Compass Therapeutics Inc

Previous wording

The following discussion of the financial condition and results of operations of Compass Therapeutics, Inc. should be read in conjunction with the financial statements and the notes to those statements included in this Quarterly Report on Form 10-Q for the three months ended March 31, 2024. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risk, uncertainties and assumptions. You should read the“Risk Factors”* section of this Quarterly Report on Form 10-Q and the*“Risk Factors”* section included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023**, for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.*

Current wording

The following discussion of the financial condition and results of operations of Compass Therapeutics, Inc. should be read in conjunction with the financial statements and the notes to those statements included in this Quarterly Report on Form 10-Q for the three and six months ended June 30, 2024. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risk, uncertainties and assumptions. You should read the“Risk Factors”* section of this Quarterly Report on Form 10-Q and the*“Risk Factors”* section included in ourAnnual Report on Form 10-K for the fiscal year endedDecember 31, 2023**, for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.*

Previous wording

CTX-009, our bispecific antibody targeting DLL4 and VEGF-A, is currently undergoing clinical studies as a monotherapy and in combination with chemotherapy in the United States. We currently have two open U.S. clinical trials with CTX-009: a Phase 2 trial of CTX-009 as monotherapy in patients with metastatic colorectal cancer (“CRC”) who received two or three prior treatment regimens and a randomized Phase 2/3 trial of CTX-009 in combination with paclitaxel in patients with biliary tract cancer (“BTC”) who received one prior treatment regimen.

Current wording

CTX-009 is currently undergoing clinical studies as a monotherapy and in combination with chemotherapy in the United States. We currently have two ongoing U.S. clinical trials with CTX-009: a Phase 2 trial of CTX-009 as monotherapy in patients with metastatic colorectal cancer (“CRC”) who received two or three prior treatment regimens and a randomized Phase 2/3 trial of CTX-009 in combination with paclitaxel in patients with biliary tract cancer (“BTC”) who received one prior treatment regimen.

Previous wording

We are conducting a Phase 2 monotherapy clinical trial of CTX-009 in patients with metastatic colorectal cancer who have received two or three prior systemic therapies irrespective of their KRAS mutation status. The trial is designed to assess the safety and efficacy of CTX-009 as a monotherapy in patients with colorectal cancer treated in the third and fourth-line settings and utilizes a Simon Two-Stage adaptive design where the criteria to advance to the second stage of the trial is three partial responses observed in 37 patients enrolled in Part A of the trial. Based on the Simon Two-Stage design, when the criteria for the first stage are met, the trial progresses to the second stage, at which time 47 additional patients will be enrolled. Initial results from Stage 1 of this trial are expected by mid-year 2024. The trial can be found on www.clinicaltrials.gov (identifier NCT 05513742).

Current wording

We are conducting a Phase 2 monotherapy clinical trial of CTX-009 in patients with metastatic colorectal cancer who have received two or three prior systemic therapies irrespective of their KRAS mutation status. The trial is designed to assess the safety and efficacy of CTX-009 as a monotherapy in patients with colorectal cancer treated in the third and fourth-line settings and utilizes a Simon Two-Stage adaptive design where the criteria to advance to the second stage of the trial is three partial responses observed in 37 patients enrolled in Part A of the trial. Based on the Simon Two-Stage design, if the criteria for the first stage are met, the trial progresses to the second stage. The trial can be found on www.clinicaltrials.gov (identifier NCT 05513742).

Previous wording

In addition, we are conducting a randomized Phase 2/3 trial for CTX-009 in combination with paclitaxel in adult patients with unresectable, advanced, metastatic or recurrent biliary tract cancers (“BTC” or “cholangiocarcinoma”) who have received one prior systemic chemotherapy regimen. The trial is designed to assess the safety and efficacy of the combination of CTX-009 and paclitaxel versus paclitaxel alone in patients treated in the second-line settings. The trial is designed to enroll 150 patients, who will be randomized in a 2:1 ratio to receive CTX-009 plus paclitaxel (n=100) or paclitaxel alone (n=50). The primary endpoint of the trial is overall response rate (“ORR”) and the secondary endpoints include progression free survival (“PFS”), disease control rate (“DCR”), duration of response (“DOR”) and overall survival (“OS”). Top line data from this study is expected in the first quarter of 2025. The trial can be found on www.clinicaltrials.gov (Identifier NCT 05506943).

