We live in a world where we can click a few buttons and almost any kind of food we could want shows up at our door in about an hour. Grubhub, Doordash, and other food delivery services have changed the way we pick where and what we eat. From the consumer's perspective, it is a fantastic service that solves a need for the consumer at no cost.

These services fail to serve restaurants in a way that is lucrative to restaurants in the long term. They take between 15-20% of total revenue because they came through their platform. Food establishments already have notoriously thin margins so it's unlikely they're huge fans of these platforms.

So if food delivery companies are charging these rates, restaurants can't generate in store sales, and people are bored and have nothing else to do,... So you would imagine these companies are taking advantage of the covid environment and printing money. You would be very wrong. While revenues have gone up drastically, these companies have failed to generate consistent profits and continue to lose money in the friendliest market possible for them.

"But wait stonk bro, look at their revenues! It's nearly 10x over the past 2 years. They're going to outgrow their costs." The problem is their service is going to be a race to the bottom. Food delivery is a commodity. I don't care about anything besides price and whether it's delivered around the time I expect. The restraunts only care about who is offering the lowest fee.

These companies will need to 1) illegally fix their prices, 2) charge customers a fixed delivery fee on all orders 3) gain some kind of customer loyalty.

1 and 2 would lead to the destruction of their business. 3 I think is impossible because they are a commodity. Unless they can prove me wrong about 3, I think grubhub and doordash are excellent shorting opportunities.

When covid restrictions lift, I believe there will be an immediate spike in demand to actually BE in a restaurant. This will likely cause a massive decrease in grubhub/doordash use. This massive dip in revenue may be all it takes to pop this bubble.

Business Description

Mind Medicine Inc, based in New York, NY, is focused on the research, development, and commercialization of novel psychedelic and cannabinoid-based life sciences products and drug repurposing for infectious diseases. The firm's technology is being developed to fill the medical needs for diseases and disorders such as pain, inflammation, and wound care. Currently MMEDF has four major clinical trials at play as their business is premised on a growing body of research that psychedelics can be a new way to treat a myriad of mental health problems. Their development process revolves around acquiring new chemical entities through strategic partnerships, taking those compounds through FDA regulated clinical trials while partnering with pharmaceutical companies, and then deploying these products to hospitals, research centers, and insurers that will license their protocols and drugs.

• Addiction Program – The addiction program is currently broken into two clinical trial pathways. The first on opioid withdrawal treatment which has completed a Phase 1 trial. Depending on the results of the Phase 1b trial they expect to initiate Phase 2 in 2020 or early 2021 in order to evaluate 18-MC’s effectiveness for withdrawal treatment. The second pathway focuses on use disorder. A phase 3 clinical trial for opioid withdrawal is projected to commence at the very earliest at the end of 2021 or 2022. The findings from the Phase 2 trials could greatly impact timelines and future capital requirements for the Addiction Program. Recently there has been new FDA incentives for Opioid Treatments which has accelerated their approval for opioid use disorders. 18-MC works as well as Ibogaine without the harmful side effects of different types of toxicities.

• Project Lucy – MindMed established Project Lucy as an added experimental therapy for anxiety disorder to its clinical development pipeline. The anticipated timeline for the opening IND is the second half of 2021. A pre-IND meeting has been scheduled with the FDA in Dec 2020. Safety profiles show LSD to be among the least harmful drugs in the world while alcohol to be the most harmful. Current medications like Benzodiazepines are 2x more dangerous than LSD yet 30 million are prescribed BENZO every year.

• Microdose LSD Program – This is a Phase 2A proof of concept trial for the Microdose LSD program. As of date this prospectus is advancing through the necessary regulatory filing in the Netherlands and Switzerland. Recent evidence suggests microdosing Psilocybin may increase focus and decrease anxiety. A microdose consists of about 10-25 ug LSD.

• MDMA & DMT Research – MindMed has recently added the psychedelic compound MDMA to its research and development pipeline. Concurrently MMEDF will pursue DMT, the principal active ingredient in ayahuasca. They are providing startup funding for a Phase 1 clinical trial testing various intravenous dosing regimen of DMT which is expected to begin at the end of 2020.

