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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.
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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 Investors.com. 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.

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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.

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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.

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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.

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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.

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Psychedelic Patents

COMPASS Pathways’ Crystalline Form Patent

Recently, 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.” According to COMPASS, “the patent covers the use of COMPASS’s synthesized investigational psilocybin formulation, COMP360, in a psilocybin therapy protocol for patients with treatment-resistant depression.” 

Given that psilocybin is an old drug, how did COMPASS get a patent covering its psilocybin product?

Answer: By recognizing that COMP360 is a novel crystalline form, COMPASS’s IP team at Cooley LLP was able to craft a patent strategy leading to the issuance of the ‘175 patent despite 60 years of prior art related to the compound psilocybin.  

Below we discuss the scope of COMPASS’s ‘175 patent and the clever IP strategy that led to the company’s success in acquiring that patent.

Claims of COMPASS’s US Patent No. 10,519,175

The ‘175 patent issued from COMPASS Pathways’ U.S. Patent Application No. 16/155,386 (“the ‘386 application”), which we discussed in a previous article.  During the prosecution of the ‘386 application, COMPASS amended the claims into the version which ultimately issued into the ‘175 patent.  The issued claims include a single independent claim (claim 1) and twenty dependent claims.  Claim 1 defines the the following subject matter:

“1. A method of treating drug resistant depression comprising orally administering to a subject in need thereof a therapeutically effective amount of an oral dosage form, wherein, the oral dosage form comprises:

crystalline psilocybin in the form Polymorph A characterized by peaks in an XRPD diffractogram at 11.5, 12.0, 14.5, 17.5, and 19.7°2θ±0.1°2θ, wherein the crystalline psilocybin has a chemical purity of greater than 97% by HPLC, and no single impurity of greater than 1%; and

silicified microcrystalline cellulose.”

Dependent claims 2 – 21 all require the elements recited in claim 1 in addition to the further limitations specified by each dependent claim.  Accordingly, all of the claims in the ‘175 patent require specific crystalline form attributes. In other words, all of the claims in COMPASS’s patent issued on account of incorporating the crystalline form data into the claims.

Patent Examiner’s Reason for Granting COMPASS’s Patent

The patent examiner at the USPTO explained the importance of its crystalline form data.  The examiner’s reason for allowing Compass’s claims was 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, Folen.”  See Folen, V. A., X-ray powder diffraction data for some drugs, excipients, and adulterants in illicit samples. Journal of Forensic Science 1975, 20, 348-372.

The Genius of COMPASS Pathways’s Patent Strategy – Claiming Crystalline Forms

Psilocybin is an old compound.  Psilocybin has been known since at least 1958, when Hofmann isolated it from so-called “magic mushrooms.” Given that patents are only granted on “new” and “non-obvious” subject matter, acquiring a patent for COMPASS’s product, COMP360 was not an easy ask.  Nevertheless, COMPASS’s lawyers (Sandhya Deo of Cooley LLP) were able to pull a rabbit out of a hat in getting an allowance for U.S. Patent No. 10,519,175. 

Recognizing that psilocybin was a known compound, the IP team focused on the novel features of COMPASS’s product, COMP360.  That product apparently has new, non-obvious crystallographic features, which can be included in the definition of COMPASS’s invention, adding novelty despite all of the prior art related to psilocybin. 

Crystalline form patents often provide pharmaceutical companies with opportunities for acquiring patent exclusivity on drugs that have already existed in the prior art, such as psilocybin in the case of COMPASS’s product, COMP360. According to Barash Law,

“A solid-form patent strategy is even more important in drug repurposing where older chemical entities which either never made it to market or which were used in a different indication are being re-tasked. While new method of treatment patents may be available in such circumstances, more valuable composition of matter/drug substance patents should be considered when scientifically reasonable. Such strategies may involve creating new polymorphs, crystalline or amorphous salts or cocrystals to create a new composition of matter estate and Orange Book listing protections.”

In drafting the claims to crystalline form inventions, the applicant often relies on analytical data collected from x-ray diffraction experiments. “Because it can be difficult to characterize crystalline forms using organic chemistry nomenclature, one often relies on solid-state analytical data as a surrogate to define the metes and bounds of such claims.”  Such is the case with COMPASS’s claim strategy in US Patent No 10,519,175.  Although the claims are method claims (not composition of matter claims), COMPASS relied on solid-state analytical data to define the metes and bounds of those method claims: “…crystalline psilocybin in the form Polymorph A characterized by peaks in an XRPD diffractogram at 11.5, 12.0, 14.5, 17.5, and 19.7°2θ±0.1°2θ.”