Current wording

We are also conducting a randomized Phase 2/3 trial for CTX-009 in combination with paclitaxel in adult patients with unresectable, advanced, metastatic or recurrent biliary tract cancers (“BTC” or “cholangiocarcinoma”) who have received one prior systemic chemotherapy regimen. The trial is designed to assess the safety and efficacy of the combination of CTX-009 and paclitaxel versus paclitaxel alone in patients treated in the second-line settings. The trial is designed to enroll 150 patients, who will be randomized in a 2:1 ratio to receive CTX-009 plus paclitaxel (n=100) or paclitaxel alone (n=50). The primary endpoint of the trial is overall response rate (“ORR”) and the secondary endpoints include PFS, DCR, duration of response (“DOR”) and OS. This trial was fully enrolled in August 2024 and top line data from this study is expected in the first quarter of 2025. The trial can be found on www.clinicaltrials.gov (Identifier NCT 05506943).

Previous wording

We intend to explore the potential of CTX-009 in additional indications, based on data from pre-clinical models, potential biomarkers such as DLL4, and clinical data from CTX-009 trials providing signs of potential activity of CTX-009 in additional indications such as ovarian cancer, liver cancer, gastric cancer, pancreatic cancer, renal cell cancer, neuroendocrine cancer and others.

Current wording

We intend to explore the potential of CTX-009 in additional indications, based on data from pre-clinical models, potential biomarkers such as DLL4, and clinical data from CTX-009 trials providing signs of potential activity of CTX-009 in additional indications such as ovarian cancer, liver cancer, gastric cancer, pancreatic cancer, renal cell cancer, neuroendocrine cancer and others. We also recently approved the initiation of an Investigator Sponsored Trial (“IST”) for the study of CTX-009 in the first-line setting in patients with BTC to be conducted at the University of Texas MD Anderson Cancer Center.

Previous wording

In October 2022, we announced a clinical collaboration with Merck & Co. (“Merck”, known as MSD outside the United States and Canada) to evaluate CTX-471 in combination with KEYTRUDA® (pembrolizumab). Compass is the study sponsor and Merck provides the clinical supply of KEYTRUDA®. Additionally, we formed a joint development committee (“JDC”) with Merck to review the results of this clinical trial.

Current wording

In the fourth quarter of 2022, we initiated a clinical trial in collaboration with Merck & Co. (“Merck”, known as MSD outside the United States and Canada) to evaluate CTX-471 in combination with KEYTRUDA® (pembrolizumab). Compass is the study sponsor and Merck provides the clinical supply of KEYTRUDA®. Prior to completing enrollment of this trial, we observed an unexpected suppression of proinflammatory cytokines that was not observed with CTX-471 as a monotherapy. As a result, the combination study will be discontinued.

Previous wording

In March 2024, we announced that we initiated planning of a Phase 2 monotherapy study of CTX-471 in patients with advanced melanoma whose tumors express a newly identified biomarker of CTX-471 activity. We plan to initiate this study in the United States in the second half of 2024.

Current wording

We have initiated planning of a Phase 2 monotherapy study of CTX-471 in patients with a set of tumors that express a newly identified biomarker of CTX-471 activity. We plan to present data on CTX-471 activity in patients whose tumors express this biomarker at a scientific conference later this year.

Previous wording

An IND was accepted and cleared by the FDA in October 2023 and the first patient was dosed in April 2024.

Current wording

An IND was accepted and cleared by the FDA in October 2023 and the first patient was dosed in April 2024. The first cohort of this trial was completed in June 2024 with no dose limiting toxicities observed. We initiated the second cohort in July 2024.

