Mydecine Innovations Group ($MYCO) is a next-generation biotechnology company that is no stranger to headlines. From their inception in 2020, they have made quite a splash. Between their successful development of novel psychedelic compounds, their partnerships with major research institutions, and the acquisition of the successful technology platform Mindleap, Mydecine has shown great potential over the past couple of years. However, the company has had a string of press releases since April that have left people questioning whether the company will make it.
There is no shortage of articles making assumptions that the company is preparing to close its doors. I got a chance to sit down with Mydecine CEO Josh Bartch to discuss what is going on with the company. He believes that their recent changes will set them up for a sustainable and successful future.
Questions about the future of Mydecine started when they announced a reverse stock split in April, and news of change has kept on rolling out since then. Josh says that the recent changes and announcements were “quite some time coming.” December of last year is when the company realized that they had to make some big changes if they were going to be able to succeed in the short, medium, and long term.
The psychedelic stock index began plummeting at the end of 2021. This is when the company realized that its high burn rate would not be sustainable as capital became more difficult to attain. Had the company not begun cutting expenses and refocused its resources, perhaps this would be an article about another failed biotech startup. For now, Mydecine’s strategic changes have given them more time to continue their work and attempt to bring new drugs to market.
During the first two quarters of the year, Mydecine began to cut expenses. Compared to the first 6-months of 2021, total expenses were down nearly 1.6 million for the same period in 2022. About 1.3 million of those cuts were during the second quarter. At the end of the second quarter, the company had only $324,146 in cash assets. Since then, the company has managed to raise more capital, but had they not made the necessary cuts, they might not have made it to the end of the quarter.
A few days after they released their quarterly report, they announced a common share subscription agreement that put about 250k in their pocket to continue their research and development. Earlier this week they closed another deal: “The Subscription Agreement allows the Company to issue and sell up to $10,000,000 of ordinary shares in the capital of the Company (the “Common Shares”) from the treasury to the Investor, from time to time, in a series of closings (each, a “Draw Closing”) at the Company’s discretion and on the terms and subject to the conditions set out in the Subscription Agreement.” Given the recent cuts, this capital is expected to keep the company running for 24 months– enough time to get their programs off the ground.
Along with the stream of announcements that hinted at some trouble behind the scenes, they also had some positive news on the R&D and clinical trial front. In June, it was announced in a press release that Mydecine’s compound MYCO-001 would be studied for its use in smoking cessation. The compound is a purified version of psilocybin, the active compound found in “magic mushrooms.” This study is the first psychedelic study in 50 years that has gained funding from the US Government.
The grant gives nearly four million dollars to Johns Hopkins to study the effectiveness of psilocybin in treating smoking cessation. Mydecine will be providing MYCO-001 as the compound being studied. And, this isn’t the only compound that Mydecine is pushing forward.
On July 18th, the company filed a patent application for a family of MDMA analogues that they have developed. This collection of compounds, under the name MYCO-006, is designed to have a shorter half-life than traditional MDMA. The goal is to make the benefits of this drug more accessible for the treatment of PTSD.
Both of these accomplishments are signs that the compounds that Mydecine is developing are showing promise as viable treatments that they will be able to bring to market. Before I got the chance to speak with the CEO, these are the two pieces of news that made me question the “Mydecine is Shutting Down” headlines that most articles had been flaunting. Though I suppose it would be possible that the company was able to carry out these two deals while knowingly sliding into a hole of an empty bank account, it seemed highly unlikely.
The trimming of excess spending will give the company the time that it needs to see its patent application approved (which generally takes about a year) and its psilocybin compound progress through clinical trials. To accomplish this, the company had to make some tough decisions about where its resources would be best spent.
In their filing for the quarter ending June 31st, 2022, Mydecine announced that they had shut down their Denver Lab and laid off the staff working on their technology platform MindLeap. Between that announcement and the low cash count, many assumed that the company was nearing the end of the road, though these developments don’t seem quite as dismal given their more recent announcements.
Last week, on September first, two press releases share the news that Mydecine intends to sell Mindleap to PanGenomic Health Inc. Both Mydecine and PanGenomic have signed non-binding letters of intent. The sale of Mindleap comes as part of a plan to refocus its resources so that the company can be more effective and efficient. Mydecine acquired Mindleap early on as part of its mission to build treatments that ‘fit into existing infrastructure.’ The company is focused on building psychedelic treatments that easily fit into the existing healthcare model, rather than trying to build a new one. Mindleap was developed with this goal in mind, but the company ultimately decided that it would be a better fit for a company whose focus is on mental health technology. PanGenomic Health has the staff to continue developing and marketing the platform. Mydecine laid off their employees working on Mindleap in anticipation of this sale.
As for the shutting down of the Denver lab, Josh explained that there was little work being done there. The lab housed only three employees and none of their drug research and development work. The building also served as office space primarily for the Mindleap staff, so it was no longer needed.
The company’s research and development are done through their partnership with the University of Alberta in Canada– just one of their strategic partnerships that they plan to focus on as they reconfigure their vertical framework. Josh told Psychedelic Invest that a big part of the changes happening within the company is in consideration of what they want to continue working on in-house and what would be better outsourced through strategic partnerships, like those with the University of Alberta and Johns Hopkins.
The last of the big changes happened within the board of directors. The resignation of four board members came just days before the release of their Q2 financial report. Two of those seats will remain vacant as part of their expense cuts. As for the other two seats, they are looking for people with expertise in the financial market and/or drug development.
One of the directors who stepped down, Josephine Wu, was based out of Hong Kong. Given the company’s lack of focus in Asia, her expertise in Pan-Asian healthcare investment is not what Mydecine needs on its board. Another vacancy was left by Damon Michaels in an attempt to create an independent board. He will continue to serve as the COO.
During the last few months, there has been a lot of upheaval for Mydecine. According to Bartch, the changes that have been in the making since December are overall cuts have been made and the company is now set up for long-term success. All necessary cuts have been made, and they do not anticipate any more big changes. He told Psychedelic Invest that the C Suite members, including himself, are currently deferring pay or taking equity as compensation. It is not uncommon for executives to defer pay while working towards making the company profitable. Biotech startups take significantly longer to turn a profit than other types of startups, and Mydecine has the additional hurdle of working with psychedelic compounds. Despite the rocky road, Josh and his team remain confident that Mydecine will be able to flourish.
Bartch told Psychedelic Invest: “There is no blueprint. We came out too hot and too fast.” He doesn’t deny that the influx of capital during the synthesis of Mydecine may have led them to stretch themselves a little too thin. But, he is also right about the lack of previous examples on which to base their decisions. Psychedelic biotech is a new industry, and it is impossible to accurately predict exactly how it is going to grow, but it is certainly not going to be a straight shot. The Mydecine team is working hard to learn from their mistakes and adjust so that the company can be successful for years to come.
This coming Thursday, I will sit down with Josh Bartch once more to talk more about the lessons he has learned throughout the process of developing Mydecine and where he sees the psychedelic industry going in the coming years. You can check out this hour-long in-depth interview on psychedelicinvest.com or our youtube channel.