The FDA could approve a key component of magic mushrooms as a depression treatment

For the past eight years, Compass Pathways has been fighting to convince the Food and Drug Administration that a chemical found in so-called "magic mushrooms" can be effective in helping people with treatment-resistant depression. Now, it may succeed in that goal.

The company has announced its synthetic version of psilocybin, the active ingredient in those mushrooms, has passed a second large-scale clinical trial, once again showing a high level of effectiveness in treating the disorder.

"[This] is the first classic psychedelic to consistently achieve a highly statistically significant result and clinically meaningful effect, with a generally well-tolerated and safe profile," the company said in a press release.

The psilocybin, called Comp360, was found to be generally well-tolerated and saw no safety findings. By six weeks, 25% of treated participants in the first trial experienced “a clinically meaningful reduction” in their depression, the company said. That number jumped to 39% in the second trial. Compass has requested a meeting with the FDA to set up a review. Assuming there are no unexpected hurdles, it's expected to receive approval.

Investors have been anticipating good news. Shares of Compass are up 24% in the past five days.

The research and growing talk about mushrooms as a mental health remedy in some ways mirror what cannabis companies saw in the 1970s-1990s. While the drive to legalize marijuana started in the late 1960s, it didn’t gain any real traction until 1973, when Oregon decriminalized the drug. Colorado, California, Alaska, Maine and Ohio would follow suit by 1975.

The next milestone was reached in 1996 when California became the first state to legalize it for medical purposes. Thus far, 40 states have legalized the use of medical cannabis, along with five U.S. territories and the District of Columbia.

Today, mushrooms that contain psilocybin have been decriminalized in a handful of cities, including Denver, Colo. (2019); Oakland, Calif. (2019); Cambridge, Mass. (2021) and Seattle, Wash. (2021). And the state of Oregon, in 2020, legalized magic mushrooms in licensed therapeutic settings. Colorado followed suit in 2022.

“This is a remarkable achievement for the field of psychiatry—especially in the TRD population, where proving benefit has historically been extraordinarily challenging,” said Kabir Nath, Compass Pathways CEO, in a statement.