Previous wording

We have incurred significant operating losses since inception and have not generated any revenue from the sale of products and we do not expect to generate any revenue from the sale of products in the near future, if at all. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of our treatments and any future product candidates. Our net losses were $10.8 million and $7.8 million for the three months ended March 31, 2024 and 2023, respectively. We had an accumulated deficit of $326.1 million on March 31, 2024. We expect to continue to incur significant expenses for at least the next several years as we advance through clinical development, develop additional product candidates and seek regulatory approval of any product candidates that complete clinical development. In addition, if we obtain marketing approval for any product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. We may also incur expenses in connection with the in-licensing or acquisition of additional product candidates.

Current wording

We have incurred significant operating losses since inception and have not generated any revenue from the sale of products and we do not expect to generate any revenue from the sale of products in the near future, if at all. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of our treatments and any future product candidates. Our net losses were $13.1 million and $11.3 million for the three months ended June 30, 2024 and 2023, respectively. Our net losses were $23.9 million and $19.1 million for the six months ended June 30, 2024 and 2023, respectively. We had an accumulated deficit of $339 million on June 30, 2024. We expect to continue to incur significant expenses for at least the next several years as we advance through clinical development, develop additional product candidates and seek regulatory approval of any product candidates that complete clinical development. In addition, if we obtain marketing approval for any product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. We may also incur expenses in connection with the in-licensing or acquisition of additional product candidates.

Previous wording

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through equity and debt financings, or other capital sources, which may include collaborations with other companies or other strategic transactions. As of March 31, 2024, we had $156 million in cash, cash equivalents and marketable securities. We expect that such cash resources will enable us to fund our operating expenses and capital expenditure requirements into late 2026.

Current wording

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through equity and debt financings, or other capital sources, which may include collaborations with other companies or other strategic transactions. As of June 30, 2024, we had $146 million in cash, cash equivalents and marketable securities. We expect that such cash resources will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2027.

Previous wording

General and administrative expenses consist primarily of salaries and related costs for personnel in executive, finance, business development and administrative functions. General and administrative expenses also include legal fees relating to patent and corporate matters, professional fees for accounting, auditing, tax, insurance, administrative travel expenses and other operating costs.

Current wording

General and administrative expenses consist primarily of salaries and related costs for personnel in executive, finance, business development and administrative functions. General and administrative expenses also include legal fees relating to patent and corporate matters, professional fees for accounting, auditing, tax, insurance, administrative travel expenses, facilities related to administrative personnel and other operating costs.

Previous wording

General and administrative expenses increased by $0.2 million or 6% for the three months ended March 31, 2024 as compared to the same period in 2023.

Current wording

General and administrative expenses increased $1.6 million, or 52% for the three months ended June 30, 2024 as compared to the same period in 2023. This increase primarily came from costs related to the accrual of expenses associated with our previously announced CEO transition.

Previous wording

Since our inception, we have devoted substantially all of our efforts to organizing and staffing our Company, business planning, raising capital, research and development activities, building our intellectual property portfolio and providing general and administrative support for these operations. We have funded our operations primarily with proceeds from the sale of our equity securities. Through March 31, 2024, we have received $430 million in gross proceeds from the sale of equity securities. As of March 31, 2024, we had cash, cash equivalents and marketable securities of $156 million.

Current wording

Since our inception, we have devoted substantially all of our efforts to organizing and staffing our Company, business planning, raising capital, research and development activities, building our intellectual property portfolio and providing general and administrative support for these operations. We have funded our operations primarily with proceeds from the sale of our equity securities. Through June 30, 2024, we have received $430 million in gross proceeds from the sale of equity securities. As of June 30, 2024, we had cash, cash equivalents and marketable securities of $146 million.

Previous wording

In the first quarter of 2024, we sold through our at-the-market (“ATM”) agreement with Jefferies LLC, 9,790,577 shares of common stock at an average price of $1.85 for total proceeds of $18.1 million and net proceeds of $17.6 million.

