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Analyst Says Pharma Co. 'Meaningfully Undervalued'

Source: Stefan Quennevill


June 2, 2023 ( Newswire) "We continue to view Mindset as meaningfully undervalued," Stefan Quennevill reported in an Echelon Capital Markets research note.

Recently, Mindset Pharma Inc. (MSSTF:OTCMKTS) revealed its FQ323 results (representing the quarter that ended March 31, 2023).

The results were in line with estimates, reported Echelon Capital Markets analyst Stefan Quennevill in a May 31 research note.


Mindset made further advancements in moving its next-generation psychedelic drugs toward clinical development.

In its results, Mindset released the following highlights:

  • CA$1.9 million in revenue, compared to Echelon's estimated CA$4.3 million.
  • General and administrative expenses and research and development expenses of CA$0.7 million and CA$2.8 million, which showed an operating loss of CA$2.9 million, compared to Echelon's expected CA$2.7 million.
  • Net loss totaling CA$0.03 per share, in line with estimates.
  • CA$1.5 million, compared to the estimate of CA$2 million.
  • CA$7.3 million in cash at the end of the quarter.

Quennevill commented this cash "should provide a sufficient runway to bring its various preclinical assets to the clinic."

Lawsuit With Reunion

A lawsuit from Reunion Neuroscience Inc. (REUN:NASDAQ;REUN:TSX) made waves during the quarter; however, Echelon noted it viewed the lawsuit as baseless and, according to Quennevill, "further proof of the strength and strategic value of Mindset's IP portfolio."

Reunion had claimed that Mindset copied the company's lead compound, RE104 (isoleucine glutarate, a prodrug of 4-OH-DiPT), during Mindset's U.S. patent application (No. 11,591,353). This lawsuit was for CA$25 million in damages. Additionally, Reunion put forth a request to designate Dr. Nathan Bryson, its chief scientific officer, as an inventor of the patent, ensuring Reunion's unrestricted operational rights with the compound.

On this, Quennevill said, "While we are by no means patent lawyers, our analysis, as well as commentary from industry IP experts, leads us to believe that the lawsuit is largely baseless, given the general principle in patent law that the patent applicant with the earliest priority date maintains the legal precedents of the claims made in the patent."

Possible Catalyst

Quennevill pointed out that the signing of a partnership for Mindset's compound, MSP-1014, could be a major short-term catalyst for the company within the next few months.

In light of this and the announced results, he noted, "We continue to view Mindset as meaningfully undervalued."

Structure and Predictions

In his report, Stefan Quennevill reiterated his speculative Buy rating on Mindset Pharma Inc. and his target price of CA$1.25 per share.

Quennevill's research also shared current market data on the company.

  • Price: CA$0.32, with a 52-week range between CA$0.27 and CA$0.70
  • Price Target: CA$1.25
  • Market Cap: CA$32 million

Quennevill noted Mindset currently has 131 million shares outstanding and an enterprise value of CA$35 million.

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