Earlier this week, shares in Bright Minds Biosciences (ticker DRUG) rocketed up more than 2,000% and, despite a slight correction over the past two days, are still up over 1,500% this month. The gain was so appreciable that it even saw the beleaguered, last-man-standing psychedelic ETF, AdvisorShare’s PSIL, gain around 70%.
The price action started on Monday, and by Tuesday evening, in response to Canada’s investment regulatory organisation, the company issued a statement just after 9pm confirming that it was unaware of any material changes in its own operations that would account for the frenzy—as is customary in such situations. (The company’s shares appreciated rapidly and somewhat inexplicably in August 2022, and Bright Minds was asked to make a similar comment.)
Over on Reddit, users speculated whether insiders were trading on non-public information, with a top comment on a FluentinFinance post supposing that the stock “will mysteriously end up in several politicians [sic] portfolios in a few weeks, after a big contract announcement.”
But, as is often the case, the explanation is far more benign. Outside of the company, big news had broken: On Monday, Danish pharma co. Lundbeck announced that it would acquire California-based biotech Longboard Pharmaceuticals for a cool $2.6 billion. Shares in Longboard quickly rose to around $60 a piece, which is what the deal values them at.
Longboard’s lead asset is bexicaserin (LP352), an oral 5-HT2C receptor antagonist under development for the treatment of seizures associated with Developmental and Epileptic Encephalopathies (DEEs) in patients aged two and older. In July, the company received Breakthrough Therapy Designation from the FDA for the candidate. An international phase 3 study, dubbed DEEp SEA, launched last month. That trial aims to enrol around 480 patients with various DEEs across around 80 sites.
But why would this news send Bright Minds’ stock soaring? Well, Longboard’s lead targets the 5-HT2C receptor, setting it apart from other anti-seizure drugs on the market and under development. Bright Minds’ own lead candidate is BMB-101, a 5-HT2C agonist that it’s investigating in DEEs, just like Longboard.
Bright Minds is one step behind Longboard and Lundbeck, having just initiated its Phase 2 study last month.
Company executives past and present took to LinkedIn to highlight the similarities. Former Chief Scientific Officer Alan Kozikowski wrote on Wednesday, presumably at least somewhat rhetorically, “Bright Minds Biosciences… are they following in the footsteps of Longboard?” The company’s current COO, meanwhile, commended Longboard’s success and added that Bright Minds “develops the drug with an improved mechanism”. Indeed, a recent company presentation claims that BMB-101 is a higher-potency 5-HT2C agonist than Longboard’s bexicaserin candidate.
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