Is This Peter Thiel–Backed Startup Trying to Monopolize the Astral Plane?

Because Compass Pathways has filed a pretty mind-bending patent claim.

Mother Jones illustration; Kiyoshi Ota/Bloomberg/Getty; Getty

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Psilocybin, the active ingredient in “magic” mushrooms, is finally poised to go mainstream after decades confined to the underground by the war on drugs. But now a company bankrolled in part by PayPal billionaire and venture capitalist Peter Thiel is raising hackles in the psychedelics community with what some observers consider an aggressive play to control the world market for psilocybin as a depression treatment.

Psychedelics advocates, along with some of the researchers testing psilocybin’s efficacy for treating a range of issues, from addiction and Alzheimer’s to depression and PTSD, are saying the drug could help fuel a mental health revolution. Michael Pollan’s 2018 book, How to Change Your Mind, and other books and reports describing beneficial uses of psilocybin and other banned drugs such as ketamine, MDMA (ecstasy), and LSD, have only added to the momentum and public interest in legally sanctioned uses. And although psilocybin remains illegal for any purpose in most of America, private donors and financiers have been channeling millions of dollars into programs to flesh out its therapeutic potential.

Psilocybin’s path to legitimacy is paralleled—and fueled—by early-stage investors hoping to stake their claim to a market many view as the next cannabis. In December, a market analyst, noting on Nasdaq.com that the psychedelics industry is predicted to reach nearly $7 billion by 2027, encouraged investors to “seriously consider adding psychedelic stocks to their portfolios.” A patent tracker created by Psilocybin Alpha identifies 33 psilocybin-related applications and another 60 approved patents related to psilocybin. (The actual number is likely greater, patent lawyers say, because applications aren’t made public until at least 18 months after they are filed.)

Thiel—whose tax-avoidance exploits were highlighted in an eyebrow-raising ProPublica exposé last week—has made substantial bets on psilocybin treatments. Compass Pathways, in which he owns a 7.5 percent stake, is one of the leaders in commercial psilocybin R&D. It has a formidable head start in the United States with three US patents to date, including at least one for a synthetic version of psilocybin.

In 2018, Compass also managed to secure a pivotal “breakthrough therapy” designation from the FDA, a category that fast-tracks federal review of drugs intended “to treat a serious condition” and that offer “substantial improvement over available therapy on a clinically significant endpoint.” Thiel invested another $12 million this past November in ATAI Life Sciences, a Berlin-based startup that has also been developing psychedelic mental health treatments.

But the audacity of an international patent application filed by Compass Pathways in April has raised concerns, not only among business rivals, but also within the grassroots community of individuals, organizations, and mental health providers who have long advocated for legal uses of banned psychedelics. 

Lars Wilde, the president and co-founder of Compass, told me in May that the company was pursuing patents only of its own synthetic versions of psilocybin and mental health treatment procedures. “We’re not protecting mushrooms, or yeast, or any of these other species that could contain psilocybin,” he said. “So we’re very much focused on the chemical entity, and they’re on a specific polymorphic form that we are protecting and that we are developing. That is what we own.”

But his firm’s international filing from the previous month suggests otherwise. Three patent lawyers who read the application at Mother Jones’ behest agreed that it is worded to include blanket coverage of the use of psilocybin as a treatment for depression and other mental health diagnoses. The first two claims read as follows:

1. A method of treating depression in a suoject [sic] in need thereof, the method comprising administering an effective amount of psilocybin or an active metabolite thereof to the subject.

2. The method of claim 1, wherein the subject has major depressive disorder, atypical depression, bipolar disorder, catatonic depression, a depressive disorder due to a medical condition, postpartum depression, premenstrual dysphoric disorder, or seasonal affective disorder.

When I asked Compass for a response to the lawyers’ opinions on the patent, a spokesperson said the company doesn’t comment on specific patent applications. “We define ourselves as a mental health care company,” Wilde had said earlier. “And what that means is we’re developing psilocybin through the clinical trials, but we also want to commercialize it fully, so we’re not intending to hand it off.”

Patent attorney Graham Pechenik, the co-founder of Calyx Law, a firm that protects intellectual property for cannabis and psychedelics, was among those who deemed Compass’ central claims overly broad, contrary to Wilde’s assertion. “Broadly construed, these cover administering psilocybin in any form—not only polymorph A or hydrate A, not only synthetic, not only purified,” he said. “The currently pending claims indeed cover any administration of psilocybin.”

All patent applications go through an official evaluation process wherein claims can be refined and altered—it’s not uncommon for applicants to submit broad claims in anticipation that they will get winnowed down. “I think it’s very unlikely these claims will be granted as written. But if they were, they could cover all administration of psilocybin,” Pechenik said.

Yet overly broad patents have been granted before, and such rulings can stunt innovation in a new industry for decades if left unchecked. “There is enormous risk of patents suppressing research and hindering healthy competition,” according to Pechenik. “History spills over with examples of developing industries consumed by patent wars—from the steam engine and sewing machine, to the lightbulb and radio, up through the smartphone.”

Wilde told me the company’s patents would not stunt research. “All the researchers out there that are worried do not have to be worried,” he said during our interview, arguing that Compass planned to partner with many academic research institutions.

But he emphasized Compass’ commitment to defending its intellectual property from rival startups. “If they were to infringe on our IP, we would protect it,” he said. “I think there’s the economic interest of the shareholders and campuses that needs to be protected.”

