3 Ways to Invest in Psychedelic IP
December 8th, 2020
App, Psychedelics, Top News
The psychedelics industry has experienced a renaissance over the past two years with the launch of the Johns Hopkins Center for Psychedelic Research and a billion-dollar IPO. While there are many ways to capitalize on the industry, intellectual property will play a key role in both protecting assets and becoming a potential source of revenue.
Let’s take a look at three companies that aim to build an intellectual property portfolio in the space.
Creating Analogs from Yeast
Researchers are finally starting to appreciate the potential for psychedelics to revolutionize depression, anxiety, addiction and other mental health disorders. While psilocybin and other compounds are readily available at a small scale, cultivating mushrooms is an expensive and time-consuming process that doesn’t scale very well as the industry continues to grow.
CB Therapeutics specializes in producing natural psychedelic molecules and their analogs as therapeutic compounds for clinical research and commercial markets. Using proprietary yeasts, enzymes and production processes, the company has developed a high-throughput system to discover, produce and scale production at a fraction of the financial and environmental cost.
The company operates out of a 7,000 sq. ft. fully licensed commercial batch facility in southern California and recently partnered with the Cleveland Clinic to begin clinical trials of psychedelic molecules for treatment-resistant depression, anxiety, PTSD, addiction disorders and other mental health disorders affecting millions of people around the world.
The company’s PsyVault™ will house the intellectual property surrounding the analog molecules that it discovers and scales over time. As the company expands its R&D and scale-up capabilities over the next year, the goal is to create a platform that enables production of hundreds of different molecules & their analogs. The development of these molecules will allow for the rapid identification, production, and deployment of these molecules over the next decade and more, enabling cost-effective novel therapies.
For investors, the licensing of these molecules could produce high-margin recurring revenue from royalties while production agreements could provide incremental revenue that scales over time.
A Powerful Psilocybin Patent
COMPASS Pathways acquired U.S. Patent No. 10,591,175 in the beginning of 2020, which covers “methods of treating drug-resistant depression with a psilocybin formulation”. The patent isn’t the only patent application in the psilocybin space, but depending on its interpretation, it could be among the most significant psychedelic patents.
In order to help appreciate the significance of the patent, it helps to look at the FDA’s approval of GW Pharmaceuticals’ Epidiolex, which had an impact on CBD as a food or dietary supplement. The enforceability of narrow patents may be much easier than broad patents, but that doesn’t mean that broad patents aren’t enforceable—they’re just less predictable.
Investors that want exposure to one of the industry’s most significant patents can purchase COMPASS Pathways, which trades on the NASDAQ under the ticker symbol “CMPS”. As one of the largest companies in the psychedelics industry, investors will also have exposure to a well-funded industry giant with promising clinical trials underway.
Combining Natural Compounds
Novel combinations of natural compounds is another common approach to developing psychedelic intellectual property rather than patenting analogs or uses for natural compounds. With the growing popularity of artificial intelligence and machine learning, many companies are quickly finding creative ways to combine compounds to produce a benefit.
Aion Therapeutics Inc., ticker symbol AION on the CSE, has filed several patents pertaining to treatments that combine the healing compounds of medical cannabis with those from edible and psychedelic mushrooms. These treatments could prove beneficial in helping patients suffering from cancer, psychiatric disorders, addiction and other conditions.
At the core of its business, the company leverages artificial intelligence techniques to discover combinatorial treatment formulations. The company also plans to individualize treatments for personalized medicine using human genome and other data unique to an individual in order to maximize efficacy and ultimately improve outcomes.
The psychedelics industry has experienced a renaissance over the past two years and intellectual property will play a key role in both protecting assets and becoming a potential source of revenue. Investors interested in the IP side of the space may want to take a closer look at CB Therapeutics, COMPASS Pathways and Aion Therapeutics Inc. as potential opportunities.
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