Compass Therapeutics, Inc. — Q3 2022 Form 10-Q Summary
Business Context and Reporting Period
Compass Therapeutics, Inc. is a clinical-stage, oncology-focused biopharmaceutical company developing antibody-based therapeutics targeting angiogenesis and the tumor immune microenvironment. The filing covers the three and nine months ended September 30, 2022. The company reported 126,191,473 common shares outstanding as of November 7, 2022.
The principal clinical programs are CTX-009, CTX-471 and CTX-8371. The company has not generated product revenue and expects to continue incurring significant operating losses while advancing clinical development.
Financial Performance and Key Metrics
| Metric | Three Months Ended September 30 | Nine Months Ended September 30 |
|---|---|---|
| Research and development expense | $9.8 million in 2022; $3.2 million in 2021 | $20.1 million in 2022; $10.8 million in 2021 |
| General and administrative expense | $2.8 million in 2022; $2.7 million in 2021 | $8.7 million in 2022; $7.5 million in 2021 |
| Total operating expenses | $12.6 million in 2022; $5.9 million in 2021 | $28.8 million in 2022; $68.9 million in 2021 |
| Net loss | $12.0 million, or $0.12 per share, in 2022; $6.0 million, or $0.10 per share, in 2021 | $27.6 million, or $0.27 per share, in 2022; $69.2 million, or $1.26 per share, in 2021 |
| Cash used in operating activities | Not separately provided for the quarter | $23.5 million in 2022; $15.0 million in 2021 |
There was no product revenue, gross profit or operating margin. Accumulated deficit was $261.2 million at September 30, 2022.
Cash and cash equivalents were $16.5 million and marketable securities were $104.1 million at September 30, 2022, for total cash, cash equivalents and marketable securities of $120.6 million. Marketable securities consisted primarily of corporate bonds, commercial paper, certificates of deposit and asset-backed securities. The company reported $641 thousand of unrealized losses on these securities in accumulated other comprehensive loss.
Total liabilities were $11.7 million, consisting primarily of accounts payable, accrued expenses and operating lease obligations. The filing indicates that the prior credit facility had been extinguished in the fourth quarter of 2021 and no debt borrowings were outstanding at September 30, 2022.
Material Changes Versus the Prior Comparable Period
- Third-quarter research and development expense increased $6.6 million, or 210%, primarily due to increased CTX-009 drug-substance purchasing and manufacturing and CTX-8371 toxicology studies.
- Nine-month research and development expense increased $9.3 million, or 86%, driven mainly by CTX-009 manufacturing and clinical costs and CTX-8371 manufacturing and toxicology costs.
- General and administrative expense increased $1.2 million, or 16%, for the nine-month period, primarily due to higher stock-based compensation.
- Nine-month total operating expenses declined $40.1 million because the prior-year period included a $50.6 million in-process research and development charge related to the TRIGR acquisition.
- Operating cash use increased to $23.5 million from $15.0 million, while investing cash use increased substantially to $104.6 million, primarily because the company invested $117.3 million in marketable securities and received $12.8 million from sales or maturities.
- The company paid a $6.0 million development milestone to ABL Bio during the third quarter related to completion of the CTX-009 Phase 1 clinical trial.
- Interest income increased to $1.1 million for the nine-month period from $25 thousand in the prior-year period, reflecting investment of excess cash in marketable securities.
Clinical Development, Outlook and Risks
- For CTX-009, the company reported preliminary Phase 2 biliary tract cancer data from 24 patients: 10 partial responses, including nine confirmed, a preliminary overall response rate of 42% and a clinical benefit rate of 92%. The study remained ongoing as of September 30, 2022.
- The company submitted a protocol to the FDA for a randomized Phase 2/3 CTX-009 plus paclitaxel study versus paclitaxel alone in biliary tract cancer. The planned study includes 120 patients, with overall response rate as the primary endpoint. FDA provided additional protocol feedback in September 2022.
- The company was initiating a Phase 2 CTX-009 monotherapy study in advanced metastatic colorectal cancer.
- For CTX-471, 60 patients had been enrolled and 50 were evaluable in the Phase 1b dose-expansion study. Preliminary results included four partial responses, three confirmed, a preliminary overall response rate of 8% and a clinical benefit rate of 62%. Two treatment-related serious adverse events occurred and resolved.
- In October 2022, the company announced a collaboration and supply agreement with Merck to evaluate CTX-471 with KEYTRUDA. Patient screening for the combination arm began in November 2022.
- For CTX-8371, toxicology studies were ongoing and the company anticipated filing an IND and initiating a first-in-human study in the first half of 2023, subject to satisfactory results. Supply-chain delays at Fujifilm had previously delayed GMP manufacturing, which was completed in the second quarter of 2022.
- Management stated that existing cash and marketable securities, together with the subsequent financing, are expected to fund operating expenses and capital expenditures into 2026 based on current plans. The company nevertheless expects to require additional funding to complete clinical development and support potential commercialization.
- On November 2, 2022, the company agreed to issue 25.0 million common shares at $3.21 per share in a PIPE financing. The transaction closed November 4, 2022, generating gross proceeds of $80.3 million before fees and expenses. This financing will dilute existing shareholders.
- Key risks include clinical-trial failure or delays, FDA or other regulatory requirements, manufacturing and supply-chain constraints, COVID-19-related disruptions, dependence on collaborators and vendors, intellectual-property risks, competition and the need for additional capital.
Important Facts for Investors to Verify
- Confirm the final use of the $80.3 million PIPE proceeds, net of placement-agent fees and offering expenses, and the resulting post-financing share count and dilution.
- Monitor cash burn, marketable-securities balances and whether the stated funding runway to 2026 changes as clinical programs advance.
- Verify FDA feedback, enrollment, timing and endpoint requirements for the CTX-009 Phase 2/3 biliary tract cancer study.
- Track confirmatory clinical data and safety results for CTX-009 and CTX-471, including the significance of preliminary response rates.
- Assess whether CTX-8371 toxicology results, manufacturing readiness and IND submission remain on the anticipated schedule.
- Review future milestone, royalty and collaboration obligations, including up to $110 million of potential CTX-009 development and regulatory milestones, up to $295 million of commercial milestones and tiered single-digit royalties under the ABL Bio agreement.
- Consider the absence of product revenue, continuing operating losses and the company’s stated expectation that additional funding will eventually be required.