What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-29 · 175 added, 190 removed, 162 unchanged (69% of the section changed)

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We are a biotechnology company dedicated to accelerating patient access to evidence-based innovation in mental health.

We are motivated by the need to find better ways to help and empower people suffering with mental health challenges who are not helped by existing treatments, and are pioneering the development of a new model of psilocybin treatment, in which COMP360 psilocybin is administered in conjunction with psychological support, which we refer to as COMP360 psilocybin treatment.

Our initial focus is on TRD, comprising patients who are inadequately served by the current treatment paradigm.

We are motivated by the need to find better ways to help and empower people with serious mental health conditions who are not helped by existing treatments.

We are pioneering a new paradigm for treating mental health conditions focused on rapid and durable responses through the development of our investigational COMP360 psilocybin treatment, potentially a first in class treatment.

COMP360 is our proprietary psilocybin formulation that includes our pharmaceutical-grade polymorphic crystalline psilocybin, optimized for stability and purity.

We believe that our COMP360 psilocybin treatment could offer a new approach to treatment of serious mental health conditions, including treatment-resistant depression, or TRD, which is a subset of major depressive disorder, or MDD, post-traumatic stress disorder, or PTSD, and potentially many other serious mental health conditions .

Our initial focus is on TRD, comprising patients who are inadequately served by current treatment options.

In 2018, we received Breakthrough Therapy designation from the FDA for COMP360 for the treatment of TRD.

In November 2021, we announced positive top-line results from our Phase 2b clinical trial evaluating COMP360 in conjunction with psychological support for the treatment of TRD.

On November 3, 2022, The New England Journal of Medicine , the world’s leading peer-reviewed medical journal, published the positive results from our Phase 2b trial.

In November 2021, we announced positive top-line results from our Phase 2b clinical trial evaluating COMP360 for the treatment of TRD.

On November 3, 2022, The New England Journal of Medicine published the positive results from our Phase 2b trial.

This is the largest, randomized, controlled, double-blind psilocybin treatment clinical trial completed to date.

The objective of the Phase 2b study was to evaluate the efficacy and safety of a single dose of investigational COMP360 psilocybin (25mg or 10mg), compared to 1mg, in patients with TRD.

The top-line results from the 233-participant trial showed a rapid and sustained response for patients receiving a single 25mg dose of COMP360 psilocybin administered with psychological support, with 29.1% of participants in remission by week 3 (p<0.002).

The trial achieved its primary endpoint for the 25mg dose, with a 25mg dose of COMP360 demonstrating a statistically significant (p<0.001) and clinically relevant treatment difference against the 1mg dose of COMP360 in reducing depressive symptom severity after three weeks.

The trial achieved its primary endpoint for the 25mg dose, with a 25mg dose of COMP360 demonstrating a statistically significant and clinically relevant treatment difference against the 1mg dose of COMP360 in reducing depressive symptom severity after three weeks.

At the beginning of 2023, we commenced our Phase 3 program evaluating our COMP360 psilocybin treatment in TRD.

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a single dose (25mg) monotherapy compared with placebo.

This trial is designed to replicate the treatment response seen in our Phase 2b trial (n=233).

We expect to report top-line data in the fourth quarter of 2024.

• Pivotal trial 2 (COMP006) (n= 568):

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25mg, 10mg and 1mg.

This trial is designed to investigate whether a second dose can increase treatment responders and whether a second dose can improve responses observed in our Phase 2b trial and to explore the potential for a meaningful treatment response from repeat administration of COMP360 10mg.

We expect to report top-line data by mid-2025.

• The primary endpoint in both pivotal trials is the change from baseline in MADRS (Montgomery-Åsberg Depression Rating Scale) total score at week 6.

During the first quarter of 2023, we commenced a Phase 2 (n=102) study to investigate the safety and tolerability of COMP360 psilocybin treatment in patients with major depressive disorder, or MDD.

In addition, pharmacokinetics and efficacy of COMP360 psilocybin treatment will be investigated.

We expect to submit the results of this study as part of our submission package for approval of COMP360 psilocybin treatment in TRD.

Beyond TRD, we recently completed enrollment of 22 patients for our open label Phase 2 study to assess the safety and tolerability of COMP360 psilocybin treatment, administered with psychological support, in people with PTSD, as a result of trauma experienced as adults.

