Compass Therapeutics, Inc.

Compass Therapeutics, Inc. (“Compass” or the “Company”) is a clinical-stage, oncology-focused biopharmaceutical company developing proprietary antibody-based therapeutics to treat multiple human diseases. The Company’s scientific focus is on the relationship between angiogenesis and the immune system. The pipeline includes novel product candidates that leverage the Company’s understanding of the tumor microenvironment, including both angiogenesis-targeted agents and immune-oncology focused agents. These product candidates are designed to optimize critical components required for an effective anti-tumor response to cancer. These include modulation of the microvasculature via angiogenesis-targeted agents; induction of a potent immune response via activators on effector cells in the tumor microenvironment; and alleviation of immunosuppressive mechanisms used by tumors to evade immune surveillance. The Company plans to advance its product candidates through clinical development as both standalone therapies and in combination with its proprietary drug candidates as long as their continued development is supported by clinical and nonclinical data. References to Compass or the Company herein include Compass Therapeutics, Inc. and its wholly owned subsidiaries.

The Company is subject to risks and uncertainties common to companies in the biotechnology and pharmaceutical industries. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s technology will be obtained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. The Company operates in an environment of rapid change in technology and substantial competition from pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees and consultants.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s consolidated financial position as of September 30, 2026 and its consolidated results of operations, comprehensive loss, changes in stockholders’ equity and cash flows for the three and nine months ended September 30, 2026 and 2025. Operating results for the three and nine months ended September 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

The unaudited condensed consolidated financial statements include the accounts of Compass Therapeutics, Inc. and its subsidiaries, and have been prepared by the Company in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet at December 31, 2025 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. Accordingly, these condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “Annual Report”).

Liquidity

Since inception, the Company has devoted substantially all its efforts to organizing and staffing, business planning, raising capital, research and development activities, building intellectual property portfolio and providing general and administrative support for these operations. The Company has funded its operations with proceeds from the sale of equity securities. Through September 30, 2026, the Company has received $568 million in gross proceeds from the sale of equity securities. As of September 30, 2026, the total of cash, cash equivalents and marketable securities was $163 million. The Company expects such cash resources will fund operating expenses and capital expenditure requirements into 2028.

There have been no material changes to the significant accounting policies previously disclosed in the Company’s Annual Report.

Recently Issued Accounting Pronouncements

In December 2025, the FASB issued ASU No. 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements”. This ASU clarifies and improves existing interim reporting guidance by consolidating disclosure requirements within Topic 270 and introducing a disclosure principle requiring entities to disclose events and changes occurring after the most recent annual reporting period that are expected to have a material effect on the entity’s financial condition or results of operations. The ASU does not introduce significant changes to recognition or measurement guidance. The amendments in this ASU are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the effect of adopting this ASU on its consolidated financial statements and disclosures.

The following tables represent the Company’s financial assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):

The objectives of the Company’s investment policy are to ensure the safety and preservation of invested funds, as well as to maintain liquidity sufficient to meet cash flow requirements. The Company invests its excess cash in securities issued by financial institutions, commercial companies, and government agencies that management believes to be of high credit quality in order to limit the amount of its credit exposure. The Company has not realized any net losses from its investments.

Marketable securities consist of debt securities classified as available-for-sale and are carried at fair value, with unrealized gains and losses reported in accumulated other comprehensive (loss) income. For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or whether it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either criterion is met, the security’s amortized cost basis is written down to fair value through earnings. If neither criterion is met, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors, considering the extent to which fair value is below amortized cost, changes in credit ratings, and adverse conditions specific to the issuer. Any credit-related impairment is recognized as an allowance for credit losses, limited to the amount by which fair value is below amortized cost, with a corresponding charge to earnings. Impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive (loss) income.

As of September 30, 2026 and December 31, 2025, the Company had not recorded an allowance for credit losses on its marketable securities. The Company does not intend to sell, and it is not more likely than not that it will be required to sell, the securities in an unrealized loss position before recovery of their amortized cost basis. The Company believes the unrealized losses are attributable to changes in interest rates and not to credit-related factors.

The following tables summarize marketable securities held (in thousands):

Property and equipment consist of the following (in thousands):

Depreciation and amortization expense for each of the nine months ended September 30, 2026 and 2025 was $64 thousand and $0.3 million respectively.

Accrued expenses consist of the following (in thousands):

Project expenses include $12.2 million of accrued manufacturing expenses primarily related to tovecimig.

Leases

The Company has evaluated its leases under ASC 842,Leases, and determined that it has one lease that is classified as an operating lease. The classification of this lease is consistent with the Company’s determination under the previous accounting standard.

