- A premier exchange listing can be the turning point for a public company
- In an emerging industry, it can also be a catalyst for the whole sector – as we saw with the Compass Pathways IPO
- We look at the strongest candidates among psychedelic stocks to be next to uplist to the NASDAQ
As all investors in psychedelic drug stocks already know, Canada-based MindMed Inc (US:MNMD / CAN:MMED) recently uplisted to the NASDAQ. Not surprisingly, this had a major impact on the stock.
- The share price immediately more-than-doubled on news of an IPO trading date.
- Trading volume (in early sessions) is roughly 10X pre-NASDAQ volume.
That’s a pretty big impact. But gaining a premier exchange listing (such as the NASDAQ) means even more than that.
With its primary Canadian listing, MindMed has been very successful in raising capital, having raised $187 million since its inception. But this has been the product of a total of six financings.
In comparison, NASDAQ-listed Compass Pathways (US:CMPS) raised $147 million for its IPO financing alone. The company just announced it is filing a prospectus for a new financing that can be expected to raise in excess of $100 million.
Much more efficient capital-raising. Much more investment capital available.
Atai Life Sciences is preparing to become the 3rd NASDAQ-listed psychedelic stock, having announced its plans to raise another $100 million for its IPO. For investors in psychedelic stocks, this raises an obvious question.
What will be the next psychedelic stock to be listed on the NASDAQ after that?
Best candidates to uplist to the NASDAQ
Putting aside the new companies with intentions to seek a NASDAQ listing, a few Canadian-listed companies can be seen as strong contenders to seek (and hopefully obtain) their own NASDAQ listing.
Cybin Inc (CAN:CYBN / US:CLXPF)
There is already a buzz among many investors in psychedelic drug stocks that Cybin Inc will be the next Canadian-listed company to seek to uplist to the NASDAQ. There are some good reasons for this expectation.
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Cybin is also one of the more successful companies in raising capital, having raised ~CAD$88.8 million (US$70 million) since going public last November.
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Cybin has advanced drug R&D, commencing a Phase II clinical trial on a psilocybin-based therapy for Major Depressive Disorder.
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Cybin has received considerable analyst coverage, in both Canada and the U.S.
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Cybin recently announced a drug development agreement with Catalent Inc, a major player in the global pharmaceutical industry.
Since closing at a 4-month low on March 30th (CAD$1.28), CYBN has been the best-performing psychedelic stock outside of MindMed itself, bolstered by a recent US$10 price target (CAD$12.40) from Roth Capital Partners. Volume has also jumped considerably.
If Cybin maintains its stock momentum (and elevated trading volume), we could easily see CYBN announce its intention to seek a NASDAQ listing in the near term.
Field Trip Health (CAN:FTRP / US:FTRPF)
Field Trip Health is another leading psychedelic stock, and another leading candidate to seek to uplist to the NASDAQ. It shares some similarities with Cybin as an uplisting prospect.
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Field Trip has raised even more capital than Cybin, in excess of US$100 million, including its recent CAD$95 million bought deal financing (US$76 million).
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Field Trip has also benefitted from analyst coverage, riding a CAD$8.50 price target from Stifel GMP to its February 2021 high of CAD$8.25.
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Field Trip’s operational focus is its well-positioned network of U.S./Canadian mental health treatment clinics, but it is also active in drug development.
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Field Trip is the first public company to seek to enter Oregon’s new (legal) market for medicinal psilocybin use.
While Field Trip is well off its February high (currently CAD$6.06), it has a share structure comparable with Compass Pathways, and the tightest float among public companies. FTRP checks many of the boxes as an uplisting prospect.
Numinus Wellness (CAN:NUMI / US:LKYSF)
Numinus Wellness actually has a stronger following among retail investors than either Cybin or Field Trip.
It was second only to MindMed as the volume leader among psychedelic stocks in the 2020 rally. It was also the second-best performer among all of the leading stocks in that rally, generating a 10X return at its 2020 peak.
