Clearmind Medicine (NASDAQ: CMND) has risen 65% premarket this morning - and on good trade too, 5 million shares - off the back of a story about having made a patent application. We struggle to see why this might be worth this sort of amount of money. Patents are important in medical treatments, oh yes they are. The patents normally come at the beginning of the path to market, possibly a decade before actually reaching market. This is therefore really early days to be attributing that sort of value to this patent.
Clearmind develops psychedelic medicines to treat varied problems - booze and cocaine addiction for example. This latest idea is to us a version of their base psychedelics to treat depression. This has its merits - there's a lot of colloquial chatter about how they can indeed be useful in alleviating at least some symptoms. So it's not a strange idea. What's really happening here is that the new and more relaxed legal regime surrounding psychedelics allows proper research into their effects - beneficial ones that is.
Clearmind Medicine stock price from NASDAQ
The announcement is that a patent has been applied for. There seems little doubt that it will be granted. Even if there is prior art - which there is, as above - that's little barrier to the granting of a patent these days. “The latest patent application refers to the protection of the unique combination of MEAI and SciSparc's Palmitoylethanolamide (“PEA”) for the treatment of depression.” Well, that's great.
But now comes the hard work. Patents are normally taken out at the beginning of the drug testing process. We then have Phase I (“does it poison people?”), Phase II (“does it work?”) and Phase III (“Any side effects?”) testing to get through. A process that takes up to a decade and costs tens of millions if not hundreds of millions. That is, hte patent application comes at the start of this long process - so ascribing a significant value to it now seems a little strange.
We tend to think this is just excitement here at Clearmind rather than a rational validation of the patent itself.
