Psychedelic Patents

MagicMed – Patent Wizard or Late to the Game?

In September of 2020, we published an article about MagicMed, wondering whether they were going to become psychedelic industry’s first patent troll. At that time, MagicMed had issued a few press releases and its CEO, Joseph Tucker had made some statements indicating that the company’s strategy was to patent and out-license compounds without any intention of conducting clinical trials or developing drugs. Fast-forward to January 2021 and it looks like our suspicions were exactly right: In an interview with Steve Darling from Proactive, Mr. Tucker explained that MagicMed’s strategy is to “capture as much intellectual property as possible and the most valuable intellectual property. ” See video below for interview.

Consistent with this patent-focused strategy, Dr. Joseph Tucker, CEO of MagicMed recently announced that MagicMed’s patent portfolio includes 12 patent applications for 9 different chemical compound categories with the potential to protect over 125 million individual molecules.

Mr. Tucker distinguished MagicMed’s “unique” strategy from other companies in the space but emphasizing that MagicMed intends to extract profits through licensing its intellectual property rather than conducting research and developing drugs. “With novel compounds, manufacturing methods, pharmacological properties, and patent filings in place, the company’s partners can focus on what they do best—running clinical trials and securing approvals. This unique business model makes MagicMed a facilitator to the entire psychedelics industry and could allow MagicMed to maximize its market potential.”

“Magic” or Smoke and Mirrors?

Some commentators have already taken issue with MagicMed’s strategy, which boils down to extracting royalties from other entities (“partners”) focused on developing psychedelic drugs. For these people there is good news: While MagicMed claims to be “well-positioned to capitalize on its diverse derivative library,” they also appear to be rather naive when it comes to patent law. As a result MagicMed will likely face an uphill battle getting any of its patent claims to issue. And, there’s a chance that their compounds are owned by someone else, who filed patents earlier. Here are three key points:

  1. MagicMed did not begin to file it’s patent applications until mid-2020. On July 9, 2020 MagicMed Industries Inc. (“MagicMed”) announced that it filed it’s first provisional patent application with the United States Patent and Trademark Office (USPTO), allegedly covering compositions of matter, drug formulation and process of preparation claims for novel psilocybin derivatives.  At that time, MagicMed characterized this patent filing as “the first in a series of applications that together will protect the Company’s broad portfolio of novel psilocybin molecular derivatives, the PsybraryTM.”
  2. On August 24th, 2020, MagicMed issued a press release confirming the company’s intention to file patent applications.  According to the press release, “MagicMed Industries intends to file numerous patents to stake broad claims over the new derivative molecules contained in the Psybrary™, from which the company’s partners can gain a significant competitive edge in new product development using molecules that are fully patent protected.”
  3. It wasn’t until December of 2020 that MagicMed completed filing the “12 patent applications for 9 different chemical compound categories with the potential to protect over 125 million individual molecules.” That was last month. And the rest of the psychedelics industry had already caught onto the idea of creating and filing intellectual property.

MagicMed was Late to the Game.

MagicMed’s priority dates could not possibly go back early than mid-2020 when it filed its first provisional patent application on psilocybin derivatives. And, MagicMed’s other patent applications weren’t filed until at least Q4 of 2020. (Before that, Mr. Tucker was boasting about his “intention” to file applications.) Given that patent applications do not publish until 18 months after their earliest priority date, MagicMed has no idea about other entities filing patent applications between about June of 2019 and the present day. Any disclosures during that period of time would create prior art that would anticipate MagicMed’s patent application.

Similarly, Mr. Tucker has no idea whether other entities filed competing patent applications between June of 2019 and MagicMed’s first patent filing. Notably, the psychedelic industry had fully embraced patents by that time; so it wouldn’t be surprising if lots of patent applications were filed between June of 2019 and July of 2020. Taken all together, the story of MagicMed could have an ironic outcome: MagicMed’s compounds could infringe other companies’ patents! If that happens, it will be curious to see if Mr. Tucker views those patent infringement lawsuits as “facilitating” MagicMed’s business.

Psychedelic Patents

Core One Labs Buys Volcan Bio and Patents

On December 31, 2020, Core One Labs announced the acquisition of Vocan Bio Inc.. As discussed below, the deal appears to center around intellectual property. Through the deal, Core One Labs acquired Vocan’s patent pending biosynthetic method of producing API grade psilocybin. Core One Labs intends to leverage this patentable technology and also develop more IP as part of its acquisition of Vocan Bio Inc.. Notable, neither Core One Labs nor Vocan have any granted patents or published patent applications assigned to them. See also Tips on Evaluating Psychedelic Patents.

According to Core One’s press release, “The acquisition of Vocan gives the Company [Core One] all the necessary licensing and research facilities to continue the development of psilocybin as an alternative therapy.” Here, the research facilities seem relevant to developing new technology but it is unclear what licensing facilities would be necessary to that development.

Core One further explains that “Vocan’s leading research team, led by Dr. Hancock, combined with its intellectual property to produce and patent biosynthesized API grade psilocybin, positions Core One as a leader in the psychedelic space.” Here, it seems clear that Core One has purchased Vocan’s (potentially patentable) biosynthetic methods. However, it remains unclear how those methods could be used to patent API grade psilocybin, which is a known molecule (i.e., not “new”). Others have developed new crystalline forms (e.g., Compass) or combinations of mushroom extracts from different species (e.g., Paul Stamets) but the press release does not offer clues as to whether Core One has plans to make new forms of psilocybin.