Crystalline Form Patents for Psychedelics

COMPASS’s remarkable achievement in acquiring US Patent No 10,519,175 raises questions about other crystalline form patents.  Prior to COMPASS’s patent grant, many in the art considered “old” psychedelic compounds unpatentable by virtue of their being part of the public domain.  However, COMPASS’s success with psilocybin crystalline form patents suggests that other “old” compounds could be packaged into new, patentable inventions by leveraging opportunities created by x-ray crystallography.  Will crystalline form patents be the next gold rush for companies pursuing IP on previously known compounds?

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Psychedelic Patents

Psychedelic Investment Opportunities – 2020 Perspective

Investing in psychedelics (e.g., magic mushrooms, psilocybin, etc.) has became a hot topic during 2019.  Following Peter Thiel’s investment in Compass Pathway in 2018, several high-profile investors entered the psychedelic space during 2019. Tim Ferriss helped launch the world’s first research center (“Imperial Center for Psychedelic Research”) dedicated to turning psychedelics into medicines.  Shark Tank investor Kevin O’Leary joined former Canopy Growth CEO Bruce Linton by investing in the new psychedelic company MindMed.

Aside from high-profile investors, many new psychedelic entities emerged in 2019.  Entities working in the space have also illustrated an increased focus on intellectual property. Taken together, all of this activity demonstrates continued momentum towards developing a psychedelic industry.

Below, we have listed some key developments leading into 2020, which provide clues about the future of the psychedelic industry.

Big Opportunity for Investing in Psilocybin Technology

In 2019, we posed the question “Are magic mushrooms (or psilocybin) going to be the next big investment opportunity after cannabis?”  Now, considering developments from 2019, the answer appears to be “yes.” Former CEO of Canopy Bruce Linton succinctly explains this sentiment: “The therapeutic potential of psychedelics is greater than cannabinoids, for sure.” 

In view of the surge of available capital from investors and the rapid emergence of new business, one might ask where the greatest opportunities lie.  What research and development activities are pushing the state of the art forward? Here, it is interesting to note that most players in the space are conducting research and development almost exclusively on two types of products: (1) Single Active Ingredients, like psilocybin; and (2) Natural Organisms or extracts.

There has been almost no work done to develop products that include a full spectrum of active ingredients (found in natural organism or their extracts) with the chemical precision typically associated with a pharmaceutical product.  Experts in both chemistry and mycology have stressed the value of investigating the non-psilocybin components of magic mushrooms and harnessing the potential benefits of compositions comprising multiple active mushroom ingredients in a standardized form.  Although a few entities have hinted at this technology, most still appear to be focused on either pure single molecules (like psilocybin) or natural mushrooms.

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.

Pure Synthetic Psilocybin – Everyone’s Current Focus

Most research and innovation pertaining to psilocybin has focused on the therapeutical potential of synthetic psilocybin. In 2019, clinical trials run by King’s College London showed that patients taking 10mg and 25mg doses of pure psilocybin experienced no adverse side-effects. Compass Pathways has been developing pure psilocybin as a treatment for Treatment Resistant Depression (“TRD”); Usona has been developing pure psilocybin as a treatment for Major Depressive Disorder (“MDD”).

Progress in both scientific research and product development has raised concerns about access to psilocybin (e.g., pure psilocybin costs $7000-8000 per gram) and sparked conversations about less expensive bioequivalent alternatives like psilacetin.  Others have pursued alternative methods of making psilocybin, such as bioengineering. 

CB Therapeutics is addressing the need for supplying psilocybin and its analogs by genetically modifying yeast to make these compounds. According to their press release, CB Therapeutics has achieved the successful biosynthesis of psilocybin, psilocin and related tryptamine-based compounds typically found in plants and fungi.  Similarly, in 2019 scientists at Miami University of Ohio published the first example of psilocybin production in prokaryotic host.

