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.