Core One further explains, “If Vocan can produce psilocybin at scale [via a patentable method], it has the potential to provide products at a lower cost than every other company, disrupting the entire industry.” This statement suggests that Core One could make psilocybin cheaply (via a patented method) and leverage their competitive advantage despite not having a patent on the resulting compound, psilocybin which is in the public domain. This is consistent with the following statement from Core One: “Vocan’s team of scientists, specializing in protein expression and biosynthetic fermentation, have discovered a patentable method of producing psilocybin, the active ingredient in psychotropic mushrooms.” (Notably, psilocybin is not the only active ingredient in psychotropic mushrooms.)

Aside from the acquisition of Vocan, Core One Labs “has developed a patent pending thin film oral strip which dissolves instantly when placed in the mouth and delivers organic molecules in precise quantities to the bloodstream, maintaining excellent bioavailability. With this technology, the Company intends to further develop its IP technology to focus on delivering psychedelic molecules with an initial focus on psilocybin.” Apparently Core Labs intends to use its newly acquired methods of making psilocybin to source the active compounds needed for its thin film oral strips.


Psychedelic Patents

Is Patenting Psychedelics Unfair?

On January 1st, 2021 the team of Konstantin Gerber, Inti García Flores, Angela Christina Ruiz, Ismail Ali, Natalie Lyla Ginsberg, and Eduardo E. Schenberg (herein “Schenberg” or “the authors”) published and article title “Ethical Concerns about Psilocybin Intellectual Property” in ACS Pharmacology & Translational Science. To summarize, the authors assert that it is unethical to make modern pharmaceuticals inspired by old natural medicinals without somehow compensating the indigenous people who have long used natural medicinals. The authors cited Psilocybin Alpha’s “Patent Tracker” to illustrate the recent trend in patenting psychedelic innovation. This conclusion is based on a general misunderstanding between (a) developing and patenting new forms of psychedelic compounds and (b) removing existing forms of those compounds from the public domain.

New Technology does not Remove Old Technology from the Public Domain.

Schenberg notes that naturally occurring “traditional” or “indigenous” psychedelic medicines have existed for millennia. Yes. Those medicines are in the public domain (aka the “prior art”). These can not be patented. The authors specifically point out that the Mazatec community is one indigenous community that has used naturally occurring psychedelic medicines for millennia. No new development or patent attorneys can take those medicines away from the Mazatecs or anyone else. Only new technology can be patented.

Developing new forms of old natural medicinals does not take anything away from the indigenous people. Researching and patenting psilocybin (see Compass) and developing pharmaceutical formulations (e.g., Compass Pathways’ crystalline form of psilocybin, COMP360) does not affect existing practices of using magic mushrooms. Rather, the patent system rewards the inventors of new technology with a limited monopoly on that technology as an incentive to bring it into existence for future generations. In the case of Compass, they developed a new psilocybin formulation (with a new, unnatural crystalline form) that is suitable for modern day medicine. The standard for patenting “new” technology is actually lower than this. For example, Paul Stamets has filed numerous patent applications on new combinations of mushroom extracts, which simply combine mushroom extracts in a new way. Arguably, Mr. Stamets is entitled to a patent on these new combinations (even though the compounds previously existed) because the new combination provides a new beneficial result, e.g., enhanced neuroregenerative properties.

New Drug Development can be Patented Despite Older Technology.

Unlike old medicines, newly developed drugs (including new combinations of natural substances, see, e.g., Paul Stamets above) can be patented. Schenberg contrast thousands of years of natural medicinals to the recent trend to make western medicines based on them: “Researching psilocybin is configuring a bioprospecting project resulting in the pharmaceutical industry pursuing innovation through intellectual property rights….” Here, note that the new technology arises from researching, “bioprospecting,” and “pursuing innovation.” This is not taking something out of the public domain. Rather, the research efforts add something new– arguably something valuable. It is that innovation that gives rise to intellectual property rights. Also, no one “pursues innovation through intellectual property rights.” Rather, intellectual property rights are awarded to those who successfully innovate.

The authors suggest that that developing new pharmaceutical products inspired by natural medicinals is unethical because the pharmaceutical companies have “no plans for reciprocity with or compensation for the indigenous communities who have protected these traditional mushroom practices for millennia.” Here, note that the indigenous communities aren’t losing anything. They are free to continue enjoying the benefits of their traditional practices. No one is stealing anything from them. The traditional medicines remain in the public domain. And the present innovators (like Compass) enjoy the fruits of their new technology. New developments of old medicinals can be patented.

As the authors point out, “… the Mazatec indigenous communities who stewarded these traditional medicines for millenia are not party to any of these patents, despite a number of international treaties asserting indigenous rights to their intangible cultural heritage.” Correct. The Mazatec indigenous communities did not invent the new technology. So, they are appropriately not party to the patents covering the new technology. Likewise, today’s innovators (like Compass Pathways) are have no claims to the “intangible cultural heritage” of the Mazatec people, e.g., traditional psilocybin medicines that have been used for millenia. Only new technology can be patented.

Lastly, the authors posit that “When the intellectual “property” derived from naturally occurring compounds is the prior art of indigenous people, we are obliged to explore the ethics of shareholders reaping the financial benefit from these compounds. Reflecting on these ethical dilemmas may offer frameworks to understand and solve for the ongoing harm of extractive economics, and perhaps even point the way toward reciprocal and reparative arrangements with indigenous stewards of medicines and molecules around the world.” Here, the authors seem to recognize that today’s new technology and new intellectual property is actually different; and they raise the question as to whether practitioners of earlier technologies should be compensated for newer versions. This is an interesting point for reflection.

