Dave HodesSeptember 7, 2022
Any analyst knows that market-reactive swings aren’t really a true indicator of what is going on inside a company.
Compass Pathways Archives - Page 2 of 4 - Green Market Report
Dave HodesSeptember 7, 2022Dave HodesAugust 30, 2022
In court filings. Terran Biosciences accused Compass of stealing research related to therapeutic use of psilocybin.
Dave HodesAugust 4, 2022
Psychedelic drug company Compass Pathways plc (Nasdaq: CMPS) reported its financial results for the second quarter 2022 and gave an update on recent progress across its business. Compass delivered a net loss for the quarter of $21.0 million, or $0.50 loss per share (including non-cash share-based compensation expense of $3.2 million), compared with $17.5 million or $0.44 loss per share, during the same period in 2021 (including non-cash-share-based compensation expense of $1.9 million). The stock was trading higher in early trading rising by 3% to sell at roughly $16.65.
George Goldsmith, Executive Chairman of COMPASS Pathways, said, “Our decision to appoint Kabir Nath as our new CEO comes at the ideal time as we enter the late stages of COMP360 development and plan for regulatory approval and commercialization. Kabir’s dedication to our mission, extensive experience in leading the commercialization of innovative therapies and track record of successful strategic growth are precisely what COMPASS needs to advance our goal to bring COMP360 psilocybin therapy to the large number of patients who are not currently served by existing treatments. I look forward to working closely with him as Chairman.”
Compass reported that its research and development (R&D) expenses were $15.9 million for the quarter versus $11.4 million during the same period in 2021. The company said, “Of this increase, $0.2 million relates to an increase in external development expenses as we continue to investigate COMP360 psilocybin therapy in clinical and pre-clinical trials. A further $1.6 million and $0.9 million were attributable to personnel expenses and non-cash share-based compensation respectively, due to increased headcount. In addition, other expenses increased $1.9 million, which primarily related to an increase in external consulting expenses.”
On the plus side, the company won a recent patent challenge, and their Phase III clinical trial of the Comp360 psilocybin therapy to come later this year is piquing investors’ interest.
Their total cash position is at $207.2 million, a $35 million decline from the end of 2021. Insiders hold nearly 50% of the shares of stocks, signaling confidence in the company’s prospects. It’s enough money to fund operations into 2024, according to Falvey during the investor call.
The company announced Nath as its new CEO on August 1. Nath has a solid background in medical technology and biopharma. He most recently was senior managing director of global pharmaceuticals at Otsuka, a biopharma company focused on research in neuroscience and treatments for adults with schizophrenia and major depressive disorder (MDD), bipolar disorder, and other neurological and neuropsychiatric conditions. Nath worked previously as president and CEO of Otsuka’s North America Pharmaceutical Business, and was called an “inspirational leader” by Goldsmith during the investor conference call. “We are thrilled to have him at the helm.”
As a result of the hiring of Nath, Goldsmith will serve as executive chairman until the end of 2022, and then as chairman beginning in 2023.
“Following our end of phase II meeting with FDA, we have submitted our Phase 3 protocols and they are under review,” Goldsmith said in a press release announcing the investor call. “We are pleased with the progress and remain on track to start our phase III clinical program this year. We also continue to expand our clinical development of COMP360 therapy with the commencement of a phase II study in anorexia nervosa, a condition of significant unmet need for which there are no FDA approved pharmacological treatment options.”
On July 28, the company launched a multi-center, double-blind randomized controlled phase II clinical trial investigating the efficacy of COMP360 psilocybin, administered with psychological support, in people with anorexia nervosa. “Approximately 20 to 40% of deaths in anorexia. nervosa are thought to result from suicide, the highest suicide rate of any mental illness,” Goodwin said during the investor call.
The company cited other achievements for this year for their COMP360 psilocybin therapy for treatment resistant depression. Those include:
– Holding end-of-phase II meeting with FDA and other regulators.
– Beginning phase III clinical program in treatment resistant depression.
– Launching additional COMP360 clinical development programs.
– Launching an investigator-led study in adults with autism spectrum disorder (ASD), the first ever mechanistic study of psilocybin in autistic adults, co-sponsored by Institute of Psychiatry, Psychology & Neuroscience (IoPPN) at King’s College London and South London and Maudsley NHS Foundation Trust.
– 10 granted patents issued to date covering composition, formulation and method of use.
– Identification of new potential novel drug candidates through the Compass Discovery Center.
Goldsmith also pointed to the company’s investor day, to be held on October 12, as a date for more investor details about the various clinical trials the company is working on, especially about the digital tools to be used for the anorexia work.
Dave HodesJuly 28, 2022
Among the four Food and Drug Administration (FDA) pathways for developing new drugs faster are Fast Track, created in 1997, designed to expedite the review of drugs to treat serious conditions and fill an unmet medical need; and Breakthrough Therapy, created by the FDA in July 2012, a process designed to expedite the development and review of drugs that are intended to treat a serious condition, where “preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over available therapy on a clinically significant endpoint(s).”
