Dec 28, 2022

The Biotech Despair of 2022 Has Planted The Seeds For A Bull Market In 2023

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2022 has been a year characterized by tightening financial conditions and the rising cost of capital. This dearth of “cheap” money combined with hawkish central bank policy has limited the financing capabilities of small and micro cap publicly listed companies and decimated share prices across the biotech sector (we have witnessed outsized share declines of 80%, 90%, and in some cases 95% year to date).  This has resulted in an unusual and particularly pronounced opportunity in the micro cap biotech space to invest in companies at valuations that are less than the total value of the cash in the company's treasury. Put simply, the breakup value (i.e., cash distributions made to shareholders should the company dissolve) of the company is higher than the company’s current market valuation. 

How is this even possible?

This is a unique situation because public companies are normally priced at a premium to their current assets, their net assets, and in some cases (like at the end of 2020 and early 2021) we saw astronomical valuations ($200M-$300M) for companies that didn't have much aside from a public listing and a story to tell. The fact that shares of companies trading below cash value are being sold off in droves is a testament to two things:

  1. The market’s overall wariness of the biotech sector at large, and
  2. Investors’ lack of confidence in the management teams to spend their cash reserves wisely. In many cases, it would make more fiduciary sense for these distressed companies to simply capitulate and distribute the treasury to shareholders, but that’s no fun.

Thankfully, there are CEO’s unwilling to return capital to shareholders and close up shop because many of these biotechs trading between $3M-20M are sitting on intellectual property that (if properly monetized) could be worth 50-100x the current valuation.  

A Sector In Decline

There are signs of capitulation across the micro/small cap biotech sector and it appears to have entered the despair/despondency stage:

The despondency stage is the time when it is the most difficult to step in and buy because sentiment is horrendous and the price trend has been straight down for many months. This is also the stage of the long term market cycle that offers investors the maximum financial opportunity. 

So, we've gone from one end of the pendulum two years ago to the complete opposite end of the pendulum today. This doesn't mean the sector has to bottom and share prices will go up January 1st, but it does mean the risk of further losses relative to the potential upside is the most attractive it has been in more than a decade.

I believe that if an investor has a 12+ month investment timeframe, the return potential is quite significant; share prices could be up 200%, 300%, 400% by the end of 2023. Obviously, there will be some companies that continue to shed share price and shed market cap as they deal with challenging financing conditions and poor investor sentiment. Dilution is absolutely a clear and present danger for investors in pre-revenue companies that are still burning through shareholder capital. However, as I mentioned, the pessimism is so high, and share prices and valuations are so low that this is the time to seriously start sifting through the wreckage and finding gems that have been tossed out in the drain along with everything else. 

Opportunities Abound

MedicalGold has identified microcap biotechs that qualify as de-risked opportunities with substantial upside potential by applying these two criteria:

  1. A dislocation between company fundamentals and market valuation (i.e. the company is trading for less than cash and equivalents on the balance sheet) 
  2. An outsized year-to-date share price decline (>80%)

Here are three such companies that you should keep an eye on.

Medicenna (Nasdaq:MDNA, TSX:MDNA)


Medicenna is a clinical stage immunotherapy company focused on the development of novel, highly selective versions of IL-2, IL-4 and IL-13 Superkines and first in class Empowered Superkines. Medicenna’s long-acting IL-2 Superkine, MDNA11, is a next-generation IL-2 with superior CD122 (IL-2 receptor beta) binding without CD25 (IL-2 receptor alpha) affinity thereby preferentially stimulating cancer killing effector T cells and NK cells. Medicenna’s early-stage BiSKITs™ program (Bifunctional SuperKine ImmunoTherapies) is designed to enhance the ability of Superkines to treat immunologically “cold” tumors. Medicenna’s IL-4 Empowered Superkine, MDNA55, has been studied in five clinical trials including a Phase 2b trial for recurrent GBM, which is the most common and uniformly fatal form of brain cancer. MDNA55 has obtained Fast-Track and Orphan Drug status from the FDA and FDA/EMA, respectively.

Read our coverage of Medicenna here.