  • Should Telsa compensate Ford for its electric car sales simply because Ford made cars before Tesla?
  • Should Apple compensate Edison for iPhone sales?
  • There are obviously lots of other comparisons

Arguably the existing patent system strikes a good balance in encouraging innovators to disclose new technology by offering them a limited monopoly. However, requiring today’s innovators to compensate others for “traditional” practices that have existed for millenia could create disincentives for innovation. In the case of the Mazatecs, the authors effectively suggest affording them intellectual property rights that extend for thousands of years– instead of existing system while limits the patent rights to about 20 years.

Psychedelic Patents

Graham Pechenik and Noah Potter Discuss Psychedelic Patents

The New Amsterdam Psychedelic Law blog recently published a video discussion between  Graham Pechenik and Noah Potter about “Who owns psychedelics: patents and state therapeutic access laws.”

The blog is run by Noah Potter is a commercial litigator but not a patent attorney.  He interviews Graham Pechenik who is an expert in psychedelic patent law.

In the interview, they discuss the following points:

  • General requirements for patentability and how psychedelic patents fit into that picture
  • Compass Pathways (very narrow) patent to very specific, particular forms of psilocybin.  Mr. Pechenik believes that Compass’s IP will not be relevant to the Oregon psilocybin service centers contemplated by Oregon Measure 109 because those service centers are unlikely to use Compass’s particular crystalline form of psilocybin.
  • Paul Stamets‘s attempts to patent combinations (e.g., the Stamets “stack”) of natural ingredients.
  • How patent law would (and would not) affect the future of the psychedelic landscape.  Mr. Pechenik believes that patents will benefit the industry — in different ways for different businesses. A rising tide lifts all boats.
  • Mr. Pechenik notes that patents don’t necessarily need to be used solely to maximize profits.  He notes that patents could be used to serve the public good.  This could be accomplished by licensing agreements that prioritize the public good.
Psychedelic Patents

COMPASS Pathways’ $100+ Million Crystalline Form Patent

Compass Pathways Plc. has developed a crystalline form of psilocybin (COMP360) that makes other crystals (like the Hope Diamond, pictured above) look cheap.  Over the last four years, Compass has built a company around this crystalline form.  Earlier this year, Compass received a patent on this crystalline form.  Now, Compass is going public. And despite zero revenue and plenty of expenses, Compass is already valued at anywhere from $100 to $500 Million.

Why?  Patents.  Specifically, the company’s clever strategy of patenting a novel crystalline form of psilocybin.

Compass Pathways IPO on Nasdaq under the symbol CMPS

On Friday August 25, 2020, Compass Pathways filed to go public on the Nasdaq Global Market under the symbol CMPS.  According to the documents filed with the U.S. Securities and Exchange Commission, Compass plans to raise $100 million through the IPO. According to Bloomberg‘s accounts from “people familiar with the matter, who asked to not be identified because the details aren’t public,” Compass’s “[m]ost recent funding rounds suggest a value of more than $500 million, before proceeds from the initial public offering….”

According to the “Financials” section of the above mentioned SEC S-1 document (see page 118) Compass is not making any money but they are burning through a ton of cash.  They have raised $116M in equity offerings and also issued about $25 Million in promissory notes, which have now converted into equity. (page 129).  As of August 20, 2020, Compass had about $72 Million of this cash remaining.

Why is Compass worth between $100 to $500 Million?

Patents.  And a very clever strategy for attaining them. After spending 4 years and about $60 Million, Compass is not making any money.  However, Compass has developed patent assets that protect its psilocybin product, COMP360.  See Compass Pathways’s PatentsIn January of 2020, Compass Pathways issued a press release stating “that it has been granted US Patent No 10,519,175 (“the ‘175 patent”), relating to methods of treating drug-resistant depression with a psilocybin formulation, by the US Patent and Trademark Office.”  See also Compass Pathways’s Crystalline Form Patent.

Here, Compass deserves some high praise for their approach to patenting psilocybin. Florian Brand, co-founder and CEO of ATAI Life Sciences, Compass’ biggest investor, recognized the importance of being able to “re-ornament chemical compounds in a way that makes them new — and patentable.”  See Mr. Brand explains, “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 [competitors from entering the space].” 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.”

Although psilocybin is a natural product and has been in the prior art (in both mushrooms and as an isolated compound), Compass developed a novel crystalline form of psilocybin. By recognizing that COMP360 is a novel crystalline form, Compass’s IP team at Cooley LLP was able to craft a patent strategy based on the differences between Compass’s crystalline form and those already in the prior art.  And it worked!

In allowing Compass’s claims, the patent examiner at the USPTO explained the importance of Compass’s crystalline form data.  Specifically, the examiner’s reason for allowing Compass’s claims hinged on the difference between (A) the characteristics of the crystalline form of psilocybin recited in Compass’s claims and (B) the characteristics of the crystalline form of psilocybin recited in “the closest prior art of record….”  This distinction made it possible for Compass to patent its crystalline form of psilocybin despite 60 years of prior art related to the compound psilocybin and thousands of years of use within naturally occurring mushrooms.

Now, Compass’s patents covering COMP360 (their crystalline form of psilocybin) support an IPO of $100MM+.  As discussed below, Compass plans to use the proceeds from the IPO to develop its most valuable asset: COMP360.

What is Compass’s Plan?