In line with the study design, participants are being monitored for a 12-week period post dosing.

We plan to announce safety and efficacy data over that period in the spring of 2024.

In addition, w e have an ongoing Phase 2 trial in anorexia nervosa.

This trial is designed to investigate whether a second dose can increase therapeutic response.

• The primary endpoint in both pivotal trials is the change from baseline in the MADRS (Montgomery-Åsberg Depression Rating Scale) total score at week 6.

Beyond TRD, we have been exploring other indications, including PTSD.

In May 2024, we completed and announced top-line results from our open label Phase 2 study to assess the safety and tolerability of COMP360 psilocybin treatment in participants with PTSD, as a result of trauma experienced as adults.

In line with the study design, the study enrolled 22 participants, who were monitored for a 12-week period post dosing.

The study met its primary safety endpoint and available secondary efficacy endpoints.

Study observations included meaningful and sustained symptom improvement from baseline in mean CAPS-5 total score, a measure of disease severity, and in Sheehan Disability Scale (SDS) score, a measure of functional impairment in daily life.

Administration of COMP360 was well-tolerated, with a safety profile consistent with previous studies of COMP360.

Based on the data from this trial, we are in the process of designing a late-stage PTSD program.

Since our formation, we have devoted substantially all of our resources to conducting preclinical studies and clinical trials, organizing and staffing our company, business planning, raising capital and establishing our intellectual property portfolio.

We do not have any therapeutic candidates approved for sale and have not generated any revenue.

We have funded our operations to date primarily with proceeds from the sale of convertible preferred shares, convertible loan notes, our initial public offering, or IPO, and our follow-on offering, of American Depositary Shares, or ADSs, representing our ordinary shares in September 2020 and May 2021, respectively.

In October 2021, we entered into a Sales Agreement with Cowen and Company, LLC, under which we may issue and sell from time to time up to $150.0 million of our ADSs at market prices, which we refer to as our ATM Facility.

Through December 31, 2023 we sold 2,982,038 ADSs under our ATM Facility, resulting in $28.6 million in net proceeds.

On June 30, 2023, we entered into a Loan Agreement with Hercules, which provided for aggregate maximum borrowings of up to $50.0 million, consisting of a term loan of $30.0 million, which was funded on June 30, 2023 and two additional tranches of $10.0 million each, which subject to certain conditions may become available to us.

On August 16, 2023, we entered into a securities purchase agreement, pursuant to which we agreed to sell and issue in the PIPE (i) 16,076,750 ADSs and (ii) PIPE Warrants to purchase up to 16,076,750 ADSs, at a purchase price of approximately $7.78 per ADS and accompanying PIPE Warrant to purchase one ADS.

We have funded our operations primarily with proceeds from the sale of our ordinary shares, ADSs, including in our offerings pursuant to our at-the-market, or ATM, offering program, proceeds from a loan agreement with Hercules, or the Hercules Loan Agreement, and proceeds from a private placement transaction, or the PIPE.

We are party to a Sales Agreement for our ATM offering program, dated October 8, 2021, with TD Securities (USA) LLC, or TD Cowen, under which we may issue and sell from time to time up to $150.0 million of our ADSs, each representing one ordinary share, through TD Cowen, as the sales agent.

Sales of our ADSs, if any, will be made at market prices.

Since the establishment of the ATM offering program, t hrough December 31 , 2024 , we sold 5,491,836 ADSs under our ATM offering program , resulting in $54.8 million in net proceeds.

On February 27, 2025, we entered into a new Sales Agreement to govern our ATM offering program with TD Cowen under which we may issue and sell from time to time up to $150.0 million of our ADSs, subject to the terms of the Sales Agreement and only after the registration statement covering such ATM offering program has been declared effective.

On June 30, 2023, we entered into the Hercules Loan Agreement, which provided for aggregate maximum borrowings of up to $50.0 million, including a term loan of $30.0 million, which was funded on June 30, 2023.

On August 16, 2023, we entered into a Securities Purchase Agreement, pursuant to which we agreed to sell and issue in a private placement transaction (i) 16,076,750 ADSs and (ii) PIPE Warrants to purchase up to 16,076,750 ADSs, at a purchase price of approximately $7.78 per ADS and accompanying PIPE Warrant to purchase one ADS.

Each PIPE Warrant has an exercise price of $9.93 per ADS and is exercisable for a three year period beginning in February 2024.