Recent Progress

  • In September 2022, Medicenna reported new anti-tumor activity data from the first four (low and mid) dose escalation cohorts of the Phase 1/2 ABILITY study of MDNA11, the Company’s “beta only” long-acting IL-2 super-agonist. These data support MDNA11’s single-agent potential in advanced solid tumors unresponsive to established treatments, as a confirmed partial response (PR) was achieved in a fourth-line (4L) metastatic pancreatic cancer patient who previously failed chemo- and checkpoint inhibitor therapies.
  • Results from low and mid-dose escalation cohorts in Phase 1/2 ABILITY study show tumor control in 5 of 14 evaluable patients, including a confirmed partial response in pancreatic cancer
  • In September 2022, Medicenna announced that it had entered into a clinical trial collaboration and supply agreement with Merck (known as MSD outside the United States and Canada) to evaluate MDNA11 in combination with KEYTRUDA® (pembrolizumab), Merck’s anti-PD1 therapy, in the ongoing Phase 1/2 ABILITY study. Under the terms of the agreement, Medicenna will sponsor the study and Merck will supply KEYTRUDA®. The two companies will establish a Joint Development Committee to optimally advance the study’s combination arm, which will proceed alongside its single-agent expansion phase.
  • Medicenna continues to conduct preclinical studies exploring the potential of its novel Superkines and BiSKITs (Bifunctional SuperKine ImmunoTherapies) as part of its ongoing efforts to build a diverse pipeline. In September 2022, preclinical data on Fc-MDNA413, a long-acting IL-4/IL-13 super-antagonist, and MDNA223, a next generation BiSKIT consisting of an anti-PD1 antibody linked to an IL-2 super-agonist, were presented at the 10th Annual Meeting of the International Cytokine & Interferon Society (Cytokines 2022).
  • The US Patent and Trademark Office (USPTO) issued U.S. Patent No. 11,117,943, titled “Superagonists and Antagonists of Interleukin-2” increasing the patent estate to 50 issued patents and 62 patent applications filed. This patent provides intellectual property (IP) protection for methods of treating leukemia using IL-2 muteins that have an increased binding capacity for IL-2Rβ and a decreased binding capacity for IL-2Rγc. Unlike MDNA109, such IL-2 superkines act as IL-2 partial agonist and antagonists (MDNA209 platform) in applications where inhibition of IL-2 and/or IL-15 functions is useful (e.g., adult T cell leukemia, auto-immune diseases, graft versus host disease, etc).

Upcoming Milestones

  • New safety, pharmacokinetic (PK), and pharmacodynamic (PD) data from the ABILITY study’s first four dose escalation cohorts will be presented next week at the Society for Immunotherapy of Cancer’s (SITC) 37th Annual Meeting.
  • Updated anti-tumor activity data from the ABILITY study’s escalation cohorts are expected in calendar Q1-2023.
  • Early anti-tumor activity data from the ABILITY study’s single agent expansion phase are expected in mid-2023.
  • Early anti-tumor activity data from the ABILITY study’s combination arm are expected in Q4-2023.

Chart & Financials

MDNA is currently trading at a $42 million market cap with C$40 million in cash as of the company's latest 9/30/2022 quarterly financials. The share price is exhibiting support near the $.40 level on Nasdaq as selling pressure wanes. Risk/reward is highly favorable for a short term (1-3 months) trade taking advantage of the end of tax loss selling season and turning the page on a dreadful -75% year-to-date performance in MDNA shares. 



Numinus Wellness helps people to heal and be well through the development and delivery of innovative mental health care and access to safe, evidence-based psychedelic-assisted therapies. The Numinus model - including psychedelic production, research and clinic care - is at the forefront of a transformation aimed at healing rather than managing symptoms for depression, anxiety, trauma, pain and substance use. Numinus is leading the integration of psychedelic-assisted therapies into mainstream clinical practice and building the foundation for a healthier society.

Recent progress

  • On June 10, 2022, following exemplary shareholder approval, Numinus completed the acquisition of Novamind Inc. – providing a strong US wellness clinic platform and a clinical research management division.
  • Q4 2022 clinic network revenue was $3.7 million, representing a 404% sequential increase from $0.7 million in Q3 2022, and an 821% increase from $400,306 during the same period last year. The increase in clinic network revenues is primarily due to acquisitions completed during the year and the expansion of clinic services.
  • During Q4 2022, Numinus completed more than 17,000 client appointments (including one-on-one and group therapy sessions, neurology-related appointments, paid group programs, Ketamine-assisted psychotherapy, Transcranial Magnetic Stimulation [TMS]). Ketamine/Spravato medicine appointments represent a 202% increase in clinic appointments compared to more than 5,600 appointments in Q3 2022, mostly due to the acquisition of Novamind at the beginning of the quarter.
  • Revenues from Cedar Clinical Research (“CCR”) during Q4 2022 were $0.5 million. CCR revenue streams are generated through the management of third-party clinical trials that use CCR’s two clinical research sites. The business division joined Numinus through the acquisition of Novamind in June 2022.
  • On June 22, 2022, Numinus Bioscience filed a patent application to the World Intellectual Property Organization (WIPO), an agency of the United Nations, for a rapid production process for Psilocybe and other fungi species containing psilocybin and other compounds. A provisional patent application for the process was submitted to the United States Patent and Trademark Office (USPTO) on June 24, 2021. With this additional filing, international patent protection would extend to all WIPO member states that have signed the Patent Cooperation Treaty (PCT), including Australia, Germany, Netherlands, and the United Kingdom, where psychedelic research is currently active.
  • On October 5, 2022, the Company announced that Numinus Bioscience has developed a psilocybin-containing tea bag for use in clinical research and, if appropriate regulatory approvals are granted, eventual treatment of clients in psychedelic-assisted therapy.
  • On June 10, 2022, Numinus announced several executive appointments. Michael Tan was promoted to President and Chief Operating Officer, Reid Robison was appointed Chief Clinical Officer, and Paul Thielking was appointed Chief Science Officer. Following 2.5 years with Numinus, Dr. Evan Wood will no longer continue in his role as Chief Medical Officer of the Company, to enable him to continue with his tenured teaching and leadership university career. Dr. Wood remains an active supporter of Numinus and will continue working with the Company as a highly engaged advisor.

