Compass plans IPO to take 'magic mushroom' drug to phase 3

Compass Pathways has filed paperwork for a Nasdaq IPO that will tee it up to take psilocybin therapy COMP360 through midphase development. Compass is developing psilocybin, the active ingredient in psychedelic mushrooms, for use in patients with treatment-resistant depression.

London-based Compass has spent the past few years building on academic research that suggested  psilocybin may be effective in the treatment of depression. The work culminated in a phase 2b that, due to a COVID-19-enforced temporary enrollment pause, is now due to deliver data late next year. If successful, Compass will use the phase 2b as a launchpad for a registrational program. 

Compass closed an $80 million series B round in April, bringing the amount raised to date above $100 million. Now, Compass is aiming to roughly double its current fundraising total by offering stock to public investors. 

The funding will support the ongoing 216-patient phase 2b, enrollment in which is ramping back up after being put on pause in March, and a planned midphase study to assess the use of COMP360 as an adjunct to selective serotonin reuptake inhibitors.  

In seeking money from public investors, Compass has disclosed some of the challenges it expects to face in developing psilocybin. The FDA put COMP360 on clinical hold in June 2018 after reviewing the IND filed by Compass. After receiving additional information on the structure of the sessions at which psilocybin is given, study personnel and criteria for discharge, the FDA lifted the hold.

Two patients treated in the phase 2b so far have experienced suspected, unexpected serious adverse reactions that may be drug related. One patient experienced adjustment disorder—symptoms that can occur after a stressful life event—that led to hospitalization. The investigator deemed the event, which happened more than a month after treatment, to be of moderate severity and possibly related to the drug. Another patient was hospitalized with suicidal ideation.

The study team is blinded to the dose the patients received—the trial is testing two active doses and one control—complicating efforts to understand what, if any, role psilocybin played. Such events can happen in depression trials, but, as IPO paperwork notes, the use of psilocybin may mean Compass faces particular scrutiny.   

“Therapies containing controlled substances may generate public controversy. Political and social pressures and adverse publicity could lead to delays in approval of, and increased expenses for, COMP360,” Compass wrote in its IPO filing. “We may face media-communicated criticism directed at our clinical development program. Adverse publicity from psilocybin misuse may adversely affect the commercial success or market penetration achievable by our investigational COMP360 psilocybin therapy.”

Compass will also need to contend with extra regulatory scrutiny. The U.S. Drug Enforcement Administration (DEA) classes psilocybin and its active metabolite, psilocin, as controlled substances. The upshot is COMP360 will continue to be “subject to a significant degree of regulation by the DEA” after coming to market, Compass wrote, and could suffer delays due to the scheduling process. 

The encouraging signs of efficacy seen in clinical trials of psilocybin have led some investors to look past those concerns and back Compass. Going into the IPO, ATAI Life Sciences owns 29% of Compass. Entities affiliated with Peter Thiel own almost 8%. 

Editor's note: This story has been updated to clarify that the FDA clinical hold occurred in June 2018.