Hot off its 1-for-15 reverse stock split on August 26, Mind Medicine (NASDAQ: MNMD) shares are hovering near $11.50, and the market's reaction to the move has been muted at best. The psychedelic therapy developer's stock is still down by more than 72.7% in the last 12 months thanks to an incipient bear market and widespread pessimism about the prospects of risky growth stocks.
What's wild is that the company hasn't exactly been peppered by bad financial news in that period, though it has had a major management shakeup. Since late December of last year, its CEO, chief financial officer (CFO), chief technology officer (CTO), chief legal officer (CLO), and chief scientific officer (CSO) have changed, along with a few board members. Can the newly emplaced leaders keep the business stable enough to continue advancing its pipeline programs and eventually foster it to success, or should investors run away from this stock?
In case you're not up to speed on Mind Medicine, in a nutshell, it's a biotech that's developing therapies for mental illnesses like treatment-resistant depression, opioid use disorder, and anxiety. Those therapies are based on psychedelic molecules like LSD and MDMA, which are still illegal in the U.S. So investors should recognize that any investing thesis about Mind Medicine should take into account the risk that any medicines it does end up developing might not be marketable in many places without a significant change in the prevailing policies. That makes it even riskier than a normal pre-product biotech stock , as it's also exposed to the risk of its clinical trials going sideways if its candidates aren't safe or effective for their intended purpose.
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After Its Reverse Stock Split, Is Mind Medicine a Buy?