In a June 22 research note, analyst Elemer Piros reported that ROTH Capital Partners initiated coverage on Mydecine Innovations Group Inc. (MYCO:NEO; MYCOF:OTCMKTS; 0NFA:FSE) with a Buy rating and a CA$3 per share target price. Its current share price is about CA$0.38.
Piros explained the rationale behind ROTH's Buy recommendation on Mydecine, formerly named NewLeaf Brands.
First, the concept and objectives Mydecine is pursuing are innovative and, thus, differentiate it from other biopharmaceutical firms, Piros highlighted. This Vancouver-based company is developing alternative medicines based on natural sources, such as psilocybins, for the treatment of mental health problems, Piros explained.
In doing so, Mydecine is pursuing an end the biopharmaceutical industry generally has avoided to date despite the longstanding existence of the idea, wrote Piros. For instance, academics have researched the use of psychedelic drugs as mental health therapeutics for 70 years.
"Mydecine is the first to treat post-traumatic stress disorder (PTSD) and smoking cessation with the natural form of psilocybin (MYCO-001)," Piros highlighted. Few treatment options exist for these medical indications.
Mydecine aims to modify psychedelic drugs to reduce the side effects of the MDMA component and shorten treatment time, Piros pointed out. Also, the company also is investigating the use of psychedelic drugs as a complement to psychotherapy, specifically for use on an infrequent basis, perhaps even only once.
"The combined approach is unprecedented from the medicinal and regulatory perspective," Piros wrote.
Second, Mydecine has potential stock-moving catalysts on the horizon, noted Piros. The next one, in Q4/21, is its investigational new drug meeting with the U.S. Food and Drug Administration (FDA). Subsequently, in Q1/22, the biopharma plans to begin two clinical trials of MYCO-001, a Phase 2 in smoking cessation and a Phase 2/3 in PTSD. Should those commence then, the former could be completed in Q1/23 and the latter in Q4/23.
Third, Piros purported, MYCO-001 has blockbuster potential in both indications. It could be commercially launched in the U.S. for smoking cessation in 2026 and, with only a 0.5% market penetration, could generate about $2.5 billion in sales by 2031, ROTH estimates. For PTSD, MYCO-001 could be debuted in the U.S. in 2027 and, with just a 20% market share, could reach about $3 billion in sales in five years' time.
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Disclosures from ROTH Capital Partners, Mydecine Innovations Group Inc., Company Note, June 22, 2021
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
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sales practice requirements for certain low-priced securities.
ROTH makes a market in shares of COMPASS Pathways plc and as such, buys and sells from customers on a principal
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ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.