Compass plans to use proceeds from the IPO to fund clinical trials for “COMP360,” its psilocybin crystalline form product. According to the S-1 document filed with the SEC, Compass intends to use the proceeds from the IPO for the following:

  1. Fund Phase II clinical trials for COMP360 (their crystalline form psilocybin product), beginning in 2020;
  2. Fund R&D for use of COMP360 for other indications beyond Treatment-resistant depression. (The indications being explored in Compass’s investigator initiated studies include: bipolar type II disorder, body dysmorphic disorder, chronic cluster headache, depression in cancer, MDD, and severe TRD.)
  3. Fund other business activities, including R&D for other novel drug compounds and strategic investments in digital technologies to complement their therapies

Compass’s Crystalline Psilocybin Makes Diamonds Look Cheap

Looking at the big picture, Compass’s present $100-500 Million dollar valuation and the company’s future all rests on the foundation of a single crystalline form of psilocybin. This one new crystalline form of an old compound (psilocybin) has made it possible for Compass to earn patent protection on its COMP360 product.  That IP is Compass’s most valuable asset.  For comparison, the famous Hope Diamond is worth an estimated $250 Million dollars, making it an exceptionally valuable crystal.  Arguably, Compass’s IP team has already made a more valuable crystal with COMP360, its novel crystalline form of psilocybin.

Psychedelic Patents

MagicMed – The First Psychedelic Patent Troll?

Is MagicMed Industries Inc. the first patent troll to enter the psychedelic space? Or has MagicMed come up with a brilliant plan that will benefit the entire psychedelics industry by providing access to new psychedelic compounds?  The short answer is that only time will tell.  We’ve provided a short discussion below.  Please feel free to offer your thoughts by commenting below.

Developing Patents for New Psychedelic Compounds

On July 9, 2020 MagicMed Industries Inc. (“MagicMed”) announced that it filed a provisional patent application with the United States Patent and Trademark Office (USPTO) covering composition of matter, drug formulation and process of preparation claims for novel psilocybin derivatives.  MagicMed characterized that patent filing as the first in a series of applications that together will protect the Company’s broad portfolio of novel psilocybin molecular derivatives, the PsybraryTM.

On August 24th, 2020, MagicMed issued a press release confirming the company’s intention to file patent applications.  According to the press release, “MagicMed Industries intends to file numerous patents to stake broad claims over the new derivative molecules contained in the Psybrary™, from which the company’s partners can gain a significant competitive edge in new product development using molecules that are fully patent protected.”

According to MagicMed, “[t]he initial focus of the Psybrary™ is on psilocybin, and is expected to expand to other psychedelics, including MDMA, ketamine, ibogaine, mescaline and ayahuasca.”

What is MagicMed’s Psybrary?

Based on MagicMed’s press releases, the term “Psybrary” refers to a library of different psychedelic molecules, “derivative molecules,” presumably because they are based on known psychedelics like psilocybin. MagicMed defines term “Psybrary” in their August 24th, 2020 press release as a “collection of novel psychedelic derivatives we are amassing through an industry leading combination of synthetic biology and medicinal chemistry.”  This approach is interesting.  Instead of synthesizing the compounds via synthetic chemistry, MagicMed is using synthetic biology (bioengineering) and medicinal chemistry (usually reserved for studying the properties of compounds as opposed to making the compounds themselves).

What is MagicMed’s Strategy?

MagicMed is synthesizing new psychedelic compounds with the intention of selling or licensing them to others in the industry. (“MagicMed is employing a diversified partnership model.  What that means is we see ourselves as enablers of the entire sector.”)

MagicMed does not have aspirations of conducting clinical trials but rather intends limit their focus to developing new psychedelic compounds. (“We are really good at creating new drug candidate psychedelic derivatives, but don’t aspire to get into clinical trials ourselves.”)

What Value is MagicMed Creating?

Patents.  Plain and simple.  MagicMed is clear about this point.  They are synthesizing psychedelic compounds and patenting them. “We anticipate filing many patents and synthesizing many new molecules, which our partner companies can screen to find their ideal drug candidate to select and advance into further development.”

“The Psybrary we anticipate will be a highly valuable resource for our partners, as it will contain many new molecules to screen, increasing their chances of finding an ideal drug candidate, and each molecule will come with a commercially-friendly manufacturing method and have its composition patent protected. We expect this will be a big asset for our partners, and could be a big hurdle for those who don’t partner with us.”

In other words, MagicMed’s “partners” can use the compounds in their Psybrary without getting sued for patent infringement.  And MagicMed’s patent portfolio can be view as a moat (aka “big hurdle”) around those compounds “for those who don’t partner with us.”

Is MagicMed the First Psychedelic Patent Troll?

Good question.  The term “patent troll” best describes a non-practicing entity that seeks to extract royalties from other practicing entities by leveraging its patent portfolio.  Whether or not MagicMed qualifies as a patent troll probably depends on what R&D MagicMed contributes to the industry.

On the one hand, MagicMed is candid about their lack of interest in clinically developing their compounds in favor of “partnering” with others interested in doing that work.  This feels like trolling because the patent owner is holding downstream research hostage in order to extract a profit by enforcing patents on technology that the patent owner has no intention of using itself.

On the other hand, MagicMed appears focussed on filling a longstanding unmet need for making psychedelic compounds. The industry wouldn’t have the ability to work with these compounds at all without MagicMed’s efforts in synthesizing them.  Arguably, their patent portfolio will enable them to enjoy some form of compensation for making those compounds available to the rest of the world.  Additionally, some have pointed to a lack of IP in the psychedelic space as a major limitation to attracting meaningful investment capital.  Creating patent assets solves this problem, allowing for growth in the space.

Psychedelic Patents

Aion Therapeutics Files Five Patent Applications

In an September 3, 2020 press release on Psilocybin Alpha, Aion Therapeutics reported that it was “pleased to announce that the Company has filed five patent applications with the United States Patent and Trademark Office (USPTO) pertaining to new treatments combining healing compounds in medical cannabis with healing compounds from mushrooms (edible and psychedelic), and other natural plants known for their medicinal properties.”