Growing Recognition that Psilocybin is Only One of the Active Ingredients in Magic Mushrooms

Given the promising results for using psilocybin as a medicine, some chemists and mycologists have pointed out that psilocybin is only one of several active ingredients found in magic mushrooms. Through 2019, there was a growing appreciation that psilocybin is only one of many active molecules in “magic mushrooms.” Magic mushroom expert, Paul Stamets believes that psilocybin is just “the tip of the proverbial iceberg” in view of many unstudied psilocybin analogs or derivatives. See Stamets & Rogan Podcast #1385

The scientific community agrees that taking pure psilocybin is different from consuming “magic mushrooms” because mushrooms (or mushroom derived products) contain a cocktail of active ingredients instead of just one active molecule.  The naturally occurring combinations of active ingredients found in mushrooms unquestionably produce different clinical and pharmacological effects compared to pure psilocybin.  Expert mycologist Paul Stamets told Joe Rogan that the “wave of the future” will be harnessing the “entourage or symphony effect” that comes from combining multiple active ingredients from magic mushrooms in a “standardized form,” rather than myopically focussing on pure psilocybin or ignoring the variability incident to natural mushroom compositions. See Stamets & Rogan #1385, above. Entering 2020, there appears to be a substantial opportunity for developing standardized formulations that include combinations of multiple magic mushroom compounds.

Despite the recent attention for psilocybin therapies, our understanding of magic mushroom compositions is still in its early stages.  According to the American Chemical Society, even “the biosynthesis of psilocybin was a mystery” until 2017.  Aside from legal impediments to research, our poor understanding of magic mushrooms is due to an unmet need for chemical rigor within the magic mushroom space.  For example, prior to 2017, methods for characterizing the chemical composition of magic mushrooms were inherently flawed because those methods altered the chemical compositions under analysis and resulted in errors of +/- 300%. See Journal of Natural Products, 2017;80(10):2835-2838(“quantitative differences of the indole alkaloid profile were observed…”)(“Previous research showed that different [biomass] extraction methods heavily impact the [indole alkaloid] profile….”).  

Responding to these problems, Hoffmeister developed “a simple and artifact-free extraction method that … helps reflect the naturally occurring metabolic profile of Psilocybe mushrooms in subsequent analysis” in 2017.  Using these methods, Hoffmeister discovered norpsilocin in magic mushrooms in 2017.  In late 2019, Hoffmeister identified several β-Carboline monoamine oxidase inhibitors in magic mushrooms. Chem. Eur. J.. In late 2019, Hoffmeister identified several β-Carboline monoamine oxidase inhibitors in magic mushrooms. Chem. Eur. J..  When interviewed about the work, Dr. Hoffmeister highlighted the ongoing need to “study fungi from a chemistry perspective.” Chemistry World.  

Despite some progress studying magic mushrooms from a chemical perspective, the non-psilocybin components of magic mushrooms (aka psilocybin analogs or derivatives) remain largely ignored.  This lack of chemical understanding raises safety & efficacy problems for products derived from natural sources, like magic mushrooms because it prevents consistency in dosing and fails to account for unwanted side effects like temporary paralysis.  

Studying the non-psilocybin components of magic mushrooms presents an enormous opportunity for creating drug products superior to pure psilocybin. Drawing from the analogy to cannabis, the effects of full-spectrum products have proven far better and more diverse than single isolated compounds, like pure THC (aka Marinol).

Paul Stamets described the situation in late 2019: “The problem with natural products is how do you standardize them to the active constituent when you have more than one active constituent, you know, how do you standardize them all?” Stamets & Rogan #1385.  Bruce Linton of MindMed agrees: “What I want to know is what amount, in what way, to get what outcome?” As we enter 2020, scientists recognize that the ingredients in magic mushrooms offer advantages over pure synthetic psilocybin; but there is still an unmet need to make formulations with standard amounts of particular ingredients.

As we enter 2020, there appears to be an opportunity for chemotyping magic mushrooms, correlating clinical effects with chemotypes, and cultivating varieties that provide the most desirable properties.

Natural Psychedelic Products – Magic Mushrooms

Throughout 2019, there has been increasing support for the idea that people have the right to use natural medicines, especially if people have access to safe/standard doses of known ingredients. Denver became the first city to decriminalize magic mushrooms in May of 2019. Oakland and Chicago followed shortly thereafter. Now, almost 100 other cities are seeking decriminalization at some level. In 2020, California may vote to allow for the sale of magic mushroom derived products, including formulations. See “11395.120 Psilocybin Mushrooms.” See also here and here.

