$CYBN Lincoln Park’s Long Haul Pact

2023年5月31日

Amidst a dwindling cash balance, and an erosive burn rate Cybin Inc. (NYSE: CYBN) found itself presented with a solution in the form of a common share purchase agreement with Lincoln Park Capital Fund, LLC (LPC). This deal will help CYBN overcome its current financial hurdles by providing cash that will help it fund its ongoing trials which may allow it to reach profitability in the long term. With 2 clinical trial results expected in Q3, CYBN stock could be a bargain as it is trading near its all-time low.

CYBN Fundamentals

Rock bottom sometimes comes in the form of a shrinking cash balance that constantly collides with incoming expenses, CYBN found itself in that very situation before the deal came along. The inevitability of bankruptcy drastically waned as a result of a $30 million funding deal that the company entered with LPC. According to the share purchase agreement, CYBN has a 36-month time frame in which it can sell shares at its own discretion. Additionally, LPC agreed not to short CYBN or participate in other hedging activities which will not see CYBN stock witnessing strong selling pressure as in the case with other similar deals.

CYB004

News of the agreement came a few days after CYBN started the first in-human dosing of dDMT (CYB004) in phase 1 clinical trials for generalized anxiety disorder. This treatment is the first of its kind as no other company has utilized dDMT in treating generalized anxiety disorder. Since most DMT treatments are focused on depression, CYBN has a major advantage over its competition in that field. One of the most prominent competitors in the DMT space is Small Pharma which does not have an anxiety treatment in its pipeline at the moment.

The global anxiety treatments market is expected to grow by 5% CAGR from $11 Billion in 2021 to $16 Billion in 2026 and CYBN could be well-positioned to gain a large share of this market since CYB004 is protected under a patent until 2041. In that way, no other company can utilize dDMT for an anxiety treatment while the patent is active. With this in mind, CYBN shared that it expects to release its phase 1 trial in Q3 which might be a major catalyst for the stock since it is the only DMT treatment for anxiety.

CYB003

In addition to CYB004, CYBN is developing its leading clinical program CYB003 psilocybin treatment for Major depression disorder (MDD) which is in phase 1/2a of clinical trials. CYBN recently shared positive interim data from that very trial where some patients experienced a short-acting psychedelic response which is a positive sign in psychedelic treatment. The trial also demonstrated that the desired effect occurred even in low doses and there was no fluctuation in plasma levels which is a great sign. CYBN expects to release the topline trial results of this trial in Q3 which could also be a major catalyst for the stock. However, CYBN is competing with several companies in depression treatments – chief among them COMPASS Pathways plc (NASDAQ: CMPS).

Currently, CMPS is in phase 3 clinical trials for a psilocybin treatment for treatment-resistant depression (TRD) which is a more extreme form of MDD. CMPS is likely to win the pipeline race since its treatment is more advanced than CYBN’s, however, CYB003 has an edge since CYBN is in preclinical studies for using CYB003 for treating alcoholism.

There are more than 15 million people in the US who struggle with alcohol use disorder – more commonly known as alcoholism. If approved, CYBN could accrue substantial revenues by providing alcohol use disorder treatments.

CYBN Financials

According to its Q3 report, CYBN reported $60.6 million in assets – representing a decline from $84 million at the beginning of the year – which could be attributed to the decline in cash on hand from $53.6 million to $22.5 million. Meanwhile, CYBN successfully reduced its liabilities compared to the beginning of the year to $4.3 million from $7.9 million.

In terms of revenues, CYBN did not report any revenues since its treatments are still under development. As for operating costs, CYBN reported $12 million – a YoY decline from $16.4 million. In this way, CYBN’s net loss improved YoY from $17.2 million to $10.7 million.

Considering CYBN’s cash burn rate, the company’s recent $30 million deal with LPC is a major help since the company’s cash balance would have been sufficient for 2 more quarters based on the current cash burn rate.

Technical Analysis

CYBN stock is in a neutral trend with the stock trading in a sideways channel between the support at $.27 and the resistance at $.29. Looking at the indicators, CYBN is trading below the 200, 50, and 21 MAs, however, it is currently testing both the 50 and 21 MAs as resistance. Meanwhile, the RSI is neutral at 49 and the MACD is approaching a bearish crossover.

As for the fundamentals, CYBN has 2 major upcoming catalysts in the expected trial results for CYB003 and CYB004 in Q3. Since these results are critical in the advancement of both trials, CYBN stock could soar on positive results as it might be closer to FDA approval.

CYBN Forecast

Thanks to LPC’s $30 million agreement CYBN may see the fruits of its labor since the deal comes at a time when CYBN’s financial situation spelled disaster for the company. With 2 clinical trial results expected in Q3, CYBN stock could be one to watch closely ahead of these catalysts with the stock trading near its all-time low.