A positive news update for Mind Medicine (NASDAQ:MNMD) is elevating the entire psychedelic treatment sector today. Specifically, the U.S. Food and Drug Administration (FDA) has just granted midomafetamine capsules (MDMA) a priority review.
If this results in regulatory approval, MindMedicine’s product could make history as the country’s “first psychedelic-assisted therapy.” While the review is not scheduled until Aug. 11, 2023, MNMD stock is rising on the news today alongside many other companies in the space. Indeed, any type of regulatory success could grant a new legitimacy to the entire sector, thereby minting a new class of winning stocks.
What’s Happening With MNMD Stock?
News of the FDA priority review has made a good week even better for MindMedicine. As of this writing, MNMD stock is up more than 8% for the day, with gains of 22% for the past five days. Despite some volatility late in January 2024, shares seem to have recovered well and are making up lost ground. If this growth continues, MNMD stock won’t trade at penny stock levels much longer.
Of course, it’s important to note that the company that actually submitted the drug application behind today’s momentum isn’t MindMedicine. Instead, it’s a biotech firm called Lykos Therapeutics, which seeks to use MDMA for treating post-traumatic stress disorder (PTSD) “in combination with other psychological interventions.”
Lykos isn’t publicly traded, but many of its biotech peers are performing well in the market today. For example, micro-cap penny stock Numinus Wellness (OTCMKTS:NUMIF) stock is up 4% while Compass Pathways (NASDAQ:CMPS) is outpacing even MNMD with gains of over 9% (although that growth is also partly due to Bank of New York Mellon (NYSE:BK) purchasing a large stake in the company).
The Next Steps
As InvestorPlace contributor Alex Sirois notes, psychedelic stocks were “taboo until recently.” Now, the new focus on MDMA as a means of therapy has helped these equities gain legitimacy in the biotech space. If a company like Lykos gains regulatory approval, it may be exactly what the sector needs to move upward.
With the review still months away, names like MNMD stock will likely dip again in the near future. However, as August draws closer, they could rise again on momentum. If the FDA gives Lykos’ treatment a thumbs up, it will send the entire sector surging.
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On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
