Mydecine Innovations Group (NEO: MYCO) (OTC: MYCOF) has burned through its cash and is closing its research operations in Denver Colorado. The psilocybin company reported financial results for the six months ending June 30, 2022, with a net loss of $8.09 million or a basic and diluted loss per share of $(1.31).
Mydecine said it had $324,146 in cash and cash equivalents as of June 30, 2022. The company had $1.4 million at the end of December. As of June 30, 2022, Mydecine said it had an accumulated deficit of $133,166,197 (December 31, 2021 – $124,915,140), On March 8, 2022, the company entered into an unsecured note payable with an institution for $153,840 which bears a 5% interest rate annually and matures on March 7, 2023. The balance of the note payable on June 30, 2022, was $87,916 including accrued interest of $2,777.
At the end of June, Mydecine management decided to stop the research that was being conducted in the research facility located in Denver, CO. According to the company’s filing, during the quarter, the employees at this facility were released or transferred to other functions of the company. Management began preparations to liquidate the laboratory equipment and furniture in this location and, subsequent to the end of the quarter, negotiated an amendment that changed the termination date of the lease.
On July 26, 2022, the company said it agreed to the Second Amendment of its Business Lease and First Amendment related to the research and development facility located in Denver, CO. The landlord waived monthly lease payments for the month of June 2022 and the partial month of July 2022 in exchange for the laboratory equipment, leasehold improvements, and furniture (the Lab Assets) within the research and development facility. The company said it also agreed to allow the landlord to keep the security deposit of $9,149.13 that the company paid at the beginning of the lease. Mydecine then transferred ownership of the Lab Assets, in “as is” condition, to the landlord and was released from any further obligations for lease payments, cleaning costs, and the obligation to restore the space to its original condition.
CEO Josh Bartch said, “The company stated in our financials that we had decided to close down the DENVER lab, and only the DENVER lab. This lab was focused on Mycology research and was a very small, non-material subset of the overall company’s focus, which is as a pure biotech, drug development company. The decision to close down the Colorado lab was for multiple reasons, first is that the Mycology research no longer fit into the company’s plan moving forward as a singularly focused biotech company, focused on developing improved second and third-generation psychedelic molecules, something the company does very well and efficiently. Second, the company, like many companies in a variety of sectors, has scaled down operations in order to cut burn rate to adapt to times, we have also done a very good job at accomplishing this as well. The closure of the Colorado lab has no material effect on the company’s overall business strategy, in fact we view it as a positive evolution.”
In addition to shutting down the lab, Mydecine decided to reduce the scope of daily operation within the Mindleap Health subsidiary. “The platform remained, and remains, available to subscribers and continued to generate operating revenues and expenses through June 30, 2022. However, software development activities were paused and the Company released Mindleap’s consultants. Management will continue to assess plans for the Mindleap platform that include, but are not limited to, strategic opportunities.”
Bartch added, “The decision to lay off the Mindleap staff is a decision the company made in regards to the future of the application under the Mydecine roof. Management made the decision that Mindleap as an application would be better suited with a company that had either an immediate use for the application, such as a clinic organization and or was solely focused on technology or app development. To that end we made the decision to sell the application, which we will be updating the market on in the near term. This will result in two direct benefits to the company, one it saves a significant amount of money in monthly and annual burn, as well as strengthens the balance sheet with non-dilutive capital.”
Just last month Mydecine announced it has successfully synthesized multiple short-acting MDMA analogs. This family of analogs had been specifically designed by experts at Mydecine to have a shorter half-life than traditional MDMA. The company has named this family of novel molecules MYCO-006 and applied for patent coverage with the World Intellectual Property Organization.
Board is Gone
During the Second Quarter, Gordon Neal who served as the Chairman of the Company’s board of directors and the chair of the Audit Committee resigned, effective May 31, 2022, in order to attend to his other business interests. Mr. Todd Heinzl, who is the owner of The Governance Box consultancy and who has been working as a corporate governance consultant for the company, was nominated to succeed Mr. Neal the chairman of the board of directors.
On August 12, 2022, the company announced that Damon Michaels, Josephine Wu, Dr. Saeid Babaei and Dr. Victoria Hale had resigned as directors of the Company. As a result of the resignations, the company is currently working to identify suitable candidates to replace Mr. Michaels, Ms. Wu, Dr. Babaei and Dr. Hale on the board, and to recruit and appoint three new independent directors to the company’s board of directors and audit committee.
Bartch concluded by saying, “Mydecine remains alive and well, and has made the necessary changes and pivots in business strategy to position it for success in the future. The company’s primary operations have been and remain in exclusive partnership with Applied Pharmaceutical Innovations out of the University Of Alberta, where Mydecine has been developing several families of first, second and third generation novel, improved psychedelic molecules for going on 3 years now. In addition to that, the company continues to work alongside Johns Hopkins to both support the NIDA Grant funded study for smoking cessation, in which is using Medicines MYCO-001 drug, as well as to continue to develop Mydecines clinical trial for smoking cessation/substance use disorder for MYCO-004.”