COMPASS Pathways(US:CMPS)2025-05-08 10:38PART I Item 1. Financial Statements (Unaudited) Presents unaudited condensed consolidated financial statements for Q1 2025 vs Q1 2024, highlighting increased cash to $260.1 million and a reduced net loss of $17.9 million Condensed Consolidated Balance Sheets The balance sheet as of March 31, 2025, shows cash and equivalents increased to $260.1 million, total assets to $319.1 million, and a new $71.9 million warrant liability Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $260,110 | $165,081 | | Total current assets | $305,468 | $201,291 | | Total assets | $319,135 | $213,666 | | Liabilities & Equity | | | | Total current liabilities | $29,999 | $34,016 | | Warrant liabilities | $71,857 | $0 | | Total liabilities | $123,668 | $58,971 | | Total shareholders' equity | $195,467 | $154,695 | Condensed Consolidated Statements of Operations and Comprehensive Loss Net loss for Q1 2025 improved to $17.9 million from $35.2 million in Q1 2024, primarily due to a $19.5 million non-cash gain on warrant liabilities Statement of Operations Summary (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Research and development | $30,880 | $24,901 | | General and administrative | $18,736 | $13,672 | | Total operating expenses | $49,616 | $38,573 | | Loss from operations | ($49,616) | ($38,573) | | Fair value change of warrant liabilities | $19,460 | $0 | | Benefit from R&D tax credit | $8,448 | $3,101 | | Net loss | ($17,864) | ($35,187) | | Net loss per share, basic | ($0.20) | ($0.55) | Condensed Consolidated Statements of Shareholders' Equity Shareholders' equity increased to $195.5 million by March 31, 2025, from $154.7 million at year-end 2024, driven by $54.6 million from ordinary share issuance - The company issued 24,014,728 ordinary shares, net of issuance costs, during the quarter, increasing additional paid-in capital by $54.6 million26 - Total shareholders' equity increased to $195.5 million at March 31, 2025, from $154.7 million at December 31, 202426 Condensed Consolidated Statements of Cash Flows Net cash used in operations was $45.7 million in Q1 2025, with $140.4 million provided by financing, leading to $260.5 million cash at quarter-end Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($45,657) | ($20,828) | | Net cash provided by financing activities | $140,359 | $63,512 | | Net increase in cash, cash equivalents and restricted cash | $95,019 | $42,639 | | Cash, cash equivalents and restricted cash, end of period | $260,489 | $263,277 | Notes to Condensed Consolidated Financial Statements Notes detail the company's biotech focus on COMP360, significant January 2025 financing raising $149.8 million and creating warrant liabilities, and a cash runway of $260.1 million through H2 2026 - In January 2025, the company completed a financing by issuing ADSs, Pre-funded Warrants, and 2025 ADS Warrants, resulting in aggregate proceeds of $149.8 million3564 - The company believes its cash and cash equivalents of $260.1 million as of March 31, 2025, will be sufficient to fund operations at least through the planned 26-week data read-out from the COMP006 study, expected in H2 202637 - Warrants issued in the January 2025 financing are classified as liabilities and measured at fair value. As of March 31, 2025, the total warrant liability was $71.9 million55 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, advancing the COMP360 Phase 3 program, increased R&D and G&A expenses, a reduced net loss for Q1 2025, and a cash runway through H2 2026 - The company is advancing its Phase 3 program for COMP360 in TRD, with top-line results for the pivotal COMP005 trial expected in late June 202590 - Cash and cash equivalents of $260.1 million as of March 31, 2025, are expected to fund operations through the COMP006 data readout in the second half of 202698129 Q1 2025 vs Q1 2024 Results Summary (in thousands) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Total operating expenses | $49,616 | $38,573 | $11,043 | | Total other income, net | $32,106 | $3,608 | $28,498 | | Net loss | ($17,864) | ($35,187) | $17,323 | Overview The company is a biotech firm focused on COMP360 for TRD, with Phase 3 trials underway and top-line COMP005 data expected in late June 2025, supported by $260.1 million cash through H2 2026 - The Phase 3 program for COMP360 in TRD consists of two pivotal trials, COMP005 (n=258) and COMP006 (n=568). Top-line 6-week data for COMP005 is expected in late June 20259091 - A Phase 2 study of COMP360 in PTSD met its primary safety endpoint and showed meaningful symptom improvement, leading to the design of a late-stage PTSD program92 - In January 2025, the company completed a financing selling ADSs and warrants. As of March 31, 2025, cash and cash equivalents were $260.1 million, with an expected cash runway through H2 20269598 Components of Our Results of Operations Key drivers of financial results include R&D and G&A expenses, with no revenue, and Other Income influenced by UK R&D tax credits and warrant liability fair value changes - R&D expenses are expected to continue to increase as the company completes the clinical development for its investigational COMP360 psilocybin treatment for TRD104 - The UK R&D tax credit is a key component of Other Income and is not dependent on taxable income, being recorded as a benefit before income tax108110 - Fair value changes in warrant liabilities, which are re-measured each period, are recognized in the statement of operations and can cause significant fluctuations112 Results of Operations Q1 2025 saw R&D expenses rise by $6.0 million to $30.9 million and G&A by $5.1 million to $18.7 million, but a $19.5 million gain on warrant liabilities led to a reduced net loss of $17.9 million R&D Expense Breakdown (in thousands) | Category | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Development expenses | $21,696 | $13,944 | $7,752 | | Personnel expenses | $6,069 | $6,604 | ($535) | | Total R&D expenses | $30,880 | $24,901 | $5,979 | G&A Expense Breakdown (in thousands) | Category | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Legal and professional fees | $9,364 | $2,447 | $6,917 | | Personnel expenses | $5,061 | $5,501 | ($440) | | Total G&A expenses | $18,736 | $13,672 | $5,064 | - Other income, net, increased by $28.5 million, primarily due to a $19.5 million gain on the change in fair value of warrant liabilities and a $5.3 million increase in the benefit from the R&D tax credit120122 Liquidity and Capital Resources The company held $260.1 million in cash as of March 31, 2025, sufficient to fund operations through H2 2026, with Q1 2025 seeing $45.7 million cash used in operations and $140.4 million provided by financing - The company had cash and cash equivalents of $260.1 million as of March 31, 2025129 - The current cash balance is expected to