The recent announcement by Compass Pathways that it is planning to go public and is seeking a NASDAQ listing has stoked media interest in the psychedelics space.
It represents a major infusion of new capital for the emerging psychedelic drug industry. It will attract new investors (and larger players) to psychedelic stocks. And there should be a strong trickle-down effect among both public and private psychedelics companies.
As we noted in our own coverage (above), it is also a strong endorsement for the business model of ATAI Life Sciences, a private psychedelics company. ATAI is a major backer and large shareholder in Compass Pathways.
ATAI Life Sciences is a unique corporate entity in the psychedelic drug industry. Not an individual player in this space, ATAI is a drug development/commercialization platform for the psychedelic drug industry.
We explained how ATAI, in particular, is going to benefit from the Compass Pathways IPO.
Obviously, its own balance sheet immediately becomes much stronger. Beyond that, the IPO is a strong advertisement for ATAI’s business model: as a psychedelics R&D platform that facilitates drug development for its growing portfolio of research partners.
A big Compass IPO success should not only drive much more venture capital in ATAI’s direction, it will also make ATAI a much more attractive partner for the smaller, emerging private players in this industry.
A big Compass IPO success should not only drive much more venture capital in ATAI’s direction, it will also make ATAI a much more attractive partner for the smaller, emerging private players in this industry.
Success breeds success.
Going forward, the psychedelic drug industry will see more capital, expertise and attention flowing to the sector. More companies will be interested in teaming up with ATAI. More investors will be wanting a piece of the action.
Psychedelic Stock Watch has pointed out previously why we see these drugs having greater drug commercialization potential than (in comparison) cannabis.
Psychedelic drugs – both natural substances and synthetics – are more amenable to our drug patenting and licensing system.
This superior risk/reward profile for psychedelic drugs makes these substances much more attractive to the pharmaceutical industry as R&D candidates than cannabis derivatives.
The rebuttal to this line of reasoning? It comes from none other than Florian Brand, co-founder and CEO of ATAI, in a recent article on psychedelic drug patenting.
“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].”
The general rule in patent law is that you cannot obtain a patent for something that is already in the public domain. And these psychedelic drugs have been around for decades.
Patents are essential for drug commercialization. Without patent protection, the (generally) enormous cost to develop a drug and bring it to market would be prohibitive in most cases.
This means that successful players in the psychedelic drug industry need to be more than just masters of the science itself. They also require the skill and expertise to navigate the law – specifically drug patent laws.
Enter ATAI Life Sciences. CEO Brand addressed precisely this point.
“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.”
In contrast, in a “Statement On Open Science” for the psychedelic drug industry, many of the industry’s leading research institutions and nonprofit organizations have pledged to share information. They are also agreeing to license their own research to others, for only the administrative costs.
This adds an additional layer of complexity to psychedelics R&D. It makes the legal expertise of a player like ATAI even more critical for drug development companies.
Psychedelic Stock Watch has already alerted investors to the importance of ATAI Life Sciences to this emerging industry back in June.
As the sector evolves, the potential of the psychedelic drug industry is drawing even greater attention. Major players in Silicon Valley and on Wall Street are seeing this sector as the answer for our Mental Health Crisis.
Positioned front-and-center to pursue this R&D – and profit from it – is ATAI Life Sciences.