Psychedelics Go Public — Katelyn Donnelly

S-1 COMPASS Pathways "We are a mental health care company dedicated to accelerating patient access to evidence-based innovation in mental health."

On the left is fMRI (functional magnetic resonance imaging) data from healthy volunteers to compare resting-state functional brain connectivity after intravenous infusion of placebo and psilocybin. Adapted from Petri et al, 2014.

COMPASS Pathways is a clinical-stage pharmaceutical company with that high-risk, high-reward investment profile. As of June 30, 2020, Compass had an accumulated deficit of $62.4 million. There is no immediate business model or revenue source.

They have a big vision:

We see a world of mental wellbeing, a world in which mental health isn’t simply the absence of mental illness, but the ability to flourish. We want to reduce the stigma surrounding mental health, to acknowledge that “everyone has a story”, and to create a system of care for all who are not helped by the existing system and existing therapies.

COMPASS Pathways have high hurdles:

They have to push their compound Comp360 through trials, overcome regulatory barriers, and ensure their patents hold. One positive for them is that in 2018, the U.S. FDA gave Compass “breakthrough therapy” status, expediting the development process

COMPASS Pathways’ biggest pre-IPO investor is ATAI Life Sciences

ATAI owns 29% of COMPASS pre-IPO. Who runs ATAI? Several German men in their 30s who also sit on the board of COMPASS. Who invested in ATAI? Peter Thiel and Steve Jurvetson.

This Fortune article interviews Christian Angermayer, CEO of ATAI, who says that they expect to partner with a Big Pharma company in the spring (the article is from Feb). Are they seeking an IPO as a last resort to raise additional cash after being turned down by Big Pharma? Maybe.

Darth Vader?

What does the rest of the psychedelic community think?: ATAI and the ventures it is backing have been aggressively trying to patent psychedelics-related intellectual property to establish exclusivity. For this reason, one source characterizes them as the Darth Vader of the psychedelics galaxy.

“You can see they’re hanging on by their fingernails,” he says. “I don’t object to COMPASS having patents or making profit. I object to their claiming ownership of IP that exists in the public commons rather than contributing to the public commons. COMPASS has shown almost no creativity. Their pitch sheet says, essentially, we’re going to establish exclusivity and make billions. But they’re entering a field that has been extensively researched by others.”

It's a 50-person team and has some classic family business/small company quirks:

George Goldsmith, our Chief Executive Officer and Chairman of our board of directors, is married to Ekaterina Malievskaia, our Chief Innovation Officer and a member of our board of directors. On August 19, 2020, the son of Dr. Malievskaia, who is currently employed by ATAI, one of our largest shareholders, entered into a contract of employment with us as Stakeholder Engagement and Operations.

Bottom line:

The problem of mental health and depression is gigantic. No question about that.

Are psychedelics a solution to depression and mental illness? The evidence is pretty compelling that it could be (one of many, but still one).

Will the regulatory environment allow for the use of psychedelics in medicine? I imagine that they will.

On what time frame? I'm not sure.

Is this the company to win if and when change transpires? TBD.