There have been no psychedelic compounds listed on the FDA’s fast-track approval list (but oxycodone made the list in 2016), and just a few listed on the FDA’s breakthrough therapy list, such as the Compass Pathways’ (NASDAQ: CMPS) psilocybin therapy for treatment-resistant depression in October 2018, and the Janssen Pharmaceuticals’ Spravato in March 2019.
All four FDA expedited drug development pathways are designed to overcome the problems of the long process of drug development, in part fueled by the AIDS epidemic when researchers had called for quicker review and development of drugs by the FDA.
In the 1960s and 1970s, clinical development of a new compound through marketing approval took respectively 7.9 years and 8.2 years, on average, according to one study.
Real World Evidence
While the development process is designed to ensure efficacy and safety, there is a new and growing acceptance of a new process of advancing drug development based on the rapid accumulation of data, which may soon be working with the randomized clinical trial (RCT) process—it’s called real-world evidence, or RWE.
The FDA promoted the use of RWE for a faster pathway to developing Covid vaccines beginning in September 2021 in a process that continues today.
Another example of RWE effectiveness was demonstrated in a recent study of the outcomes of ketamine from patients treated in 178 participating independent community ketamine practices across the U.S.—a setting that offers significantly different outcomes compared to patients in randomized trials.
The outcomes were measured on 9,016 outpatients with symptoms of depression who received ketamine intravenous therapy (KIT) between 2016 and 2020.
It was the largest published analysis to date examining the real-world effectiveness of a standard KIT induction protocol for depression using data from patients treated at community clinics across the United States.
One of the critical findings of the study is that a richer data set from RWE can form the basis of predictive models that directly inform clinical care. One example is how data about how medications, taken daily or as adjuncts to KIT, can modify the response. “More broadly, point of care data collection and personal sensing streams (e.g. actigraphy, or “wearables”) can establish links between self-report measures and functional health outcomes,” the study reported.
So RWE can help inform clinical care going forward. But what is the relationship now between real-world evidence and clinical trials?
The outcomes of RWE today usually get a lower credibility assignation by researchers working on RCTs. But RWE research is a practice that does not need to be done like a random clinical trial research for it to be reliable, according to another study.
Some of the advantages of RWE include less time and cost compared to RCT; research that can’t be done with RCT, such as safe research on high-risk groups; rapid access and easier information and data retrieval; and more.
The FDA sees the advantages and published draft guidance for working with RWE in September 2021. According to the FDA, RWE can be generated by different study designs or analyses from randomized trials, including large simple trials, pragmatic trials, and observational studies—all built on such real-world data (RWD) as electronic health records, product and disease registries, patient-generated data including in-home use settings, and data gathered from other sources that can inform on health status, such as mobile devices.
As more RWD is collected, RWE is being gradually expanded, with a developing need to be more structured and use the new silos of health data being generated every day. RWE and RCT research are not in a mutually competitive relationship, a study noted. “Presently, RWE research cannot substitute RCT research. However, RCT research, bestowed the highest reliability, and RWE research, perceived to reflect the actual clinical aspect, can be proven to share a mutually supplementary relationship to become the most powerful resource in evidence-based medicine.”
Today, as spelled out in a “Forbes” article by Dr. Dan Riskin, the founder of Verantos, health systems, insurers, and pharmaceutical firms have all created RWE divisions. Insurance companies use RWE to analyze whether high-cost therapies provide sufficient benefit.
But there are still many questions to answer. For example, would an identical RCT trial and an RWE study reach the same conclusions? The FDA is looking into that in more detail, hoping to make RWEs more valid by conducting additional RCT/RWE trial emulations to add to the ten already done.
Meanwhile, progress on RWEs for psychedelics research continues. Compass Pathways is searching for an RWE manager as it further investigates the process. And one company that hopes to make headway in using RWE for developing psychedelics is Albert Labs in British Columbia. “RWE studies are a much faster and vastly less expensive way to conduct and take medicine through regulatory approval to commercialization compared to RCT trials, as evidenced in bringing Covid 19 vaccines to market,” said Malcolm Barratt-Johnson, chief medical officer for Albert Labs in a blog featured on their website.
Dave HodesJuly 11, 2022
The psychedelics renaissance is in an expanded growth mode, not just in the U.S. and Canada, but in other countries as well.
But everywhere in the world, it’s a bit of a Dr. Jekyll/Mr. Hyde scenario: startup businesses ostensibly building a serious moneymaking enterprise in a nascent industry, while conducting experiments in labs with novel brain-chemistry substances that could change the world of mental health wellness for good… if all goes as planned.
The usual financial indicators point to a troubled and struggling industry. One example: the North American Psychedelics Index is at its lowest point in 5 years.
And look at some of the top companies and how they are faring: MindMed (NASDAQ: MNMD)reported an accumulated deficit (page 8) of $156.1 million on March 31, 2022; Atai Life Sciences listed 22 potential difficulties involved in their clinical trials that could be serious problems to their growth (https://ir.atai.life/static-files/9c1939ee-7c32-422f-8bdf-de5b2702a0a6, pgs. 46-47); and Cybin, with many impressive developments since the beginning of the year (https://sec.report/Document/0001628280-22-017746/annualinformationformaif-c.htm, pg. 20), reminds investors that “since inception, the company has had negative operating cash flow and incurred losses,” and that the company’s negative operating cash flow and losses “may continue for the foreseeable future”( https://sec.report/Document/0001628280-22-017746/annualinformationformaif-c.htm, pg. 46).
