Compass Therapeutics(CMPX) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial information, including financial statements and management's discussion and analysis, for Compass Therapeutics, Inc Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements and accompanying notes for Compass Therapeutics, Inc. and its subsidiaries Condensed Consolidated Balance Sheets (Unaudited) This table provides a snapshot of the Company's financial position, detailing assets, liabilities, and stockholders' equity at specific dates | Metric | June 30, 2025 (unaudited) (in thousands) | December 31, 2024 (Note 1) (in thousands) | | :-------------------------------- | :--------------------------------------- | :-------------------------------------- | | Assets | | | | Cash and cash equivalents | $22,856 | $43,483 | | Marketable securities | $78,093 | $83,239 | | Total current assets | $106,195 | $132,751 | | Total assets | $116,698 | $140,403 | | Liabilities | | | | Accounts payable | $2,595 | $2,249 | | Accrued expenses | $10,992 | $6,287 | | Total current liabilities | $13,858 | $8,874 | | Total liabilities | $23,491 | $15,170 | | Stockholders' Equity | | | | Total stockholders' equity | $93,207 | $125,233 | | Total liabilities and stockholders' equity | $116,698 | $140,403 | Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) This statement outlines the Company's revenues, expenses, and net loss over specific reporting periods | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :----------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Licensing revenue | $— | $850 | $— | $850 | | Research and development expenses | $16,415 | $11,174 | $29,476 | $20,695 | | General and administrative expenses | $4,651 | $4,721 | $9,556 | $7,969 | | Total operating expenses | $21,066 | $15,895 | $39,032 | $28,664 | | Loss from operations | $(21,066) | $(15,045) | $(39,032) | $(27,814) | | Other income | $1,185 | $1,969 | $2,518 | $3,951 | | Net loss | $(19,881) | $(13,076) | $(36,514) | $(23,863) | | Net loss per share - basic and diluted | $(0.14) | $(0.10) | $(0.26) | $(0.17) | | Comprehensive loss | $(19,863) | $(13,077) | $(36,516) | $(23,991) | Condensed Consolidated Statements of Stockholders' Equity (Unaudited) This statement details changes in the Company's equity accounts, including common stock, additional paid-in capital, and accumulated deficit Stockholders' Equity (in thousands) | Metric (in thousands) | Balance at Dec 31, 2024 | Balance at Mar 31, 2025 | Balance at Jun 30, 2025 | | :---------------------- | :---------------------- | :---------------------- | :---------------------- | | Common Stock | $14 | $14 | $14 | | Additional Paid-in Capital | $489,692 | $491,391 | $494,182 | | Accumulated Other Comprehensive (Loss) Income | $210 | $190 | $208 | | Accumulated Deficit | $(364,683) | $(381,316) | $(401,197) | | Total Stockholders' Equity | $125,233 | $110,279 | $93,207 | - Total stockholders' equity decreased from $125.2 million at December 31, 2024, to $93.2 million at June 30, 2025, primarily due to a net loss of $36.5 million for the six months ended June 30, 2025, partially offset by stock-based compensation[20] Condensed Consolidated Statements of Cash Flows (Unaudited) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(25,040) | $(24,642) | | Net cash provided by investing activities | $5,228 | $2,384 | | Net cash (used in) provided by financing activities | $(815) | $17,434 | | Net change in cash, cash equivalents and restricted cash | $(20,627) | $(4,824) | | Cash, cash equivalents and restricted cash at end of period | $23,424 | $19,404 | Notes to Unaudited Condensed Consolidated Financial Statements These notes provide additional information and explanations for the figures presented in the financial statements 1. Nature of Business and Basis of Presentation This section describes the Company's core business as a clinical-stage biopharmaceutical company and its financial reporting basis - Compass Therapeutics, Inc. is a clinical-stage, oncology-focused biopharmaceutical company developing proprietary antibody-based therapeutics, with a scientific focus on the relationship between angiogenesis and the immune system[25] - The Company has funded operations primarily through equity securities sales, receiving $430 million in gross proceeds through June 30, 2025[29][65] - As of June 30, 2025, cash, cash equivalents, and marketable securities totaled $101 million, expected to fund operations into 2027[29][67][87] 2. Summary of Significant Accounting Policies This section outlines the key accounting principles and methods used in preparing the financial statements - There have been no material changes to the significant accounting policies