However, in other ways the company doesn’t appear to be quite as strong a candidate as either Cybin or Field Trip in terms of the likelihood of a near-term NASDAQ uplisting.
It was second only to MindMed as the volume leader among psychedelic stocks in the 2020 rally. It was also the second-best performer among all of the leading stocks in that rally, generating a 10X return at its 2020 peak.
However, in other ways the company doesn’t appear to be quite as strong a candidate as either Cybin or Field Trip in terms of the likelihood of a near-term NASDAQ uplisting.
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Numinus has raised just over US$50 million as a public company (~CAD$68 million).
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It hasn’t received equivalent analyst coverage to Cybin or Field Trip.
Otherwise, Numinus looks more like Field Trip than Cybin. The company also has a growing network of mental health clinics, which is it also leveraging to advance its own drug development initiatives.
Numinus is one of the few (legal) producers of natural psilocybin via its Psilocybe mushroom cultivation and the company has its own lab facility with a Health Canada Controlled Substances license.
The share price performance has lagged both Cybin and Field Trip in 2021, meaning that NUMI now trails both of those companies in market cap. A strong candidate to uplist, but perhaps not as early as either of the previous two companies.
Other uplisting prospects
The previous three companies would clearly be the favorites as early candidates to seek to uplist to the NASDAQ. But several other public companies would have (likely) already had their own plans to uplist – or are now moving in that direction after seeing MindMed’s success.
Among the other public (or soon-to-be public) companies in this space, we see four of these companies as being the most-likely companies to move toward an uplisting.
Mind Cure Health (CAN:MCUR / US:MCURF) has been very active in developing a diversified business model. This includes a robust digital therapeutics platform, clinic services, drug R&D, and also a product line of nootropics that is now on sale.
The primary focus of Mydecine Innovations Group (CAN:MYCO / US:MYCOF) is its Phase II clinical trial for an MDMA-assisted therapy for PTSD. Mydecine is also one of the early leaders in psilocybin cultivation and recently announced the first (legal) international export of psilocybin mushrooms.
Bright Minds Biosciences (CAN:DRUG / US:BMBIF) is purely focused on drug development. Its lead drug, 5-HT2C has shown considerable promise as a treatment for both opioid addiction and binge eating, in preclinical studies.
If it wasn’t for the fact that Small Pharma Inc hasn’t even started public trading, we would have probably penciled it in as the most-likely uplisting prospect after the first three leaders. About to commence trading on the TSX Venture Exchange (via RTO), UK-based Small Pharma raised CAD$58 million for its qualifying transaction. That’s the most capital raised by a Canadian-listed company prior to trading.
Small Pharma also boasts advanced drug development: commencing a Phase IIb clinical trial on a DMT-based therapy for depression. Ultimately, this could be the quickest company to go from an initial listing to a successful uplisting.
Sector catalysts
Even if a particular company isn’t successful in uplisting, or chooses not to apply, each new NASDAQ listing is arguably a catalyst for the whole sector.
That was certainly the case with the first psychedelic stock to trade on the NASDAQ: Compass Pathways. The CMPS IPO was the obvious catalyst for the spectacular rally for these stocks in the last 3 ½ months of 2020.
In just the first two trading sessions following news of MindMed’s successful uplisting, MindMed itself wasn’t the only psychedelic stock to rocket off of recent lows.
It’s still too early to access the overall impact of the MindMed uplisting. However, there is every indication that this is serving as a broad catalyst for these stocks.
More publicity for the sector with each new NASDAQ listing. Greater investor access for (in particular) U.S.-based investors. More credibility for this emerging industry.
The overall excitement of investors for this emerging industry is built on two things.
- Spectacular treatment results for psychedelic drugs in both clinical and non-clinical settings
- Numerous major treatment markets desperately in need of more effective therapies
However, the launching pad for these psychedelic stocks could be new NASDAQ listings – even if they are not the particular stock to get listed.
Today, it’s MindMed.
Tomorrow?
DISCLOSURE: The writer holds shares in MindMed Inc, Cybin Inc, Numinus Wellness, Mind Cure Health, and Novamind Inc.