Of The 6 Largest Psychedelic Drug Stocks, Only One Has Not Advanced YTD

The most critical financial information on the health of a company is whether, or not, it has a Net Positive Operating Cash Flow; recent growth in its Net Operating Cash Flow; its Altman -Z Score; its Piotroski F-Score; and the percentage probability that it could go bankrupt within the next 2 years (definitions at end of article).

None of the 6 largest psychedelic drug stocks (market caps of $75M or more) tracked in the munKNEE Psychedelic Drug Stocks index have a Positive Net Operating Cash Flow and they are ranked below as to their likelihood of Financial Distress within the next 2 years according to data from macroaxis.com as well as their stock performances year-to-date (February 24th): 

  1. Compass Pathways (CMPS): UP 4.6% YTD
  2. Mind Medicine (MNMD): UP 67.9% YTD 
    • is focused on developing a R-enantiomer of 3,4-methylenedioxymethamphetamine for the treatment of core symptoms of autism spectrum disorder and has completed Phase 1 for the treatment of opioid withdrawal with an a3ß4 nicotinic cholinergic receptor antagonist;
    • has a market capitalization of $128M;
    • has a 56% Chance of Financial Distress within 2 years;
    • has a 0.0 Altman Z-Score;
    • has a 3.0 Piotroski F-Score.
  3. Cybin (CYBN): UP 72.4% YTD
    • is focused on the treatment of major depressive and alcohol use disorders with a deuterated psilocybin analog, anxiety disorders with deuterated dimethyltryptamine and neuroinflammation with a phenethylamine derivative; and has developed EMBARK, a psychedelic-assisted psychotherapy;
    • has a market capitalization of $94M ;
    • has a 56% Chance of Financial Distress within 2 years;
    • has a 0.0 Altman Z-Score;
    • has a 3.0 Piotroski F-Score.
    • Read: CYbin to lay off 15% employees for cost savings
  4. Atai (ATAI): DOWN 37.2% YTD
    • its therapeutic candidates include: a subcutaneous formulation of R-ketamine, a formulation of N,N-dimethyltryptamine and a formulation of Salvinorin A for treating treatment-resistant depression; oral formulations of ibogaine, deuterated mitragynine and noribogaine for treating opioid use disorder; an oral formulation of an 3,4-methyl enedioxy methamphetamine for the treatment of post-traumatic stress disorder; an oral formulation of a deuterated version of etifoxine for the treatment of generalized anxiety disorder; and a novel intranasal formulation of N-acetylcysteine to treat mild traumatic brain injuries;
    • has a market capitalization of $500M ;
    • has a 56% Chance of Financial Distress within 2 years;
    • has a 0.0 Altman Z-Score;
    • has a 2.0 Piotroski F-Score.
    • Read: Atai Life stock slumps 40% as depression drug fails mid-stage study
  5. GH Research (GHRS): UP 1.0% YTD
    • is focused on developing 5-Methoxy-N,N-Dimethyltryptamine (5-MeO-DMT) therapies for the treatment of patients with treatment-resistant depression (TRD); has completed two Phase 1 clinical trials and Phase 1/2 clinical trials in patients with TRD;  and is in preclinical development trials with both injectable and intranasal 5-MeO-DMT product candidates;
    • has a market capitalization of $611M ;
    • has a 58% Chance of Financial Distress within 2 years;
    • has a 0.0 Altman Z-Score;
    • has a 2.0 Piotroski F-Score.
  6. Seelos (SEEL): UP 3.1% YTD
    • its therapeutic candidates include: an intranasal racemic ketamine for the treatment of acute suicidal ideation and behavior in patients with major depressive disorders; a protein stabilizer for the treatment of amyotrophic lateral sclerosis (ALS) and Sanfilippo syndrome; a partial dopamine agonist for the treatment of patients with Parkinson's Disease.
    • its preclinical programs include: an anti-alpha-synuclein peptidic inhibitor to treat patients with Parkinson's Disease; an orally available antagonist for chemoattractant receptor-homologous molecule for the treatment of chronic inflammation in asthma and pediatric orphan indications; an oral histamine H3A receptor antagonist for narcolepsy and related disorders; and an injectable therapy for post-operative pain management;
    • has a market capitalization of $75M ;
    • has a 61% Chance of Financial Distress within 2 years;
    • has a 2.4 Altman Z-Score;
    • has a 3.0 Piotroski F-Score.
    • Read: Seelos Therapeutics Announces Completion of Enrollment of its Phase II/III Trial of SLS-005 in Amyotrophic Lateral Sclerosis on the HEALEY ALS Platform

In total, the munKNEE Psychedelic Drug Stocks Index is UP 4.4% YTD.

If you are interested in this category of clinical-stage psychedelic compound-based stocks consider the AdvisorShares Psychedelic ETF (PSIL) that consists of 23 such stocks bur keep in mind that the vast majority have market capitalizations of $50M or less (i.e. are nano-caps). It is DOWN 5.0% compared to the Psychedelic Drug Stocks Index featured above.

Below are the definitions for Positive Net Operating Cash Flow, the Altman Z-Score, and the Piotroski F-Score:

  • Positive Net Operating Cash Flow:
    •  is money coming in through sales minus operating expenses and a company doesn't survive without it, as such, it is the best measure of a company’s financial and operational health.
  • The Altman Z-Score:
    • is a numerical measurement used to predict the chances of a business going bankrupt in the next two years compared to a company in a similar line of business and has an accuracy that ranges from 82% and 94%.
      • companies with Z-Scores above 3.1 are generally considered to be stable and healthy with a low probability of bankruptcy,
      • scores that fall between 1.8 and 3.1 lie in a so-called 'grey area' and
      • scores of less than 1 indicate a high probability of distress.
  • The Piotroski F-Score:
    • is a popular financial indicator that puts together nine criteria to evaluate the financial strength of a company based on its profitability, leverage, liquidity, source of funds, and operating efficiency.
      • scores of 8 and 9 are usually classified as strong-value stocks and
      • scores of 2 or below are considered weak value stocks.

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