The PIPE Warrants may be exercised on a cashless basis if there is no effective registration statement registering the shares underlying the PIPE Warrants.

We received $116.8 million in net proceeds, and will receive up to an additional approximately $159.6 million in gross proceeds if the PIPE Warrants are fully exercised.

We have incurred significant operating losses since our inception.

We incurred total net losses of $118.5 million and $91.5 million for the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, we had an accumulated deficit of $ 379.6 million.

Through December 31, 2024, PIPE Warrants were exercised for 3,752,050 ADS, resulting in $37.3 million in exercise proceeds.

We will receive up to an additional approximately $122.4 million in gross proceeds if the PIPE Warrants are fully exercised.

We have incurred recurring losses since our inception, including net losses of $155.1 million and $118.5 million for the years ended December 31, 2024 and 2023, respectively.

In addition, as of December 31, 2024, we had an accumulated deficit of $534.7 million.

Our historical losses resulted principally from costs incurred in connection with research and development activities and general and administrative costs associated with our operations.

In the future, we intend to continue to conduct research and development, preclinical testing, clinical trials, regulatory compliance, market access and commercialization activities that, together with anticipated general and administrative expenses, will result in incurring further significant losses for at least the next several years.

Our operating losses stem primarily from development of our investigational COMP360 psilocybin treatment for TRD, and we expect they will continue to increase as we conduct our Phase 3 program in TRD for our investigational COMP360 psilocybin treatment candidate and potentially including expanding into additional indications, and initiating preclinical and clinical development of additional programs for different therapeutic candidates, as well as using digital technologies and solutions to enhance our therapeutic offering.

In addition, although our non-COMP360 preclinical efforts will be stopped in connection with the strategic reorganization, our spending in the future may increase if we choose to expand into additional indications or initiate the development for different therapeutic candidates.

Furthermore, since the completion of our IPO, we have incurred, and expect to continue to incur, significant costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses.

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Until such time as we can generate significant revenue from sales of therapeutic candidates, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements.

Our ability to raise additional funds may be adversely impacted by macroeconomic conditions and disruptions to and volatility in the credit and financial markets in the United States and worldwide, such as those resulting from fluctuating interest rates and rates of inflation and foreign exchange fluctuations, instability in the banking system, a potential government shutdown in the United States, volatility due to the upcoming presidential election in the U.S., potential recessions in any of the regions or countries in which we operate, geopolitical tensions from the ongoing war between Ukraine and Russia and the Israel-Hamas war and changing conditions resulting from public health crises.

Our inability to raise capital as and when needed could have a negative impact on our financial condition and ability to pursue our business strategies.

There can be no assurances, however, that our current operating plan will be achieved or that additional funding will be available on terms acceptable to us, or at all.

As of December 31,2024, we had cash and cash equivalents of $165.1 million.

We believ e that our existing cash and cash equivalents, together with the net proceeds raised to date during the first quarter, will be sufficient for us to fund our operating expenses and capital expenditure requirements into late 2025.

We believe that our existing cash and cash equivalents, together with the net proceeds raised to date during the first quarter of 2025 of $140.4 million, will be sufficient for us to fund our operating expenses and capital expenditure requirements at least through the planned 26-week data read-out from our COMP006 study, which is expected in the second half of 2026.

We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

See “—Liquidity and Capital Resources—Funding Requirements” below.

Recent Developments

In January 2025, the Company issued and sold (i) 24,014,728 American Depositary Shares, each representing one ordinary share, nominal value £0.008 each, of the Company and accompanying warrants to purchase up to 24,014,728 ADSs,

and (ii) in lieu of ADSs, to certain investors, pre-funded warrants to purchase up to 11,044,720 ADSs and accompanying 2025 ADS Warrants to purchase up to 11,044,720 ADSs.

The offering price is $4.2750 per ADS and accompanying 2025 ADS Warrant, and $4.2649 per Pre-Funded Warrant and accompanying 2025 ADS Warrant.

The Pre-Funded Warrants have an exercise price of $0.0001 per ADS and are exercisable immediately.

The Pre-Funded Warrants expire when exercised in full.

The 2025 ADS Warrants have an exercise price of $5.7960 per ADS and are exercisable following a specified data milestone.

The 2025 ADS Warrants will expire after three years.

