MIST is special situation biotech that is a *process* play (not a *science* play) that has a 90% chance of being up 50-100% and 10% chance of being down 50%. This catalyst will play out over the next 45 days as it reports top-line Phase III data for it sole drug, ETRIPAMIL. As you will read, ETRIPAMIL, should have already been approved years ago.

MIST has designed a nasal inhaler (ETRIPAMIL) to deliver a calcium channel blocker for treatment of a cardiovascular condition called PVST. The company has completed Phase I, Phase II and Phase III with great data – i.e., approvable data. However, MIST screwed up the presentation of the Phase III data for their FDA filing, causing them to be denied FDA approval and crashing the stock from $20 to $2. With the FDA's support, MIST recapitalized around $4/share, MIST agreed to re-run the same trial, and FDA agreed to let MIST re-use the existing Phase III data in support of a second approval application. MIST has finished re-running the trial and will re-present the data in the "middle of the back half of 2022" (i.e., over the next 60 days). Assuming this data is consistent to the already completed trials of similar design, then MIST will have approvable Phase 3 data (twice now), to support the approval of ETRIPAMIL. Given MIST had previously traded at $20 upon approval expectations, it’s not unreasonable for MIST to get back there. MIST states they are funded through mid-2023, so they are in position to run a non-dilutive sales process in 1H 2023, although they could commercialize the drug themselves.

Why does this opportunity exist? What did MIST do wrong?

The condition of PVST results in the rapid onset of a rapid heartbeat (patients feel like they are dying). This condition naturally resolves itself over a few hours, but patients still seek treatment to stop the condition. MIST developed a drug which treats this condition in the first 30 minutes of administration. MIST's data shows the drug works. However,  MIST submitted its primary endpoint to the FDA as being 5 hours after drug administration. But the condition naturally resolves over a 3-4 hours! Thus, while MIST showed the drug worked in curing the PVST in the first 30 minutes of administration... they picked a point-in-time that would not show this.  Said another way, they ultimately submitted to the FDA a drug application that said their drug wasn’t better than placebo (which is the case at the 5-hour mark, for any drug treating PVST!).

We don't know why they picked the 5-hour mark. Management implies that the FDA told them to pick the 5-hour mark. Another line-of-thinking is management underestimated the placebo response rate at 5-hour mark.  Regardless, it was a gaffe.

To change the clinical endpoint of its application, MIST has to re-run the entire trial (otherwise, any company could just game their end point to suit their data to get approved). MIST has re-run that trial with a new 30-minute primary endpoint and is processing the data now.

This is not a science project:

1. Calcium channel blockers are not bleeding edge technology. Calcium channel blockers are an existing treatment protocol for PVST. However, the existing treatment protocol for PVST is an IV delivery of the drug in a hospital/ER setting. MIST simply ran the trials to show you can get this class of drug into your bloodstream via a nasal inhaler. The obvious-but-gritty analogy is... rather than inject yourself with drugs... MIST helps you snort them (hence the ticker name… mist).

2. They have already run through all the scientific steps mandated by the FDA to show the drug works. MIST already completed a Phase III trial with approvable data. It’s an extraordinarily unique opportunity to say, ‘just run the Phase III again’ and you should be good to go!

3. The second Phase III has a slightly tweaked trial design allowing for patients to use (i) higher dosage and (ii) multi-dose. Accordingly, one would expect efficacy of the drug to be even higher in this re-run of the Phase III.  One shouldn't expect safety issues as (i) there were not safety issues at this dosage level in Phase II, (ii) the FDA was involved in this study design, and most importantly, (iii) the company states they are NOT blinded to safety data and there haven't have been any safety data concerns through the trial.

This is just process play:

1. MIST just needs to re-run their science experience to obtain approvable data. In this scenario, the stock should be up 50-100%.  Plenty of sell-side models/research out there one can use to extrapolate a price target from for an approved NDA.

2. If MIST screws up something again, then they may need to run a third trial or just sell to someone more competent. Given we know the drug works, MIST shouldn't be a zero (ostensibly with a second set of Phase III data showing the drug works!). But perhaps it trades for something much less than the current stock price. Say $3.50 (upon the prior failed trial they were able to raise a rights offering at $4.25 to fund the second Phase III).

3. What can go wrong? They had to re-run the trial in the pandemic, so maybe COVID will had some unpredictable noise. Perhaps the multi-dosing regimen confused patients as it was ‘different’ than the last study? This is really a case of the unknown, unknown tail risk.

So... downside to $3.50, upside to $15.  Stock at $8.  I personally weigh the probabilities extremely to the upside (90%+) and sized the position to the maximum loss I'm willing to experience in case management screws up the submission... again.