We re-initiate coverage on MIRA Pharmaceuticals with a Buy rating and a DCF-based 21-month price target of $10.00. MIRA isa preclinical development-stage life sciences company with two neuroscience programs, MIRA-55 and Ketamir-2, targeting a broad range of neurologic diseases and neuropsychiatric disorders.
Our rating is based on our view that the innovative potential of MIRA-55 and Ketamir-2 and their promising mechanisms of action warrant a higher valuation than the market is currently assigning to the company’s shares. However, MIRA represents a high-risk investment as the company has numerous hurdles to clear before bringing its product candidates to market. Many of the numerous hurdles MIRA will face along the product development timeline are binary events, and each could reduce the value of an asset to zero or, at a minimum, represent a significant setback. Further, MIRA competes in crowded target markets and may therefore face impediments to developing market traction against better-established competitors even after successful clinical development.
We expect MIRA to realize a sizable cash inflow from the sale of the Ketamir-2 and MIRA-55 assets in 2026 and begin generating product revenue in 2027.
That Ketamir-2 is not considered a controlled substance according to United States Drug Enforcement Administration (DEA) schedules, helps MIRA Pharmaceuticals avoid certain legal and regulatory requirements, elevated production costs, and manufacturing/transportation restrictions. A DEA classification of MIRA-55 is currently pending. If successfully developed, price and insurance coverage will be key considerations for patients and providers, influencing market penetration. Proper marketing strategy and sales tactics will be crucial in raising awareness about the drugs’ new mechanisms of action and to inform prescribers of potential use cases.
Our main concerns focus on the current entrenchment of low-cost generics across the target indications, a market condition expected to be more pronounced in three to five years when MIRA Pharmaceuticals expects its product candidates to be market ready. In addition, there are branded prescription drug candidates being developed by competitors with deeper pockets than MIRA Pharmaceuticals, which have a probability of coming to market before MIRA’s products, thus gaining a first-mover advantage in areas of unmet need. Finally, when compared to larger firms with established brands and sales channels, it is difficult for companies of MIRA’s size to conduct effective product awareness campaigns.
We expect MIRA’s stock to exhibit volatility that is typical of early-stage, biotech microcap companies. With the stock currently hovering in the one-dollar vicinity, a prolonged slump in the stock price carries the risk of delisting from the Nasdaq, which could result in further devaluation. On the upside, once proof-of-concept for its technologies has been established, MIRA could become an attractive acquisition target for larger competitors in the field.