Once the ADS Warrants become exercisable, the Company may force the exercise of the 2025 ADS Warrants (by way of cash or cashless exercise, at the Company’s option), in whole or in part, by delivering a notice of forced exercise to the holders, provided that the closing price for the Company’s ADSs on Nasdaq exceeded the warrant exercise price of $5.796 for the three consecutive trading days prior to the date on which the notice of forced exercise is delivered.

Macroeconomic Conditions

We continue to monitor current macroeconomic and geopolitical events, including, among others, fluctuating inflation and interest rates, instability in the banking system and the related impact on U.S.

and global economies, fluctuations in foreign exchange rates, the potential for a government shutdown in the United States, the impact of the upcoming presidential election in U.S., the risk of economic slowdown or recession in the United States and geopolitical tensions from the ongoing war between Ukraine and Russia and the Israel-Hamas war, for any potential impact that these or other events or conditions may have on our business.

and global economies, fluctuations in foreign exchange rates, the potential for a government shutdown in the United States, the potential for significant changes in U.S.

policies or regulatory environment or disruption for U.S.

government agencies, the risk of economic slowdown or recession in the United States, the potential for significant changes in U.S.

policies or regulatory environment and geopolitical tensions from the ongoing war between Ukraine and Russia and conflict in the Middle East, for any potential impact that these or other events or conditions may have on our business.

Our ability to raise additional funds may be adversely impacted by macroeconomic conditions and disruptions to and volatility in the credit and financial markets in the U.S.

and worldwide.

Our inability to raise capital or secure other funding as and when needed could have a negative impact on our financial condition and ability to pursue our business strategies.

There can be no assurances, however, that our current operating plan will be achieved or that additional funding will be available on terms acceptable to us, or at all.

Components of Our Results of Operations

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Research and Development

Research and development expenses consist primarily of:

• development costs, including expenses incurred under agreements with contract research organizations, or CROs, and contract management organizations, or CMOs, investigative sites and consultants that conduct our clinical trials, preclinical studies and other scientific development services, as well as manufacturing scale-up expenses and the cost of acquiring and manufacturing materials for preclinical studies and clinical trials and laboratory and trial site supplies and equipment;

• personnel expenses, including salaries, related benefits and travel expenses for employees engaged in research and development functions;

• non-cash share-based compensation expenses resulting from equity awards granted to employees engaged in research and development functions;

• other expenses, including costs of outside consultants, including their fees and related travel expenses, allocated facility-related expenses such as direct depreciation costs, allocated expenses for rent and maintenance of facilities and other operating costs.

We expense research and development costs as incurred.

We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our service providers.

Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our consolidated financial statements as a prepaid expense or accrued research and development expenses.

Research and development activities are central to our business model.

Product or therapeutic candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials and related product manufacturing expenses.

As a result, we expect that our research and development expenses will continue to increase over the next several years as we:

complete the clinical development for our investigational COMP360 psilocybin treatment for TRD;

(ii) fund research for our investigational COMP360 psilocybin treatment in other neuropsychiatric indications;

(iii) seek to develop digital technologies to complement and augment our treatments, and seek to access other novel drug candidates for development in neuropsychiatric and related indications;

(iv) improve the efficiency and scalability of our third-party manufacturing processes and supply chain;

and (v) build our third-party or in-house process development, analytical and related capabilities, increase personnel costs and prepare for regulatory filings related to our potential or future therapeutic candidates.

As a result, we expect that our research and development expenses will continue to increase as we seek to complete the clinical development for our investigational COMP360 psilocybin treatment for TRD and prepare for regulatory filings related to our potential or future therapeutic candidates.

The successful development and commercialization of our investigational COMP360 psilocybin treatment is highly uncertain.

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• successful enrollment in and completion of clinical trials and preclinical studies, including our Phase 3 clinical trials in TRD;

• sufficiency of our financial and other resources to complete the necessary preclinical studies and clinical trials and our ability to raise capital on favorable terms or at all;

• sufficiency of our financial and other resources to complete the necessary preclinical studies and clinical trials, including our Phase 3 clinical trials in TRD, and our ability to raise capital on favorable terms or at all;

• receiving regulatory approvals or clearance for conducting our planned clinical trials or future clinical trials;

• receiving positive data from our clinical trials that support an acceptable risk-benefit profile of COMP360 psilocybin treatment and any future therapeutic candidates in the intended populations;

• receiving positive data from our clinical trials that support an acceptable risk-benefit profile of COMP360 psilocybin treatment and any future therapeutic candidates in the intended patient populations;

• receipt and maintenance of regulatory and marketing approvals from applicable regulatory authorities;

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A change in the outcome of any of these variables, amongst others, with respect to the development of our investigational COMP360 psilocybin treatment in preclinical and clinical development could mean a significant change in the costs and timing associated with the development of our investigational COMP360 psilocybin treatment.