Competitive Advantages

• High barriers to entry – Due to the need to conduct regulated trials as well as the time and money involved there is a significant barrier to entry that will keep other labs coming in and trying to compete without serious funding. Therefore, MindMed’s ability to build a compelling drug pipeline is a key to its success as they are ahead of the game.

• Very Extensive Pipeline – MindMed has a diverse offering of drugs and research currently going on. This is one of those things that is important because if just one drug fails it may not significantly impact their price as they have various drugs to offer. Their pipeline is specific to psilocybin products but they have various psilocybin drugs in various stages treating various conditions.

Assessment of Management

Co-Founder & Co-CEO JR Rahn – JR is a former Silicon Valley tech executive who realized that transformational solutions to mental illness and addiction might lie in psychedelic medicines. He spent 2 years researching and began personally investing in psychedelic research through his investment company. JR partnered with drug development veteran Stephen Hurst to start Mindmed in 2019, assembling a leading clinical drug discovery and development team with vast experience conducting clinical trials and research on drug candidates derived from psychedelics. Before starting Mindmed, JR worked in market expansion and operations at Uber.

Co-Founder & Co-CEO Stephen L. Hurst, JD – Steve has more than thirty-five years’ experience in the biopharmaceutical industry including work for The Immune Tolerance Institute, The Regents of the University of California, The World Bank and BIO Ventures for Global Health. In addition, Steve has previously advised on psychedelic therapies research and clinical trial designs. He has held senior executive positions with Sequential, Inc. and Inhale Therapeutic Systems, Inc., (now Nektar Therapeutics, Inc.), where he helped the company grow to over 700 employees and raised more than $700 million in investment capital. Steve and Drs. Freeman and Glick co-founded Savant HWP, Inc., in 2009 to advance 18-MC to clinical trials. He is a graduate of Golden Gate University, School of Law and the University of California, Berkeley.

Chief Operating Officer Carol Nast – Carol has spent her career in executive level positions with large multinational companies and early stage companies in the medical industry. She is a recognized expert in product development and commercialization and has extensive experience in the management of complex, multinational partner programs and has lead successfully the development and commercialization of over 100 products. Carol was COO at NuGen, a genomics company, and served in executive level positions at Inhale Therapeutics (Nektar), Syva (a division of Syntex Pharmaceuticals,) BioRad and Pfizer. Her passion is the successful launch and adoption of breakthrough products in emerging markets that have significant impact by solving a vexing challenge.

Chief Financial Officer Dave Guebert – Dave Guebert is a CPA, qualified in both Alberta and Pennsylvania, and a Member of the Institute of Corporate Directors. He started his career in 1979 at Deloitte where he qualified for his CPA designations. He went on to serve as the Controller for the XV Olympic Winter Games from 1986 to 1988. Since then has taken on increasing senior roles, acting as Chief Financial Officer for a number of public and private companies, primarily in the technology industry. He currently sits as a board member and Audit Committee Chair for Legend Power Systems (TSXV: LPS), RMMI Inc. (CSE: RMMI) and Quisitive Technology Solutions, Inc. (TSXV: QUIS). From 2010 to 2017, he was board member and Audit Committee Chair of Merus Labs International Inc. (TSX: MSL; NSDQ: MSLI), a specialty pharmaceutical company. Dave is a graduate of the University of Saskatchewan. He has served as a volunteer on the Audit and Finance Committee of the Calgary Stampede and the Board of the Calgary Olympic Development Association as well as various roles in hockey, baseball and his community.

Chief Scientific Officer Donald Gehlert, PHD – Don has extensive experience in drug discovery and expertise in key functional areas of exploratory development and disease biology. During his career at Lilly, Don led or participated in teams that introduced 19 molecules into the Lilly pipeline including both small and large molecule therapies. He also participated on Phase I and Phase II clinical development teams that designed and delivered translational proof of concept studies in the areas of ADHD, obesity, AUD, depression, pain and migraine. He is a co-author on 182 publications and a co-inventor on 15 issued and pending patents.