Even so, it’s these companies—plus others in the space, such as Field Trip, Awakn Life Sciences, and Seelos Therapeutics—that always show up in financial reporting as the companies to watch. They may look dark and troubled on paper right now, but according to researchers, their future in the industry is blazingly bright.
Data Bridge, a market research company, reported projections that the global psychedelic drugs market is expected to more than double over the next few years, reaching $8 billion by 2029 from $3 billion in 2021.
Even though the U.S. and Canada lead the global psychedelics market development—there are more than 50 publicly traded companies related to the development or administration of psychedelic-like drugs in the U.S., with at least 3 valued at more than $1 billion—there are other countries working in psychedelics as well, according to the Data Bridge report, including Mexico, Germany, China, France, U.K, Italy, Spain, The Netherlands, Russia, Switzerland, Belgium, Austria, the UAE, Egypt, Israel, and others.
The U.S. had a market share of 93.5 percent in 2021 in the North American region, and is projected to continue experiencing high growth through this year, according to a psychedelic drugs market research report. Germany is expected to dominate the European market with a market share of around 19 percent by 2031, while the U.K. and France are also expected to drive demand in Europe for psychedelics over the next few years.
In 2020, China dominated the East Asia psychedelics market with 40 percent share, and the psychedelics market there is projected to expand at a rate of 17.1 percent from 2021 to 2031.
Psilocybin formulations are showing the most promise for accelerated business development. But MDMA quickly surpassed it this year.
For instance, there are currently a combined 109 clinical studies with psilocybin either recruiting or active in the U.S., Canada, Denmark, Switzerland, Ireland, the U.K., Argentina, Sweden, Germany, and Jamaica.
But there are 116 MDMA clinical studies combined in the U.S., Canada, Switzerland, the U.K., Spain, Israel, The Netherlands, France, Norway, South Africa, Italy and Germany.
Clinical trials have become one of the key indicators for the success of a company in this industry, as it demonstrates both the business determination and scientific acumen to set up a trial as a necessary stepping stone to get to market, along with an ability to continue to fund the expensive research and development that can go on for years.
Depression Drivers
But what’s really driving the market for psychedelics and their proven mental wellness attributes is an increase in depression across the globe, with more people seeking alternative treatments because standard depression drugs do not address some of their more serious depression issues. The total cost of mental illness in the U.S. is estimated to be $2.5 trillion; and the global antidepressant market is worth over $13.5 billion.
One study reported that the ideal antidepressant has not been found, as the problems of intolerance, delayed therapeutic onset and limited efficacy persist. The complications of treating depression include the fact that it may be “an umbrella construct” with multiple disorders of “varying biological pathophysiology” which each require different treatment.
So far, more and more psychedelics studies appear to confirm that the psychedelic compounds they are studying (especially psilocybin) may provide the answer for treating depression without the disturbing side effects or the need for constantly taking medications.
There will continue to be ongoing issues as the psychedelics industry grows while the mental health wellness world watches, tests various compounds and molecules, and builds new enterprises.
Some issues are predictable, such as problems with patents going forward as in the case of the challenge against Compass Pathways’ (NASDAQ: CMPS) psilocybin patent. That challenge was denied by the U.S. Patent Trial and Appeal Board’s (PTAB) in late June in a decision that appears to actually be a win for both sides.
Other issues are less predictable, such as psychedelics administered without psychological support and/or a supportive environment that may have limited antidepressant efficacy, and in very rare cases, could even worsen a patient’s condition, according to a 2017 study. “We share the view that the presence of psychological support is an essential component of the psychedelic treatment model. But we also recognize that the magnitude and nature of its contribution needs to be better defined and tested,” the authors wrote.
Increasing demand for psychedelic therapy is poised to synergize with an upswell in funding initiatives from other non-medical sources through 2022 and into 2023, potentially jeopardizing standards of safety and professionalism if corners are cut, according to another study. “In anticipation of and, to some extent, already witnessing the beginning of a ‘hype-cycle’, we believe that innovative, pragmatic and exploratory research can play a vital role, helping safeguard the development of a particularly promising, yet vulnerable, approach to mental health care.”
The psychedelics industry is hot all across the globe. It’s making leaps and bounds in terms of developing the science, even as it scrambles for financial resources to keep research and development funded. There are signs of a shakeout of companies this year and into 2023, with more mergers, acquisitions, and partnerships expected.
Multi-million deals will continue—like the $64 million and $70 million investment deals in 2021. Decriminalization and psychedelics drug reform will continue—legalization of psilocybin is making headway in the U.S. (Oregon and Colorado); it is already legalized in Austria, the British Virgin Islands, The Netherlands and Jamaica.
Whatever the business and science dynamics of the industry are today, psychedelics are all aimed at a righteous goal once approved and out of the labs: Provide the world with a new choice for better mental health. The question is how long will that take, and what global power will lead the charge.
