Why This MindMed Analyst Is Bullish: 'One Of The Most Diverse Pipelines In Psychedelics'

Mind Medicine (MindMed) Inc (NASDAQ: MNMD) shares traded higher by 3.3% on Monday after one analyst initiated bullish coverage of the psychedelics stock.

The Analyst: Maxim analyst Jason McCarthy initiated coverage of MindMed with a Buy rating and $6 price target.

The Thesis: McCarthy said MindMed is well-funded, reasonably valued and has plenty of promising research projects in the works.

“MindMed has one of the most diverse pipelines in psychedelics and a partnership with a leading research institution to provide exclusive license to data to support continued expansion,” McCarthy wrote in a note.

MindMed’s leading research program is Project Lucy, a Phase 2a trial of high-dose (experiential) LSD to treat generalized anxiety disorder (GAD). In addition, MidMed is developing a LSD neutralizer that could potentially help terminate the drug’s psychoactive period and potentially reduce the possibility of adverse events.

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MindMed is also researching the potential use of LSD in treating ADHD and pain and testing its 18-MC ibogaine derivative for use in treating opioid addiction.

McCarthy is projecting commercialization of MindMed’s MM-120 (LSD) for GAD in the U.S. and Europe in 2026 and is factoring in a 60% risk adjustment. He is also projecting commercialization of MM-290 (low dose LSD) for ADHD in the U.S. and Europe in 2027 with an 80% risk adjustment and MM-110 (18-MC) in the U.S. and Europe in 2025 with a 70% risk adjustment.

The company has about $160 million in cash to fund its research, and potential data readouts on its various programs could serve as bullish catalysts for the stock through the end of 2022, McCarthy said.

Benzinga’s Take: The psychedelics stock group is a small group of public companies working in a very early stage market that is extremely high risk. However, if psychedelics follow the same long-term trajectory that cannabis has, early investors that are willing to stomach the risk and volatility could generate some spectacular long-term gains.