Mind Medicine is a Buy, says Roth Capital

Roth Capital Partners published a report on Friday on psychedelics biopharma company Mind Medicine (Mind Medicine Stock Quote, Charts, News, Analysts, Financials NASDAQ:MNMD), with analyst Jonathan Aschoff giving the stock a “Buy” rating after a coverage transfer. The stock has fallen a long way over the past year and a half, but Aschoff sees lots of upside from current levels for MindMed, putting up a 12-month target price of $25.00, which at press time represented a projected return of 840 per cent.

MindMed is a New York-based clinical-stage company with a focus on brain health and with lead asset MM-120, a form of lysergic acid diethylamide (LSD), which is being developed for treatment of generalized anxiety disorder (GAD). 

In August, the company started patient dosing in a Phase 2b dose-optimization study of MM-120 for the treatment of GAD, with patient enrolment currently ongoing and topline results expected in late 2023. The company is also enrolling in a Phase 2a proof-of-concept trial with MM-120 to evaluate microdosing in treating ADHD.

Other assets include MM-402, a synthetic form of MDMA, with which the company is at the preclinical stage with an initial focus on autism spectrum disorder, and 18-MC, an ibogaine derivative being developed for supervised withdrawal in Opiod Use Disorder.

“We are pleased with the progress made in the third quarter as we continue executing on our core development programs, MM-120 and MM-402, and accelerating preparations for Phase 3 studies – all with the goal of bringing our treatments to market as efficiently as possible for the benefit of both patients and shareholders,” said CEO Robert Barrow in the company’s third quarter press release in November.

For the Q3 financials, MindMed reported a net loss of $16.5 million compared to a loss of $17.2 million a year earlier.

For Aschoff, he is projecting MindMed’s revenue for MM-120 to begin in 2026, starting at $150 million and rising to $2.191 billion by 2031. His current price target stems from a DCF analysis using a 40 per cent discount rate applied to all cash flows and the terminal value, which is based on a 4x multiple of Roth’s projected 2031 operating income of $2.6 billion. 

On the research, Aschoff noted a Phase 2 study of LSD in the treatment of anxiety disorders which was recently published in the journal Biological Psychiatry, with topline results showing the beneficial effects of LSD and its potential to safely mitigate symptoms of anxiety and depression.

“For MM-120, we expect Phase 2b and Phase 2a results in GAD and ADHD, respectively, likely before year end 2023,” he said.