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Experts share how a brewing fight could shape the future of the $100 billion psychedelics industry

Submitted by Tech Insider on June 2, 2021 - 3:11pm

DMT research at Imperial College London

Summary List Placement

A decade ago, Carey Turnbull was at the forefront of a movement to fund research into the medical potential of psychedelics.

Now, the businessman turned psychedelics philanthropist has found a new cause: fighting to keep the knowledge and discoveries that undergird the psychedelics industry in the public domain.

He recently estimated that he's spent about $400,000 of his own money on a fight against what he and others in the psychedelics community say are overreaching patents. For now, they're taking aim at patents filed by the psychedelics-industry giant Compass Pathways, a $1.4 billion firm focused on medical uses of psilocybin, the active ingredient in magic mushrooms.

Research into the medical potential of psychedelics is experiencing a renaissance after decades of neglect amid the war on drugs, and the dispute over Compass' patents is part of a larger fight over the future of what could become a $100 billion market.

In the past few years, companies and nonprofit organizations have begun to focus on compounds such as psilocybin, MDMA, and DMT to see how they could become approved medications. In 2020, the 14 biggest private companies in the psychedelics space raised hundreds of millions of dollars from investors, and some went public.

Psilodep psychedelic research at Imperial College London

Companies such as Compass are filing patents as part of a strategy to win over investors and stake claims in the emerging market.

Compass was granted its first US patent in 2019 for a method of manufacturing its synthetic psilocybin. In late March, Compass announced that it had been granted two additional US patents, both of which focus on oral versions of its synthetic psilocybin. The company has also received patents in Germany and the UK, and is seeking them in other countries, its investor presentation showed.

The patents could let Compass prevent other companies from making psilocybin using its methods. A patent the company filed, but that isn't yet approved, could limit how others use psilocybin in a therapeutic setting.

Securing patents is a standard move in the broader biotechnology industry, but controversial in psychedelics because many psychedelic compounds have been used and studied for a long time, and therefore — critics argue — belong in the public domain.

Using psilocybin to treat depression, and patenting it

Compass is developing psilocybin as a treatment for depression that doesn't get better with other medications. 

Psilocybin makes people hallucinate when they consume it. The compound affects how different parts of the brain talk to and synchronize with one another. Compass is testing a synthetic version of psilocybin in combination with talk therapy sessions.

As previously reported by Vice's Shayla Love, the company has received criticism for what some say is an attempt to patent basic components of psychedelic-assisted therapy, such as conducting therapy in "a room with a substantially non-clinical appearance" with "soft furniture" and "muted colors."

Lars Christian Wilde, a cofounder and the chief business officer of Compass, told Insider that the company isn't trying to patent items that are in the public domain. Instead, it's using patents to protect new inventions, he said.

"Somehow this understanding that Compass is going to have a big monopoly in psychedelics has developed, and I think that it's really important for us to say this is not what we're striving for, and as a matter of fact, that's very much impossible," he said.

psychedelics magic mushrooms psilocybin

Opponents led by Turnbull have already forced Compass to withdraw some of its patent claims in the US, as previously reported by Fortune's Jeffrey M. O'Brien.

The fight against psychedelics patents

Carey Turnbull, president of the Heffter Research Institute and board member of the Usona Institute

Turnbull, a longtime philanthropist who supports research into psychedelics, first came across Compass' patent applications a few years ago. At the time, the contents weren't public. Turnbull said he assumed the company had figured out a small adjustment in the synthesis process and was attempting to patent that detail.

But then the application became public, and the claims were far-reaching. That pushed Turnbull into action, and his work forced Compass to withdraw many of its claims related to the process of manufacturing psilocybin.

"That was stunning to those of us in the field," Turnbull said. "My thought was, 'That's not possible. It's been around for decades.'"

Last year, Turnbull created the nonprofit Freedom to Operate to fight overreaching patents in the psychedelics industry, and the group has now raised about $1 million. Turnbull also sits on the boards of nonprofits that back psychedelics research. One of them, Usona Institute, is developing psilocybin as a medication. He said he isn't speaking as a representative of any organization aside from FTO.

Many psychedelics companies are pursuing patents to win over investors

Compass isn't the only for-profit psychedelics company making patents part of its strategy.

MindMed, Cybin, and Field Trip Health said in their investor presentations that they're pursuing patents to protect their intellectual property.