Dave HodesMay 11, 2022One of the most important aspects of the psychedelics business—and one that is becoming more contentious—is about securing and protecting the patent for the specific molecule or synthetic that a psychedelics company is banking on because it can essentially protect the investment of millions of dollars a startup spends on setting up and running clinical trials, hiring expensive medical staff and other business development expenses.
Patents give protections for making, using, or selling the patented inventions of a patent holder for 20 years. They are a form of government-granted monopoly. The public policy justification for patents rests on the theory that the right to exclude competitors incentivizes innovation and encourages inventors to disclose their inventions to the public, instead of maintaining them as trade secrets.
But when it comes to an emerging industry like psychedelics, there are no clear-cut answers to what patents should do, what they can do, and who can own them.
According to an article in the Harvard Law Review, the sudden influx of psychedelic patents has prompted criticism from stakeholders including patient advocates, scientists, journalists, lawyers, and members of Indigenous communities. “Some claim patents on psychedelics monopolize products of nature that should remain affordable and widely available. They contend that patents can exploit the traditional knowledge of Indigenous communities without permission or adequate acknowledgment and compensation. Others argue psychedelic patents are making a small number of companies gatekeepers for the emerging psychedelics industry, which could inhibit research, stifle innovation, and restrict access to needed therapies.”
One of the unique difficulties in securing a patent in the psychedelics industry is making decisions based on “prior art”, defined as “references or documents which may be used to determine novelty and/or non-obviousness of claimed subject matter in a patent application.”
Psychedelics are so new that there really isn’t much prior art. And you can’t patent a plant. But those are just a few of the trapdoors of patents in psychedelics.
To explain the patent issue in more detail, Psychedealia talked with Peter Rands, a patent attorney, and the CEO and founder of biotech company Small Pharma (OTC: DMTTF), working on DMT assisted psychotherapy. He used DMT as an example. “DMT is a molecule that is a known compound. You cannot patent what is known,” Rands said. “The specific application of known compounds can be patented if there is something novel and non-obvious about it.”
The interesting thing about the psychedelics environment, he said, is that for the most part, the private companies that are developing proprietary medicines—the fundamental evidence that these molecules were effective as kind of antidepressant medicines, maybe expanding beyond depression into other mood disorders or other neurological conditions—was put into the public domain by academia, such as Johns Hopkins and Imperial College. “So no one has proprietorship either on the fundamental molecule or the specific applications,” he said. “This opens up the question of the value of secondary patents.”
An example of a secondary patent is the specific polymorph that one of the top psychedelics industry companies, Compass Pathways, has patented with their Compass360 psilocybin therapy, which is the company’s synthesized psilocybin formulation being developed for psilocybin therapy in treatment-resistant depression. “I worked for three years at a generics company, where what we were doing was finding ways around patents, or challenging them in court,” Rands said. “And a patent that covers a very narrow polymorph is really easy to design around.”
He said that he keeps an eye on patents in the psychedelics industry. “Absolutely. There have been some interesting ones. There are a lot of companies trying to come up with novel combinations. A lot of companies are finding the sort of specific ways to assess the subjects and see what they can get protection around with kind of a pre-screening mechanism, basically, for people that will be receptive or unreceptive to psychedelic therapy.”
He said that Small Pharma is specifically focusing on the manufacturing methods for producing their DMT, which they think is more efficient than any other producers. “We published it fully in our patent application. So you know, to the extent that it’s protectable, it is also in the public domain.”
Compass Pathways (NASDAQ: CMPS) is currently addressing a patent challenge from Freedom to Operate (FTO). FTO is a non-profit founded to advance science and education, specifically to support and facilitate scientific research, in the public interest and for the public benefit.
FTO is currently challenging Compass Pathways’ first patent with claims covering its Form A hydrate psilocybin. The Form A hydrate is distinct from the anhydrate psilocybin for which the company has already been granted eight patents in the U.S., UK, Germany and Hong Kong. It is used in Comp360.
It’s the fifth time that FTO has challenged a Compass Pathways patent. FTO claims the patent on this form of crystalline psilocybin is invalid because the substance was publicly used prior to the date on which the patent for the claimed invention was first filed.
FTO claims that the form of psilocybin had first been used as far back at 1963, according to an open letter on the subject. The challenge is expected to continue, but it has genuinely caught the attention of the psychedelics community.
Christian Angermayer, who founded Atai Life Sciences and helped found Compass Pathways, expressed his opinion about patents in an open letter, starting off with a sort of Patents 101 discussion: “Patents were actually implemented in the U.S. to reward innovators in the short term with a temporary monopoly,” he wrote. “Patents and any similar forms of protection like data exclusivity can be compared to a mortgage on a house. For a certain period of time, society has to pay back the mortgage (assuming the house is great, and people want to move in), but after that, society owns it and can live there rent-free.”
Angermayer then added that he feels that the patent discussion is mixed up with other societal issues. “Many use this discussion to express their discomfort with current FDA regulations,” he wrote, commenting on the burdens and expense of trials. Others, he wrote, use the patent discussion to express their discomfort with capitalism itself. “I personally believe that capitalism—though it has its flaws—is by far the best economic system tried to date and that many, especially young people who flirt with socialism at the moment, forget the destruction, pain and death socialism has brought for hundreds of millions of people over the years. I would be interested in having this discussion, but…it’s not a psychedelic discussion.”
