The recent €108M Nasdaq IPO of Compass Pathways highlights the UK as a hub for psychedelics research. The rest of Europe, however, lags behind.
Last week’s IPO of Compass Pathways generated huge excitement from investors. The startup’s stock price was driven up by 70% on Friday following the entry onto the Nasdaq, and has stayed that way this week.
Although recreational psychedelic drugs are tightly controlled in many countries, their potential for the treatment of mental health disorders such as depression is tantalizing the biotech and pharma industry.
For example, current antidepressants such as fluoxetine can only treat the symptoms of depression, and can bring side effects such as anxiety and low sex drive. Supervised dosing with psilocybin, the main ingredient of magic mushrooms, achieved long-lasting therapeutic effects in a small study run by the UK’s Imperial College London in 2016. The drug is thought to do this by rewiring the brain, and has fewer side effects than traditional medication.
“The media has become increasingly interested and next to follow were regulators and investors,” said Cosmo Feilding-Mellen, the CEO of UK psychedelics startup Beckley Psytech. He added that Compass’ IPO “reflects the fact that psychedelic medicines are no longer a taboo, they are something that mainstream media, business, and healthcare can support.”
Compass Pathways — founded in 2016 — is developing psilocybin as a treatment of different types of clinical depression, including a form that is resistant to current medications. Fueled by its recent IPO and a €68M Series B round in March, the company is pushing three programs through phase II clinical trials. This makes Compass one of the most advanced companies in the field.
While the US and Canada host lots of companies delving into psychedelics research, the UK on the other side of the pond also seems to be a thriving hub. After Compass, you also have the firm Eleusis — which is testing a treatment for Alzheimer’s disease in phase I — and preclinical-stage startups Small Pharma and Beckley Psytech.
In contrast, few biotech companies seem to be taking up the baton in the rest of Europe. The only major player is the Berlin-based ATAI Life Sciences. In 2019, the firm acquired the New York-based Perception Neuroscience, which is developing a modified form of ketamine to treat neuropsychiatric disorders. ATAI Life Sciences also owns a big stake in Compass Pathways.
So why is the UK so prominent of all European countries in this field? Feilding-Mellen believes the UK’s leadership is backed up by decades of psychedelic research. This led to the first-ever clinical trial using psilocybin in treatment-resistant depression, which took place at Imperial College London in 2016.
Companies developing psychedelic treatments for mental health disorders grouped by country base. Source: GlobalData.
Compass’ big splash on the Nasdaq is only a part of the surge of activity in the psychedelics field this year. In the UK, Beckley Psytech raised €3.3M in a Series A in July. Meanwhile, across the Atlantic, two psychedelic drug developers went public in March: the Canadian Champignon Brands listed on the Canadian Securities Exchange with a modest €2.6M IPO, and US firm Mind Medicine (MindMed) jumped onto the Canadian NEO Exchange for over €17M. Today, MindMed also announced plans to list on the Nasdaq.
This flurry of fundraising also coincides with a gradual easing of the stigma against psychedelics research after these drugs became widely banned in the 1960s. Feilding-Mellen is confident that legal red tape isn’t a serious barrier to getting these drugs to market.
“If we are able to prove in large, regulatory-standard clinical trials that psychedelic medicines are safe and effective, then regulators will grant licenses for these drugs to be prescribed,” he told me.
“This is the same path that other well-known controlled drugs such as Ritalin (amphetamine) and Epidiolex (cannabidiol) have gone through in the past and there is no need for drug policy reform to make this happen.”
With the psychedelics field starting to mature this year, the rest of Europe could soon be encouraged to join in on the fun.
“There are a lot of amazing researchers all over Europe and I’m sure we will see more psychedelic research projects cropping up across the continent,” concluded Feilding-Mellen.
Image from Elena Resko