally-derived psilocybin) for smoking cessation program, which was announced as a partnership with Dr. Matthew Johnson at Johns Hopkins. We were interested in the trial design that the company announced: a seamless Phase 2 / 3 study. As we reported, these adaptive clinical trials allow for changes to the protocol after initiation, which makes them more flexible and (ideally) efficient. Mydecine, in explaining its decision, went on to claim that the study “could be completed as early as Q4 2022”.
However, we reported that seamless trial design is generally accepted to only be appropriate for certain drug development programs. It has primarily been employed in the development of oncology drugs, and despite former FDA commissioner Scott Gottlieb’s intention to expand their use to other areas of medicine, the scope of such trials is still largely limited to immunology and targeting specific molecular deficits.
We went on to discuss some of the limitations and issues associated with such trial designs, but were limited in assessing Mydecine’s trial design due to it being unpublished.
Half a year later, in March 2022, we shared an overview of our analysis of public psychedelic companies’ cash runways. We referenced Mydecine by name, explaining that our data suggested the company’s runway was almost over as of September 30, 2021. Since then, the company has scraped through with a number of financings.
A month later we reported on the company’s decision to pursue a 50:1 reverse stock split. “Despite the fact that such splits leave a company’s value unchanged,” we noted, “they’re often viewed as a bearish signal.” By the time the split took place, the stock had continued its steep downward slide.
A few weeks later it became apparent that the company’s CEO, David Joshua Bartch (who generally goes by ‘Josh Bartch’), had filed more than ten insider trading notices, some of which were filed over two years after the fact. One filing showed a May 2021 private transfer of 10 million shares from Bartch to an unknown counterparty. Another detailed a November 2021 transaction in which Bartch received over 5 million shares as compensation.
It was radio silence from Mydecine, so we reached out to Bartch for comment. After confirming that the private transfers did not represent sales of stock, the CEO told us that he would “be doing a few interviews in the near future addressing this,” as well as clarifying “the reasoning for the reverse split, several very positive company updates and the numerous false statements circulated in chat rooms.” The follow-up was never received by Psychedelic Alpha.
We also commented, again, on the company’s financials:
“The company is running on fumes, with a monthly burn of $1.6m according to accounts for the quarter ended March 31. During that quarter, the company spent $2m on salaries and consulting fees.”
In June (Issue 106) we reported that the FDA snubbed Mydecine’s seamless trial design. The company announced that it had abandoned its seamless Phase 2 / 3 trial, which we discussed in September 2021, in a move described as a “pivot” that would lengthen the company’s trial timeline.
Two weeks later, in Issue 108, we clarified that Mydecine’s smoking cessation trial had not commenced. Rather, the Johns Hopkins University trial, which would use Mydecine’s MYC-001, had been initiated. Even Bloomberg’s reporting misrepresented the facts, as we noted on Twitter (and had confirmed by Mydecine).
Two weeks ago, in Issue 113 of the Bulletin, we presented new analysis showing that smaller public psychedelics companies were cutting back on spend, while larger ones tended to double down and increase their burn as drug development progresses. We identified Mydecine as “perhaps the most dramatic example” of the trend among smaller companies.
But, earlier this week we pointed out that the company’s cash burn wasn’t slimmed down uniformly. Rather, one area of the company’s spend remained quite consistent: director and management compensation.
The company’s financials showed just $300k in the bank at the end of June 2022, which isn’t even a third of the amount needed to cover 6 months of management’s cash compensation. What’s more, the headline director and management fees presented in the company’s financials don’t show the whole picture, as compensation was largely delivered via related party transactions. The company also changed the way in which it recorded such compensation, “converting key management employees and recording their compensation as payroll.”
Amidst this turmoil, four company Directors resigned last Friday. Among them were Dr. Victoria Hale and the company’s Co-Founder, Director and COO, Damon Michaels.
That brings us up to today, where the company’s future remains uncertain. In lieu of a quick financing or partnership, it’s difficult to see where Mydecine can go from here.
UPDATE: Shortly after we finished writing this segment, Mydecine announced that it has raised $240k via a private placement. The company has also replaced its Audit Committee with insiders including the CEO and CSO after the independent directors that formerly constituted the committee resigned last week. The company’s CFO, Larry Dean Ditto, resigned effective today.
atai Becomes Latest Psychedelics Company to ‘Streamline’ Pipeline
On Tuesday, atai Life Sciences reported its Q2 2022 financial results and business update, which included revisions to the company’s drug pipeline.
The company, which operates as a platform model, has moved to ‘streamline’ its pipeline. In concrete terms, this means atai will cease to provide further funding (beyond its present commitments) to a number of programs as part of a “company-wide cost optimization initiative”.
The casualties of this streamlining are as follows:
- Revixia Life Sciences – developing Salvinorin A for substance use disorder, treatment-resistant depression and pain.
- Neuronasal – developing intranasal N-acetylcysteine (NAC) for mild traumatic brain injury.
