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Psychiatric Drug Maker Raises $80M in Venture Funds

Psilocybe aztecorum

Psilocybe aztecorum, also known as “magic mushrooms,” the source of psilocybin (Alan Rockefeller, Wikimedia Commons)

27 Apr. 2020. A developer of treatments for mental health disorders based on controlled hallucinogenic substances is raising $80 million in new venture financing. Compass Pathways in London says the funds raised in its second venture round will help expand into treatments beyond its current focus on depression.

Compass Pathways develops treatments for depression and other mental illnesses from psilocybin, an hallucinogenic compound found in so-called magic mushrooms, and considered a controlled substance under drug laws in the U.S. While psilocybin is not naturally addictive, it is used as a recreational drug to generate feelings of euphoria and sensory distortion. The drug can also trigger disturbing hallucinations, panic attacks, and anxiety, and is considered a risk for individuals with a family history of schizophrenia or early onset mental illness.

Compass Pathways was founded in 2016 by physician and medical researcher Ekaterina Malievskaia and technology entrepreneur George Goldsmith, a wife and husband team who dealt with depression in a family member. Development of psilocybin into a treatment for depression is based on earlier research with the substance in the U.S. at Johns Hopkins University, New York University, and UCLA, as well as institutions in the U.K. and Switzerland.

The company’s lead compound is COMP360, a derivative of psilocybin for people with depression that does not respond to current treatments. In October 2018, FDA designated COMP360 as a breakthrough therapy for treatment-resistant depression.

As reported by Science & Enterprise in December 2019, Compass Pathways presented results to a professional meeting from an early-stage clinical trial showing COMP360 is largely safe and feasible to administer. Results show the healthy volunteer participants receiving COMP360 experienced no negative effects on cognitive or emotional functioning, nor any serious adverse effects. Individuals receiving COMP360 did report some psychedelic adverse effects, such as changes in sensory perception and mood. The study team also says COMP360 can be feasibly administered in controlled settings, such as the group sessions used in the trial.

The new funding is led by Lars Wilde, Compass Pathways’ president and co-founder. Taking part in the round are ATAI Life Sciences, a current investor in the company, with new investors McQuade Center for Strategic Research and Development, Founders Fund, Able Partners, Camden Partners Nexus, Perceptive Advisors, Skyviews Life Science, and Soleus Capital. Compass’s first venture round in August 2018 raised £25 million ($US 31 million).

“This fundraise,” says Goldsmith, Compass’s CEO in a company statement released through PRNewswire, “shows that our investors recognize this urgent need for innovation in mental health, and will enable us to do more research and development, bringing therapies safely to those who need them, as quickly as possible.”

The new funds are expected to support the company’s current mid-stage clinical trial testing COMP360 among 216 participants with treatment-resistant depression at 23 sites in Europe and North America. Participants in the trial are randomly assigned to receive one of three dosage levels of the therapy, then assessed on a standard rating scale of depression severity over 12 weeks. The company also plans to expand psilocybin therapy into other psychiatric disorders, develop digital technologies, and create new academic and clinical research partnerships.

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