Adam Jackson
Late Friday after the markets closed, Mydecine Innovations Group (NEO: MYCO) (OTC: MYCOF) reported back-to-back annual results that showed the company struggling to find ground amid growing debt.
The Canadian company, which focuses on researching and developing psilocybin-based products, reported financial results and company highlights for the years ending Dec. 31, 2021, and Dec. 31, 2022.
Mydecine has been creating treatments for mental health and addiction disorders through its drug development strategy, reaching several milestones in 2022, including identifying promising indications for “treating global populations in need,” the company said in a statement.
Mydecine reported a net loss of C$11.56 million, with a shareholder’s loss per share of C$1.34 at the end of 2022. This is an improvement from the same period in 2021, where losses totaled C$28.89 million, with a loss per share of C$6.17 — which included a loss of C$279,623 from discontinued operations.
“We’ve spent a significant amount of time refining our core focus to be sustainable, elegant, and efficient while still retaining the blue sky that we believe the various drugs we’re developing hold,” said Josh Bartch, chairman and CEO.
Bartch identified several challenges facing the company, including tightening of capital markets, which has been “forcing companies to pivot or die.”
Drug Pipeline
The company also signaled several proprietary advancements, including first- and second-generation drug candidates.
Mydecine said that it created a group of new molecules called MYCO-006, which are similar to MDMA but have a shorter half-life. In other words, the molecules may have a faster onset and shorter duration of effects than traditional MDMA. The company applied for a patent for its new molecules with the World Intellectual Property Organization.
Novel drug development is the main focus, with a primary target indication being smoking cessation (related to dependent oral fixation).
The company is conducting psilocybin research at the University of Alberta in Canada and has planned research and clinical trial sites worldwide, such as Johns Hopkins University School of Medicine, Leiden University Medical Center, Macquarie University, and The Imperial College of London.
Mydecine ended research that was being conducted in its research facility in Denver, the company’s headquarters, during the first half of 2022. Management said that it laid off and transferred employees at the facility to other parts of the company.
The company also sold its technology subsidiary, Mindleap Health Inc., to PanGenomic Health for C$3.6 million worth of stock, which Mydecine said reduced operating cash outflows and allowed the company to narrow its focus on its remaining core projects.
The company closed several private placements in 2022, which provided gross proceeds of C$3.92 million. Mydecine had a net loss of C$11.56 million from operations for the year ending December 31, 2022, but had a cash position of C$11.03 million at the same time. The company received additional funds of C$1.8 million in early January 2023 from selling investments.
Mydecine expects to advance its projects in the next 12 months by using advanced artificial intelligence and machine learning to design and screen drugs of interest, commencing animal studies and subsequent human trials, working closely with internationally recognized firms to conduct clinical trials, continuing to develop molecule families MYCO-004, MYCO-005, and MYCO-006, and exploring new strategic partnerships to leverage the company’s ongoing efforts.
Going Concern
Still, the company has been facing financial difficulties. It has been losing money since it was founded and racked up a total debt of C$136.5 million by the end of 2022. The debt keeps growing because the company is not making enough money to cover its expenses.
The company’s net loss from continuing operations by the end of 2022 was $17.2 million. Additionally, the company used $8.4 million in operating activities during the year, which means it spent more cash than it brought in.
The company’s ability to keep going is dependent on its ability to generate more profits or get financing from investors. But there’s no guarantee that it will be able to get the necessary financing in the future, which could affect its ability to continue as a business, according to boilerplate excerpts in filings.
Despite the difficulties, the company has the plan to continue operating and to provide returns to its shareholders. It cited the COVID-19 pandemic, which has made conditions even more challenging, as it has disrupted businesses worldwide and made it harder for the firm to secure financing.
In short, the company is facing significant financial challenges, and its future is uncertain.