Psilocybin’s illegality may make it harder for interested parties to contest Compass’ claims. Psychedelic mushrooms and their extracts have likely been used for ages as an informal depression treatment, but a patent examiner would need solid evidence dating from before the filing of a company’s application. Because illegal substances are taboo, criminally punishable, and typically consumed on the down-low, proving “prior art”—that is, showing that a product or a specific use of it existed before someone tried to patent that—could be challenging. Gaps in public documentation make it easier for companies like Compass to get approval for broad claims.

International patent applications (also called PCT applications) streamline the process of applying for patents in multiple nations at once. They are “an easier and cheaper way of filing a patent application in a large number of countries,” says Martha Rumore, senior counsel at Frier Levitt, a firm specializing in health care and life sciences, and “a way to start down the path to secure worldwide rights.” After the application is reviewed by a central receiving office, each country must approve the claims separately to make the patent enforceable within its jurisdiction. 

The World International Property Organization, the body that oversees the process, accepts public comments on pending applications, including documentation of prior art. “Compass will have the opportunity to amend the application’s claims and to try to convince each country’s patent office that it has made an inventive advance over the earlier work of others, but Compass has a serious task ahead,” says William McNichol, a former patent attorney and professor at Rutgers University.

The April application, first revealed by Vice, includes expansive claims such as the right to deliver psilocybin-based therapies in a room “decorated using muted colors” or “wherein the room comprises soft furniture” or has “a high-resolution sound system.” Or “wherein the therapist provides reassuring physical contact with the subject.”

“You have seen some controversy about the breadth of the proposed patent of Compass, which included things like wearing eye shades, listening to music, you know, these sort of elements of the therapeutic experience that most people wouldn’t imagine to be susceptible [to a] patent,” notes Kathryn Tucker, a lawyer and founding member of the Psychedelic Bar Association. “So there was a sense of overreach.”

With the turf war over psilocybin’s fate in full swing, many in the not-for-profit psychedelics realm fear that broad patents will lead to monopolies and hamper access to drugs and treatments, from affordable insulin to COVID vaccines.

Among Compass’ critics is the quirky soap company Dr. Bronner’s, which went after the company’s April filing in a press release: “It’s time to publicly call out the for-profit psychedelic pharma company Compass Pathways for their monopolistic and shady behavior.” Dr. Bronner’s has donated millions of dollars to bolster psychedelic research and legalization efforts, including $150,000 to support the therapeutic-use initiative that Oregon voters passed in November. It also launched a “HEAL SOUL!” advocacy campaign on its oddball soap labels, touting “psychedelic-assisted therapies to help heal the soul.”

A more humanistic counterpart to Compass Pathways is Usona, a nonprofit medical organization pursuing psychedelic therapy research. Usona favors “open science” and pledges to “make public the scientific discoveries and processes that arise from its research” in the interest of the greater good. Its online pledge has been signed by hundreds of scientists, philanthropists, and medical practitioners.

Usona’s approach “is the exact opposite approach from Compass Pathways,” Tucker told me. Usona put its process for synthesizing psilocybin into the public domain, rendering it unpatentable, whereas Compass, “as a big corporate entity, is working to create patent protection, because it’s going about this in a fairly traditional Big Pharma approach.”

Like cannabis before it, psilocybin exists in a legal gray area but is anticipated to boom if and where legalization occurs. Denver became the first city to decriminalize the drug back in 2019, followed weeks later by Oakland, California. The following year, Santa Cruz and Ann Arbor, Michigan, decriminalized psilocybin mushrooms—which fans call “shrooms.” Oregon was the first state to legalize psilocybin therapy, and the California Senate earlier this month passed SB 519, a bill that proposes to decriminalize psychedelics. “All of these things indicate that there’s a serious upswing in commercial or potential commercial activity, and patent filings always track those things pretty well,” says Dale Hunt, a patent attorney and CEO of Breeder’s Best, a cannabis consultation company.

Patents, as Hunt points out, are a key part of making companies desirable to investors, particularly when an idea or industry is new. Funders want to see a startup secure intellectual property rights before they bankroll it—or at the very least will reward the acquisition of that IP. “We definitely saw that in cannabis,” Hunt says. “Some of the companies that amassed a meaningful portfolio of patents were great acquisition targets or were very investable and are the ones that are off to the races.”

Since 1996, when cannabis legalization was driven by a grassroots push that began with California’s Prop. 215, a medical-use initiative passed by voters, production has since boomed as more and more states legalize the drug for therapeutic or recreational uses. Legal cannabis is now estimated to be a $24 billion industry that generates $92 billion in economic activity.

The Compass episode therefore strikes at the heart of a deeper debate about how patents shape industry and medicine. For-profit players insist patents are needed to bring a new drug to market. Without that protection, they say, how would companies attract the investment required to get a new drug to market?

Compass’ critics would counter that patents, besides disadvantaging smaller businesses, are not needed. Take Usona, whose research advances have succeeded without patents, and which secured breakthrough therapy designation from the FDA in 2019—though Usona’s ability to successfully market a drug remains to be seen.

Yet with most psychedelics startups pursuing a traditional IP approach, grassroots advocates fear psilocybin will go the way of cannabis: big-money interests piggybacking on, and eventually taking over, decades of hard work by the broader community. “Who’s gonna win in this sort of battle is yet to be seen,” Tucker said. “But there’s definitely some tension in these approaches.”

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FACT:

Mother Jones was founded as a nonprofit in 1976 because we knew corporations and the wealthy wouldn't fund the type of hard-hitting journalism we set out to do.

Today, reader support makes up about two-thirds of our budget, allows us to dig deep on stories that matter, and lets us keep our reporting free for everyone. If you value what you get from Mother Jones, please join us with a tax-deductible donation today so we can keep on doing the type of journalism 2021 demands.

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