Upcoming Milestones

  • New Drug Application for MDMA-assisted treatment for PTSD (in collaboration with the Multidisciplinary Association For Psychedelic Therapies (MAPS) in 1H23.
  • Expansion of Contract Research Organization (Cedar Clinical Research) operations.
  • Working towards listing on a major US exchange.

Chart & Financials

Numinus has been whittled down to a C$50 million market cap. Meanwhile, the company has roughly C$30 million in cash and stands as one of the leading companies in the integration of psychedelic-assisted therapies into mainstream clinical practice, and building the foundation for a healthier society.

Enveric (Nasdaq:ENVB)


Enveric Biosciences (NASDAQ: ENVB) is a biotechnology company dedicated to the development of novel small-molecule therapeutics for the treatment of anxiety, depression and addiction disorders. Leveraging its unique discovery and development platform, The Psybrary™, Enveric has created a robust Intellectual Property (IP) portfolio of New Chemical Entities (NCEs) for specific mental health indications or physical ailments. Enveric’s lead program, the EVM201 Series, comprises next-generation synthetic psilocybin analogues that are considered prodrugs of the active metabolite, psilocin. Enveric is initially developing EVM201 for the treatment of anxiety disorder. Enveric is also advancing its third generation of therapeutics, the EVM301 Series, to offer a holistic approach for treating central nervous system disorders. Enveric is headquartered in Naples, FL with offices in Cambridge, MA and Calgary, AB Canada. For more information, please visit

Recent progress

  • Spun-off its cannabinoid clinical development pipeline to a wholly-owned subsidiary, Akos Biosciences Inc. The spinoff will take place in the form of a dividend to Enveric shareholders. Enveric Biosciences CEO Joseph Tucker said the company believes the spin-off will unlock the value of Akos and create greater strategic focus for each company as separately traded stocks. Enveric shareholders will own a majority of Akos, which is expected to be listed on the Nasdaq in the first half of 2023. The dividend will be treated as a taxable event for U.S. federal income tax purposes. Enveric Biosciences will continue to operate as a biotechnology company dedicated to the development of novel small-molecule therapeutics for the treatment of anxiety, depression and addiction disorders.
  • Filed 15+ patents covering over 1 million molecules.
  • Lead drug candidates progressing through IND-enabling studies.

Upcoming Milestones

Chart & Financials

Enveric is a puzzling stock due to its relatively large cash position that dwarfs the current market cap. The chart shows evidence of a capitulation decline in recent weeks. 


The biotech investor despair of 2022 has planted the seeds for a bull market rebound in 2023. While many beaten down biotech stocks offer the best risk/reward opportunity in years, the biggest risk in 2023 is that the Fed will continue to tighten financial conditions and liquidity will become increasingly scarce. This is why we believe that companies with strong cash positions that will not have to finance in 2023 (if conditions remain unfavorable) will be able to weather the storm and continue to create value by aggressively pursuing their drug development programs, while cash-poor companies will be forced to stall until more favorable market conditions arise or dilute their shareholders into oblivion. 

Here is a list of Canadian biotechs that have a tremendous amount of cash relative to their market cap.

It is usually the darkest before dawn. Investing in high risk, early stage companies is no different. Please do your own due diligence, it’s your money and your responsibility. 


Author owns shares of Enveric Biosciences and Medicenna Therapeutics at the time of publishing and may choose to buy or sell at any time without notice.


The work included in this article is based on current events, technical charts, company news releases, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. This publication is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource and biotechnology companies can easily lose 100% of their value so read company profiles on for important risk disclosures. It’s your money and your responsibility.