So what can be done? A more preventative approach to improving the quality of psychedelic patents involves bolstering the prior art search by creating prior art repositories, according to the Harvard Law Review. Another potential assistance would be tightening up U.S. patent law requirements for novelty and non-obviousness.
Some call for patent pledges in the psychedelics industry. And some say that this industry should not use patents at all. “Because psychedelics represent the most innovative approach to mental healthcare in decades, and the most promising potential solution to the mental health crisis, they are too important to be monopolized,” the Harvard Law Review concluded. “Keeping psychedelics in the public domain, off-limits to the patent system, may be akin to prohibiting patents on abstract ideas, products of nature, and natural phenomena, because they are fundamental tools of scientific inquiry.”
Dave HodesMay 10, 2022
During an earnings and clinical program update conference call today, George Goldsmith, founder and CEO of Compass Pathways (NASDAQ: CMPS), along with Dr. Guy Goodwin, chief medical officer and Mark Falvey, chief financial officer, discussed developments related to COMP360, updates about their work with the FDA, and promoted their completed phase IIb clinical trial of psilocybin therapy for treatment-resistant depression (TRD) in 22 sites across Europe and North America, which was the largest randomized, controlled, double-blind psilocybin therapy clinical trial conducted.
The company is also running a phase II clinical trial of COMP360 psilocybin therapy for post-traumatic stress disorder (PTSD), and working on developing treatments for both anorexia nervosa and autism.
Compass announced some of its goals for 2022:
– An end-of-phase II meeting with the FDA and launch of their phase III program of COMP360 psilocybin therapy in TRD.
– Publication of COMP360 clinical data in a peer-reviewed journal and at medical conferences.
– Progression of their phase II COMP360 psilocybin therapy trial in PTSD.
– Launch of COMP360 clinical development programs in additional indications.
– Implementation of data and technology strategy to support their predictive and preventative model of mental health care.
– Scaling up of their therapist training platform to support their phase III program.
– Development of new compounds through their discovery center and other collaboration.
Earnings
In terms of earnings, Compass has been all over the place in 2021, up over predictions in earnings per share by 33.12 percent in Q1; down 18.92 percent in Q2; up again 19.93 percent in Q3; and down 22.86 percent in Q4.
Share volume is up slightly over the last 10 days from the previous 3 months—349.43 v. 265.9—with 42.51 shares outstanding. Insiders own 48.87 percent of shares, and institutions 19.65 percent.
The Compass stock price has been trending down significantly, now near a 52-week low of $7.36 from a high of $48.96 on November 1, 2021. Seven analysts rate it as either a buy or strong buy.
Mike Falvey, chief financial officer for Compass, reported during the conference call today a net loss for the three months ended March 31, 2022, of $21.2 million, or 50 cents per share, compared with a net loss of $12.7 million or 35 cents per shares during the same period in 2021. These results include non-cash share-based compensation of $3.1 million in 2022 and $1.7 million in 2021.
Research and development expenses were $15.4 million for the three months ended March 31, 2022, compared with $6.9 million during the same period in 2021. “The increase was attributable to an increase of $5.1 million in external development expenses, $2.6 million in personnel expenses, and $1 million in non-cash share-based compensation,” Falvey said. “Increases in the quarter were primarily due to preparation for the expected launch of our phase three trial and TRD scheduled for the second half of this year.”
General and administrative expenses were $10.1 million for the three months ended March 31 2022, compared with $6.7 million during the same period in 2021. “The increases this quarter were primarily in support of our growing research and development organization and operations, and activities to support operation as a public company,” Falvey said.
“Compass continues to maintain a strong financial position with cash and cash equivalents of $243.7 million on March 31, 2022, compared with $273.2 million at December 31 2021,” Falvey said. “With these resources, we expect to be able to fund our operations into 2024. We view our strong balance sheet as an important strategic asset which we will continue to manage carefully as we invest to advance these promising potential therapies while creating value for our shareholders,” he said.
Dave HodesMay 9, 2022
The financial players in the disruptive psychedelics industry have become part of a jigsaw hodge-podge of new and strategic investors each taking a risky shot in an industry that is slowly attracting more millionaires.
They want to get their piece of the action. But with an emerging industry like psychedelics and all the unknowns involved in it, they are essentially banking on the financing moves of other big-money movers and shakers in the psychedelics space for guidance.
Some are sensing a big-time, long-term winner in the making if they can just manage to wait out a company’s startup financial pain management. Others are content to just watch the ups and downs play out—for now.
There are signs that the industry is about to make the kind of real progress that even conservative investors like to hear. The clinical work of psychedelic companies is getting tantalizingly closer to creating an FDA-approved psychedelic drug that would be a truly original treatment for mental health, currently led by developments in psilocybin and MDMA.
And some of the bigger investors have a personal reason for taking their own leap of faith with their fortunes, adding an interesting wrinkle to their investing motivation.