As discussed above, using magic mushrooms as a means for administering psilocybin and other active ingredients results in considerable ambiguity regarding the amount and chemical composition.  In 2019, several companies began work towards solving this problem.

In 2019, Silo Wellness developed a magic mushroom based nasal spray designed to administer standard doses of active ingredients.  According to Silo Wellness’s CEO Mike Hartman, “We addressed the age-old trouble with plant- and also fungus-based medicine: Exactly how do you understand just how much is a dose?” “The nasal spray being created is not pure psilocybin, but rather, Arnold tells New Atlas is a “full myco-spectrum extract of Jamaican magic mushrooms in an aqueous solution.”  Notably, Silo Wellness’s product recognizes limitations of pure psilocybin and need for “full spectrum” compositions in precise dosage forms. At this point it is unclear how Silo Wellness formulates its nasal spray to ensure consistency across batches of the product.  It is also unclear whether Silo Wellness simply uses full spectrum mushroom extracts; or whether their compositions are formulated with particular ratios of ingredients designed to optimize the polypharmacology of magic mushrooms. Notwithstanding Silo Wellness’s work, there appears to be an opportunity for creating formulations that include optimized combinations of psilocybin analogs and also exhibit little or no variability between batches.  

In 2019, Field Trip Ventures announced “the world’s first legal research and cultivation facility for psilocybin-producing mushrooms.”   According to their President, Mujeeb Jafferi, “One of the goals is to build a library of psychoactive fungi and developing scalable commercialization options.”  He explains, “We know of a few alkaloids based in these mushrooms but there’s a lot we don’t know yet.”  According to Bloomberg, “Field Trip’s Jafferi believes the Jamaican research lab could provide a better understanding of how some of the 180-odd mushrooms known to contain mind-altering molecules work as it aims to enter them into clinical trials.”

Another new company, OLP Therapeutics appears to recognize the importance of both consistency and full spectrum mushroom products.  OLP’s stated vision is “Creating standardized, pharmaceutical-grade, natural mushroom products.” They explain, “Critical to our work is chromatography that allows for analysis and labeling of percentages of active ingredients,” including “maintaining strict standardization of psilocybin products.”

Another relatively new company, Orthogonal Thinker has announced a psilocybin product called Psilly.  The company explains that “Psilly differs from other psilocybin products in development as it consists of a proprietary formulation that uses natural, rather than biosynthetic, alkaloids.”  Like Silo Wellness’s product, Psilly appears to utilize naturally produced ingredients rather than synthetic compounds; and it is unclear how Orthogonal addresses consistency and precision in the dosage formulations.  Presumably a “proprietary formulation” would include a deliberately chosen collection of active ingredients; but it is unclear whether Psilly was formulated based on any polypharmacology data. 

Another new company, Frontier Neurochem describes itself as “a global life sciences focusing on researching, developing and commercializing novel therapeutics based on serotonergic 5-HT2a agonists including previously overlooked psychedelic compounds for the emerging field of Psychedelic Medicine.”  The company has also developed a storefront for selling psilocybin analogs.

Also established in 2019, ThinkMyco, a mycology and mushroom-derived product company focuses on “discovering and commercializing fungal derived bio-pharmaceuticals” by “developing next-generation bio-pharmaceuticals and unique delivery systems by studying naturally occurring neurogenic fungal compounds for the treatment of central nervous system indications.”

Despite the growing support for increasing access to magic mushrooms and other natural sources of psychedelic drugs, we still have a poor understanding of the chemical composition of mushrooms. But, there is an increased recognition of the problems created by a general lack of chemical precision with natural psychedelics, like magic mushrooms.  In 2019, several companies entered the space with the goal of developing standardized formulations that include precise amounts of ingredients, where the ingredients are selected to harness the entourage effect.

New Psychedelic Compounds

In 2019, the Cheong group at the Uimyung Research Institute for Neuroscience at Sahmyook University designed and synthesized four novel synthetic tryptamine analogs and demonstrated their activity at the serotonin-2a receptor.

In 2019, CaaMTech scientists published work describing the chemical synthesis and characterization of several synthetic psilocybin derivatives.

Intellectual Property – Psychedelic Patent Filings Increase

In a previous post on Psychedelic Investments, we pointed out that Intellectual Property would become a key consideration within the nascent psychedelic industry. In mid 2019, we noted that a few early movers, including Compass Pathways, Paul Stamets, CaaMTech, and Tassili Life Sciences had invested in intellectual property related to psychedelics.  Now, about 6 months later, the race to patent psychedelic inventions is fully underway.

