Mind Medicine (NASDAQ:MNMD) has been making great progress lately in advancing the use of a drug in its pipeline known as MM-120, which is being advanced in the phase 2b study known as MMED008 for the treatment of patients with generalized anxiety disorder [GAD]. That is, in Q4 of 2023 it is hoping to release results from its phase 2b MMED008 study, which is using MM-120 for the treatment of patients with generalized anxiety disorder [GAD]. This one catalyst would be reason enough to look into this biotech, however, the good news is that there is another data readout expected thereafter possibly within a short period.
This would be the release of results from a phase 2a proof-of-concept study using the very same drug [MM-120] for the treatment of patients with Attention deficit hyperactivity disorder [ADHD]. The goal is to get this data from this phase 2a study as soon as possible in Q4 of 2023, but the company notes that if it can’t, then such data will likely spill over in Q1 of 2024. Either way, I believe that this is another solid indication to look forward to, especially since this is another multi-billion dollar market just like GAD. Lastly, that is not all, Mind Medicine has already made the move to start looking at another drug in its pipeline. This would be a phase 1 trial initiation expected for MM-402 for autism spectrum disorder [ASD] in Q4 of 2023. There has also already been a move to improve its capital through a senior secured credit facility, which could extend its cash runway into possibly 2026 as well. With all these catalysts on deck in a short amount of time, I believe that it was important to look into this company’s prospects.
MM-120 Candidate For Lead Indication Generalized Anxiety Disorder
The main clinical program in Mind Medicine’s pipeline would be the use of MM-120 for the treatment of patients with Generalized Anxiety Disorder. It is said that the Generalized Anxiety Disorder market is set to reach $7.4 billion in 2023. This is a huge market opportunity for Mind Medicine to go after and if it can successfully complete its ongoing study, then it will be able to target this large market. The estimate for this market makes sense though, because it is said that anxiety affects about 264 million people worldwide. One thing to note about MM-120 is that it incorporates LSD D-tartrate, which is a product that produces hallucinogenic properties. Not only is MM-120 for GAD the main program in the pipeline, but it is already being explored in the phase 2b MMED008 study. The goal of this study was to recruit a total of about 198 patients that would have been randomized to receive either 25 µg, 50 µg, 100 µg or 200 µg of MM-120, or placebo. The primary endpoint is looking at the dose-response relationship of any of the 4 doses of MM-120 versus placebo as it relates to the Hamilton Anxiety Rating Scale [HAM-A] from baseline to week 4. In order to fully understand this primary endpoint upon data release, it is important to note what it is. The HAM-A scale is used to measure the severity of a patient’s anxiety. Each item is scored with a score of “0” indicating [no anxiety being present] to “4” indicating [severe anxiety]. The total score ends up ranging anywhere between “0” to “56” points. Anything under 17 points indicates mild severity, then 18-24 is mild to moderate anxiety severity and then 25-30 points is moderate-severe anxiety levels. Thus, MM-120 treated patients at the different doses above will be compared to placebo in this regard. The premise here is that patients taking MM-120 have a much lower score at the end, compared to those who have only received placebo. Now, on to the reason why I believe it was most important to look into this biotech. It is because results from this phase 2b study, using MM-120 for patients with GAD, are likely going to be released in Q4 of 2023.
Financials
According to the 10-Q SEC Filing, Mind Medicine had cash and cash equivalents of $116.9 million as of June 30, 2023. It believed that this would have been enough cash to fund its operations into the 1st half of 2025, however, it chose not to wait to find a way to raise more cash. Thus, just recently closed a $50 million senior secured credit facility with K2 HealthVentures. Upon closing this loan facility, the biotech secured $15 million instantly. However, it still has $35 million up for grabs so that it can obtain additional funding as the clinical programs in the pipeline progress. There may be a drawback in that the first aggregate of $20 million will end up being tied to milestones being achieved per the deal.
Not only that, but the other $15 million is going to only happen under mutual discretion of both Mind Medicine and the lender. Lastly, this senior credit loan facility is just an option in place for the biotech. Should it believe that it can raise cash in another way, then it doesn’t need to act upon the remaining loan if it decides not to. The bottom line is that, should it end up using the remaining loan amount, [milestones being met and mutual agreement happening on the last part of the loan] then it believes it has enough cash on hand to fund its operations into 2026.
Risks To Business
There are several risks that investors should be aware of before investing in Mind Medicine. The first risk to consider would be with respect to the release of results from the phase 2b MMED008 study, which is using MM-120 for the treatment of patients with generalized anxiety disorder [GAD]. These results are expected to be released in Q4 of 2023 and there is no guarantee that the data will turn out to be positive. A second risk to consider would be with respect to the other phase 2a proof-of-concept study, which is using MM-120 to treat patients with ADHD. Such results are anticipated either in Q4 of 2023 or Q1 of 2024. There is no assurance that positive data will be released or that this company will be able to move on towards the next stage of clinical testing either. A third risk to consider would be with respect to draft guidance released by the FDA on psychedelic drugs. There are many requirements that will need to be carried out, such as making sure that the drugs are not abused and additional measures that will need to be carried out before a biotech can submit a new drug application for potential FDA approval.
Conclusion
The final conclusion is that Mind Medicine is a good speculative biotech play to look into. That’s because it is gearing up to report results from two studies, as I highlighted above. One of the trial data to be released involves the use of MM-120 for the treatment of patients with generalized anxiety disorder [GAD] and then the other data release is with respect to MM-120 being used to help treat patients with ADHD. Both of these indications are multi-billion dollar market indications. I laid out the possible market value for GAD above, but even the ADHD market is a large one. It is expected that the global ADHD market is expected to reach $32.24 billion in 2023. The one major risk still remains and that is the draft guidance I noted above. Biotechs such as this one developing psychedelic drugs are going to need to adhere to such guidance for conducting clinical studies and eventually going for regulatory approval.
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