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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.

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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.