previously disclosed in the Company's Annual Report[30] 3. Fair Value Measurements This section details the fair value hierarchy and measurements for the Company's financial assets and liabilities Fair Value of Assets (in thousands) | Asset Category | Fair Value as of June 30, 2025 (in thousands) | Fair Value as of December 31, 2024 (in thousands) | | :--------------- | :------------------------------------------ | :--------------------------------------------- | | Corporate bonds | $61,175 | $44,963 | | Commercial paper | $9,415 | $12,084 | | Certificates of deposit | $918 | $15,269 | | U.S. government treasuries | $2,734 | $4,399 | | Asset-backed securities | $3,851 | $6,524 | | Money market funds | $3,730 | $23,880 | | Total assets | $81,823 | $107,119 | 4. Marketable Securities This section provides information on the Company's investments in marketable securities, including their fair values and maturities - The Company invests excess cash in high-credit quality securities to ensure safety, preservation of funds, and liquidity[32] Marketable Securities (in thousands) | Marketable Securities (in thousands) | Fair Value as of June 30, 2025 | Fair Value as of December 31, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Corporate bonds | $61,175 | $44,963 | | Commercial paper | $9,415 | $12,084 | | Certificates of deposit | $918 | $15,269 | | U.S. government treasuries | $2,734 | $4,399 | | Asset-backed securities | $3,851 | $6,524 | | Total assets | $78,093 | $83,239 | | Maturing in one year or less | $42,338 | $56,386 | | Maturing after one year through two years | $35,755 | $26,853 | 5. Property and Equipment This section details the Company's property and equipment, net of accumulated depreciation Property and Equipment (in thousands) | Property and Equipment (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Equipment | $4,734 | $4,716 | | Leasehold improvements | $1,612 | $1,612 | | Software | $364 | $364 | | Furniture and fixtures | $22 | $22 | | Total property and equipment–at cost | $6,732 | $6,714 | | Less: Accumulated depreciation | $(6,601) | $(6,361) | | Property and equipment, net | $131 | $353 | - Net property and equipment decreased from $353 thousand at December 31, 2024, to $131 thousand at June 30, 2025, primarily due to accumulated depreciation[36] 6. Accrued Expenses This section provides a breakdown of the Company's accrued expenses, including project and compensation-related costs Accrued Expenses (in thousands) | Accrued Expenses (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Project expenses | $8,604 | $2,873 | | Compensation and benefits | $2,004 | $2,793 | | Other | $384 | $621 | | Total accrued expenses | $10,992 | $6,287 | - Total accrued expenses increased by $4.7 million to $10.99 million at June 30, 2025, from $6.29 million at December 31, 2024, primarily due to an $8.2 million increase in accrued manufacturing expenses, including $3.6 million for CTX-10726 contractual obligations[37] 7. Commitments and Contingencies This section outlines the Company's contractual obligations, including operating leases and 401(k) matching contributions - The Company's operating lease for its corporate office and laboratory facility was modified effective September 27, 2024, extending the non-cancelable term through May 2031 and adding 10,724 square feet[41] - Right-of-use assets increased by $9.9 million due to the lease modification, totaling $9.8 million as of June 30, 2025[41] Undiscounted Lease Cash Flows (in thousands) | Undiscounted Lease Cash Flows (in thousands) | Amount | | :------------------------------------------- | :----- | | Remainder of 2025 | $382 | | Years ending December 31, 2026 | $1,588 | | Years ending December 31, 2027 | $2,204 | | Years ending December 31, 2028 | $2,249 | | Years ending December 31, 2029 | $2,294 | | Years ending December 31, 2030 | $2,356 | | Thereafter | $995 | | Total minimum lease payments | $12,068 | | Present value of future minimum lease payments | $9,904 | - The Company matches employee 401(k) contributions up to 6% of salary, with matching contributions of $0.1 million for each of the three months ended June 30, 2025 and 2024, and $0.2 million for each of the six months ended June 30, 2025 and 2024[44] 8. Stock-Based Compensation This section details the stock-based compensation expense recognized and the activity of stock options and restricted stock units Stock-Based Compensation Expense (in thousands) | Stock-Based Compensation Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $857 | $458 | $1,664 | $1,382 | | General and administrative | $1,934 | $1,663 | $3,641 | $2,742 | | Total | $2,791 | $2,121 | $5,305 | $4,124 | - Total unrecognized stock-based compensation