CB Therapeutics has filed a patent for its production process, which appears to be biosynthesis using genetically modified yeast and a continuous extraction process. According to Sher Butt, CEO of CB Therapeutics, “Our team of talented scientists and engineers are dedicated to developing new methods and systems to advance synthetic genomics and bio-engineering….This has resulted in a rapidly growing IP portfolio as we continue to file patent applications…”. Press Release November 14, 2019.

In July of 2019, Silo Wellness filed a provisional patent application intended “to cover metered dosing formulations of plant and fungal compounds for oral, nasal, sublingual, and topical use.metered dosing.”  See Silo Wellness Patent Application.

Kevin O’Leary and Bruce Linton backed “MindMed is building an IP portfolio and undertaking clinical trials of medicines based on psychedelics. MindMed will also grow its pipeline through acquisitions, Joint-Ventures, and collaborative development agreements.”

Tassili Life Sciences, Corp. has four patents pending, all with 2019 priority dates.  Tassili appears to be focussed on IP and the company has a section of their webpage dedicated to Intellectual Property.

According to Google Patents, CaaMTech has filed multiple worldwide patent applications directed to psilocybin derivatives, combinations thereof, and methods of treating a variety of conditions.

Compass Pathways has filed patent applications for GMP psilocybin and a specific crystalline form of psilocybin. See also statement from Ekaterina Malievskaia (founder of COMPASS) about Compass’s IP. According to Bloomberg, Compass’s co-founder George “Goldsmith says the cost of the clinical trials forced him and Malievskaia to go for-profit, to protect their specific techniques as intellectual property and give potential investors the confidence to write checks.” Notably, Rick Doblin, the nonprofit psychedelics advocate, says “Compass’s patent applications are narrow enough that they won’t threaten a nonprofit effort in the U.S..”

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.”

According to their press releases, Orthogonal Thinker “has raised approximately over $5 million in total seed capital, with some of the proceeds being used to further develop and pursue intellectual property protection on Psilly, the Company’s proprietary psilocybin product, according to the letter of the law.” The company boasts an “Approximate $90 Million Valuation.” (“Plant Science and Product Development Company Raises Additional Funds to Further Psychoactive Intellectual Property Development.”)

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.”

Future of Psychedelic Industry

In 2019, investors began to enter the psychedelic space and companies increased their focus on intellectual property.  This momentum grew throughout 2019 and promises to build into 2020. Against that background, investors and scientists agree that there is still an unmet need for fundamental scientific research.  Despite the promising results, we still don’t understand the chemical composition of naturally occurring psychedelics or how variations in that composition correlate with clinical properties.  These unmet needs create opportunities for entering (or investing in) the space in 2020.

Given technological landscape and the state of the art, the future of the psychedelic industry will require rigorously characterizing natural sources of psychedelic drugs and correlating their variable clinical effects with chemical composition. This work will support the development of next generation psychedelic formulations that provide improved properties (compared to single active ingredients) in standardized dosage forms.

Based on the above, in 2020 one might expect investors to seek out companies that are developing (and patenting) technology that supports the development of standardized psychedelic formulations that have multiple active ingredients in reliable dosage forms.

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Psychedelic Patents

Compass Pathways Discusses Psilocybin Patents

Ekaterina Malievskaia, co-founder of Compass Pathways recently published a statement about the company’s psilocybin research program, including a section about “MANUFACTURING AND PATENTING” psilocybin. See MAPS website.  The statement appears to respond to the Statement on Open Science signed by many leaders in psychedelic research.  Recently, the U.S. Patent and Trademark Office granted COMPASS Pathways U.S. Patent No. 10,519,175, which covers methods of treating treatment resistant depression with a specific crystalline form of psilocybin.

In the statement Ms. Malievskaia explains that making an Investigational Medicinal Product (an “IMP”) is difficult and expensive and that sharing the product of that work could only be accomplished through standard licensing agreements, which protect Compass’s ability to “recoup the expenses” and “ensure the integrity of the data collected” by controlling who has access to psilocybin made through Compass’s manufacturing patents. 