Psychedelic Billionaires
Over the last couple of years, the psychedelics industry has seen a few billionaires take the plunge, including German billionaire Peter Thiel, co-founder of PayPal and an early investor in Facebook, currently enjoying a net worth of $7.9 billion, down from a 2021 high of over $9 billion. He has also done venture stage investments in both SpaceX and LinkedIn.
Thiel invested $11.9 million in Atai Life Sciences (NASDAQ: ATAI), which was founded by billionaire Christian Angermayer in 2018, who himself got into psychedelics after an illuminating personal experience with psilocybin.
Thiel and Angermayer watched their Atai Life Sciences stock surge 40 percent in its NASDAQ debut in June 2021, just the third psychedelics company to go public in the U.S., raising $225 million from selling 15 million shares. Angermayer also owns about a quarter of Compass Pathways (NASDAQ: CMPS), one of the earliest stars of the psychedelics industry that is gaining even more momentum after completing a phase IIb clinical trial of psilocybin therapy for treatment-resistant depression in 22 sites across Europe and North America.
It was the largest randomized, controlled, double-blind psilocybin therapy clinical trial ever conducted.
Angermayer has become a sort of investor guru for psychedelics. He appears to ostensibly be on more of a personal mission to cure the ills of mankind than just a billionaire playboy looking for cool investments. He always discusses the huge market for any psychedelic drug that can successfully treat depression, often citing the statistic from the World Health Organization that there are 300 million people suffering from depression worldwide.
That’s just the sort of help-for-all-mankind bandwagon that attracts other big-money players who are checking out the market. Just two years ago, a group of Silicon Valley and Wall Street executives reportedly raised $30 million to speed the development of MDMA to treat trauma patients, including Genevieve Jurvetson and her husband Steven, who co-founded the automation startup Fetcher. They donated $2.6 million.
Joby Pritzker, the Silicon Valley investor whose private equity company has holdings in Tesla, Uber, and SpaceX, donated over $1 million and is on the board of the Multidisciplinary Association for Psychedelic Studies (MAPS).
Another Silicon Valley superstar, billionaire Bob Parsons, founder of the web-hosting company GoDaddy, gave $2 million.
Parsons also has a personal connection to psychedelics. He is a Vietnam vet suffering from PTSD who began exploring psychedelic therapy as an option to manage his trauma.
Parsons later went even further with his psychedelics investments. He gave $5 million to the Mount Sinai Health System in September to build and support training and education for therapists using MDMA-assisted psychotherapy and other psychedelic medicine approaches. The multiyear grant will support the Center for Psychedelic Psychotherapy and Trauma Research in the Department of Psychiatry at the Icahn School of Medicine at Mount Sinai.
R&D Investment
But it’s not always the big money guys playing, because the industry is seeing record-setting benchmarks in the industry coming from other investor sources. For example, in 2021, investments in psychedelics companies grew to $595 million across 45 deals, setting a new annual record, accelerated by such drivers as the overall declines in return on investment for drug research and development pushing pharmaceutical companies to explore alternative product types like psychedelics.
But it’s all a bit of a sticky wicket. While all this good news is playing out, the leading psychedelics companies are still experiencing financial loses. For example, one of the top five psychedelics companies, MindMed, listed a net loss of $93 million in 2021in their annual report, adding that “considerable effort was directed towards employing a successful financing strategy.”
But still: The millionaire—and billionaire—drumbeat for psychedelics gets louder every year. In fact, the world’s richest person, super billionaire Elon Musk (current net worth is $268 billion) appears to be hovering around the psychedelics industry, tweeting in April that he “talked to many more people who were helped by psychedelics & ketamine than SSRIs & amphetamines.” Is he next to jump in? Or is this psychedelics bonanza slowing down for the time being? As with many things in the disruptive psychedelics industry, all that can be done is to wait and see.
Dave HodesApril 19, 2022
The year 2021 has not been kind to the psychedelics industry. The stock performances of the 60 publicly traded psychedelics companies on the Psychedelic Stock Index have been trending steadily downward since February 22, 2021, to their lowest point since the index began on June 1, 2020.
The pandemic has definitely affected psychedelic business development. Nevertheless, a few companies are getting closer to offering products and expanding therapy services. So a looming perfect storm of more psychedelic companies laying the groundwork for further development may encourage a business rebound in 2022.
Here are our picks for the five psychedelic companies to watch in 2022:
Atai Life Sciences, Berlin, Germany – listed on NASDAQ (ATAI) since July, 2021 – Market cap $999 million
Atai Life Sciences, a clinical-stage biopharmaceutical company aiming to transform the treatment of mental health disorders, is also one of the largest shareholders in Compass Pathways. In December, 2021, Atai Impact, launched in October, 2021 as the philanthropic program of Atai Life Sciences, announced its first major initiative, the establishment of the Atai $2 million Fellowship Fund in Psychedelic Neuroscience in collaboration with Massachusetts General Hospital’s Center for the Neuroscience of Psychedelics. The company also entered into a series of joint ventures and acquisitions in 2021, including with Psyber, a globally based startup focused on the development of brain-computer interface-enabled digital therapeutics for treating mental health issues. What’s coming in 2022: In January, 2022, the U.S. Food and Drug Administration (FDA) gave Atai Investigational New Drug (IND) clearance to conduct a clinical study of ketamine. Atai plans to initiate the study early this year through its platform company Perception Neuroscience.
