COMPASS Pathways(CMPS) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements Unaudited H1 2025 financial statements reflect increased assets and liabilities, a reduced net loss, and substantial financing inflows Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2025, shows total assets at $293.5 million and total liabilities at $131.0 million, driven by cash and warrant liabilities Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $221,881 | $165,081 | | Total current assets | $276,403 | $201,291 | | Total assets | $293,536 | $213,666 | | Liabilities & Equity | | | | Total current liabilities | $31,328 | $34,016 | | Warrant liabilities | $74,398 | $— | | Total liabilities | $130,981 | $58,971 | | Total shareholders' equity | $162,555 | $154,695 | Condensed Consolidated Statements of Operations and Comprehensive Loss For H1 2025, the company reported a net loss of $56.3 million, an improvement from 2024, primarily due to warrant fair value changes and R&D tax credits Statement of Operations Highlights (in thousands, except per share data) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Research and development | $61,205 | $53,970 | | General and administrative | $31,344 | $27,925 | | Total operating expenses | $92,549 | $81,895 | | Loss from operations | $(92,549) | $(81,895) | | Fair value change of warrant liabilities | $16,920 | $— | | Benefit from R&D tax credit | $12,735 | $6,810 | | Net loss | $(56,267) | $(73,288) | | Net loss per share | $(0.62) | $(1.11) | Condensed Consolidated Statements of Cash Flows H1 2025 saw $84.3 million net cash used in operations, offset by $140.5 million from financing, resulting in a $56.8 million net cash increase Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(84,346) | $(55,244) | | Net cash provided by financing activities | $140,525 | $63,722 | | Effect of exchange rate changes | $611 | $(99) | | Net increase in cash | $56,790 | $8,379 | | Cash, cash equivalents and restricted cash, end of period | $222,260 | $229,017 | Notes to Condensed Consolidated Financial Statements Notes detail the company's COMP360 development, a $149.8 million January 2025 financing, and sufficient cash to fund operations for at least twelve months - The company is a clinical-stage biotechnology company developing its investigational COMP360 psilocybin treatment for treatment-resistant depression[32] - In January 2025, the company completed a financing that raised aggregate proceeds of $149.8 million through the issuance of ADSs, Pre-funded Warrants, and 2025 ADS Warrants[36][63] - Management believes the cash and cash equivalents of $221.9 million as of June 30, 2025, will be sufficient to fund operations and capital expenditures for at least the next twelve months[38] - Warrants issued in the January 2025 financing are classified as liabilities and measured at fair value, with changes recognized in the statement of operations. As of June 30, 2025, the total fair value of these warrant liabilities was $74.4 million[56] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses COMP360's clinical progress, including positive Phase 3 TRD data, and the financial impact of increased R&D and G&A expenses Overview and Clinical Development The company's COMP360 treatment for TRD achieved its primary endpoint in Phase 3 trial 1, with $221.9 million cash expected to fund operations into 2027 - The pivotal Phase 3 trial 1 (COMP005) for TRD achieved its primary endpoint, with a single 25 mg dose of COMP360 demonstrating a highly statistically significant reduction in symptom severity versus placebo at six weeks (p<0.001)[80] - The second pivotal Phase 3 trial (COMP006) is ongoing, and 26-week data is expected to be reported in the second half of 2026[82] - Following positive Phase 2 results in PTSD, the company is designing a late-stage program for this indication[83] - As of June 30, 2025, the company had $221.9 million in cash and cash equivalents, which is expected to fund operations into 2027[89] Results of Operations H1 2025 operating expenses increased to $92.5 million due to clinical trials and financing-related fees, partially offset by significant other income Operating Expenses Comparison (in thousands) | Expense Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Research and development | $61,205 | $53,970 | $7,235 | | General and administrative | $31,344 | $27,925 | $3,419 | | Total operating expenses | $92,549 | $81,895 | $10,654 | - The increase in R&D expenses was primarily due to advancing late-stage COMP360 clinical trials, partially offset by decreased personnel costs from a Q4 2024 reorganization[111][112] - The increase in G&A expenses for the six-month period was driven by higher legal and professional fees related to the 2025 Financing[114] - Total other income, net, increased by $27.8 million for the six-month period, driven by a $16.9 million gain on fair value of warrant liabilities, a $5.9 million increase in R&D tax credit benefits, and a $5.0 million increase in foreign exchange gains[115][119] Liquidity and Capital Resources Operations are funded by equity and debt, with $221.9 million cash expected to last into 2027, but future funding depends on clinical trial progress - The company has primarily funded operations through equity offerings (including an ATM program), a loan agreement with Hercules, and a private placement (PIPE)[117] - Net cash used in operating activities increased to $84.3 million for the six months ended June 30, 2025, from $55.2 million in the prior year period, mainly due to unfavorable working capital changes[120][121] - Net cash provided by financing activities increased to $140.5 million for the six months ended June 30, 2025, primarily from the 2025 Financing[120][122] - Future expenses are expected to increase with the advancement of the Phase 3 program in TRD, initiation of a late-stage program in PTSD, and commercial preparedness activities[123] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes in market risk exposures have occurred since the December 31, 2024, Annual Report on Form 10-K - There have been no material changes in market risk exposures since the last Annual Report on Form 10-K for the year ended December 31, 2024[133] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[134] - No changes in internal control over financial reporting occurred during the three months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal controls[135] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any material litigation or legal proceedings expected to adversely affect its business or financial condition - The company is not currently a party to any material litigation or legal proceedings[137] Item 1A. Risk Factors Numerous risks include a history of losses, need for additional funding, dependence on COMP360, complex regulatory processes, and controlled substance challenges - The company is a clinical-stage entity with a history of significant losses ($591.0 million accumulated deficit as of June 30, 2025) and expects to incur losses for the foreseeable future[139] - Substantial additional funding is required to complete development and commercialization of COMP360, and failure to obtain it could force delays or termination of programs[144] - The company's business is highly dependent on the successful development, regulatory approval, and commercialization of its only clinical-stage candidate, COMP360 psilocybin treatment[172][173] - COMP360 is subject to strict controlled substance laws (Schedule I in the U.S.), which creates significant regulatory hurdles for clinical development and potential commercialization, including the need for DEA rescheduling[179][181] Item 5. Other Information The company amended its Hercules loan agreement, completed a Phase 2 anorexia nervosa trial with encouraging signals, and reported no 10b5-1 plan changes - On July 30, 2025, the company amended its Loan and Security Agreement with Hercules, removing a $10.0 million tranche and increasing a separate, discretionary tranche by $10.0 million to an aggregate of $20.0 million[560] - The Phase 2 trial of COMP360 in anorexia nervosa (COMP401) was completed. While there was a positive signal in the 25mg arm, high dropout rates in the control arm limited the study's statistical power. The safety profile was consistent with the patient population[561] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including officer certifications and the amended loan agreement with Hercules Capital