MIRA Pharmaceuticals (NASDAQ: MIRA) stock is in a bullish November mood, closing yesterday at $3.63, an over 106% increase since the start of the month*. However, a recent report from Zack’s SCR suggests that this surge could be just the beginning of even more pronounced and substantial gains. In fact, the analyst penning the report models for MIRA shares to reach $16.50 using discounted cash flow analysis and a 20% discount rate. And the basis of the bullish target is rooted in sound valuation logic, evaluating and accounting for MIRA’s tangibles, market position, and experienced management capable of bringing to market a potentially best-in-class alternative treatment for anxiety, cognitive decline in the elderly, and neuropathic pain by harnessing the power of its synthetic analog of THC treatment candidate, MIRA1a.
Effectively treating those indications alone puts a massive revenue-generating opportunity in MIRA’s crosshairs. But they added more potential pipeline firepower on Monday, announcing that it has acquired an exclusive license to develop and commercialize Ketamir, a potential derivative of the antidepressant ketamine, which has shown indications of having fewer side effects, working more rapidly, and like its targeted neurological conditions, can target a patient population in the millions, especially those that have not responded to existing treatments.
It appears investors tuned into that combined potential, adding to a bullish run supported by MIRA stock scoring its highest-ever trading volume last week. Volume wasn’t the only measure that soared. MIRA shares did as well, reaching an intraday high of $6.40, 92% higher from the prior day’s close. While some of that gain has been given back to profit takers, the enthusiasm around and interest in MIRA stock hasn’t. Compared to much of October’s trading volume levels, MIRA’s volume has increased 10X, even up to 30X, from what was exchanged daily last month. That’s not all.
Clearing Potential Roadblocks and Regulatory Hurdles
The potentially better news for MIRA and its investors is that the dual run is likely to continue – and for excellent reasons. Despite its preclinical status, MIRA benefits from being competitively advantaged to deliver an innovative chemical entity and THC analog that, if approved, could tap into the enormous therapeutic potential for treating several neurological disorders. Know this, too: the value being ascribed to MIRA isn’t based purely on its innovative approach to utilizing THC to treat debilitating mental and physical conditions. Many companies are trying to exploit opportunities in the space, but unlike those, MIRA has a unique advantage adding to its value proposition: it may have already cleared most of the expected, and unexpected, regulatory hurdles.
That difference is attracting the attention of both the sector and investors. It’s well deserved, considering MIRA is blazing what could be an exclusive trail to getting a targeted THC-based drug to market after the U.S. Drug Enforcement Administration (DEA) determined that its treatment candidate, MIRA1a, is not and will not be classified as a controlled substance or listed chemical. In simpler terms, MIRA1a, unlike even some mid to late-stage drug development companies, will face less risks, challenges, and legal and regulatory hurdles typically associated with THC and marijuana drug development studies. Better still for MIRA, MIRA1a’s classification could significantly reduce production costs, lengthen competitive distance, and potentially eliminate manufacturing, transportation, and banking issues. Those benefits are more than good news for potential patients; they also place MIRA in an enviable competitive position.
And by leveraging its intrinsic strengths and inherent advantages, MIRA could score the lion’s share of an estimated $120 billion combined market opportunity: roughly $90 billion from treating neurological conditions, and an estimated $30 billion by serving the more generalized cannabis markets. In addition to the lead provided by the DEA ruling, MIRA benefits from its own groundwork completed, including promising preclinical studies showing MIRA1a’s potential to enhance cognitive performance, inspire anti-anxiety effects, and improve pain tolerance. Effectively treating those latter two indications would position MIRA to treat a high disease burden and fill significant unmet needs.
Thus, MIRA is wasting no time to turn ambition into revenues. The company plans to file its initial Investigational New Drug (IND) application investigating MIRA1a for treating anxiety and cognitive decline in elderly patients in Q3 next year, with its Phase I trial expected to commence 30 days post-IND submission. While that might sound far off, it isn’t from a value-creating perspective. Remember that drug development companies, especially those entering clinical-stage research, tend to accrue value from each milestone reached. In MIRA’s case, that can include achieving more than just research goals. Considering its candidate’s DEA classification, positive data from preclinical studies, and product differences that may be unrivaled advantages, partnerships and/or license agreements are very much in play.
Attracting the Right Kind of Attention
Speculatively speaking, those could come sooner rather than later. Remember, MIRA isn’t doing more of the same within its sector. They are developing a next-generation synthetic analog of THC that, while still in the early stages of development, has a de-risked and better-defined pathway to commercialization. That distinction has driven further attention to MIRA1a – some potentially coming from Big Pharma, which has turned to a more expedited business model of acquisition over development during the past decade.
