As a treatment for mood disorders, psychedelics-inspired medicine isn’t quite in the mainstream yet. Undoubtedly, Compass Pathways (NASDAQ:CMPS) and CMPS stock holders would like to see more progress in this area.

It won’t be a quick or easy path to full decriminalization. Psilocybin, an active ingredient in what some folks might informally call “magic mushrooms,” is still considered a controlled substance in the U.S.

Yet, Compass Pathways is boldly pursuing research into psilocybin’s potential as a treatment for mental health disorders, including major depressive disorder.

And while psilocybin is still technically illegal on a federal level in the U.S., regulators should eventually acknowledge current research that favors psilocybin as a viable alternative to conventional treatments.

A Closer Look at CMPS Stock

The initial public offering (IPO) for CMPS stock took place in mid-September, so we must concede that this isn’t a stock with a lengthy history.

So far, it seems that the trading community hasn’t made a firm decision on the stock. Mostly, it has just gone sideways.

There were a couple of nice price pops in there, though. For instance (or two), CMPS stock jumped to the $60 level in December and then again in February.

Unfortunately, however, those spikes were short-lived. The share price keeps coming back to the $35 area, and now in mid-May, it’s still there.

Still, the long-term outlook could still be bullish for CMPS stock. After all, a major catalyst — such as a regulatory approval — could send the share price soaring.

Illegal, Yet Encouraged

As I hinted at earlier, Compass specializes in investigating the effectiveness of psilocybin therapy in treatment-resistant depression.

The company’s synthesized formulation of psilocybin is known as COMP360. In North America and Europe, Compass Pathways is running a Phase IIb study of the use of psilocybin therapy for treatment-resistant depression.

Again, psilocybin is federally considered illegal in the U.S. Yet, the U.S. Food and Drug Administration (FDA) granted Compass Pathways Breakthrough Therapy designation for psilocybin therapy for treatment-resistant depression.

Plus, the U.S. Patent and Trademark Office recently approved two patents for the company’s psilocybin-enhanced treatments.

So somehow, psilocybin as a mental health disorder treatment is both illegal and encouraged in the U.S.

This is just another sign of America’s growing pains as it grapples with the mainstreaming of unconventional medicine.

We’re seeing this with cannabis, as well. Eventually, I expect that Washington will make up its mind. And when it does, Compass Pathways will have the patents and formulations in place to prosper in its niche market.

Research Proves the Point

Regulators tend to move slowly. At the same time, potentially life-changing research much forge ahead.

Case in point: the New England Journal of Medicine recently published an exploratory study suggesting that COMP360 may compare favorably to conventional antidepressant medication escitalopram — sold under the brand names Cipralex and Lexapro — in the treatment of major depressive disorder.

The study involved 59 participants, and compared a six-week course of escitalopram to Compass Pathways’ COMP360 psilocybin product.

A Quick Inventory of Depressive Symptomatology yielded a two-point difference favoring the psilocybin group versus the escitalopram group. Moreover, this trend favoring psilocybin was present from week one.

Moreover, in terms of secondary outcomes “including clinician-rated depression scales” and other metrics, psilocybin “showed numerical advantages on clinical measures compared with escitalopram.”

On top of that, patterns favoring psilocybin “were found in other secondary endpoints measuring work and social functioning, anxiety, avoidance, anhedonia, and wellbeing.”

To sum it all up, psilocybin looked better than escitalopram on multiple fronts. And thankfully, no serious adverse events were reported during the study.

The Bottom Line

Further research will be the key to unlocking psychedelic medicine’s healing potential in the area of mental disorders.

In the meantime, Compass Pathways will continue to advance COMP360 as a potentially superior treatment to conventional medications.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.