The press release also clarified that these are provisional patent applications.  “Aion Therapeutic’s intellectual property counsel, Pinnacle IP Strategies LLC (“Pinnacle“), drafted and will prosecute the patent applications. According to Pinnacle, Aion Therapeutic’s provisional patent filings in the U.S. will provide Aion Therapeutic a right of priority under the Paris Convention to pursue patent protection to Jamaica, as well as, priority for over 170 countries under the Patent Cooperation Treaty (“PCT“). Establishing an effective filing date for Aion Therapeutic’s inventions in the U.S. preserves that priority date – with up to one year to pursue a subsequent filing in any country that is a party to those agreements.”

In a previous post about How to Evaluate Psychedelic Patents, we distinguished between issued patents, pending patent applications, and provisional patent applications. The later two have not been issued/granted and must first be examined in order to see if the claimed invention is both (1) New and (2) Non-obvious in view of the prior art.  (Prior art means anything published before the application’s priority date, which in Aion’s case appears to be sometime in the summer of 2020.

In the case of Aion Therapeutics, it is unclear how the company will overcome the prior art issued associated with other (much earlier filed) patent applications that are directed to (what appears to be) very similar subject matter.  For example, this patent application by inventors Murat KÜÇÜKSEN and Neset KÜÇÜKSEN shows up on Google Patents by searching for Psilocybin + Cannabinoid.  The application has a priority date of January 18, 2017 and “relates to the use of one or more cannabinoids and/or terpenes in combination with psilocybin and/or psilocin for use in the prevention or treatment of psychological or brain disorders. Preferably the one or more cannabinoids are taken from the group cannabidiol (CBD); cannabidiolic acid (CBDA); tetrahydrocannbidivarin (THCV); tetrahydrocannbidivarinin acid (THCVA); cannabichromene (CBC); cannabichromenic acid (CBCA); cannabigerol (CBG) and cannabigerolic acid (CBGA).”

One possibility is that the Aion technology does not use psilocybin and/or psilocin but relies on other “psychedelic” components from mushrooms.  (The above mentioned KÜÇÜKSEN application is limited to combinations that include psilocybin and/or psilocin with the cannabinoid(s).).   Another possibility is that the Aion technology avoids the use of the cannabinoids listed above as part of the KÜÇÜKSEN application.

The idea of combining a psilocybin derivative with a cannabinoid does have tremendous promise because of the potential for harnessing the Entourage Effect and making formulations that are better than single active ingredients (see, e.g., Compass Pathways use of pure psilocybin without the other synergistic actives in magic mushrooms). But, can Aion pursue this technology without running into competing IP, like the KÜÇÜKSEN application? Moving forward, it will be interesting to learn more about Aion’s patent portfolio, especially what makes it “novel” as we watch the situation develop.

Psychedelic Patents

5 Tips for Evaluating Psychedelic Patents

In previous articles, we wrote about the emerging psychedelics industry and its newfound focus on intellectual property. The recent and dramatic increase in patent filings gives rise to questions about how to evaluate intellectual property within the relatively new (but no longer infant) psychedelics space.  

At a high level, analyzing psychedelic patents is pretty straight forward.  Start with the claims in the application and ask whether the subject matter defined by those claims is (1) New, (2) Non-obvious, and (3) adequately enabled, described, and defined within the application.  These criteria highlight the critical importance of the patent’s priority date, which determines what body of evidence is available to inform those questions.

In practice, evaluating a patent portfolio can take weeks and tens or hundreds of thousands of dollars of analysis from a patent attorney.  This article seeks to give investors some tips for performing a simple litmus test for a psychedelic patent portfolio.

Below are 5 key questions for investors to consider when evaluating a psychedelic patent portfolio.

Five Key Questions for Investors to Ask about Psychedelic Patents

1. When you say “Patents,” do you mean Patented or Patent Pending?

  • The term “patent” is often used interchangeably to describe any type of patent application. See, e.g., Troy Farah’s most recent Double Blind article (published July 10, 2020) about toad venom, where he describes the subject matter published in a pending application (WO2014115113A1) as “already been patented.” This article illustrates the widespread confusion in the psychedelic space between patents, patent applications, patent publications. And, there is a big difference between a published or pending application and a granted (or issued) patent.  For example, the “patent” identified by Mr. Farah is not a patent but rather a pending application that has been abandoned in all but one of the territories where the applicants initially sought patent coverage. 
Screenshot from Google patents, showing the status of International Patent Application No. PCT/IB2014/058524, which published as WO2014115113A1. Notably, the application has since been ABANDONED in all territories but Japan, where the application is still PENDING. The application has not issued into a patent anywhere in the world.
  • The word “patent” describes a granted patent not a pending patent application. The former refers to claims that have issued after being examined by the patent office in view of the post relevant prior art. Granted patents are presumed to be valid because they have been evaluated by the patent office prior to issuance. The patent office has determined that the claims are new (aka novel) and non-obvious. 
  • Pending applications have not been granted; many have not been substantively examined; some haven’t been examined at all. Evaluating pending patent applications requires determining how the patent office will examine the claimed subject matter and making an educated guess as to what claims will be allowed. The documents exchanged between a patent applicant and the patent office are published, providing insight as to the ultimate disposition of the case.  
  • Provisional applications are not published and never get examined. They merely serve as priority documents for applicants wishing to pursue non-provisional applications. Accordingly, there is no objective information about the value of a provisional application available in the patent file, leaving all of the guesswork to investors.