Compass Pathways, London, England – listed on NASDAQ (CMPS) since September 2020 – Market cap $751 million
Compass Pathways is a mental health care company dedicated to accelerating patient access to evidence-based innovation in mental health. Compass has completed a phase IIb clinical trial of psilocybin therapy for treatment resistant depression in 22 sites across Europe and North America, one of the largest randomized, controlled, double-blind psilocybin therapy clinical trial ever conducted. Compass is also running a phase II clinical trial of COMP360 psilocybin therapy for post-traumatic stress disorder (PTSD). What’s coming in 2022: The company is preparing for a meeting with the FDA in early 2022 to finalize a program using their psilocybin therapy, and anticipates commencing that program late in 2022.
Cybin, Toronto, Ontario, CN – listed on NYSE (CYBN) since August 2021 – Market cap $192 million
Cybin is a leading biotechnology company focused on progressing psychedelic therapeutics by utilizing proprietary drug discovery platforms, innovative drug delivery systems, novel formulation approaches and treatment regimens for psychiatric disorders. It was the first psychedelics company to trade on the NYSE in August, 2021. The company has raised just over $96 million to date to fund clinical trials, M&A and IP strategies. What’s coming in 2022: In October 26, 2021, the FDA authorized an IND application to proceed with the company’s sponsored feasibility study using Kernel’s Flow technology to measure ketamine’s psychedelic effect on cerebral cortex hemodynamics (brain flow blood). Kernel Flow uses pulsed light instead of continuous wave light to increase measured brain information. Kernel Flow is a wearable device the size and look of a bicycle helmet. In the future, it could be more broadly used for neuroscientific or physiological studies of brain activity during psychedelic use.
Field Trip Health, Toronto, CN – listed on NASDAQ (FTRP) since July 2021 – Market cap $149 million
Field Trip does research and development on novel, psychedelic-inspired regulated medicines, and operates clinics that deliver ketamine-assisted psychotherapy in Canada and the United States. Field Trip currently operates and/or owns nine clinics in Toronto, Ontario; Fredericton,
New Brunswick; New York, New York; Santa Monica, California; Chicago, Illinois; Atlanta, Georgia; Seattle, Washington; Houston, Texas; and Amsterdam, The Netherlands. What’s coming in 2022: The company is planning to build an additional nine Field Trip Health Centers in Vancouver, British Columbia; San Diego, California; Washington, DC; Stamford, Connecticut; San Carlos, California; Austin, Texas; Scottsdale, Arizona; Dallas, Texas; and Miami, Florida. On January, 2022, Field Trip announced that the U.S. Patent and Trademark Office (USPTO) issued a Notice of Allowance for Field Trip’s patent application for their first novel psychedelic molecule in development. Field Trip expects the patent to be issued in February, 2022.
MindMed, New York, NY – listed on NASDAQ (MNMD) since April 2021. Market cap $357 million.
MindMed is a clinical-stage biotech company that seeks to discover, develop and deploy psychedelic-inspired medicines and therapies to address mental health and addiction. What’s coming in 2022: On January 4, 2022, the company announced the completion of its Phase 1 clinical trial of 18-MC, the company’s non-hallucinogenic proprietary derivative of ibogaine, being developed for the treatment of indications linked to opioid use disorder. This phase 1 single and multiple ascending dose trial conducted at a single clinical research site in Perth, Australia, evaluated the safety, tolerability, pharmacokinetics, and effects on the cognitive activity of 18-MC in healthy volunteers. The trial was completed in December 2021 with results expected in early 2022.
Sources: Company SEC filings; Yahoo! Finance; Psychedelic Stock Index; company websites and press releases
Dave HodesApril 6, 2022
Using huge amounts of money to invest in a business with no products seems like a fool’s errand.
But in the psychedelics world, that’s just what’s going on. Big money from billionaires like Peter Thiel and others is pouring in because of big predictions for future growth hopefully fueled by a big shift in mental health remedies and therapies.
Big.. hopes..
But all of that bigness doesn’t hide the fact that there is still a lot of guesswork in the psychedelics side of the biotechnology business that is not for the faint of heart investor. And some investors who have been riding the rollercoaster of a psychedelics stock market hoping for some sign of steady growth look away one week, not interested, then take another look when another big money announcement hits.
Psychedelics are intriguing, it’s good for all mankind.. but it’s fraught with financial landmines and market hiccups.
One biotech news company said that, when the pandemic hit, every biotech IPO was generating value. But the momentum didn’t last. Stock prices of newly public biotech companies tumbled in 2021, caused by clinical and regulatory setbacks, macro-economic forces, and an increasingly negative investor.
So if it was that hard for biotech companies to survive, many who had actual products to sell and had a research-to-market system in place, did that mean that investing in psychedelics companies, with so many more unknowns than the standard biotech company, should not even be on an investor’s radar?
