1 Small-Cap Biotech That Analysts Expect to Triple

Amid a surge in mental health disorders and growing demand for psychedelic drugs for therapeutic use, the global psychedelic drugs market is projected to hit $6.4 billion in 2034, exhibiting a steady compound annual growth rate (CAGR) of 12.2% from 2024 to 2034. One stock that’s well-positioned to benefit from this trend is small-cap biotech company Mind Medicine (MNMD), also known as MindMed.

In a recent milestone, the company announced its inclusion in the benchmark Russell 2000 Index (RUT) of small-cap stocks. This recognition not only underscores Mind Medicine’s commitment to advancing treatments for brain health disorders, but also brings the stock to a new audience of investors and portfolio managers.

With analysts predicting more than 200% upside, on average, for this disruptive biotech name, here’s what investors need to know about this new Russell 2000 component.

About Mind Medicine Stock

New York-based Mind Medicine (MNMD) is making waves in the biotech industry with its cutting-edge approach to mental health treatment. Best known for its focus on medicinal chemicals and botanical products, the company is pioneering the use of psychedelics in clinical therapies. Its innovative pipeline includes drug candidates targeting the serotonin, dopamine, and acetylcholine systems, offering treatments with and without acute perceptual effects. 

By setting new standards in mental health care, Mind Medicine is transforming the future of brain health. The company’s market cap currently stands at $479.9 million.

Shares of MindMed have skyrocketed 85.8% over the past 52 weeks, easily outpacing the broader S&P 500 Index's ($SPX)gain of 26.7% during the same time frame. In 2024 alone, the stock is up about 90%, easily smashing the SPX’s 16.8% returns on a YTD basis.

Despite these staggering returns, MNMD has actually pulled back about 43% from its April highs, allowing investors to buy the dip.

Mind Medicine Slides After Q1 Earnings

Following the release of its Q1 earnings results after the close on May 8, MindMed shares tumbled 5.1% in the subsequent trading session, as the market reacted negatively to its reported loss per share of $1.14, which exceeded Wall Street’s forecasted loss per share of $0.54. 

Mind Medicine, which is pre-revenue, closed the quarter with a robust $252.3 million in cash and cash equivalents, up from $99.7 million in the final quarter of fiscal 2023. Given this cash cushion, the company expects to fund its operations comfortably into 2026.

During the quarter, the company reported significant progress for its LSD-based drug, MM120, targeting Generalized Anxiety Disorder (GAD). After a successful end-of-Phase 2 meeting with the Food and Drug Administration (FDA), the company is gearing up to launch MM120 into Phase 3 clinical trials in the second half of this year.

MindMed also reached a significant milestone with a successful underwritten offering and concurrent private placement, raising an impressive $175 million in gross proceeds. 

Mind Medicine Slides in Sympathy on FDA Ruling

Shares of Mind Medicine fell more than 10% on June 5 after an FDA advisory panel declined to approve MDMA, commonly known as ecstasy or molly, as a treatment for post-traumatic stress disorder (PTSD). This decision was a blow to advocates of psychedelic therapies, and sparked a broader sell-off in psychedelic stocks. 

However, analysts at RBC Capital defended MindMed, noting that many of the FDA’s concerns were specific to the data set submitted by Lykos Pharma. As a result, the brokerage said, investors should take the opportunity to buy the sympathy sell-off in MNMD stock.

What Do Analysts Expect For Mind Medicine Stock?

Overall, MNMD stock has a consensus “Strong Buy” rating. Of the nine analysts covering the stock, eight recommend a “Strong Buy,” and the remaining one gives a “Moderate Buy” rating. 

The average analyst price target of $23.38 indicates an expected upside potential of 242% from the current price levels.