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Roth says Mydecine 3Q results 'well-precedented'; reiterates Buy rating and $3 price target

Published: 16:22 17 Nov 2021 EST

Mydecine Innovations Group Inc -
The biotech company plans to open a randomized trial in the first financial quarter of 2022

Roth Capital Partners called psychedelic firm Mydecine Innovations Group Inc (OTC:MYCOF, NEO:MYCO)’s third-quarter financial results “well-precedented," reiterating its Buy rating and $3 price target after evaluating the potential cash flow from its lead drug candidate MYCO-001. 

“We estimate that the probability-adjusted, fully taxed (21%) NPV (15% discount rate) of potential cash flows through 2035 is $1.1 billion, corresponding to our 12-month price target,” wrote the Roth Capital analysts. 

They added: “Factors that could impede shares from reaching our price target include failure of Mydecine’s drugs to demonstrate significant efficacy benefit or being found to be unsafe, leading to the discontinuation of the programs.”

READ: Mydecine announces 3Q results, says it's preparing to supply MYCO-001 for Johns Hopkins smoking cessation study

For the period ended September 30, 2021, Mydecine significantly narrowed its net loss to $4.5 million, or a basic and diluted loss per share of $0.02, compared to a net loss of $17.4 million, or a basic and diluted loss per share of $0.11 for 3Q 2020.

Mydecine’s highlight of the period was the announcement to continue clinical research that was initiated a few years ago at Johns Hopkins University, led by Dr Matthew Johnson. 

The biotech company plans to open a randomized trial in the first quarter of 2022. Abstinence from smoking will be evaluated at three and six months in approximately 100 individuals. 

The analysts wrote: “While somewhat ambitious, Mydecine projects completion of the trial as early as in 4Q 2022. Robust clinical data may be convincing to regulators to consider accelerated approval with commitments for a confirmatory study in the post-marketing setting.”

Traditional smoking cessation therapies yield 10% to 35% quit rates in controlled trials. Real-life success rates are unfortunately far lower. “MYCO-001 could become the first psilocybin therapy to be approved for any indication,” the analysts added.

"The smoking cessation market is unfortunately very large. With a small market penetration of 0.5% Mydecine can achieve around $2.5 billion in sales, five years following launch in 2026, in our estimate."

Mydecine is developing innovative first-and-second-generation novel therapeutics for the treatment of mental health and addiction through world-class technology and drug development infrastructure. Mydecine Innovations Group was founded in 2020 on the guiding principle that there is a significant unmet need and lack of Innovations in the mental health and therapeutic treatment environments.

Contact Ritika at ritika@proactiveinvestors.com

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