Psychedelic drug development startup MindMed became the second company of its kind to list on the Nasdaq on Tuesday, but its share price crashed 30% during the first day of trading.
The company, which went public on Canada’s NEO stock exchange through a reverse takeover in March 2020 and has a current market cap of $1.3 billion, is working on clinical trials to explore the medicinal properties of powerful psychedelics, including lysergic acid diethylamide, MDMA, psilocybin.
One study is looking at how small, non-hallucinogenic doses—what’s commonly referred to as “micro-doses”—of LSD might be a treatment for adult attention-deficit/hyperactivity disorder, while another one is looking at how LSD might treat anxiety.
The company is also working on a trial studying a substance derived from ibogaine, a hallucinogenic shrub, that could treat opioid addiction. JR Rahn, the co-founder and CEO of MindMed refers to the 18-MC, the ibogaine derivative, as a potential “antibiotic of addiction.”
Despite the stock price dropping almost 30% on the first day of trading, Rahn believes up-listing to the Nasdaq is a big win for the company and for the psychedelics industry. In September, U.K.-based Compass Pathways, which has patented a synthetic form of psilocybin for use in treatment-resistant depression, went public on the Nasdaq and another company Atai Life Sciences will be listed on the exchange soon.
“Three is a trend,” says Rahn. “This is not just a one-off thing anymore—this is going to stay and there are clearly large problems we’re solving and investors are willing to allocate capital.”
Perhaps the biggest win, Rahn says: “Let’s not forget we as an industry and as a company, have listed psychedelic substances on the Nasdaq. That in and of itself, to me, is an achievement. That goes far in de-stigmatizing the substances we’re working on.”
The next step for MindMed is to focus on its clinical trials. “I still think we’re in early innings here,” says Rahn. “Our objective is not to make these accessible to a few people on 5th Avenue. Our objective is to make these medicines available to all communities, including disenfranchised communities.”
On WallStreetBets, the subreddit made famous by the GameStop frenzy, investors are talking up how MindMed is going to “the moon,” meaning the stock price will go up. One Redditor posted a picture proving he got MindMed’s logo tattooed on his backside while another wrote that they invested in MindMed because he quit cigarettes nine years ago after a “massive mushroom trip.”
“Realized I was telling my body I hated it every day and therefore I hated myself. It works, I smoked from age 14-22,” wrote Cookiestonks.
The 29% crash today didn’t seem to bother many Redditors.
“Regardless people need to chill out and understand the fluctuations are temporary and not get trigger happy to sell,” wrote Secret-Business5127. “There is potential in this stock.”
Another Redditor explained day’s sell-off: “People will sell for profits from the last few days then it will find its feet and run,” wrote Chasec0311. “MNMD isn’t a [pump and dump]. It’s a true long.”
When asked about the army of MindMed day traders on Reddit, Rahn says he sees the passionate investor base as a positive.
“I think having an engaged shareholder base is not a bad thing,” says Rahn. “Certainly, we do not want to turn our stock price into a video game, but if we can use these impact-driven shareholders to ultimately allocate capital to the problems we want to solve, there’s nothing wrong with that.”
Potent psychedelics like LSD, psilocybin and MDMA, which are currently Schedule I controlled substances, have a high potential for abuse and no medical value, according to the U.S. government. But over the last decade, a renaissance of psychedelic research has shown that these hallucinogenic compounds have potential therapeutic properties for hard-to-treat mental illnesses like depression and post-traumatic stress disorder. The research has created a cottage industry of nonprofit and for-profit companies looking for ways to harness and capitalize on these compounds.
As for the stigma these drugs still hold, Rahn believes that will eventually give way.
“If we can solve depression, anxiety, PSTD, does it really matter what the substance is? Shouldn’t we be more focused on the outcome and the benefit to society?” Rahn said in an earlier interview.
For Rahn, a former Uber employee, the potential of psychedelics as a medicine is personal. When Rahn was 8 years old, his mother had a heart attack and died while reading to him and his sister. For decades, he blamed himself for her death. For years, he struggled with substance abuse to cope with feelings of anxiety and guilt. He found a way out after a friend suggested exploring psychedelics and he found himself in LSD-assisted therapy.
“I internalized as an 8-year-old child that I was responsible; I didn’t realize I wasn’t until I was 30,” he says.
A year ago, MindMed was a penny stock. Rahn believes the fact that his company is now listed on the Nasdaq is a sign that things are changing in the psychedelics space.
“I think the industry is rapidly advancing because the problems are so large,” he says. “Anxiety, depression, addiction, they plague society.”
Rahn continues: “Psychedelics are definitely not going to be a panacea, but they might become a vaccine for mental health.”
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