Mindset Pharma has tons of upside, says Echelon

Mindset Pharma (Mindset Pharma Stock Quote, Charts, News, Analysts, Financials CSE:MSET) is making meaningful progress on the clinical front, according to Echelon Capital Markets analyst Stefan Quenneville, who in a recent report reiterated a “Speculative Buy” rating on the stock.

Toronto-based Mindset, which develops next-generation psychedelic medicines to treat neurological and psychiatric disorders, announced on June 22 that it received approval from the UK Medicines and Healthcare Products Regulatory Authority and the Research Ethics Committee to initiate a Phase 2 study of its lead drug candidate MSP-1014, a novel, patent-protected prodrug of psilocin, the active metabolite of psilocybin mushrooms.

Mindset said the Phase 2 trial will consist of two parts: safety and tolerability of up to three escalating doses and a randomized, placebo-controlled study arm on the safety and tolerability of a single dose selected from the first part. 

“Our team has worked diligently and tirelessly to achieve this major regulatory milestone. With today’s announcement, MSP-1014 now has a clear path to become one of the most clinically advanced psilocin-based novel chemical entity (NCE),” said Mindset CEO James Lanthier in a press release.

“As psilocybin continues to make strides in its ongoing clinical development, the opportunity for novel optimized drug candidates is expanding significantly,” he said.

Quenneville said he had expected MSP-1014 to start a Phase 1 trial sometime over the first half of the year, making the announced jump directly to a Phase 2 study with a later fourth quarter start date effectively leaving his clinical timelines for MindSet largely intact. 

“This meaningful progress on the regulatory/clinical front positions MSP-1014 as one of the most clinically advanced next-generation psychedelic novel chemical entities (NCE) in development. Furthermore, as MSP-1014 is not part of its Families 2 and 4 partnership with Otsuka Pharma, the value of this program to a potential partner has clearly been enhanced,” Quenneville wrote in his June 22 report.

The analyst thinks Mindset will likely sign a partnership deal to help fund the upcoming R&D on MSP-1014, with an announcement of such a deal likely to act as a catalyst for the stock.

Mindset’s share price was up around $1.00 in September 2021 but has fallen since and is currently trading at between $0.30 and $0.40 per share. Year-to-date, the stock is up about 12 per cent.

With the update, Quenneville retained a 12-month target price on MSET of $1.25 per share, which at press time translated to a projected return of 257 per cent.

“Our Speculative Buy rating reflects anticipated share price volatility as well as the inherent clinical trial risks,” he said.