For example, if the FDA, the European Medicines Agency, or EMA, the Medicines and Healthcare products Regulatory Agency, or MHRA, or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect, or if we experience significant delays in enrollment in any of our planned clinical trials, we could be required to commit significant additional financial resources and time on the completion of clinical development of that therapeutic candidate.

For example, if the FDA, the European Medicines Agency, or EMA, the Medicines and Healthcare products Regulatory Agency, or MHRA, or another regulatory authority were to require us to conduct clinical trials or other testing beyond those that we currently expect, or if we experience additional significant delays in enrollment in any of our planned clinical trials, we could be required to commit significant additional financial resources and time on the completion of clinical development of that therapeutic candidate.

General and Administrative

General and administrative expenses consist primarily of:

• personnel expenses, including salaries and related benefits, travel and other expenses incurred by personnel in certain executive, finance and administrative functions;

• non-cash share-based compensation expenses resulting from the equity awards granted to employees engaged in certain executive, finance and administrative functions;

• legal and professional fees, including consulting, accounting and audit services;

• facilities and other expenses, including depreciation costs, allocated expenses for rent and maintenance of facilities, director and officer insurance and other operating costs.

We anticipate that our general and administrative expenses will continue to be significant in order to support our continued research activities and development of our investigational COMP360 psilocybin treatment.

We also anticipate we will continue to incur significant accounting, audit, legal, regulatory and compliance costs, as well as investor and public relations expenses associated with being a public company.

Additionally, if and when we believe a regulatory approval of a therapeutic candidate appears likely, we anticipate an increase in payroll and other expenses as a result of our preparation for commercial operations, especially as it relates to the sales and marketing of our therapeutic candidate.

We anticipate we will continue to incur significant accounting, audit, legal, regulatory and compliance costs, as well as investor and public relations expenses associated with being a public company.

In the short-term, we expect reduced personnel expenses as a result of the reorganization that took place in the fourth quarter of 2024.

However, in the long-term, we anticipate future increases in both personnel and other expenses as a result of our preparation for commercial operations, especially as it relates to the sales and marketing of our therapeutic candidate.

Other Income, Net

Other income relates to interest earned on cash balances.

Interest Expense

Interest expense relates to interest paid on debt.

Foreign exchange gains

Foreign exchange gains consist of foreign exchange impacts arising from foreign currency transactions, primarily related to the translation of intercompany balances as a result of a change in our functional currency, as well as bank balances held in a foreign currency

Benefit from Research and Development Tax Credit

Benefit from R&D tax credit consists of the R&D tax credit received in the UK, which is recorded within other income, net.

As a company that carries out extensive research and development activities, we seek to benefit from the Small and Medium Enterprise, or SME, Program.

As a company that carries out extensive research and development activities, we seek to benefit from the Small and Medium sized Enterprise, or SME, Program.

Qualifying expenditures largely comprise employment costs for research staff, consumables, a proportion of relevant, permitted sub-contract costs and certain internal overhead costs incurred as part of research projects for which we do not receive income.

Based on criteria established by His Majesty’s Revenue and Customs, or HMRC, a portion of expenditures being recognized in relation to our pipeline research and development, clinical trial management and third-party manufacturing development activities were eligible for the SME regime for the year ended December 31, 2024 and 2023.

We expect such elements of expenditure will also continue to be eligible for the SME regime for future accounting periods.

We expect such elements to be eligible for R&D incentives in the future although there may be some limitations on expenditure on activities undertaken outside the UK.

The UK R&D tax credit is fully refundable to us and is not dependent on current or future taxable income.

As a result, we have recorded the entire benefit from the UK research and development tax credit as a benefit which is included in our net loss before income tax and, accordingly, not reflected as part of the income tax provision.

If, in the future, any UK R&D tax credits

generated are needed to offset a corporation tax liability in the UK, that portion would be recorded as a benefit within the income tax provision and any refundable portion not dependent on taxable income would continue to be recorded within other income, net.