Current wording

For the first six months of 2024, we sold through our at-the-market (“ATM”) agreement with Jefferies LLC, 9,790,577 shares of common stock at an average price of $1.85 for total proceeds of $18.1 million and net proceeds of $17.6 million.

Previous wording

During the three months ended March 31, 2024, we used $13.9 million of cash in operating activities, resulting from our net loss of $10.8 million plus the change in operating assets and liabilities of $5.2 million, partially offset by non-cash charges of $2.1 million (primarily from share-based compensation expense of $2.0 million).

Current wording

During the six months ended June 30, 2024, we used $24.6 million of cash in operating activities, resulting from our net loss of $23.9 million minus the change in operating assets and liabilities of $4.7 million, partially offset by non-cash charges of $3.9 million (primarily from share-based compensation expense of $4.1 million).

Previous wording

During the three months ended March 31, 2023, we used $12.2 million of cash in operating activities, resulting from our net loss of $7.8 million plus the change in operating assets and liabilities of $5.6 million, partially offset by non-cash charges of $1.2 million (primarily from share-based compensation expense of $1.3 million).

Current wording

During the six months ended June 30, 2023, we used $22.3 million of cash in operating activities, resulting from our net loss of $19.1 million minus the change in operating assets and liabilities of $5.4 million, partially offset by non-cash charges of $2.2 million (primarily from share-based compensation expense of $2.9 million).

Previous wording

During the three months ended March 31, 2024, $4.1 million of cash was used in investing activities related to the net sale of marketable securities. During the three months ended March 31, 2023, $4.3 million of cash was provided by investing activities related to marketable securities.

Current wording

During the six months ended June 30, 2024, $2.4 million of cash was provided by investing activities, related to the net sale of marketable securities. During the six months ended June 30, 2023, $3.6 million of cash was provided by investing activities which primarily related to the net sale of marketable securities.

Previous wording

During the three months ended March 31, 2024, $17.4 million of cash was provided by financing activities. This primarily included $17.6 million of net cash from sale of common stock under an ATM Agreement, after issuance costs. During the three months ended March 31, 2023, we had $41 thousand in proceeds from the exercise of stock options.

Current wording

During the six months ended June 30, 2024, $17.4 million of cash was provided by financing activities. This primarily included $17.6 million of net cash from sale of common stock under an ATM Agreement, after issuance costs. During the six months ended June 30, 2023, $3.1 million of cash was provided by financing activities. This primarily included $3.0 million of net cash from sale of common stock under an ATM Agreement, after issuance costs.

Previous wording

We believe that our existing cash, cash equivalents and marketable securities as of filing of the Form 10-Q will enable us to fund our operating expenses and capital expenditure requirements into late 2026 based on our current plans, which may change based on clinical or pre-clinical results. These plans include: A Phase 2/3 and two Phase 2 clinical trials of CTX-009, a Phase 1b combination trial for CTX-471 and a Phase 1 trial of CTX-8371. We expect that we will require additional funding to complete the clinical development of these three programs, commercialize our product candidates, if we receive regulatory approval, and pursue in-licenses or acquisitions of other product candidates. If we receive regulatory approval for CTX-009, CTX-471 or CTX-8371 or other product candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize these product candidates ourselves.

Current wording

We believe that our existing cash, cash equivalents and marketable securities as of filing of this Quarterly Report on Form 10-Q will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2027 based on our current plans, which may change based on clinical or pre-clinical results. These plans include: A Phase 2/3 and two Phase 2 clinical trials of CTX-009, a Phase 2 trial for CTX-471 and a Phase 1a trial of CTX-8371. We expect that we will require additional funding to complete the clinical development of these three programs, commercialize our product candidates, if we receive regulatory approval, and pursue in-licenses or acquisitions of other product candidates. If we receive regulatory approval for CTX-009, CTX-471 or CTX-8371 or other product candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize these product candidates ourselves.