MindMed Short Squeeze

The Data

MindMed recently announced that the company’s Phase 2b trial for MM120 in GAD (generalized anxiety disorder) patients met its key secondary endpoint, demonstrating clinically & statistically significant durability of activity observed through week 12 after a single dose with no additional therapeutic intervention.

Due to the large unmet need in treating generalized anxiety disorder, in combination with the robust phase 2b results, the FDA granted the breakthrough therapy designation (BTD) to MM120. 

There are 20,000,000 adults in the US with GAD, and 77% (more than 15 million) of those adults report having moderate to severe anxiety. The current set of first-line treatments (benzodiazepines, SSRIs, etc.) are not effective in treating a significant percentage of the patient population. Furthermore, benzos and SSRIs have significant undesirable side-effects including addiction and reduced sex drive.

The breakthrough therapy designation from the FDA is especially significant because this program is part of the FDA's broader effort to get promising new treatments to patients as quickly as possible. Drugs that receive Breakthrough Therapy designation can benefit from more intensive FDA guidance on an efficient drug development program, organizational commitment involving senior managers, and eligibility for rolling review and priority review.

This means that the FDA will work closely with the drug sponsor to provide guidance on the development process to expedite the development and review of the drug, including more frequent meetings and communications with the FDA.

Since announcing the phase 2b trial results for MM120 on March 7th, MNMD shares consolidated in a volatile range between $8 and $11:

MNMD (Daily)

$8 has proven to be strong support. Meanwhile, a breakout above $11 could trigger further upside to the next zone of resistance near $14-$15. 

It is especially notable that short interest on MNMD has risen from ~13% one month ago to ~22% today. That means that short sellers have continued to press their bets in the wake of the stellar MM120 phase 2 results and breakthrough therapy designation from the FDA. 

The high & tight consolidation in the MNMD chart over the last several weeks is strong evidence that it is building energy for a further upside squeeze. 

Looking at the timeline of key milestones we can see that we can expect an end of phase 2 meeting with the FDA in the next couple weeks. In addition, a phase 1 trial readout from MindMed’s R-MDMA drug candidate MM402 is expected by June. 

The timing of the phase 1 results from MM402 might coincide nicely with the FDA’s final approval of MDMA for the treatment of PTSD (Lykos, former MAPS). MDMA is poised to be the first psychedelic compound approved by the FDA for the treatment of a mental health disorder. MindMed’s MM402 R-MDMA drug candidate is being investigated for the treatment of autism spectrum disorder (ASD). 

The MM402 phase 1 trial is intended to characterize the tolerability, pharmacokinetics and pharmacodynamics of MM402 and should enable further clinical trials to characterize the effects of repeated daily doses of MM402 and the exploration of early signs of efficacy in the ASD population.

MindMed had US$99.7 million in cash as of the company’s 12/31/2023 financials. In addition, MindMed raised US$175 million in early March on the back of the MM120 phase 2 readout. This gives the company a large warchest with which to fund the full Phase 3 clinical trial for MM120 in GAD, in addition to the company’s other clinical trial pipeline including MM402.

I believe that the phase 2 results for MM120 in GAD are so compelling that MindMed could potentially attract a strategic investment from a large pharmaceutical company looking to get a foothold in the medical psychedelics arena. This would be the first such investment by a large pharma company in medical psychedelics, and would mark a major transformational milestone for the sector. 

I bought MNMD shares earlier this week and I may buy or sell at any time without notice.