Income Tax Expense

We are subject to corporate taxation in the United States and the UK.

Due to the nature of our business, we have generated losses since inception and have therefore not paid UK corporation tax.

Our income tax expense represents only income taxes in the United States.

If, in the future, any UK R&D tax credits generated are needed to offset a corporation tax liability in the UK, that portion would be recorded as a benefit within the income tax provision and any refundable portion not dependent on taxable income would continue to be recorded within other income, net.

Interest Income

Interest income relates to interest earned on cash deposits.

Interest Expense

Interest expense relates to interest paid on debt.

Corporate Income Tax Expense

We are subject to corporate taxation in the U.S.

and the UK (known as corporation tax in the UK).

Due to the nature of our business, we have generated losses since inception and have therefore not been required to pay UK corporation tax.

Our corporate income tax expense represents only income taxes in the U.S.

Unsurrendered UK losses may be carried forward indefinitely and may be offset against future taxable profits, subject to numerous utilization criteria and restrictions.

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After accounting for tax credits receivable, we had accumulated trading losses for carry forward in the UK of $339.7 million and $252.3 million as of December 31, 2024 and 2023, respectively, which is offset by a full valuation allowance.

During the year ended December 31, 2023 and 2022, the Company recorded a tax provision of $0.8 million and $0.4 million, related to the income tax obligations of its operating company in the US, which generates a profit for tax purposes.

During the year ended December 31, 2024 and 2023, we recorded a tax provision of $1.6 million and $0.8 million, respectively, related to the corporate income tax obligations of our operating company in the U.S., which generates a profit for tax purposes.

Results of Operations

The following table summarizes our results of operations for the years ended December 31, 2023, 2022 and 2021 (in

The following table summarizes our results of operations for the years ended December 31, 2024 and 2023 (in thousands):

Year ended December 31,

2023 2022 2021

OPERATING EXPENSES:

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OTHER INCOME, NET:

Other income 4,878 4,061 40

Interest expense

Foreign exchange gains 3,686 821 1,990

Benefit from R&D tax credit 21,097 12,875

Interest income

Interest expense

(4,479) (2,204)

Foreign exchange (losses) gains

(1,032) 3,686

Total other income, net 24,677 19,235

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Research and Development

The table below summarizes our research and development expenses incurred for the years ended December 31, 2023 and 2022 (in thousands):

Research and development expenses consist of the following (in thousands):

Year ended December 31,

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Total research and development expenses $ 119,039 $ 87,518 $ 31,521

Research and development expenses increased by $22.5 million to $87.5 million for the year ended December 31, 2023, from $65.1 million for the year ended December 31, 2022.

The increase in research and development expenses was primarily attributable to:

• an increase of $14.0 million in external development expenses, which primarily related to increases of $12.2 million in clinical trial expenses and $1.9 million in the cost of preclinical studies, partially offset by a $0.1 million decrease in drug development and manufacturing costs;

• an increase of $6.9 million in personnel expenses, primarily as a result of hiring additional personnel in our research and development departments to support the expansion of our digital, preclinical and clinical teams, in late 2022 and 2023;

• an increase of $1.6 million in non-cash share-based compensation expense due to increased staffing levels year over year, meaning increased equity grants;

• an increase of $0.1 million in facilities and other expenses, which related to increases in external consulting fees compared to the prior period.

We expect research and development costs to continue to increase substantially in the near future, consistent with our plan to continue to advance our Phase 3 program for COMP360 psilocybin treatment in TRD in 2024 .

For the year ended December 31, 2024, the increases in research and development expenses, as compared to the same period in 2023, were primarily attributable to the following:

• an increase in development expenses associated with advancing our late-stage COMP360 clinical trials;

• an increase in personnel expenses as a result of increased staffing levels supporting our research and development teams as well as one-time costs associated with the reorganization that took place in the fourth quarter of 2024;

• an increase in non-cash share-based compensation expense primarily due to the accounting for certain equity-based awards.

• a decrease in facilities and other expenses primarily due to a decrease in external consulting fees.

We expect research and development costs to continue to increase substantially through completion of our Phase 3 program for COMP360 psilocybin therapy in TRD.

