Is Compass Pathways a Buy? | The Motley Fool

Psychedelics have been long vilified, and are still illegal. Yet there may be situations where these narcotics are actually helpful to people. Studies have suggested that both MDMA (street name, “ecstasy”) and psilocybin (“magic mushrooms”) can help people who suffer from post-traumatic stress disorder and serious depression. In both cases the drugs are combined with talk therapy.

Compass Pathways (CMPS 1.95%) is focused on using psilocybin in human trials for people who have treatment-resistant depression. How big is this market opportunity? Corinne Cardina, bureau chief of Healthcare and Cannabis at Fool.com, and Motley Fool writer Taylor Carmichael discussed the stock on Fool Live. This segment was recorded on May 14.

Corinne Cardina: Let’s move to Psilocybin or as you said, magic mushrooms. This one actually has some public company tie-in. We’re going to talk about COMPASS Pathways, which is a really interesting company. I was reading about this. The leaders of COMPASS Pathways are a wife and a husband team, love to see that. Although [LAUGHTER] in our recommendation we actually say that it’s a risk. [LAUGHTER] But sometimes I look at Bill and Melinda.

Taylor Carmichael: [LAUGHTER] They might divorce, you never know.

Corinne Cardina: But I think it’s really interesting because their son struggled with treatment-resistant depression for a long time, and so when you see those parents embark on passion projects, that passion does not sleep. It’s very personal to them. But let’s backup. Tell us about the latest updates in the Psilocybin world for healthcare.

Taylor Carmichael: It’s similar to ecstasy in that it requires talk therapy. Both these medications require counseling and require a physician or a psychiatrist or psychologists to talk you through your experiences. They’re both looking for, I don’t know how to pronounce it, Corinne, is it Psilocybin?

Corinne Cardina: Psilocybin

Taylor Carmichael: Psilocybin.

Corinne Cardina: I think.

Taylor Carmichael: Its target is depression, whereas the other one’s target is PTSD. Two different things, but they have a similar — the importance of the psychologist cannot be overstated. At least in the case of ecstasy, I mean, most of the money is going to the physician or to the person that talks you through it. Because ecstasy is not patent protected, to get back on the patent thing for a second. They have no patent rights. That part, that drug will not be expensive. It will be a fairly cheap part of the therapy. When you see that $20 billion to $80 billion estimate, understand that a lot of that’s going not to any drug maker, but to the physicians involved. If you were to think about this in terms of investment, you want to think about training physicians and that would be the possible way you would make money as an investor. I don’t think it’s going to be from the drug. Although in this case you do have a…