fund operating expenses and capital requirements at least through the planned 26-week data read-out from the COMP006 study, which is expected in the second half of 2026129 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($45,657) | ($20,828) | | Net cash provided by financing activities | $140,359 | $63,512 | Critical Accounting Policies and Significant Judgments and Estimates Critical accounting policies were updated in Q1 2025 to include warrant liabilities, recorded at fair value using the Black-Scholes model, requiring significant management judgment and re-measurement each period - The company accounts for certain warrants as liabilities in accordance with ASC Topic 815-40, recording them at fair value and re-measuring them each reporting period133 - The fair value of these warrant liabilities is determined using the Black-Scholes pricing model, a method that is subject to a significant degree of management's judgment133 Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes in market risk exposures were reported compared to the Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes in market risk exposures that affect the disclosures presented in the company's Annual Report on Form 10-K for the year ended December 31, 2024137 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during Q1 2025 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025138 - There were no material changes in the company's internal control over financial reporting during the first quarter of 2025139 PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any litigation or claims that would materially adversely affect its business or financial condition - The company is not currently a party to any material legal proceedings141 Item 1A. Risk Factors This section outlines numerous risks, including financial losses, dependence on COMP360 development, regulatory hurdles for controlled substances, adverse side effects, competition, and reliance on third parties - The company is a clinical-stage entity with a history of significant losses, an accumulated deficit of $552.6 million as of March 31, 2025, and expects to incur losses for the foreseeable future143 - The company's business is highly dependent on the success of its investigational COMP360 psilocybin treatment, which is subject to stringent controlled substance laws (Schedule I in the U.S.) and may never receive regulatory approval or be successfully commercialized176183 - The company relies on third parties for the manufacturing of COMP360 and for conducting clinical trials, exposing it to risks of supply disruption, regulatory non-compliance, and delays413418 Risks Related to Financial Position and Need for Additional Capital This sub-section details the company's history of significant operating losses, expected future losses, critical need for additional capital, and potential for dilution or restrictive terms from future financings Risks Related to Development, Clinical Testing and Commercialization This sub-section outlines extensive risks in developing and commercializing COMP360, including trial failures, adverse side effects, regulatory approval for a Schedule I substance, market acceptance, and competition Risks Related to Regulatory Compliance This sub-section details risks from psilocybin's Schedule I status, requiring rescheduling for commercialization, and compliance burdens from anti-corruption, tax (Section 280E), healthcare fraud, and data privacy laws Risks Related to Intellectual Property This sub-section details IP risks, including challenges in obtaining, maintaining, and defending COMP360 patents, potential invalidation, insufficient protection, third-party infringement claims, and protecting trade secrets and trademarks Risks Related to Our Dependence on Third Parties This sub-section outlines reliance on third parties, including CMOs for COMP360 manufacturing and CROs for clinical trials, exposing the company to risks of failures, quality issues, supply disruptions, and delays Risks Related to Business Operations, Managing Growth and Employee Matters This sub-section covers operational and personnel risks, including retaining key talent, managing growth, employee morale, misconduct, competition, cybersecurity threats, and business disruptions from external events Risks Related to the Ownership of Our ADSs This sub-section addresses risks for ADS investors, including price volatility, no dividends, challenges in enforcing judgments, differing voting rights, and potential adverse U.S. tax consequences from PFIC or CFC classification Risks Related to Our Controls Over Financial Reporting This sub-section highlights the risk of failing to maintain effective internal control over financial reporting, which could lead to inaccurate reporting, fraud, loss of investor confidence, and negative impact on ADS trading price General Risk Factors This sub-section covers broad external risks, including currency exchange rate fluctuations, unfavorable global economic and geopolitical conditions, and uncertainty from potential changes in U.S. government policies and tax laws Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities This section reports on the company's purchases of 26,563 ordinary shares at a weighted-average price of $4.20 per share in Q1 2025, primarily for employee tax withholding obligations Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2025 | 0 | — | | Feb 2025 | 22,095 | $4.31 | | Mar 2025 | 4,468 | $3.67 | | Total | 26,563 | $4.20 | - The shares purchased represent ordinary shares surrendered to the Company to satisfy tax withholding obligations in connection with the vesting of employee equity awards562 Item 3. Defaults Upon Senior Securities This item is not applicable, indicating no defaults upon the company's senior securities during the period - Not applicable; no defaults upon senior securities were reported563 Item 4. Mine Safety Disclosures This item is not applicable to the company's business operations - Not applicable; the company has no mine safety disclosures to report564 Item 5. Other Information During Q1 2025, no directors or executive officers adopted, terminated, or modified any Rule 10b5-1 trading plans or similar arrangements - During Q1 2025, no directors or executive officers adopted, terminated, or modified any Rule 10b5-1 trading plans or similar arrangements565 Item 6. Exhibits This section lists exhibits filed with the 10-Q, including amended employment agreements for key executives, a research collaboration amendment, SOX certifications, and XBRL data files - Filed exhibits include amended employment agreements for CEO Kabir Nath and CFO Teri Loxam, and an amendment to the research collaboration with King's College London569 - Certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, signed by the CEO and CFO, are included as exhibits569