Compass Pathways is planning a $100 million (£78m) US IPO to continue its development of a depression treatment based on psilocybin, the active ingredient in ‘magic mushrooms’.

The Cheshire-based biotech firm hopes that its crystalline formulation of psilocybin, a drug known as COMP360, will help treat patients who have not responded to traditional forms of therapy for depression when offered in conjunction with continued psychological support from trained therapists.

The IPO is designed to raise funds for COMP360’s phase 2b clinical trial for this therapy, which is soon to restart after the Covid-19 crisis put pause to such studies back in March. If approved by regulators, COMP360 will come into competition against Johnson & Johnson’s Spravato (esketamine) and a combination of olanzapine and fluoxetine. However, Compass claims COMP360 has an advantage over these competitors due to psilocybin’s ability to release serotonin and dopamine and increase the levels of neuroplasticity, which could specifically benefit those suffering from depression.

The US Food and Drug Administration (FDA) has already singled out COMP360 as a “Breakthrough Therapy”, which could lead to an expedited six-month review if trials are successful, and the drug has received extra support during development thanks to its Fast Track status. A second trial of the drug’s utility as an adjunct to selective serotonin reuptake inhibitors (SSRIs) is also at the mid-stage point.

Compass has raised more than $100m (£78m) to date, including an $80m (£62m) series B in April, from investors including PayPal founder Peter Thiel and ATAI Life Sciences, which holds a 29% interest in the company. And the ompany plans to double that figure in its IPO on the NASDAQ, having filed for listing confidentially with the Securities and Exchange Commission (SEC) on 2 July 2020 under the symbol CMPS.

The coronavirus pandemic has seen investors flock to biotech stocks, with the new cycles focused on health treatments, cures and vaccines and recent biotech IPOs keenly priced and oversubscribed. However, COMP360 faces a more difficult road to market than other competing therapies because whilst psilocybin is not regulated under any international UN treaties, it is classification as a controlled substance by the US Drug Enforcement Administration (DEA) and a class A drug in the UK. The company can also expect additional media scrutiny about any psilocybin-based therapies due to the stigma associated with magic mushrooms, despite a long history of cultures using magic mushrooms for medicinal and religious practices for millennia.


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