One thesis for investing in psychedelic stocks goes like this: Over the next 5-10 years, psychedelic medicines and the companies that produce them will utterly disrupt the pharmaceuticals market, particularly when it comes to mental health care. Therefore, those who invest in the sector early will make a great return on investment. “The potential 2028 market for psychedelics is a knee wobbling $52.36 billion,” according to the thesis.
You hear that figure as an investor and it’s usually “Where do I sign up?” But it’s tough because you have to be aware of the variables. Science. Mental health. Brain chemistry. Long clinical trials. FDA. DEA.
This is a science-driven industry. There are generally no shortcuts to drug development, but there are accelerated programs for fast track and breakthrough therapy approval from the FDA.
There is a lot at stake in drug development. Any drug development, including capital costs and expenditures on drugs that fail to reach the market, has been estimated to range from less than $1 billion to more than $2 billion.
On top of that, psychedelics therapies are still in the experimental stage, using guided sessions and other assisted methodologies as they ask a patient to trust their minds to a total stranger wielding a substance that takes them through visual and aural twists and turns that some people don’t want to experience.
Will it have broad appeal? That’s another question that an investor needs to consider.
The usual adjustments and business gyrations still haunt this emerging industry—resignations and reassignments and science team building—especially science team building, since this can provide a quicker pathway to clinical studies.
But recently, there are other, more alarming signs that the industry can be a bit shakier than some believe it to be. Core One Labs (CSE: COOL) (OTC: CLABF), whose science team developed DNA sequences that produce enzymes replicating the biosynthetic pathway used by psilocybe mushrooms, just acquired Awakened, a psychedelics research and technology company, in February. Good moves, both.
But that wasn’t enough to keep Core One afloat. It is looking to be acquired. “Acquisition or investment by a major pharmaceutical company could be mutually beneficial,” the company reported in a press release.
Mind Cure Health (CSE: MCUR) (OTCQX: MCURF) reported that it was halting its psychedelic medicines research, following a “strategic review” undertaken by the company. The review determined that “the additional capital required to execute the Company’s business plan is unlikely to be found under the current and foreseeable market conditions and that none of the strategic alternatives available to the Company necessitated ongoing developmental expenditures.”
The industry is sagging. The Horizons Psychedelic Stocks index (OTC: HPSYF)—which include psychedelics industry leaders MindMed, Cybin, Compass Pathways and others—shows a steady, and somewhat steepening decline, since October, 2021.
While the bad news piles up, there is still good news that trickles in as well. For example, Compass Pathways (Nasdaq: CMPS) partnered with King’s College London to launch a psychedelic research center.
Startups are not shying away, such as Real Brands (OTCQB: RLBD. Real Brands Inc. is a multi-brand owner, formulator, extractor and manufacturer of branded hemp-derived CBD products. The company is initiating expansion to become a premier provider of medical psychedelics and will be working on getting DEA licensure for psychedelics.
Another recent addition to the psychedelics space is Mota Ventures Corp. (OTCPK:PEMTF) (CSE:MOTA), with the acquisition of Verrian Ontario, which will provide the company with addiction medicine experts, R&D facilities and a 110,000 square foot pharmaceutical manufacturing facility in Radebeul, Germany.
Novamind, Inc. (CNSX: NM)(OTCQB: NVMDF) and Red Light Holland Corp. (CSE: TRIP) (OTC Pink: TRUFF) both reported increased revenue. Red Light generated revenues of $622,247 for the quarter resulting in a gross profit of $232,792, an increase of $75,822. Novamind delivered total revenue of $2,452,540 in the quarter ending December 31, 2021—an increase of 32% over the previous quarter.
What the industry has going for it more today than even a year ago is increased visibility from media—The Economist, Wall Street Journal, Scientific American and other mainstream publications are picking up their coverage of the industry.
That helps to create more discussion about how to help the mental health of the world—along with a slowly building relaxing of some government rules and laws about some psychedelics in both the United States and the UK.
Attitudes are changing about psychedelics—an investor can genuinely bank on that.
Investors can take comfort in that there are companies out there trying to help them understand the psychedelics landscape and get in early to test the waters.
For example, Origin Therapeutics is an actively managed investment issuer providing investors with diverse exposure to the psychedelic industry. “There is a tremendous amount of innovation taking place in the psychedelics sector,” said Origin Therapeutics CEO Alexander Somjen on the company website. “Investors want to get in on it—but for many, it is only possible to access companies that are already publicly traded, which means that a lot of that initial opportunity to participate in the earliest stages of growth has passed.”
Origin Therapeutics plans to invest in a diverse range of psychedelic companies that encompass different areas of growth in the industry. This could include early-stage drug development companies, clinics, and other ancillary companies that help to push the industry forward, such as those companies focused on education, marketing, and building awareness around the psychedelics industry.
There are more historic and encouraging scientific breakthroughs such as when the Multidisciplinary Association for Psychedelic Studies (MAPS) released results of Phase 3 trial investigating MDMA-assisted therapy in May 2021, which is just the ticket for an investor looking at a long run in psychedelics.
Seasoned investors know that a big, long, super profitable run can happen. The volatility of the stocks will calm. But no one can soundly predict when the goodwill outweigh the not-so-good as the industry develops, and declare that the growing pains of this emerging industry have been healed.
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