Compass Therapeutics(CMPX) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The company reported a net loss of $7.4 million for Q1 2021, with cash and equivalents at $39.7 million and total assets at $48.2 million, reflecting a $158.8 million accumulated deficit Condensed Consolidated Balance Sheets As of March 31, 2021, total assets decreased to $48.2 million, liabilities increased to $14.7 million, and stockholders' equity decreased to $33.5 million Condensed Consolidated Balance Sheet Data (in thousands) | Account | March 31, 2021 (Unaudited) | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $39,695 | $47,076 | | Total current assets | $41,647 | $50,202 | | Total assets | $48,198 | $51,911 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $10,850 | $10,099 | | Total liabilities | $14,727 | $11,966 | | Accumulated deficit | ($158,830) | ($151,408) | | Total stockholders' equity | $33,471 | $39,945 | | Total liabilities and stockholders' equity | $48,198 | $51,911 | Condensed Consolidated Statements of Operations Net loss for Q1 2021 increased to $7.4 million from $6.4 million in Q1 2020, primarily due to a $1.1 million rise in R&D costs Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Research and development | $4,704 | $3,571 | | General and administrative | $2,635 | $2,260 | | Total operating expenses | $7,339 | $5,831 | | Loss from operations | ($7,339) | ($5,831) | | Net loss | ($7,422) | ($6,402) | | Net loss per share - basic and diluted | ($0.14) | ($0.90) | | Basic and diluted weighted average shares outstanding | 51,313 | 7,122 | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $5.6 million, resulting in a $7.5 million net decrease in cash, bringing the end-of-period balance to $39.8 million Summary of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($5,605) | ($7,761) | | Net cash used in investing activities | ($13) | ($12) | | Net cash used in financing activities | ($1,875) | $0 | | Net change in cash, cash equivalents and restricted cash | ($7,493) | ($7,773) | | Cash, cash equivalents and restricted cash at end of period | $39,846 | $17,793 | Notes to Unaudited Condensed Consolidated Financial Statements Notes confirm the company's biopharmaceutical business, 12-month funding outlook, new lease standard adoption, term loan details, and COVID-19 impact on trials - The company is a clinical-stage biopharmaceutical company developing proprietary antibody therapeutics for cancer treatment[23] - Based on current plans, the company expects its cash and cash equivalents of $39.7 million (as of March 31, 2021) to fund operating expenses and capital requirements for the next 12 months[27] - The company adopted the new lease accounting standard ASU 2016-02 on January 1, 2021, resulting in the recognition of a right-of-use asset of $5.1 million and a corresponding lease liability[32][44] - As of March 31, 2021, the company had $7.5 million in debt outstanding from its Credit Facility with Pacific Western Bank, with principal payments of $625,000 due monthly through March 2022[39][101] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's clinical-stage biopharmaceutical focus, Q1 2021 net loss of $7.4 million due to increased R&D, and cash expected to fund operations into Q2 2022, with substantial additional funding required Overview and Pipeline The company is a clinical-stage biopharmaceutical firm with lead product CTX-471 in Phase 1b and CTX-8371 in IND-enabling studies, having incurred significant operating losses - Lead product candidate CTX-471 is in the dose expansion stage (Phase 1b) of its trial, with a Phase 2/3 trial expected to start in H2 2022[65] - Second product candidate CTX-8371 is undergoing IND-enabling studies, with an IND submission targeted for H1 2022[65] - The company has incurred significant operating losses since inception, with an accumulated deficit of $158.8 million as of March 31, 2021[67] Results of Operations Total operating expenses increased by $1.5 million to $7.3 million in Q1 2021, driven by a $1.1 million rise in R&D and a $0.4 million increase in G&A Comparison of Operations (in thousands) | Line Item | Q1 2021 | Q1 2020 | Change | | :--- | :--- | :--- | :--- | | Research and development | $4,704 | $3,571 | $1,133 | | General and administrative | $2,635 | $2,260 | $375 | | Total operating expenses | $7,339 | $5,831 | $1,508 | | Net loss | ($7,422) | ($6,402) | ($1,020) | R&D Expenses by Program (in thousands) | Program | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | CTX-471 | $998 | $865 | | CTX-8371 | $1,494 | $55 | | Unallocated R&D | $2,095 | $2,606 | | Total R&D | $4,704 | $3,571 | Liquidity and Capital Resources As of March 31, 2021, the company had $39.7 million in cash, expected to fund operations into Q2 2022, with substantial additional funding required for future development - The company had $39.7 million in cash and cash equivalents as of March 31, 2021[69][90] - Existing cash is expected to fund operating expenses and capital expenditure requirements into the second quarter of 2022[69][104] - Future operations will require substantial additional funding, which the company expects to raise through equity/debt financings or strategic collaborations[68][94][105] Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2021[111] - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[112] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings - The company is not currently involved in any material legal proceedings[115] Item 1A. Risk Factors No material changes to risk factors from the 2020 Form 10-K, highlighting limited operating history, significant losses, funding needs, and clinical development uncertainties - The company has a limited operating history, no products approved for sale, and a history of significant losses which are expected to continue[4] - Substantial additional financing is required to pursue business objectives, and failure to obtain it could force delays or termination of development efforts[4] - Clinical development is lengthy, expensive, and uncertain. Positive results from early-stage trials may not be predictive of future results[4] - The business could be materially and adversely affected by the COVID-19 pandemic[5] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities during the period[118]