- DemeRx NB – developing noribogaine for opioid use disorder and pain management. Note that the ibogaine program, DemeRx IB, will remain in atai’s pipeline.
- Some drug discovery work.
atai hopes that this slimmed-down pipeline, in addition to a $175m loan facility with Hercules Capital announced just prior to their financial results, will give it an extra year of runway. That takes the company’s projected runway through 2025.
We’re seeing a trend, here: psychedelics companies are undertaking cost optimisation reviews of their operations. Just last week we saw MindMed refine its pipeline down to just two core foci: LSD and R(-)-MDMA.
Featured Psychedelic Jobs
The American Psychedelic Practitioners Association is hiring for a number of roles including project managers, a COO/CFO and an admin assistant. See them all here.
Sunstone Therapies is hiring a Research Manager in Maryland, U.S.
California’s Decrim. Bill Gutted by Lawmakers, Withdrawn by Sen. Wiener
Last week (Bulletin 114) we reported that California’s psychedelic decriminalisation bill, SB-519, had tentatively passed its final committee, pending amendments. The nature of these amendments was not clear at the time of publication, and “even Senator Scott Wiener, who is forwarding the Bill, [was] awaiting final clarity on such amendments,” we noted.
It turns out that the amendments equated to a total gutting of the Bill, turning a decrim. bill into one that suggests that a ‘study’ be initiated into the ramifications of any such action.
In response to the Bill’s gutting, Senator Scott Wiener’s office has said that the Bill will be withdrawn. Wiener intends to introduce a similar effort next year.
Thai Government to Sponsor Research into Psilocybin, with Mind to Rescheduling
Local news outlet Thaiger reports that the Thai government will grow and harvest psilocybin-containing mushrooms for the purposes of researching their potential therapeutic effects. The country’s Narcotics Control Board will oversee the production of the mushrooms in the city of Khon Kaen, while research will take place at the city’s University.
Other universities are invited to join the research. If the studies are “successful”, psilocybin-containing mushrooms will be removed from the country’s ‘Category 5’ narcotics list, similarly to how the government changed its stance on Kratom.
In the meantime, psilocybin remains illegal in Thailand, though tourists frequently purchase them via ‘happy’ and ‘magic’ food and drink items at bars and restaurants across the country.
Psychedelic Events Galore!
We’re pleased to be media partners and participants at a number of upcoming events. Here’s a quick rundown…
ICPR is right around the corner! Our Editor Josh Hardman will be giving a talk in the morning and moderating a panel in the afternoon. PA100 gets you 100 euros (that’s 100 dollars, these days…) off tickets.
Psilocybin SF is a two-day virtual conference that kicks off on Global Mushroom Day (September 20th). We’re pleased to be community partners with this event, which is admittedly a little outside the realm of our usual programming. Our lovely readers can apply for one of two free tickets we have been allocated by filling in this form using the code PSYCHEDELIC ALPHA. The tickets are only $35 a pop, though, so if you can – please support their efforts by buying a ticket.
MAPS’ Psychedelic Science conference returns in 2023, and we’re proud to be one of two announced media partners (alongside our friends at Microdose).
SXSW 2023 is also on our radars, not least due to the fact that Editor Josh and Editor-at-Large Graham Pechenik are hoping to host a panel along with Shayla Love (VICE) and Priti Krishtel (I-MAK) titled Building an Equitable Psychedelic Medicines System. But, we need your vote (by Sunday) to make it happen.
Assorted Weekend Reading
- Slate: podcast episode, Big Pharma’s Bet on Psychedelics.
- University of Cincinnati: interview with Neşe Devenot, who just wrapped up the Psychedemia conference.
- Bloomberg: Tiffany Kary’s The Dose newsletter covers a lawsuit that “challenges the Canadian federal government to make it easier for medical patients to get access to psilocybin”. Toronto-based Lawyer Marc Goldgrub discussed the developments on LinkedIn.
- Psychedelic Spotlight: provides coverage of the Right To Try case being brought against the DEA. We can’t cover every single front of the push to expand legal access to psychedelics, so make sure you follow our friends at publications like The Trip Report and The Microdose to stay abreast of these developments.
- MPR News: interviews Prof Jessica Nielsen in a piece titled, Could psychedelics be the future of mental health?
- WaPo: covers Zidle Door (psychedelic) church’s suing the city of Oakland over a 2020 police raid.
Something a Little Lighter…
We’re enjoying a psychedelic business meme account that has popped up on our Twitter radar this past week: Head Twitch Memes.
In true public broadcasting style, let us remind you that other drugs are in development. Gilgamesh Pharmaceuticals is working on “safer ibogaine analogs” and atai is still plugging away at developing ibogaine via its DemeRx partnership, two mention just two others.
Elsewhere, a bear in Turkey tucked into some “mad honey” and ended up feeling a little spaced out. The Dodo has the story, and the video.
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