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MindMed in Trouble? Serious Problems or Retail Panic?

The article MindMed in Trouble? Serious Problems or Retail Panic? was originally published on Microdose.

MindMed in trouble? What a nice attention-grabbing…

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The article MindMed in Trouble? Serious Problems or Retail Panic? was originally published on Microdose.

MindMed in trouble? What a nice attention-grabbing headline (even if we try our best to avoid the click-bait thing here at Microdose).

Yet that seems to be the question on the minds of many investors. There’s been a string of events beleaguering the (former?) psychedelic fan favorite. First, there were the Freemans and their very public pushback against MindMed management. Then the dropping of their once promising 18-MC program for addiction. Then a reverse stock split that had retail investors bemoaning the state of their future retirement plans. And then the Freemans once again, this time with their controversial lawsuit around a former MindMed executive and the company’s IP.

Now we have news that MindMed has closed a share offering to raise additional capital.

Normally this wouldn’t raise too many eyebrows, as every company in the space will continue to use dilution to raise funds. If anything, a raise in this kind of capital-intensive industry is often seen as a long-term positive, as an additional $30 million helps the clinical trial piggy bank. Cash is generally king, especially in these tough financial times.

Yet it seems that the people have simply had enough. Retail investor sentiment is hurting, and with so much of MindMed’s support coming from retail investors this string of controversial news is beginning to affect the company image and its stock price.

MindMed shares are down — a lot. But this downward trend started over a month ago and was due to a wider market pullback based on macro conditions. Still, the share offering has had an outsized effect and has led to a serious drop this week.

But, for context, the entire industry has been down. Cybin, a company without any drama and considered a solid industry player, is down over 50% this month.

And to step out even further, the entire biotech sector has pulled back. The SPDR S&P Biotech ETF (NYSEARCA: XBI), an ETF that tracks the top biotech firms on the S&P was down considerably this month (before a recent bump up this week).

So while there are some legitimate questions around MindMed’s IP protection plans and shareholder compensation, this panic feels like a mix of a lack of patience by retail investors and the Freeman’s stirring the pot, perhaps unnecessarily.

MindMed is perhaps suffering from the curse of being a fan favorite. Retail investors and Reddit fans can help your stock hit the moon during short-term runs, but they can also panic and lose sight of the long-term realities of biotech time horizons. Here’s an example of the kind of sentiment on Reddit after MindMed’s share offering: “RIP to my fellow Mind Med Investors/Gamblers — title of one post from the popular “shroomstocks” Reddit community of over 55,000 users (I beginning to blame the GameStop and meme-stock phenomenon distorting retail investors’ expectations).

And what about the Freemans? Owners of over 5% of MindMed’s total shares, they are now attempting to call a shareholder vote and get more voting power on MindMed’s board. Are their motives actually in line with those of retail investors, or are they using the current downturn to get themselves in a power position within the company?

The drama continues.

But like most things, patience (with some vigilance) is probably the most prudent course of action.

See below for the full share offering press release.

 

 

MindMed Announces Pricing of Public Offering of Common Shares and Warrants

NEW YORK, Sept. 27, 2022 /PRNewswire/ — Mind Medicine (MindMed) Inc. (“MindMed”) (NASDAQ: MNMD) (NEO: MMED), a clinical stage biopharmaceutical company developing novel products to treat brain health disorders, today announced the pricing of its underwritten public offering of 7,058,823 common shares, together with accompanying warrants to purchase 7,058,823 common shares. The combined offering price to the public of each common share and accompanying warrant is $4.25. Each common share will be sold in combination with an accompanying warrant, and each warrant is exercisable to purchase one common share. The accompanying warrant will be immediately exercisable and has an exercise price of $4.25 per common share and expires five years from the date of issuance.

All of the securities are being sold by MindMed.  The gross proceeds from the offering to MindMed are expected to be approximately $30 million, before deducting underwriting discounts and commissions and offering expenses. The offering is expected to close on or about September 30, 2022, subject to customary closing conditions. No distribution under the underwritten public offering shall occur in Canada or to a person resident in Canada.

RBC Capital Markets and Cantor are acting as lead joint book-running managers for the offering. Oppenheimer & Co. is acting as a joint book-running manager for the offering.

A shelf registration statement relating to this offering was filed with the Securities and Exchange Commission (“SEC”) on May 4, 2022, and declared effective by the SEC on May 16, 2022.  The offering is being made only by means of a written prospectus and prospectus supplement that form a part of the registration statement.  A preliminary prospectus supplement and accompanying prospectus relating to the offering have been filed with the SEC and are available on the SEC’s website at www.sec.gov or on SEDAR at www.sedar.com.  A final prospectus supplement and accompanying prospectus will be filed with the SEC and will be available on the SEC’s website at www.sec.gov or on SEDAR at www.sedar.com.  When available, copies of the final prospectus supplement and the accompanying prospectus may also be obtained by contacting RBC Capital Markets, Attention: Equity Capital Markets, 200 Vesey Street, 8th Floor, New York, NY 10281, or by telephone at (877) 822-4089 or by email at equityprospectus@rbccm.com or by contacting Cantor Fitzgerald & Co., Attention: Capital Markets, 499 Park Avenue, 4th Floor, New York, NY 10022, or by email at prospectus@cantor.com.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities being offered, nor shall there be any sale of the securities being offered in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About MindMed

MindMed is a clinical stage biopharmaceutical company developing novel products to treat brain health disorders. We are developing a pipeline of innovative drug candidates, with and without acute perceptual effects, targeting the serotonin, dopamine and acetylcholine systems.

MindMed trades on the NASDAQ under the symbol MNMD and on the Canadian NEO Exchange under the symbol MMED.

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