cost as of June 30, 2025, was $24.8 million[45] Stock Option Activity (2020 Plan) | Stock Option Activity (2020 Plan) | Outstanding at Dec 31, 2024 | Granted (6M ended Jun 30, 2025) | Outstanding at Jun 30, 2025 | | :-------------------------------- | :-------------------------- | :------------------------------ | :-------------------------- | | Number of Unvested Options (000's) | 14,062 | 4,482 | 18,544 | | Weighted Average Exercise Price | $2.83 | $3.61 | $3.02 | | Aggregate Intrinsic Value ($000's) | $579 | $2 | $7,064 | - As of June 30, 2025, the total unrecognized compensation cost related to outstanding options was $19.5 million, to be recognized over a weighted average period of 1.5 years[48] RSU Activity (2020 Plan) | RSU Activity (2020 Plan) | Unvested, Dec 31, 2024 | Vested (6M ended Jun 30, 2025) | Unvested, Jun 30, 2025 | | :----------------------- | :--------------------- | :------------------------------ | :--------------------- | | Shares (000's) | 3,766 | (823) | 2,943 | | Weighted Average Price Per Share | $2.41 | $2.48 | $2.39 | | Weighted Average Fair Value ($000's) | $9,076 | $(2,042) | $7,034 | - As of June 30, 2025, the remaining unrecognized compensation cost related to RSUs was $5.3 million, expected to be recognized over a weighted average period of 1.4 years[51] 9. Related Parties and Related-Party Transactions This section confirms the absence of material related party transactions during the reporting periods - There were no material related party transactions during the six months ended June 30, 2025 and 2024[52] 10. Other Income This section reports the Company's other income, primarily consisting of interest income from marketable securities Other Income (Interest Income) (in thousands) | Other Income (Interest Income) (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest Income | $1,185 | $1,969 | $2,518 | $3,951 | - Other income, consisting exclusively of interest income, decreased by 40% for the three months ended June 30, 2025, and by 36% for the six months ended June 30, 2025, compared to the same periods in 2024, due to a lower cash and marketable securities balance[53][81][86] 11. License, Research and Collaboration Agreements This section describes the Company's key licensing and collaboration agreements, including potential milestone payments and royalties - The Company has an exclusive global license agreement with ABL Bio for tovecimig (ABL001), a bispecific antibody targeting DLL4 and VEGF-A, with potential milestone payments up to $96 million for development/regulatory and $303 million for commercial in oncology, plus tiered single-digit royalties[54] - The Company is eligible to receive royalty payments from ABL Bio for two bispecific antibodies previously licensed to Compass, following the termination of license agreements for preclinical assets in May 2021[55] - A collaboration agreement with Adimab, LLC includes provisions for single-digit royalties on future net sales for certain antibodies, including CTX-471, with future potential milestone payments of $2.0 million as of June 30, 2025[56] 12. Segment Information This section clarifies that the Company operates as a single segment and provides a breakdown of research and development expenses by program - The Company operates in one segment focused on research and development of drug candidates[57] R&D Expenses by Program (in thousands) | R&D Expenses by Program (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Tovecimig | $7,749 | $6,413 | $14,426 | $10,911 | | CTX-471 | $1,760 | $828 | $2,459 | $1,507 | | CTX-8371 | $1,044 | $605 | $1,573 | $1,191 | | CTX-10726 | $1,736 | $— | $2,473 | $— | | Research and development (Total) | $16,415 | $11,174 | $29,476 | $20,695 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition, operational results, and future funding requirements Overview This section introduces Compass Therapeutics as a clinical-stage biopharmaceutical company focused on oncology and its product pipeline - Compass Therapeutics is a clinical-stage, oncology-focused biopharmaceutical company developing proprietary antibody-based therapeutics targeting angiogenesis, the immune system, and tumor growth[59] - The pipeline includes three clinical product candidates: tovecimig (DLL4 x VEGF-A bispecific), CTX-471 (CD-137 agonistic antibody), CTX-8371 (PD-1 x PD-L1 bispecific), and CTX-10726 (PD-1 x VEGF-A bispecific) in IND-enabling studies[60] Recent Developments This section highlights recent clinical trial updates and preclinical study results for the Company's key product candidates - Tovecimig (DLL4 x VEGF-A bispecific) Phase 2/3 study in advanced biliary tract cancer (BTC) shows a decreasing rate of overall survival (OS) events, suggesting a potential positive effect on OS[61] - The tovecimig study met its primary endpoint in April 2025, achieving a 17.1% overall response rate (ORR) in combination with paclitaxel, compared to 5.3% for paclitaxel alone (p=0.031)[62] - CTX-8371 (PD-1 x PD-L1 bispecific) Phase 1 data supports cohort expansion in non-small cell lung cancer (NSCLC) and triple-negative breast cancer (TNBC) based on two deep responses observed[63] - CTX-10726 (PD-1 x VEGF-A bispecific) demonstrated superiority in PD-1 potency and anti-tumor response compared to ivonescimab in preclinical studies; IND submission is planned for Q4 2025, with clinical data expected in 2026[64] Operating Activities This section discusses the Company's historical operating losses, accumulated deficit, and future funding needs - The Company has incurred significant operating losses since inception, with net losses of $19.9 million and $13.1 million for the three months ended June 30, 2025 and 2024, respectively[66] - Net losses for the six months ended June 30, 2025 and 2024 were $36.5 million and $23.9 million, respectively, leading to an accumulated deficit of $401.2 million as of June 30, 2025[66] - Substantial additional funding will be required to support continuing operations and growth strategy, expected to be financed through equity and debt financings, collaborations, or strategic transactions[67] Components of Results of Operations This section defines the primary components of the Company's financial results, including research and development, general and administrative expenses, and other income - Research and development expenses include clinical, manufacturing, employee-related, preclinical study, quality/regulatory compliance, and facilities/equipment costs, expensed as incurred[69][70] - General and administrative expenses primarily cover salaries, legal fees, professional fees, administrative travel, and selling/marketing costs[74] - Other income consists exclusively of interest income on marketable securities[76] Results of Operations This section provides a detailed comparison of the Company's financial performance across different reporting periods Comparison of the Three Months Ended June 30, 2025 and 2024 This section compares the Company's financial results for the three-month periods ended June 30, 2025 and 2024 Financial Performance (in thousands) | Metric (in thousands) | 2025 | 2024 | Change | | :-------------------- | :--- | :--- | :----- | | Licensing Revenue | $— | $850 | $(850) | | Research and development | $16,415 | $11,174 | $5,241 | | General and administrative | $4,651 | $4,721 | $(70) | | Total operating expenses | $21,066 | $15,895 | $5,171 | | Loss from operations | $(21,066) | $(15,045) | $(6,021) | | Other income | $1,185 | $1,969 | $(784) | | Net loss | $(19,881) | $(13,076) | $(6,805) | - Licensing revenue decreased by $850 thousand to $0 for the three months ended June 30, 2025, as the prior year included a $1 million milestone payment from Elpiscience (net of sublicense royalty)[78] - Research and development expenses increased by $5.2 million (47%) to $16.4 million, primarily due to a $5.7 million increase in manufacturing expenses related to tovecimig and CTX-10726[79] Comparison of the Six Months Ended June 30, 2025 and 2024 This section compares the Company's financial results for the six-month periods ended June 30, 2025 and 2024 Financial Performance (in thousands) | Metric (in thousands) | 2025 | 2024 | Change | | :-------------------- | :--- | :--- | :----- | | Licensing Revenue | $— | $850 | $(850) | | Research and development | $29,476 | $20,695 | $8,781 | | General and administrative | $9,556 | $7,969 | $1,587 | | Total operating expenses | $39,032 | $28,664 | $10,368 | | Loss from operations | $(39,032) | $(27,814) | $(11,218) | | Other income | $2,518 | $3,951 | $(1,433) | | Net loss | $(36,514) | $(23,863) | $(12,651) | - Research and development expenses increased by $8.8 million (42%) to $29.5 million, driven by an $8.2 million increase in manufacturing expenses for tovecimig and CTX-10726[84] - General and administrative expenses increased by $1.6 million (20%) to $9.6 million, primarily due to a $1.6 million increase in share-based compensation expense[85] Liquidity and Capital Resources This section discusses the Company's current cash position, future funding needs, and sources of capital - As of June 30, 2025, the Company had $101 million in cash, cash equivalents, and marketable securities, which is expected to fund operating expenses and capital expenditure requirements into 2027[87][94] Cash Flow Summary (in thousands) | Cash Flow Summary (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------- | :----------------------------- | :----------------------------- | | Cash used in operating activities | $(25,040) | $(24,642) | | Cash provided by investing activities | $5,228 | $2,384 | | Cash provided by (used in) financing activities | $(815) | $17,434 | | Net change in cash and cash equivalents | $(20,627) | $(4,824) | - Cash used in operating activities was $25.0 million for the six months ended June 30, 2025, primarily due to a net loss of $36.5 million, partially offset by non-cash charges and changes in operating assets and liabilities[89] - Cash provided by investing activities was $5.2 million for the six months ended June 30, 2025, related to the net sale of marketable securities[91] - Cash used in financing activities was $0.8 million for the six months ended June 30, 2025, due to taxes paid for RSU share settlements, compared to $17.4 million provided in the prior year from common stock issuance[92] - The Company anticipates requiring additional funding to complete clinical development, commercialize product candidates, and pursue in-licenses or acquisitions, with financing expected through equity/debt, collaborations, or strategic alliances[94][95] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Compass Therapeutics, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The Company is exempt from providing quantitative and qualitative disclosures about market risk as it is a smaller reporting company[97] Item 4. Controls and Procedures This section details the management's evaluation of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting Management's Evaluation of Our Disclosure Controls and Procedures This section confirms management's assessment of the effectiveness of the Company's disclosure controls and procedures - As of June 30, 2025, management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective[98] Changes in Internal Control over Financial Reporting This section reports on any material changes in the Company's internal control over financial reporting during the quarter - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2025[99] PART II. OTHER INFORMATION This section includes additional information such as legal proceedings, risk factors, equity sales, and other required disclosures Item 1. Legal Proceedings This section states that the Company is not currently involved in any material legal proceedings, while acknowledging the potential for ordinary course legal activities - As of the filing date, the Company is not involved in any material legal proceedings, though it may be subject to various legal proceedings and claims in the ordinary course of business[102] Item 1A. Risk Factors This section highlights new risk factors related to adverse global conditions and executive actions on drug pricing, supplementing previously disclosed risks - New risk factors include potential negative impacts from adverse global conditions, such as economic uncertainty, tariffs, and geopolitical instability[104] - Executive actions on drug pricing, such as Executive Orders 14273 and 14297, could negatively impact the Company's ability to obtain adequate reimbursement for its products if approved[105] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section indicates that there were no unregistered sales of equity securities or use of proceeds to report during the period - There were no unregistered sales of equity securities or use of proceeds to report[107] Item 3. Defaults Upon Senior Securities This section confirms that the Company has not defaulted on any senior securities - There were no defaults upon senior securities[108] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[109] Item 5. Other Information This section reports that no directors or officers adopted, terminated, or modified Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading agreements during the quarter - No directors or officers adopted, terminated, or modified Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading agreements during the three-month period ended June 30, 2025[110] Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including corporate documents, certifications, and XBRL-related files - The exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, certifications of principal executive and financial officers (31.1, 31.2, 32.1, 32.2), and various Inline XBRL documents[111] Signatures This section contains the required signatures of the Company's Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer, certifying the filing of the report - The report is signed by Thomas Schuetz (Principal Executive Officer), Barry Shin (Principal Financial Officer), and Neil Lerner (Principal Accounting Officer) on August 11, 2025[114]