2. What is the priority date of the patent or application?

  • Only new and non-obvious inventions are patentable. The novelty and non-obviousness (or inventive step) of those inventions are evaluated based on the priority date of the application.
  • An invention is new if it was not disclosed in any publication before the priority date of the patent application claiming the invention.
  • Any disclosures published prior to the priority date of the patent application are collectively referred to as the “prior art.” The priority date determines what is (and is not) prior art. Was the invention new and not obvious at the time of the priority date.  As we discussed elsewhere, the recent explosion of psychedelic technologies didn’t really start until 2018 or 2019.  So, inventions having priority dates prior to this gold rush have a tremendous advantage as to what constitutes prior art during examination.  By contrast, applications filed in 2019 or 2020 have significantly greater risks of encountering “prior art” issues.  
  • An invention is non-obvious if the prior art would not have rendered it “obvious” to a person of ordinary skill in the psychedelics industry.
  • The priority date is critical because it defines what is (and is not) prior art.  This is critical in the psychedelics industry where technology is evolving rapidly. Today’s groundbreaking idea could seem obvious next year. To maintain objectivity during the examination process, an invention is evaluated for novelty and non-obviousness based on its priority date.
  • Below is an example of a patent document, which shows where the priority information is printed. This is Compass Pathway’s crystalline form patent.  Note the priority date of October 9, 2017. In the relatively new psychedelics space, a priority date from 2017 is excellent because it precedes the ongoing race to file patents on psychedelic technology.
Portion of the face of Compass Pathway’s U.S. Patent 10,519,175 B2, showing data about the application. Here, at section 30, the Foreign Application Priority Data shows that Compass claim priority dating back to October 9, 2017, which (in the psychedelic space) is a very good, i.e., relatively early priority date.

3. What is the claim scope of the patent or patent application?

  • The most important part of any patent document is the claims. The claims define the invention. The claims define the property that is owned (or sought to be owned in a pending application) by the applicant. Often patent documents have flashy titles or expansive language in some parts of the application but extremely narrow claims.  Accordingly, it’s important to evaluate the claimed property, which is defined by the claims.
  • Do the claims define compounds, compositions, methods, processes, or something else?  David Nichols, Ph.D., a professor emeritus of medicinal chemistry and molecular pharmacology at Purdue University correctly explains that “The strongest patents are based on novel molecules,” i.e. compounds or compositions of matter. Patents claiming compounds or compositions of matter provide protection for all uses of those materials and offer the highest possible level of protection for psychedelic inventions. 
  • An article published in Lucid News describes several fall back positions for claiming patentable subject, including Compass Pathways’s strategy for patenting a novel crystalline form of psilocybin.
  • Companies that do not have compound (or composition of matter) patents will likely argue that claims to other types of subject matter (e.g., methods of use) are just as good. That’s a red flag. The company is already working with derivative technology. The compounds or compositions are already in the prior art, which is why they can’t claim them.  For a recent example, see MindMed’s July 2020 Corporate update where Stephen Hurst repeatedly de-emphasized the importance of composition of matter patents.  Because the MindMed team is working with prior art compounds, LSD and 18-MC, they are unable to claim compositions of matter.  Accordingly, the “close to a dozen” patent applications they filed (since March 2019) are probably directed to methods of use and/or other less valuable subject matter.
  • Do the claims in the patent cover the company’s product?  This sounds like a dumb question but it’s often overlooked. Even if a psychedelics a company has an extensive patent portfolio and a promising product line, a smart investor should ask to see how the claims cover each specific product of interest.  This can be accomplished with a claim chart, which is beyond the scope of these high-level tips.

4. How many claims are in the patent or patent application?

  • Does the patent portfolio have multiple claims directed to the technology of interest?  Does it claim the technology in multiple different ways?
  • Each patent claim is a distinct property.  Protecting a product with multiple patent claims multiples the level of protection. A competitor challenging the validity of the IP would need to invalidate all claims covering the product.  Ideally, a company would protect a compound, compositions (or formulations) containing the compound, methods of making the compound and the formulations, and methods of using them to treat various diseases and conditions.  
  • Ideally a patent has a collection of claims that define the invention as various levels of generality, with some claims capturing the broadest reaches of the innovation and other narrowly tailored to a particular embodiment in order to avoid prior art problems.  Here, companies often claim a genus of compounds, various subgenuses of compounds, specific molecules, and also specific forms or formulations of the molecules.

5. How many applications are in the portfolio?

  • Much like the number of claims in an application, the number of applications in the portfolio provides some high-level insight regarding a company’s IP strategy. 
  • Does the company frequently and consistently capture new innovation in patent application throughout the research and development process?  Or was the company happy enough to simply check the “IP” by filing a couple of applications?  Either of these strategies allows a company to say that they “have IP.”  But, the value of that IP can be considerably different. 

Conclusions – Look for lots of claims with early priority dates

The above 5 tips are simple, high-level questions to get started with evaluating a patent portfolio for a psychedelics company.  Assessing the value of a specific portfolio requires studying each claim in each application in view of the prior art that was available at the earliest priority date for that application.  That analysis can be resource intensive.  The above tips are intended to offer investors some simple ways to quickly identify potential strengths and weaknesses in a psychedelic company’s IP portfolio. While anyone can file a provisional patent application and boast “we have patents pending,” portfolios that have diverse claims, carefully directed to the product(s) of interest, with early priority dates are probably going to provide the most value in the long run.

Psychedelic Patents

Psychedelic Patents: The Cat is Out of the Bag

In January of 2020, Psilocybin Technology published an article about “Psychedelic Investment Opportunities,” in which it reiterated the earlier position (from 2019) that Intellectual Property would become a key consideration within the nascent psychedelic industry. We pointed out that “Although many entities have started filing patents directed to psychedelics, the space is still relatively new and uncrowded.  As the space develops, the importance of good intellectual property will increase; and the likelihood of creating meaningful intellectual property will probably decrease.  Accordingly, investing in companies developing new, broadly applicable technologies with a strong commitment to intellectual property seems to be the best strategy as we enter 2020.”  

