Psychedelic Drug Patents: All Patents Are Not Created Equal

• Psychedelic drug development is targeting two general types of patents: composition of matter patents and method of use patents
• Composition of matter patents are generally preferred since they confer the broadest form of patent protection, but can be more difficult to attain
• Method of use patents offer narrower protection than composition of matter patents, but conversely can offer a higher probability of success
• Both categories of patents will be of significant interest to investors in psychedelic stocks

Drug patents. Pending patents. Provisional patent applications.

Investors in psychedelic drug stocks know they are interested in these patents. What they may not know is precisely what the significance is with respect to patent news relating to drug R&D.

All patents are not created equal. More precisely, there are four types of patents which are eligible to prospective inventors: machine patents, article of manufacture patents, composition of matter patents, and method of use (or “process”) patents.

You can obtain a patent for an article (and its particular uses). You can obtain a patent for the machine that makes the article. You can obtain a patent for the composition of an article. Or, you can obtain a patent for a process, a unique method of obtaining a clearly definable objective.

It is the last two types of patents that will be of primary interest to investors in psychedelic stocks.

Composition of matter patents

As psychedelic drug companies (public and private) pursue the development of their “novel molecules”, the principal goal for most of these companies are composition of matter patents: a molecule that is sufficiently innovative to be awarded a patent. Then companies need to be able to defend that patent from potential legal/administrative “challenges” to those claims.

In other words, a composition of matter patent is a rebuttable right, not an impenetrable suit of armor. The same is true with other patents. A patent is composed of one or more elements, generally framed as “claims”.

If new evidence is introduced relating to the patent (or even new opinions), this can serve to nullify one or more of the claims of a particular patent. This can weaken the scope of the patent, or (if substantial enough) negate it altogether.

We’ve recently seen examples of some of this uncertainty in patent law in the psychedelic drug industry. First it was Compass Pathways (US:CMPS).

A non-profit corporation known as Freedom to Operate made a “request for opinion” to the UK IP Office with respect to one of Compass’ composition of matter patents, in this case a “polymorph” known as GB2572023.

In a Tweet from Vice Magazine’s Shayla Love, it was reported that 12 of the claims associated with this patent were deemed to be “not inventive” in the opinion of the UK IP Office. This casts doubt on the strength or even validity of this patent, even as news emerged of a new Compass patent.

Investors are obviously rattled. CMPS closed Monday at the lowest price ($30.01) since its first week of trading.

A second salvo on the patent front came a few days later – in Canada. Johnson & Johnson (US:JNJ) was denied patent protection in Canada for its esketamine drug, Spravato.

This complete loss of patent protection is based upon a particular aspect of Canadian patent law that deems Spravato non-inventive. However, it casts additional doubt on the strength of composition of matter patents in the psychedelic drug industry.

Psychedelics (with few exceptions) are not “new” drugs. Most of the known synthetic psychedelic drugs were originally produced many years ago. Natural psychedelic substances have been used (generally by indigenous peoples) for centuries.

Therefore, no one can simply “patent” LSD or psilocybin, or other psychedelic drugs with known medicinal potential.  Instead, if companies want patent protection, they need to create derivatives of these substances that can generate equal or superior medicinal benefits while also being sufficiently unique in their chemistry to be eligible for patent protection. Thus the emphasis on novel molecules.

Indeed, some players in psychedelic drug R&D are focusing on only creating novel molecules. They plan to leave the time and expense of actual drug development to their research partner(s) who licenses the molecule.

As we are seeing with Compass Pathways’ research and other psychedelic drug R&D, the (legal) question of whether a particular molecule is “novel” enough is anything but black-and-white.

Method of use drug patents

For these reasons, we also see companies pursuing psychedelic drug R&D targeting method of use patents. In the pharmaceutical industry, an inventor is eligible for a method of use patent for discovering a new way to administer a drug for a diagnostic or therapeutic purpose.

Here it becomes immediately obvious that the new psychedelics-based therapies being devised for the treatment of mental health issues are genuinely inventive and innovative.

The likelihood of being awarded a method of use patent for a psychedelic drug therapy would generally seem to be higher than obtaining a composition of matter patent for the same psychedelic. It may also mean that these method of use patents are “stronger” in the sense of being easier to defend from challenges to the patent.

Thus while method of use patents for a psychedelic-based therapy do not provide as broad patent protection as a composition of matter patent for a particular psychedelic drug, they may represent a more successful overall strategy for patent protection in the psychedelic drug industry.

For investors, the message here is to have exposure to companies pursuing both types of patent protection. Betting heavily on (only) composition of matter patents could carry a heavy price if further weaknesses are uncovered in the “inventiveness” of these claims.

Conversely, having investing exposure to only method of use patents means not tapping the full upside potential of this industry if these composition of matter patents can hold up to administrative and legal scrutiny.

Other important IP

There is further IP potential in the psychedelic drug industry in the form of the supporting technologies being developed parallel to psychedelic drug development.

Drug synthesis, drug delivery systems, and digital therapeutics platforms are important and complimentary IP for this industry. Psychedelic drug companies are already active in advancing these technologies – and already reaching out for additional patent protection to safeguard these innovations.

While some uncertainty exists regarding composition of matter patents, there are broad opportunities for IP development in the psychedelic drug industry beyond composition of matter patents alone.

Ultimately, companies will need to secure various patents (and perhaps defend them) if the psychedelic drug industry is to fully live up to its enormous commercial potential. This means investors will likely need to increase their own level of savvy regarding patent law.

Two types of drug patents. Several other important categories of psychedelics-related IP. The education begins.