Atai Life Sciences, which has a large stake in Compass and recently filed to go public on the Nasdaq, said in its S-1 filing that patents and IP are an integral part of its business model.

Christian Angermayer, a billionaire backer of Compass and cofounder of Atai, said that because a lot of money is needed to fund the clinical research that will transform psychedelics into approved medications, for-profit companies — and their patents — are needed to bring these treatments to market.

Christian Angermayer

In a panel at a conference on the psychedelics industry, two investors said they would hesitate to invest in a psychedelics company that doesn't have a patent strategy in place.

"Patents provide some level of comfort for investors, but I think there are multiple approaches to things," said Richard Cheung, the general counsel at Noetic Fund, during the event.

A different way of doing business

There are some psychedelics companies that are working to limit the use of patents or avoid them entirely.

Journey Colab, a Y Combinator startup that's working to win approval from the Food and Drug Administration to use mescaline as a medical treatment, said in a statement that while it did not oppose patenting truly novel inventions, it opposed strategies "that seek only to stymie competition or create winner-take-all outcomes."

Psilocybin in pill form

"We believe it's inappropriate to attempt to patent molecules that are in the public domain, and/or to patent existing, common therapeutic procedures," Journey Colab said.

Liana Sananda Gillooly is a cofounder of North Star, a nonprofit focused on encouraging businesses in the psychedelics industry to sign a pledge to respect the traditional uses of psychedelics and create ethical business models.

Gillooly said that at least a dozen companies have signed so far, including Noetic Fund and Maya Health.

"We can't pretend that we're going to somehow stop the juggernaut and business as usual," Gillooly said.

She said the aim is to "generate an alternative pathway forward that incorporates and places into action some of these principles that work with slow and patient capital, that works with kind of more grassroots developmental projects, instead of top-down, cookie-cutter psychedelic clinics models."

MAPS is studying whether a psychedelic compound can help treat PTSD

Gillooly is also a development officer at the Multidisciplinary Association for Psychedelic Studies, a nonprofit pursuing a strategy for its psychedelic-based medical treatment that doesn't rely on patents.

MAPS is developing an MDMA-assisted therapy for post-traumatic stress disorder that recently showed promising results in a clinical trial. MAPS hopes to gain FDA approval for the treatment in 2023.

Magic mushrooms psychedelic psilocybin

Rick Doblin, the organization's founder and executive director, said he isn't interested in filing patents related to its work with MDMA. Instead, MAPS is focused on data exclusivity, a protected period of time granted to FDA-approved treatments before rivals can sell similar versions.

MAPS would get about five years to offer its treatment before competitors could also do so, and it may be granted an additional year if the organization engages in pediatric studies.

Rick Doblin 100 list

Doblin said that five or so years is more than enough time to reap the rewards of developing new treatments.

"The field is so new, there are so many people suffering, that the more companies are out there, the better every company will do. It changes stigma, gets therapists trained," he said. "It doesn't make sense to block everyone else."

'People are free to do what they want'

Compass is taking a more aggressive stance than MAPS. The company submitted an application in 2020 that attempts to patent aspects of psychedelic therapy such as giving psilocybin in a room with soft furniture or "a substantially non-clinical appearance."

Two patent attorneys — Graham Pechenik and Mark Lemley — who reviewed the application for Insider said the patent, if granted, would essentially bar other companies from incorporating these elements into their own practices.

Still, Pechenik, a patent attorney who works with psychedelics companies, said applications are often filed with claims that are broader than what a company expects to receive.

Magic mushrooms

Lemley, a professor of law at Stanford University, said that elements such as furniture and decor are just one element of the patent claim. Compass would only be able to bar competitors who are using both a similar setting and treatment.

Compass disputed this characterization of its patents, saying that it's not trying to patent the ways that these therapies are delivered.

"People are free to do what they want. Clearly we're not patenting a setting," Wilde said.

Freedom to Operate is seeking to challenge in court the patent that Compass was granted in 2019, which protects its manufacturing process for psilocybin. FTO has contracted around 20 consultants, attorneys, psychiatrists, and chemistry experts for this fight, and Turnbull said he knows it could be a long battle.

"I was told by someone very knowledgeable that this could go on for many years and cost many millions of dollars," Turnbull said. "I didn't look six months ahead. I just thought, 'OK, that thing is wrong. I think somebody has to say something about it.'"

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