Other industry experts have now echoed Psilocybin Technology’s sentiments.  For example, Matthew Baggott, former director of data science and engineering at the biotechnology corporation Genentech, explains “As psilocybin nears approval for depression, you will see many other groups applying for patents involving other psychedelic tryptamines.”  Based on the increasing number of patent filings and patent-centered press releases, it appears that the future is now. The importance of psychedelic patents is no longer a prediction.  It’s a fact. The race to patent psychedelic technology has exploded throughout the first half of 2020. Below are a few highlights of how companies are describing their intellectual properties strategies. 

Recognized Importance of Patents in the Emerging Psychedelic Industry

Below are several examples of disclosures pertaining to patents in the psychedelic space.  Although these are just snippets from the mainstream media, they illustrate two clear trends. First, in 2019-2020, the industry’s attention to intellectual property has increased dramatically. Second, much of the patent related activity appears to be focused on marketing rather than research and development, raising questions as to whether any of the recent IP has any value outside of attracting attention through press releases using the work “patent” in the title.

Some have noted the importance of this buzzword.  For example, on January 22, 2020, Vince Sliwoski of Harris Bricken noted that Compass’s COMP360 patent is not the only patent application related to psilocybin, but it has generated a lot of press.  Others have pointed out the importance of a substantive IP strategy. For example, in March of 2020, Gretchen Temeles of Duane Morris, LLP wrote an article about “Patent protection of psychedelic therapeutics,” in which she observed that “the renewed interest in psychedelics has spawned an increase in commercial activity and an increase in the number of patent applications and granted patents covering psychedelics.” Dr. Temeles advised that  “companies in the psychedelic therapeutics area would do well to take a page out of the cannabis playbook…. As commercialization in the psychedelic therapeutics area moves forward, those companies with strong patent portfolios will be at a competitive advantage.” See Analogy to Cannabis.

In any event, the psychedelics industry has fully embraced the importance of intellectual property and started filing patent applications on questionable inventions.  As a result, investors will need to change their thinking when it comes to evaluating IP.  Instead of asking whether a company has filed patents, a savvy investor will need to take a closer look at when the patent applications where filed and how the growing number of disclosures may affect those filings.

  • In December of 2019, Psilocybin Technology published an article describing Silo Wellness’s patent strategy. At the time, the aggressiveness of Silo Wellness’s intellectual property strategy was noteworthy.  At the time, their webpage emphasized its “Provisional Application for a Patent for metered dosing formulations” and directed readers to an entire page dedicated to Intellectual Property.  On that page (since removed), Silo Wellness explained: “We have filed [in July 2019] a provisional application for a patent to cover metered dosing formulations of plant and fungal compounds for oral, nasal, sublingual, and topical use. We are developing solutions for metered dosing for mushrooms, Ayahuasca/DMT, and peyote/mescaline.”  The intellectual property was apparently developed by Michael Hartman, who has developed extensive metered-dose inhaler IP for other pharmaceutical companies. Silo Wellness further highlighted it’s IP-guided strategy by describing its dual focus on technology and IP:  “The problems we are attempting to address through protectible IP (patent and trade secrets) are as follows: 1. How to deliver a predictable and safe experience; and 2. How to make them palatable. 
  • According to their December 2019 press releases, Yield Growth Corp. and its subsidiary Flourish Mushroom Labs “has filed 13 patents to protect its extraction method and formulas and one patent for the use of compounds in psychedelic mushrooms to treat obesity and diabetes and to aid in weight loss.” See Yahoo Finance. According to their press release on Bloomberg, “Yield Growth earns revenue through multiple streams including licensing, services and product sales.” In a subsequent press release on May 14, 2020, Yield Growth announced that its subsidiary “NeonMind has filed a U.S. provisional patent application to protect the invention that the administration of psilocin and/or psilocybin results in overall weight loss in individuals….” Then, less than one month later, the company issued another press release, announcing that “Neonmind expands development of psychedelic patent portfolio” and promoting its June 5, 2020 filing of another patent application. Then, on June 18, 2020, the company issued another press release about filing another patent application. In that press release, Dr. William Panenka, Chair of the NeonMind Scientific Advisory Board explained, “As part of our overall patent strategy, we are establishing defensible intellectual property around multiple compounds that act on these receptors and intend to follow this with rigorous clinical trial work to establish efficacy.”
  • According to their webpage, Frontier Neurochem “has developed patent-pending technologies and formulations of Psilocybe mushroom and Iboga alkaloids extracts meeting cGMP Pharma-grade standards for safe and effective pharmaceuticals.”
  • ThinkMyco describes its business focus as the “development of unique technologies and IP spanning the whole range of fungi based growth industries.”
  • In April 2020, Debra Borchardt reported that “Orthogonal Thinker Takes Steps Towards Patenting Psilocybin Product.”  Ms. Borchardt explained that Orthogonal’s steps involved filing a provisional patent application.
  • In an April 22, 2020 press release, Kevin O’Leary and Bruce Linton backed MindMed announced that the company “…discovered and filed a patent application in the United States (preserving all worldwide rights) for a neutralizer technology“MindMed, working with the Liechti Laboratory, will continue to research and build a patent portfolio around psychedelic compounds that create novel approaches to medicine.”
  • On April 29, 2020, Revive Therapeutics issued a press release advertising that “The Company has key provisional patent applications with the U.S. Patent and Trademark Office that cover methods of production of psilocybin-based formulations, including sublingual sprays, effervescent tablets, hard-shell capsules, sublingual and transmucosal delivery systems (i.e. gum drops, oral strips, dosing pens). Furthermore, Revive has a patent-pending portfolio that includes Psilocybin extraction and crystallization methodologies.”
  • On May 26, 2020, Shayla Love wrote an article in Vice predicting that “As magic mushrooms make the shift from recreational drug to mental health treatment, patients won’t be eating caps and stems, but a synthetic product made in a lab—one that can be patented and profited from.”
  • On June 29, 2020, North Sur Resources and Mindset pharma issued a press release touting their intellectual property and explaining that “Mindset is an Ontario-based psychedelic pharma company that has filed multiple patents for new, pharmacologically optimized psychedelic medicines.” That press release further stated that “Mindset has filed multiple patent applications describing its new chemical entities and is advancing a group of compounds through pre-clinical screening in order to identify one or more lead compounds to select for clinical trials. Mindset’s goal is to develop a broad portfolio of psychedelic-inspired intellectual property around novel drugs and related synthesis processes that will grow in value as the psychedelic medicine space develops and regulatory acceptance increases.”

