Psychedelic Drug IPO Remains Confident Despite Ongoing Losses

(Noted News) — In their first earnings report, Compass Pathways recorded further Q3 losses last Thursday but maintained that some momentum was to come once they receive results from ongoing clinical trials. 

The company, which describes itself as a “mental health care company dedicated to accelerating patient access to evidence-based innovation in mental health,” is the first major psychedelic drug stock on a major U.S. stock exchange. Their earnings report comes following just one week after Oregon’s full decriminalization of nearly every drug.

Foundational to Compass’ business model is the use of psilocybin—the psychoactive active ingredient in magic mushrooms—for chronic depression. Their clinical trials are focused on developing a psilocybin-based treatment regimen that they call COMP360, which will be used for “treatment-resistant” depression. 

The plan is to get the regimen approved by the FDA, patented, and then marketed as a product to vendors in the U.S. and Europe.

Despite tallying up losses of over $25 million in the first half of 2020, the company still maintains innovator-status and the backing of some big investors, including Peter Thiel, co-founder of PayPal. 

Psychedelic drugs are gaining legitimacy as alternatives to antidepressants, with LSD, MDMA, DMT, and others on the brink of clinical breakthroughs and legal reforms, attracting more and more financial backing. 

Last year, the FDA approved a drug called SPRAVATO, which uses something similar to ketamine as a treatment for depression. SPRAVATO was rolled out in the summer for people who are suicidal.

Compass Pathways also made good ground when it was accepted to The Psychiatry Consortium.

“The Psychiatry Consortium, managed by Medicines Discovery Catapult, is a strategic collaboration of leading medical research charities and pharmaceutical companies focusing on the challenge of identifying and validating novel drug targets to address the unmet therapeutic needs of people living with mental health conditions. COMPASS Pathways will work alongside Psychiatry Consortium members and academic partners to advance research projects, providing support through access to funding, expertise, and commercialization know-how.”

In early November, proponents of psilocybin enjoyed another successful study that proved some effectiveness in the treatment of depression.

The findings of the study state: “In this randomized clinical trial of 24 participants with major depressive disorder, participants who received immediate psilocybin-assisted therapy compared with delayed treatment showed improvement in blinded clinician rater–assessed depression severity and in self-reported secondary outcomes through the 1-month follow-up.”

Compass experienced a loss of 55 cents per share on zero revenue but still holds on to at least $196.5 million cash on hand which is expected to last until 2023. 

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