Growth Drivers

• Big Pharma Searching – Major corporations are coming on board to MindMed’s funding as well as increased interest for institutional investment. US Gov’t most recent DARPA contract gave $27M. Johnson & Johnson Phase 1 to approval of spravato. Several universities are investing in this research like Johns Hopkins, UCSF school of nursing, & NYU School of Medicine.

• Massive Addressable Market – Relative to their potential addressable market, MindMed has an insane amount of room to grow if their drugs do what they think is possible

Issues / Risks

• Substantial Losses – Because all of MMEDF’s products are still in clinical stages, MIND Medicinine will continue to take losses quarter to quarters moving forward until they create a product that can get past phase 3 testing. Acquiring funding in the future will only get harder as they continue to burn cash. They will continue to burn cash until they get a drug approved and then they must worry about how to manufacture the drug itself (this is a totally different ball game and can be outsourced but is still an important part of the game)

• Product Development – Healthcare industry product development is almost an art. There are always major risks and uncertainty relative to the ability to raise additional funding to support operation as well as risks of early positive results from preclinical research that does not predict results of later stage clinical trials. There also comes risks related to filing as investigation new drug applications (INDs) as these must be approved. If clinical trials for their products fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities, they would incur additional costs/delays in completing or ultimately be unable to complete the development of their products. This means even if their drugs are effective, they still might not be approved as the FDA are cucks.

• Patent Related Litigation – MMEDF must do their best to keep their patents protected in order to protect their intellectual property and trade secrets. There are several third-party licenses needed to effectively develop and manufacture their key products. Any changes in patent laws could diminish the value of the products. It will be interesting to see how competition tries to come in as MindMed gets farther into their development

Summary and Recommendation

MindMed is hands down the best pure Psilocybin play to make in the market right now. From their targeted treatments to their drug pipeline itself, there is a very bright future ahead of them if things go as planned. With that being said things must go as expected and there is a ton of risk relative to their drugs. The three major risk factors I have identified relative to the company’s products are as followed. First being the actual usefulness of the drugs. Will these drugs be able to be scientifically backed by research and work as an alternative for the disorders they want to treat or will there not be enough evidence to use it as a treatment? Second being related to the US gov’t mindset on psilocybin. Will the drugs even be allowed to get to Phase 3 testing as the US gov’t could label this like marijuana for several more years with its negative stigma? And third being related to the consumer itself. Will consumers be willing to take this as an alternative for their symptoms, is there still that stigma behind psilocybin as a whole where people will not be open into taking their drugs?

Overall the psilocybin play is at such an early stage trying to make any prediction on what it may look like in the next 10 years is almost impossible. I think if you invest into MindMed today you are investing in the pure medical aspect of psilocybin and the effectiveness it would have on the medical community. Making a play on MindMed would be nothing related to the consumer aspect (which I think is where the money/funding/approving is to be made for now). The toughest thing to foresee is “hey does this really work” and “yo US gov’t is this going to get actually approved”. I think there is some serious potential here as institutions and big pharma have dabbled their hands into it which means there is absolutely something here, it's just very unsure on what it could be. This would definitely be a long term play as most of their drugs are in phase 1 or phase 2 or just entering phase 3 which means they will continue to burn cash for at least the next 2-3-4 years until they even have a product ready for development. Expect to see the stock price go through crazy swings as approvals, delays, cancelations, and updates come out relative to each of their drugs. This would truly be one of those that you would put in your portfolio and not look at for a good amount of time.

Relative to buy/sell I never want to say you should or shouldn’t. But this position is 110% based on the speculation of how big of a player you think psilocybin will be in the future. Its recent hype has revolved around its various products getting through early 1a and 2a stages of drug testing. They still have a long way to go and have various obstacles in the way. I did not include any financials in the above numbers because they are not generating revenue. Right now they have about 18.24M sitting and cash and run at a net income rate of -8.68M. Both of these numbers can easily change as they can get new funding as well as increase their spending as their drugs require more testing towards phase 3. But keeping everything ceteris paribus (all things equal), given their current rates of spending and cash they have a time frame of a little over 2 years.