Mental Health Drug Company Raises $127.5M in IPO

(Julien Gong Min, Flickr)

18 Sept. 2020. A company developing a drug for depression based on synthesized compounds in hallucinogenic substances is raising $127.5 million in its initial public stock offer. Compass Pathways Plc in London offered 7,500,000 shares this morning on the Nasdaq exchange priced at $17.00, which by the closing bell at 4:00 pm ET rose to $29.00.

Compass Pathways develops treatments for depression and other mental illnesses from a synthesized version of 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 synthetic derivative of psilocybin for people with depression that do 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 April, Compass Pathways is testing COMP360 in a mid-stage clinical trial 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.

According to the biotech industry newsletter Endpoints News, Compass Pathways originally planned raising $100 million in its IPO, but chose to expand the proceeds to $127.5 million. The company’s closing price of $29.00 per share today is 70.6 percent higher than the $17.00 IPO price, while the Nasdaq overall fell nearly 1.1 percent for the day.

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