The above publications demonstrate how the psychedelic industry has now recognized the value of intellectual property. The trend can be further illustrated by using Google’s search tools to search for relevant articles by date.  For example, prior to 2020 there were far fewer mentions of psychedelic related intellectual property. Prior to 2019, there were only a few pages of Google results relevant to the topic. And prior to 2018, it’s hard to find articles discussing the topic at all.

But is your patent worth anything?

In conclusion, the psychedelic’s industry has moved into what was once a wide open space for developing technology.  Prior to about 2018, the opportunities for patenting new psychedelic technologies were virtually limitless. Now the situation has changed. New psychedelic companies are emerging every week.  And each new psychedelic company claims to have intellectual property that will guarantee its dominance over the future of the industry. Now that the psychedelic patent landscape has started to fill up with new players, the patent-related questions have also evolved. While simply filing a patent application was significant prior to about 2019, the new question is whether a particular patent application has any value given the influx of other entities racing to claim similar inventions.  The industry has already seen the rise and impending fall of Compass Pathways patent, which foreshadows the next wave of IP questions in the industry.

Considering investing in a psychedelics conpany? Here are 5 High Level Tips for Evaluating a Psychedelic Patent Portfolio.

Psychedelic Patents

Patent Attorney Charles Boulakia joins Flourish Mushroom Labs

On February 4, 2020, the Yield Growth Corporation announced that Patent Lawyer, Charles Boulakia was appointed to the Flourish Mushroom Labs Advisory Board. According to the press release Mr. Boulakia “has over 20 years of experience in the preparation and prosecution of patent applications in a variety of industries including: biotechnology, chemistry, biofuel, oil and gas and pharmaceuticals.”  Mr. Boulakia is a registered patent agent (reg. no. 58,616) at the United States Patent and Trademark Office. According to his firm’s webpage, Mr. Boulakia is a partner of Ridout & Maybee LLP in the firm’s Toronto office.

Yield Growth CEO, Penny White Discusses New Patent Attorney, Charles Boulakia

According to Yield Growth CEO, Penny White, “Our plan is to develop proprietary processes for the cultivation, extraction and processing of psilocybin magic mushrooms, and also develop data through trials about dosages and uses of psilocybin for therapeutic use.”  Towards these goals, Ms. White expressed her enthusiasm that “Charles [Boulakia’s] expertise will be an enormous asset as we develop our intellectual property strategy. He will also be instrumental in our efforts to scientifically prove certain therapeutic benefits of magic mushrooms.”

Yield Growth and Flourish Mushrooms Recent Patent Filing Efforts

On December 10, 2019, Yield Growth Corporation announced that its subsidiary Flourish Mushroom Labs filed a U.S. provisional patent application relating to “methods of using serotonin antagonists, in particular, psychedelic mushroom actives, for weight loss. See Yahoo Finance. See Psilocybin Technology’s article discussing how this work was originally considered groundbreaking.  Presumably, Mr. Boulakia will assist Flourish Mushrooms by developing this and other intellectual property assets.  From the press release, it also appear that Yield Growth and Flourish Mushrooms are in the process of developing an intellectual property strategy.

Based on the press release and other publicly available information , it is unclear how Mr. Boulakia will assist with “scientifically prov[ing] certain therapeutic benefits of magic mushrooms.”  Although Mr. Boulakia’s impressive academic record includes an M.Sc. (Biochemistry) from McGill University’s Cancer Research Centre (1996), his recent professional activity does not seem focused on conducting the clinical research required to “prove certain therapeutic benefits of magic mushrooms.”  Such scientific studies are typically conducted by medical doctors and research scientists.

Importance of Patents and Intellectual Property in Nascent Psychedelic Space

Despite a lack of clarity regarding the scope of Flourish Mushrooms’s IP portfolio or how Charles Boulakia will assist in  “scientifically prov[ing] certain therapeutic benefits of magic mushrooms,”  Yield Growth and Flourish Mushrooms are 100% clear about the importance of intellectual property within the nascent magic mushroom industry. See also Psychedelic Investment Opportunities.

Arguably, entrepreneurs looking to invest in psychedelics could generate the greatest returns by investing in research and development relevant to the future of the psychedelic industry.  Entrepreneurs could pursue patent protection for psilocybin technology and then leverage that advantage when the laws change.  E.g., decriminalization or legalization of magic mushrooms.  Following this logic, several entities, including Compass Pathways, Paul Stamets, CaaMTech, and Tassili Life Sciences have invested in intellectual property related to psychedelics.