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In some ways, running a junior public company is like playing a game.
When a company generates significant gains in share price off of positive operational news (and favorable investor sentiment), management makes a move by looking to lock-in those gains.
How? By doing a new financing on much more favorable terms and thus strengthening the capital structure.
MIndMed announces new financing at much higher unit price
MindMed Inc (CAN:MMED / US:MMEDF / GER:MMQ) has had a major run-up in its share price. Today, MindMed announced a CAD$25 million bought deal financing.
Since September 17th, MMED has taken off, going from CAD$0.44 to as high as CAD$1.34 – a triple. Now the company is raising more capital, and financing this new infusion at CAD$1.05 per unit.
Compare this to MindMed’s most recent private placement in May.
Roughly the same number of units were issued: 23.8 million today versus 25 million in May. But with the unit price having risen from CAD$0.53 to CAD$1.05, MindMed has raised nearly twice as much capital: $25 million today versus $13.2 million in May.
This is not some smoke-and-mirrors biotech company looking to fleece investors after a jump in share price.
MindMed has an industry-leading portfolio of psychedelic drug research initiatives that have reached formal clinical trials. It is continuing to both advance and broaden this research.
Based on its strong research foundation, MindMed has already publicly announced its application for a NASDAQ listing – bringing much better access to capital markets and retail investors.
The combination of the Compass Pathways (US:CMPS) IPO, a rising share price, and MindMed’s NASDAQ application has served to focus a tremendous amount of new media attention on the company.
Psychedelic Drug Company MindMed Applies For Nasdaq Up-Listing (Forbes, September 25th)
Turn On, Tune In, Get Well (The New Yorker, October 5th)
Turn On, Tune In, Get Well (The New Yorker, October 5th)
It has even received some recent coverage from a leading precious metals website.
Why Kevin O’Leary partnered with MindMed; humanity faces growing mental health crisis (Kitco Gold, October 6th)
Volume has exploded in recent weeks, now averaging roughly 5 million shares daily.
Markets reacted strongly to today’s news.
Predictably, the share price took a hit. It fell down to (and briefly below) the unit price of CAD$1.05, from yesterday’s record close of CAD$1.24.
Volume is intense. MMED has traded over 7 million share in just the first hour of trading. But already, the share price is bouncing back.
Sophisticated investors recognize this as an astute move, from a management team that has generally been making good decisions. MindMed is now on a much stronger financial footing as it awaits the processing of its application to up-list on the NASDAQ.
Major shareholders – including cannabis icon, Bruce Linton and Canada’s “Mr. Wonderful”, Kevin O’Leary – are laughing all the way to the bank.
The next billion-dollar psychedelic stock?
Psychedelic Stock Watch has been following MindMed’s recent success closely. The question we asked back on September 26th is quickly becoming more pertinent.
As of the moment (with a share price of CAD$1.07), MindMed sits with a market cap of CAD$300 million. A billion dollars certainly looks to be within reach – especially if the company makes its expected move to an up-listing on the NASDAQ.
With psychedelic stocks heating up in general, most psychedelics investors will be looking to grab a piece of MindMed.
DISCLOSURE: The writer holds shares in MindMed Inc.
