What Investors Interested in Psychedelics Need to Focus on Regarding IP Issues

June 27, 2022 13:49:06

The psychedelics market is expected to record significant growth over the next decade as researchers uncover more ways psychedelics can be used to treat mental health conditions. With industry projections showing that psychedelics may even surpass the extremely lucrative cannabis industry, one question that remains in some stakeholders’ minds is how the psychedelic market will deal with IP issues as it grows.

Psychedelics present a curious situation that makes a variety of the substances ineligible for patent protection. For example, while pharmaceutical companies that develop and synthesize chemical compounds in the lab are allowed to patent their drugs, psychedelics such as LSD, mescaline, ibogaine and psilocybin cannot be patented because they were initially synthesized decades ago, and their existence is well documented.

Furthermore, the U.S. Patent and Trademark Office doesn’t have experts in the psychedelics patent field because the substances have been outlawed for decades. So how will companies that research and develop psychedelic drugs for commercial activities protect their intellectual property if psychedelic molecules such as psilocybin and LSD are not eligible for patents?

Patenting novel forms of psychedelics could be a viable option. Compass Pathways, for instance, has been able to obtain patents for novel forms of crystalline psilocybin. Other psychedelics firms are also looking at filing patents for new formulations, use methods, extraction protocols, synthetic pathways and different methods for treating diseases.

This landscape can be incredibly tricky to navigate for an investor looking for a solid psychedelic IP to invest in. Exercising due diligence before making investments can help these investors figure out which IPs to choose given the variety of companies available on stock exchanges, including Silo Pharma Inc. (OTCQB: SILO).

For starters, potential investors should consider the marketability and patentability potential as well as the associated timeline and costs for portfolios with pending and provisional patent applications. Note that some psychedelic patents could be challenged, increasing the timeline and costs involved. As such, investors should make sure they scrutinize portfolios that rely on provisional and/or pending applications.

Exercising diligence will also allow investors to see whether or not a patent owner has a clear chain of title and is authorized to assign patent rights and obligations and avoid future disputes, especially in early-stage companies that may not have documented patent ownership as well as translation of ownership clearly.

Investors interested in psychedelic patent applications should also consider who the investors of the firm behind the patent are, whether the government or third parties are owed rights to the patent for providing research funding, and whether or not a third party has challenged the patent application.  

NOTE TO INVESTORS: The latest news and updates relating to Silo Pharma Inc. (OTCQB: SILO) are available in the company’s newsroom at https://ibn.fm/SILO

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