Several companies in the medicinal cannabis space, large and small, could have an interest, including Cara Therapeutics (NASDAQ: CARA), Corbus Pharmaceuticals (NASDAQ: CRBP), and Harmony Biosciences (NASDAQ: HRMY). Inking a collaborative deal wouldn’t be surprising, especially after Jazz Pharmaceuticals’s (NASDAQ: JAZZ) purchase of GW Pharma for $7.2 billion in 2021 exposed how valuable earning a foothold in the medicinal cannabis space can be. That was a significant amount for the times. However, with a momentous shift since then by patients turning to alternative treatments like CBD, psilocybin, and other organics, that purchase price may not be the high bar in 2023 and beyond.
In fact, as more is learned about the medicinal power of cannabis, as well as how to maximize that value through better manufacturing processes, companies developing innovative treatments for high-value markets could benefit from a seller’s market. MIRA1a allows MIRA to check those boxes, with its differentiating factors enabling it to target large addressable markets with a dual-path synthetic showing the likelihood for reduced adverse side effects when compared to other marijuana extracts. Doing so could be lucrative, and so far, preclinical data shows MIRA1a to have a better side effect profile. That puts it a step closer in its mission to earn FDA approval as a prescription medication, a potential that can be expedited by not facing unexpected DEA scrutiny.
An Innovative Approach to Treating Unmet Medical Needs
With those uncertainties at least highly mitigated if not eliminated, MIRA’s path to market could follow the FDA approval precedent set by GW Pharma. Like them, MIRA1a is targeting substantial market opportunities, with a current focus on treating three key therapeutic areas with high disease burden and significant unmet needs: neuropathic pain, anxiety, and cognitive decline in the elderly.
Neuropathic pain is a complex pain condition arising from dysfunction or damage to the nervous system, which can continue even when the initial cause of the pain, such as an injury or disease, has healed or been treated. It’s estimated to affect approximately 7-10% of the general population, with notable examples of the condition including diabetic peripheral neuropathy, postherpetic neuralgia, and multiple sclerosis-related neuropathy.
There are existing treatments for the condition, including medications like anticonvulsants, antidepressants, and opiates. However, in addition to their potentially severe side effects, including addiction, their effectiveness can be limited. That’s led to significant interest in developing targeted therapies for neuropathic pain, including cannabinoid therapies, which are showing unique abilities to more effectively treat this type of pain.
Two other conditions that MIRA1a may be able to address include anxiety and cognitive decline in the elderly. Anxiety disorders are chronic conditions typically marked by an excessive & persistent sense of apprehension, with physical symptoms such as sweating, palpitations, and feelings of stress. It’s estimated to affect roughly 40 million US adults in different ways, including phobias, Social Anxiety Disorder, PTSD, Generalized Anxiety Disorder, and Panic Disorder. Currently, the standard of care leverages cognitive-behavioral therapy through pharmacological options like SSRIs, SNRIs, and TCAs. Those can also be limited in treatment effectiveness and often come with significant unintended side effects.
Cognitive impairment encompasses conditions marked by a notable decline in one’s cognitive abilities, including Alzheimer’s disease and dementia. It’s estimated that about 16 million people in the US are living with cognitive impairment. The issue with treating these conditions is that current approaches to treating cognitive impairment generally do not restore lost function and are only capable of delaying the progression of the disease. That’s led to aggressive studies to find alternative therapeutics, especially those that are more efficacious, have fewer side effects, and faster onset of action. Showing promise in preclinical evaluations that could accrue to the clinical stage, MIRA1a may be the answer. If so, the combined market potential for MIRA1a is massive, with millions of patients needing better, safer care that could be worth billions in the revenues column.
A Value Proposition Exposed
And the recent surge in volume and price shows that despite its recent 106% increase, the MIRA value proposition is very much intact. Furthermore, with a regulatory pathway to commercialization in place, the growth trajectory of both could get even steeper. That assessment aligns with the report from Zack’s SCR, whose appraisal of MIRA supports a $16.50 share price from revenues expected from an FDA-approved MIRA1a. That price to MIRA’s current may expose a value proposition and disconnect too attractive to ignore.
As noted, many investors aren’t. Bullish interest helped MIRA stock score an intra-month high of $6.40, less than 10% off its all-time high of $6.95 and 76% higher than its current. Thus, just closing that gap presents an attractive proposition. But in the longer term, especially with an amenable DEA classification for its lead candidate, leaning into the high end of speculative modeling may be the path better taken. Remember, MIRA doesn’t need to go it alone, and more likely than not, they won’t.
As the company advances its preclinical testing, including genetic toxicology, safety pharmacology, and general toxicology testing to enable the filing of an IND application, MIRA noted that strategic collaborations and partnerships to maximize the value of its product candidates could be in play. Hence, based on market position, supportive data, and a streamlined path of opportunity, taking them at their word may be more than wise; from an investor’s perspective and with momentum behind them, it may also be timely.
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