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On Wednesday, Chardan Capital Markets began coverage of Bright Minds Biosciences Inc. (NASDAQ:DRUG), assigning a Buy rating to the company’s stock along with an $80 price target. The stock has demonstrated remarkable performance, delivering a 2,637% return over the past year. The firm’s interest in Bright Minds Biosciences has been piqued by the potential of its leading drug candidate, BMB-101, a 5-HT2C agonist, which is being developed for the treatment of epilepsy. InvestingPro data reveals strong analyst consensus with a target price of $93.35, suggesting significant upside potential.
Bright Minds Biosciences’ stock has seen an uptick in investor attention following the acquisition of Longboard Pharmaceuticals by Lundbeck last October. Longboard’s 5-HT2C agonist bexicaserin, which shares a similar binding profile to BMB-101, was the focal point of the acquisition. With a current market capitalization of $209.5 million and an "GREAT" overall financial health score according to InvestingPro, Chardan believes that Bright Minds Biosciences still presents an attractive narrative. Subscribers can access 8 additional ProTips and comprehensive financial metrics to better evaluate this investment opportunity.
The firm recognizes that BMB-101 could stand out from other 5-HT2C agonists due to its distinctive binding profile. This uniqueness, according to Chardan, positions the drug to potentially generate over $1 billion in peak sales within the epilepsy market. However, they also caution that the clinical risk associated with BMB-101 is considerable due to the limited data currently available.
Chardan’s analysis indicates that Bright Minds Biosciences is likely to require additional funding soon, as it has approximately $30 million in cash reserves. This anticipated fundraising could lead to significant dilution for existing shareholders. Despite these risks, Chardan views Bright Minds Biosciences as a high-risk, high-reward opportunity, bolstered by a partially validated mechanism of action (MoA).
In other recent news, Bright Minds Biosciences Inc. announced its first-quarter financial results for 2025, which included a reaffirmation of the timeline for their upcoming Phase 2 trial results. The company is conducting a Phase 2 trial named BREAKTHROUGH to evaluate BMB-101, a novel 5-HT2C agonist, for its effectiveness in treating developmental and epileptic encephalopathies and absence epilepsy. Bright Minds expects to release top-line results from this trial in the second quarter of 2025. The company reported having C$57.9 million in cash, bolstered by a successful US$35 million private placement completed in November 2024. This financial stability is expected to support operations for the next 12 months. Additionally, Bright Minds is continuing the development of preclinical assets BMB-202 and BMB-201. H.C. Wainwright reaffirmed its Buy rating and $85.00 price target for the company, following the financial results announcement. Enrollment for the BREAKTHROUGH trial is ongoing, and the company remains focused on its clinical and preclinical developments.
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