The terms of the Company’s only corporate office and laboratory facility (the “Facility”) lease were modified effective September 27, 2024 through the execution of a new lease. The modified terms extended the non-cancelable lease term through May 2031. The modified terms also included the right to use an additional 10,724 square feet that became available for the Company’s use in May 2025. The classification and incremental borrowing rate of 6.25% for the lease did not change as a result of this lease modification. Right-of-use assets obtained in exchange for the new operating lease liabilities due to the lease modification were $9.9 million for a total right-of-use assets as of September 30, 2026 of $8.0 million. The remaining lease term of the Facility lease is 4.7 years as of September 30, 2026. The Company has $568 thousand of restricted cash associated with an irrevocable letter of credit required by the landlord to enter into this lease.

Lease costs related to the Facility were $0.5 million and $0.5 million for the three months ended September 30, 2026 and 2025, respectively and $1.5 million and $1.3 million for the nine months ended September 30, 2026 and 2025, respectively. Cash payments related to the Facility were $0.5 million and $0.2 million for the three months ended September 30, 2026 and 2025, respectively and $1.2 million and $0.8 million for the nine months ended September 30, 2026 and 2025, respectively.

The table below presents the undiscounted cash flows for the lease term. The undiscounted cash flows are reconciled to the operating lease liabilities recorded on the condensed consolidated balance sheet (in thousands):

Defined Contribution Plan

The Company has a 401(k) defined contribution plan (the “401(k) Plan”) for substantially all its employees. Eligible employees may make pre-tax or post-tax (Roth) contributions to the 401(k) Plan up to statutory limits. The Company matches employee contributions to the plan up to 6% of salary. The Company made matching contributions of $0.2 million and $0.1 million for the three months ended September 30, 2026 and 2025, respectively. The Company made matching contributions of $0.4 million and $0.3 million for the nine months ended September 30, 2026 and 2025, respectively.

Stock-based compensation expense for the three and nine months ended September 30, 2026 and 2025 was classified in the condensed consolidated statement of operations as follows (in thousands):

As of September 30, 2026, the remaining unrecognized stock-based compensation cost from all plans to be recognized in future periods totaled $42.1 million.

2020 Plan

In June 2020, the Company’s board of directors adopted the 2020 Stock Option and Incentive Plan (the “2020 Plan”) and reserved 2.9 million shares of common stock for issuance under this plan. The 2020 Plan includes automatic annual increases. The increase on January 1, 2026 was 7.1 million shares. As of September 30, 2026,4.5 million shares remain available for grant.

The 2020 Plan authorizes the board of directors or a committee of the board to grant incentive stock options, nonqualified stock options, restricted stock awards and restricted stock units ("RSUs") to eligible officers, employees, consultants and directors of the Company. Options generally vest over a period offour years and have a contractual life often years from the date of grant.

2025 Inducement Plan

In December 2025, the Company’s board of directors adopted the Compass Therapeutics, Inc. 2025 Inducement Plan (the “Inducement Plan”). The maximum number of shares of common stock reserved and available for issuance under the Inducement Plan isfour million shares. As of September 30, 2026, a total oftwo million options were granted as part of the Inducement Plan totwo new officers as a material inducement for those officers to join the Company.

Stock Options:

The following table summarizes the stock option activity for the 2020 Plan and the Inducement Plan:

For the nine months ended September 30, 2026, the weighted average grant date fair value for options granted was $3.64. There was no intrinsic value for options vested as of September 30, 2026. As of September 30, 2026, the total unrecognized compensation cost related to outstanding options was $37.5 million, to be recognized over a weighted average period of 1.4 years.

For the nine months ended September 30, 2025, the weighted average grant date fair value for options granted was $2.68. The intrinsic value for options vested as of September 30, 2025, was $6.0 million. As of September 30, 2025, the total unrecognized compensation cost related to outstanding options was $15.5 million, to be recognized over a weighted average period of 1.4 years.

The weighted average assumptions used in the Black-Scholes pricing model to determine the fair value of stock options granted during the nine months ended September 30, 2026 and 2025 were as follows:

RSUs:

The following table summarizes the RSU activity for the 2020 Plan and the Inducement Plan:

The weighted average price per share is the weighted grant price based on the closing market price of each of the stock grants. The weighted average fair value is the weighted average share price times the number of shares.

As of September 30, 2026, the remaining unrecognized compensation cost related to RSUs to be recognized in future periods totaled $4.6 million, which is expected to be recognized over a weighted average period of 1.4 years.

