At the end of the year, it is often interesting to look at what a company has accomplished. Novamind (CSE: NM | OTCQB: NVMDF | FSE: HN2) has taken a practical approach to the fast-emerging therapeutic psychedelics market, supporting the commercial models of much higher risk biotech companies. The company operates its own free-standing clinics to provide psychedelic enhanced psychotherapy. At the same time, the company hosts sponsored clinical trials, granting its patients early access to innovative treatments not yet available to the general public.
These two arms are each generating revenue and have tremendous opportunities for expansion. For a psychedelics start-up, the idea of generating revenue is often years in the future. Not Novamind. In Q1 of fiscal 2021, the company generated $1,877,750 in gross revenues as compared to $873,281 in Q1 fiscal 2020. That revenue growth means that the company can preserve its working capital even as it expands its business.
The sad fact is the need for mental health treatment has snowballed with the effects of COVID. For example, announcing the opening of a Salt Lake City clinic, specifically focused on substance use under incoming Medical Director, Dr. Amy de la Garza, Novamind’s Chief Medical Officer, Dr. Reid Robison, commented: “Social isolation and despair related to the COVID-19 pandemic have further fueled a significant increase in substance use disorders and related deaths. Dr. de la Garza’s expertise in addiction medicine and behavioural health is a vital addition to our team as we continue to expand Novamind’s clinic footprint to address unmet need and broaden our innovative, evidence-based treatments.”
The promise of therapeutic psychedelics has been recognized by health insurance industry. In a November 10, 2021 press release, Novamind announced that it secured direct billing from four insurers – Blue Cross Blue Shield, the University of Utah, PEHP Health & Benefits and MBA Benefit Administrators—for intravenous ketamine for treatment-resistant depression. Dr. Robison stated, “This initial success with insurance coverage of ketamine is promising for the future of psychiatry because it sends a strong signal that payors are interested in more effective treatments for mental health conditions as supporting research emerges.”
Novamind recognized the need to have facilities in which to care for its clients. Announcing the opening of a new clinic, Yaron Conforti, CEO and Director of Novamind, stated “Opening the new Draper site is in direct response to overwhelming patient demand at our clinics, but it’s also part of a much larger initiative. Access to a broader range of treatments has never been more critical for people in need of mental healthcare, and Novamind is in a unique position to provide that access through our national expansion.”
As part of that national expansion, Novamind announced the acquisition of a mental health practice in Arizona. Foundations for Change has two outpatient mental health clinics specialized in ketamine assisted psychotherapy located in Arizona. In the release announcing the acquisition, Mr. Conforti stated, “This is an exciting step towards our vision to expand access to psychedelic medicine across the United States.”
With its free-standing clinics and a significant roster of patients, Novamind is also ideally positioned to both conduct its own research and to undertake studies on behalf of other companies. The company obtained Schedule 1 licenses from the U.S. Drug Enforcement Agency (DEA) for Dr. Reid Robison, and Dr. Paul Thielking, Chief Scientific Officer. Commenting, Dr. Robison stated, “Obtaining the DEA Licenses is a critical step towards hosting clinical trials for psilocybin-assisted psychotherapy. We’re proud of our clinical research organization’s track record investigating innovative solutions for central nervous system conditions. This milestone reflects our expertise and enables us to continue on our mission to create breakthroughs in mental health treatment.”
Certainly, Novamind’s Board of Directors thinks so. While Novamind’s share price declined, along with the rest of the psychedelics sector, in the last quarter of 2021, CEO and Founder Yaron Conforti and other members of the Board of Directors bought nearly a million shares in the open market.
Insider accumulation is a very positive sign for a company. The share price itself is down largely due to tax-loss selling which is over for the year. Novamind has no debt and, as of September 30, 2021 working capital of $6,834,011.
Novamind leads its peers in revenue and with its acquisitions and new clinics should continue to improve its revenues throughout 2022. The company is trading between $0.45 and $0.65 with a significant upside for share price appreciation as the market recognizes the tremendous potential of the therapeutic psychedelics market.
