Psychedelic Medicine Sector

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>>> How Psychedelic Drugs Found In Nature Can Become Private Property
Psychedelic drugs

Evidence indicates people have used mushrooms and ayahuasca, which appear in nature, for at least 1,000 years


Investor's Business Daily

by BILL PETERS

09/04/2020


https://www.investors.com/news/psychedelic-drugs-face-millennium-old-risk-profitability/


When psychedelic drugs developer Compass Pathways filed its IPO paperwork last Friday, the company warned of a risk that could sabotage hopes for profitability.

"We rely on patents and other intellectual property rights to protect our investigational COMP360 psilocybin therapy, the enforcement, defense and maintenance of which may be challenging and costly," the filing said. COMP360 is Compass' therapy for treatment-resistant depression that incorporates synthetic psilocybin, the hallucinogenic compound in magic mushrooms.

The trouble is the most commonly known psychedelic drugs — LSD, magic mushrooms, ecstasy, ayahuasca — aren't exactly new. The longer a drug is around and the more it settles into the realm of public knowledge, the more difficult it is to claim ownership via a patent.

Nobody owns those psychedelic drugs. To land patent protection and prevent copycatting, psychedelic drug developers will likely need to tweak the molecular makeup of existing drugs. Or, they'll need to find new modes of delivering the drug into the human body.

"The rule is if something already belongs to the public, you can't take it away from them," Gretchen Temeles, special counsel at the Philadelphia law firm Duane Morris, said in an interview.

But as Compass Pathways, MindMed and other psychedelic startups try to box out rivals in the fight for intellectual property, some nonprofit research groups are vowing to offer up their inventions for the common good, adding an extra layer of drama in an industry gradually drifting into Wall Street's orbit.

Milestone In Psychedelics

London-based Compass Pathways, which is backed by PayPal (PYPL) and Palantir co-founder Peter Thiel, became the first pure-play psychedelic drug company to file for a U.S. IPO, seeking a Nasdaq listing under the ticker CMPS.

Psychedelics still face a long road ahead to legalization, but regulatory resistance began eroding over the past few years. Medical giant Johnson & Johnson (JNJ) got FDA approval last year for a ketamine-derived nasal spray for treatment-resistant depression. The FDA has also fast-tracked therapy that uses MDMA, also known as ecstasy or Molly.

But Compass has also highlighted the threat from nonprofits like the Usona Institute, which does its own research on psychedelics. The IPO filing warned that nonprofits like Usona "may be willing to provide psilocybin-based products at cost or for free, undermining our potential market for COMP360." Usona didn't respond to a request for an interview.

A Millennium In The Public Domain

Evidence indicates people have used mushrooms and ayahuasca, which appear in nature, for at least 1,000 years. A chemist at German pharmaceutical giant Sandoz first synthesized LSD in the 1930s and created synthetic psilocybin in the 1950s.

But research on psychedelics, to a large degree, went dark after the U.S. government crackdown on drugs began in the 60s and 70s. As a result, Temeles said, there hasn't been as much literature produced on psychedelics as for legal drugs.

Since there's less available literature on Schedule 1 substances, the universe of material for a patent examiner to search when evaluating claims is smaller.

"Sometimes claims get granted without having been searched real thoroughly," she said. "And that means challengers look at them and think, 'Hm. That claim looks kind of weak. Let me see if I can challenge it.'

"We haven't seen much of that," she continued. "The industry is too new. It has happened in the cannabis industry and it is likely to happen in the psychedelics industry."

How To Patent Psychedelic Drugs

A new substance doesn't necessarily have to depart that much from an original to be considered new. Nexium and Prilosec, for instance, are separated by slight molecular adjustments. In the end, though, a drug has to qualify as something new in the eyes of a patent examiner.

But which parts of a chemical's makeover meet the bar for originality — and which are too easy, obvious, unearned or insubstantial — can be a matter of debate. Patent litigation can be costly. And without sufficient patent protection, competition is likelier to devolve into a scenario in which drug developers hawk largely indistinguishable products and chew through their budgets as they try to out-market one another.

It also risks making drug companies less attractive to investors. Investors will likely be looking for signs a company values its inventions and the profits that come from them.

Florian Brand, co-founder and CEO of ATAI Life Sciences, Compass' biggest investor, noted the importance of being able to re-ornament chemical compounds in a way that makes them new — and patentable.

"If you talk about the psychedelic compounds, the well known ones, like psilocybin and ibogaine, you certainly have to be a little bit more creative, once there's a lot of knowledge on these molecules, to establish an ability to block," he said.

He continued: "We are working with attorneys on this, across the platform, with all companies, to have a strong ability to block in place. It ranges from composition of matter, to use patents to process formulation and manufacturing patents."

Brand believes generic competition is 10-20 years away. Companies able to bring a legal treatment to market early, he argued, had more time to build name recognition.

Patenting Is Just One Step

If a company lands a patent for a new molecular composition for a drug — a so-called composition of matter patent — others have to obtain a license to use that compound. While original drugs might offer a thicker layer of patent protection, they also might require more ingenuity to make.

"You have to invent the molecule. So yes, that is the hardest," said Rick Doblin, founder of the nonprofit Multidisciplinary Association for Psychedelic Studies, when asked if the composition patents were the most difficult to obtain.

Temeles notes that new chemical compositions are only part of the process of bringing a drug to market. Some drugs might be easy to make in small portions in a lab. But synthesizing larger quantities, at a purity level that is safe for human consumption, can be difficult. The process of synthesizing can also leave behind materials that have harmful side effects.

Claims that protect a certain production method can help in making drug chemicals that are difficult to produce in larger quantities. Companies can patent the form a drug comes in as well.

Early Psychedelic Drugs Patent Dispute

The race to accumulate intellectual property comes after people who worked with Compass expressed worry that it was hurrying its efforts to research and commercialize psilocybin, Quartz reported in 2018. They said the company, which started as a nonprofit before morphing into a for-profit company, was putting patients at risk and muscling its way toward market dominance in a way that resembled those of bigger pharmaceutical companies.

Meanwhile, groups like MAPS and the Usona Institute, want to take a more egalitarian approach to their inventions.

"If we have patents or patents pending, we will license that intellectual property, for no more than reasonable and ordinary administrative costs, to anyone who will use it for the common good (lol) and in alignment with these principles," Usona says in a statement on "open science." That statement was signed by dozens of people, from Usona, MAPS and other researchers and advocates.

In January, after challenges to or rejections of prior applications, Compass said it received a U.S. patent for COMP360. Shortly after, the law firm Kohn & Associates disputed the patent.

Kohn & Associates has challenged some of Compass' other efforts to obtain patents, according to Lucid News. As that outlet reported in April, Carey Turnbull, a board member of Usona and the Heffter Research Institute, another nonprofit focused on psychedelics research, has helped fund the law firm's efforts. But a U.S. Patent and Trademark Office panel dismissed Kohn's challenge to Compass' U.S. patent in August.

Compass also has one patent in Germany and two in the U.K., according to its IPO filing. It has more than 20 applications pending.

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