2025 Underwritten Offering

On August 12, 2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Jefferies LLC, Piper Sandler & Co., and Guggenheim Securities, LLC, as representatives (the “Representatives”) of the underwriters named therein (the “Underwriters”), pursuant to which the Company agreed to issue and sell an aggregate of (a)33,290,000 shares (the “Firm Shares”) of its common stock, par value $0.0001 per share (the “Common Stock”), at a price to the public of $3.00 per share, and (b) pre-funded warrants to purchase up to 6,710,000 shares of the Company’s Common Stock (the “Pre-Funded Warrants”), at a price to the public of $2.9999 per warrant with an exercise price of $0.0001 per share (the “Offering”). Pursuant to the Underwriting Agreement, the Company granted the underwriters a 30-day option, which the underwriters exercised, to purchase up to an additional 6,000,000 shares of its Common Stock (the “Optional Shares”, and together with the Firm Shares, the “Shares”) at the public offering price, less underwriting discounts and commissions. The Company received aggregate net proceeds of $129.3 million, after deducting underwriting discounts and commissions of $8.3 million and other offering costs of $0.4 million.

The 2025 Pre-Funded Warrants were determined to be equity classified. Accordingly, proceeds from the offering were allocated to common stock, the 2025 Pre-Funded Warrants on a relative fair value basis and were recorded in stockholders’ equity. As of September 30, 2026, all of the 2025 Pre-Funded Warrants remain outstanding.

Basic net loss per share has been computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock plus potentially dilutive securities outstanding during the period. Potential shares of common stock exercisable for little or no consideration are included in both basic and diluted weighted-average number of shares of common stock outstanding.

During the three and nine months ended September 30, 2026, basic and diluted weighted-average number of shares outstanding were 186.8 million and 186.7 million shares, respectively, and included pre-funded warrants to purchase 6.7 million shares of common stock with an exercise price of $0.0001 per share. During the three and nine months ended September 30, 2025, basic and diluted weighted-average number of shares outstanding were 168.8 million and 148.5 million shares, respectively, and included pre-funded warrants to purchase 6.7 million shares of common stock with an exercise price of $0.0001 per share.

The computation of diluted net loss per share for the three and nine months ended September 30, 2026 excluded 25.5 million shares subject to outstanding stock options and restricted stock units because their inclusion would have had an anti-dilutive effect on diluted net loss per share. The computation of diluted net loss per share for the three and nine months ended September 30, 2025 excluded 18.4 million shares subject to outstanding stock options and restricted stock units because their inclusion would have had an anti-dilutive effect on diluted net loss per share. The following potentially dilutive securities (in common stock equivalents) have been excluded from the computation of diluted weighted-average shares outstanding for the three and nine months ended September 30, 2026 and 2025, as they would be antidilutive:

Collaboration Agreements

ABL Bio Corporation ("ABL Bio") Agreement

In November 2018, the Company and ABL Bio, a South Korean biotechnology company, entered into an exclusive global (excluding South Korea) license agreement which granted the Company a license to tovecimig (ABL001), ABL Bio’s bispecific antibody targeting DLL4 and VEGF-A. Under the terms of the agreement, the two companies would jointly develop tovecimig, with ABL Bio responsible for development of tovecimig throughout the end of Phase 1 clinical trials and the Company responsible for the development of tovecimig from Phase 2 and onward. ABL Bio received a $5 million upfront payment and $6 million development milestone payment. In addition, ABL Bio is eligible to receive up to $96 million of development and regulatory milestone payments, and up to $303 million of commercial milestone payments and tiered single-digit royalties on net sales of tovecimig in oncology.

In May 2021, the Company and ABL Bio terminated license agreements to several preclinical assets. As a result of the return of these assets to ABL Bio and termination of the license agreements, the Company is eligible to receive royalty payments if ABL Bio develops or licenses two bispecific antibodies that were previously licensed to the Company.

Adimab Agreement

The Company entered into a collaboration agreement with Adimab, LLC on October 16, 2014. The agreement includes provisions for payment of royalties at rates ranging in the single digits as a percentage of future net sales within a specified term from the first commercial sale for certain antibodies, including our product candidate, CTX-471. There wereno milestone payments made during the nine months ended September 30, 2026. As of September 30, 2026, future potential milestone payments in connection with this agreement amounted to $2.0 million.

Segment reporting is prepared on the same basis that our chief executive officer, who is our Chief Operating Decision Maker, manages the business, makes operating decisions and assesses performance. The Company operates inone segment. The Company’s business is research and development of drug candidates. Costs, including supplies, outsourced development, and other research and development costs are tracked by major program. While internal personnel costs are tracked by program for overall program spending, it is not broken out for management review. Facility and equipment costs are not allocated to programs. Research and development expenses are summarized by program in the table below (in thousands):

Item 2. Management’**s Discussion and Analysis of Financial Condition and Results of Operations.