2023-12-06 09:24:20 ET
Clearmind Medicine Inc. (NASDAQ:CMND) is on the move this week after favourable stock market news. The company dedicates its resources to discovering a cure for cocaine addiction. The company announced ‘positive results’ with its addiction drug. CMND cites reduced cocaine-induced craving in rats as a positive indicator that the drug works.
The market took the news seriously, and the price rallied by about 40% in a single day.
Our analysis considers it too early to dive into the highly experimental drug company. Fighting cocaine addiction is noble. The market, however, missed the fact that the drug development is still being tested on rats, not humans. Buying at the current valuation is likely to result in losses.
Our sentiment comes from a well-considered position. CMND has been in this position before. Extended delays in the delivery of good news saw the biotech stock bleeding. Many investors were trapped in past price rallies.
CMND was trading at $100 before bleeding to the current price
It is essential to highlight that CMND traded at prices above $100 until April this year. From that point, the stock plummeted to its current lows. Investors who lost market capital probably hope the stock will rise soon. However, there is no indication that the stock will rally to its former glory soon. At least not when the company has yet to get the licence to test its products on people. Until then, CMND is a stock that serious investors and traders must avoid like a plague.
CMND is simply the goose that got cooked. Positive vibes about a drug that cures cocaine addiction are noble but of little investment value. The company must offer the market information about real milestones in developing the drug. The only information that can change our views is news from large sample randomised clinical trials. Until then, we strongly recommend against buying CMND.
Summary
The positive news about CMND is just a smoke screen. The market should only take the news seriously once the company offers tangible results. Investors should wait for results from RCT trials. Until then, CMND is a cooked goose, as the stock risks remain .
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