Activist company

Shares of psychedelics company MindMed fall 50% after selling new shares

Shares of psychedelic company Mind Medicine Inc. fell 50% on Wednesday after the company offered a dilutive secondary offering of 7.1 million shares.

The offer was priced at $4.25 a share, a 30% discount from Tuesday’s closing price of $6.12. The company has also offered an equal number of warrants, which can be used to purchase one common share.

Proceeds are expected to total approximately $30 million. RBC Capital Markets and Cantor were lead underwriters in the deal, with Oppenheimer & Co. acting as co-manager.

MindMed MNMD,
the stock rallied more than 50% in a single day in August, after being named a key asset by a young investor who made $110 million from the Bed Bath & Beyond BBBY meme stock,

Jake Freeman, a 20-year-old college student, had bought a 6.2% stake in the struggling retailer in July, and SEC filings show he profited royally. Freeman interned for New Jersey hedge fund Volaris Capital, according to his LinkedIn profile.

To learn more, see: This investor made $110 million trading Bed Bath & Beyond – and he’s a 20-year-old college student

Freeman and his uncle Scott Freeman, a former pharmaceutical executive, had amassed an activist stake in MindMed, according to an August Financial Times report. Freeman said he plans to have a “constructive” dialogue with the Mind Medicine board as he completes his studies in complex analysis and mathematical statistics at the University of Southern California. He is now studying for the GRE.

MindMed recently conducted a placebo-controlled, investigator-initiated Phase 2 trial of LSD as a treatment for anxiety and published an article about the study in the peer-reviewed scientific journal Biological Psychiatry in September. The paper expanded on data presented during an oral presentation at the PYSCH symposium in London in May, the company said in a statement.

Read also: ‘Magic mushrooms’ can help alcoholics drink 83% less – or quit drinking altogether, research suggests

The data showed a significant reduction in anxiety in patients who took LSD for up to 16 weeks, showing effects that lasted through week 50. They also showed a reduction in depression. This was the first trial to use LSD on patients with anxiety who did not have life-threatening illnesses. The study was conducted in Switzerland – where psychedelic research is permitted – and involved 44 participants.

“This article further reinforces the positive preliminary evidence for LSD in patients with anxiety disorders,” Rob Barrow, chief executive of MindMed, said in a statement.

The results “are encouraging and support our proprietary product candidate MM-120 in its potential to one day provide therapeutic benefit to patients with GAD (generalized anxiety disorder) after a single, single-dose administration,” he said.

The company is currently conducting a phase 2b study.

Oppenheimer analyst Francois Brisebois said the results were encouraging, including cross-sectional data, which showed a trend towards lower anxiety symptoms in patients once they switched from placebo to LSD. He reiterated his outperform rating on the stock and his price target of $52. The stock is currently trading around $3.

MindMed has also launched a placebo-controlled study that aims to assess the effects of MDMA-like substances in healthy volunteers. These substances include MDA, Lys-MDMA and Lys-MDA.

The topic of psychedelics and their potential for use in mental health disorders has become popular lately, in part spurred on by a new Netflix documentary with Michael Pollan, “How to Change Your Mind”, which features promising stories from cancer patients losing their fear. deaths and veterans overcoming post-traumatic stress disorder. But the researchers warn that there are still unknown risks associated with the therapy, and not all patients respond in the same way.

Read now: The Promise and Perils of the Billion-Dollar Industry Blooming Around Psychedelic-Assisted Therapy

MindMed shares have fallen 85% since the start of the year, while the S&P 500 SPX,
fell 22%.