Ms. Malievskaia notes that Compass’s intellectual property does not prevent members of the community from inventing different psilocybin manufacturing procedures, using other sources of the psilocybin, or buying Compass’s product. In other words, others will be excluded from using Compass’s (arguably better) manufacturing process unless they enter into some form of licensing agreement with Compass. The good news is that Compass will not have a monopoly on magic mushrooms as some journalists have contended.  

Below, the “MANUFACTURING AND PATENTING” section of Compass’s statement is reproduced with emphasis on several relevant portions used to synthesize the above summary.  

Statement from Compass

While psilocybin is a naturally occurring molecule, psilocybin as an Investigational Medicinal Product or IMP is a regulatory entity that includes a detailed description of a GMP-compliant, scalable and reproducible manufacturing process; associated preclinical data; and ongoing safety data collected in clinical trials. The IMP can be thought of as a product’s fingerprint, so that regulators can recognize the safety and efficacy evidence gathered in the clinical trials as it relates to this unique product. The creation of an IMP is an extremely complex and expensive* process that requires sustainable funding and a serious multi-disciplinary team effort. Based on our experience and the regulatory input from EMA, we now estimate that the development process will continue through marketing authorization and cost over £3 million (nearly $4 million).

In the process of synthesis, formulation and creation of preclinical data, we reached out to the researchers at Heffter and Usona with offers to share experience and ever rising cost, the last conversation being at PS17 in Oakland. Shortly after, the initial phases of the synthesis and formulation were completed, and psilocybin became the Investigational Medicinal Product. From that point on, for the reasons of data consistency, there was no regulatory acceptable mechanism of “sharing” it other than through standard licensing agreements for the use of IMP. This is the way clinical research regulation works around the world.

As the previously published synthesis processes did not scale to meet regulatory standards, we had to invent our own process. As he would have done for anyone who would have asked for his help, David Nichols advised our manufacturing team. With his support our team has solved over 60 distinct technical problems in the synthesis and formulation process. Some of these inventions became the basis for our manufacturing patents. In general, patents provide an opportunity for an organization willing not only to take a significant financial risk to recoup the expenses, but more importantly, to ensure integrity of the data collected before and after the approval.

Our patents do not preclude others from creating a range of different solutions for the synthesis and formulation of psilocybin; nor do they preclude the use of naturally occurring mushrooms, extracts, or any other products created by alternative synthesis and formulation routes. Equally, our patents do not prevent other clinicians from using our product or any psilocybin-containing products in conjunction with the types of therapy or psychological support they judge to be helpful, as long as it does not jeopardize patient safety. Lastly, neither our patents, regulatory strategy, nor pricing strategy have an impact on the practices of the underground community of practitioners in nonclinical settings.

Our exclusive contract with the drug manufacturer does not prevent others from choosing among many different competing manufacturers through the standard Request for Proposal (RFP) process. The advances of science may now offer new creative solutions for the synthesis and formulation of psilocybin with new partners for those who are willing and able to spend the time, effort, and funds to create an alternative psilocybin-based IMP.

While we have created the supply of psilocybin for our own research, we have made the unusual decision to share it with qualified independent researchers free of charge in exchange for being able to use their safety data. [Is something really “free” if the receiving party must provide valuable date “in exchange” for it?] This is not a commercial decision, but yet another way to accelerate the generation of clinically relevant evidence that may ultimately improve patient outcomes.

This process has proven to be challenging at times. As we have learned, university legal departments and technology transfer offices are vigilant about the potential Intellectual Property (IP) that might be created in the process of investigator-initiated studies. This IP, despite the best intentions of the researchers, does not belong to the scientists, who have limited say in how it is used by their institutions. In the event of IP creation, Technology Transfer Offices have a legal obligation to license it out to the ‘highest bidder’ with the most aggressive and scalable business model that will generate the most return for the academic institution. Even though such IP would be created by independent researchers with our IMP, in order to use the invention, we still have to compete with other commercial entities who might have different ethics or commercial goals.

This is an important consideration for the signatories of the Statement on Open Science and Open Praxis who work for academic institutions, as they need to align with their institutions on terms of IP licensing. The core principle of the statement is that knowledge created by signatories is open to all – that is, the knowledge is to be given away unconditionally by relinquishing researchers’ rights to protect it and to control who gets to use it after it becomes public.

We believe our patent strategy offers some protection against uses that may not be fully aligned with our mission to create access to innovative treatments for as many people as possible at an affordable cost to patients and health care systems.

*Our emphasis added above in bold.