General and Administrative

The following table summarizes our general and administrative expenses for the years ended December 31, 2023, and 2022 (in thousands):

General and administrative expenses consist of the following (in thousands):

Year ended December 31,

2024 2023 Change

Personnel expenses $ 23,422 $ 18,192 $ 5,230

Non-cash share-based compensation expense 8,367 5,765 2,602

Legal and professional fees 14,535 9,800 4,735

Facilities and other expenses 12,001 13,042 (1,041)

Non-cash share-based compensation expense 9,208 8,367 841

Total general and administrative expenses $ 59,166 $ 49,401 $ 9,765

General and administrative expenses increased by $4.1 million to $49.4 million for the year ended December 31, 2023 from $45.4 million for the year ended December 31, 2022.

The increase in general and administrative expenses was primarily attributable to the following:

• an increase of $1.0 million in personnel expenses, primarily due to an increase in staffing levels in late 2022;

• an increase of $2.6 million in non-cash share-based compensation expense due to increased staffing levels in late 2022, meaning increased equity grants;

• a decrease of $1.6 million in legal and professional fees, primarily related to a decrease in advisory fees;

• an increase of $2.0 million in facilities and other expenses, p rimarily attributable to increases in banking fees of $0.9 million, Centers of Excellence costs of $0.9 million and other expenses of $0.2 million.

We expect to continue to incur significant general and administrative expenses as a result of ongoing requirements as a public company, in addition to ongoing general and administrative support for research and development growth initiatives.

For the year ended December 31, 2024, the increase in general and administrative expenses, as compared to the same period in 2023, was primarily attributable to the following:

• an increase in personnel expenses as a result of increased staffing levels supporting our corporate functions as well as one-time costs associated with the reorganization that took place in the fourth quarter of 2024;

• an increase in legal and professional fees, primarily related to expenses associated with consulting, legal advice and patent applications;

• an increase in non-cash share-based compensation expense, primarily due to the accounting for certain equity-based awards.

• a decrease in facilities and other expenses, primarily due to a decrease in banking fees and reduced insurance premiums.

Other Income, Net

Other income was $4.9 million for the year ended December 31, 2023 and $4.1 million for the year ended December 31, 2022.

The increase in other income primarily related to increased interest income as a result of higher interest rates on cash deposits.

The gain in prior year was in connection with a forward exchange contract that we entered into and settled in the third quarter of 2022.

Other income, net consists of the following (in thousands):

Year ended December 31,

2024 2023 Change

Benefit from R&D tax credit

$ 21,097 $ 12,875 $ 8,222

Interest income

8,268 4,623 3,645

Foreign exchange (losses) gains

(1,032) 3,686 (4,718)

Interest expense

Interest expense was $2.2 million for the year ended December 31, 2023 and nil for the year ended December 31, 2022.

The increase is related to the Loan Agreement with Hercules entered into on June 30, 2023, as well as the payment-in-kind (PIK) interest on the loan.

Foreign exchange gains

Foreign exchange gains increased by $2.9 million to a gain of $3.7 million for the year ended December 31, 2023 from a gain of $0.8 million for the year ended December 31, 2022, primarily related to the translation of intercompany balances as a result of a change in functional currency and translation of bank balances held in a foreign currency.

More information on this can be found in section “ Item 7A.

Quantitative and Qualitative Disclosures About Market Risk” .

As our operating model and business develops we will continue to monitor and assess our legal entity structure, the predominant currency of our future cash outflows and the continuing impact of foreign exchange rates on our results of operations.

Benefit from Research and Development Tax Credit

During the year ended December 31, 2023 and 2022, we recognized an R&D tax credit from the UK as a benefit within other income, net of $12.9 million and $14.4 million, respectively.

Research and development expenses increased, however, the tax credit receivable decreased by $1.5 million in 2023 compared to 2022 due to a reduction in the R&D tax relief rates.

Up until April 1, 2023, the effective rate was 33.3% on in-house expenditures and 21.7% on work that was contracted out.

On and after April 1, 2023, the effective rates reduced to 18.6% and 12.1%, respectively.

Income Tax Expense

The income tax expense was $0.8 million for the year ended December 31, 2023 and $0.4 million for the year ended December 31, 2022 .

The income tax expense was related to income tax obligations of our operating company in the United States, which generates a profit for tax purposes.

(4,479) (2,204) (2,275)

Other income 823 255 568

Total other income, net

$ 24,677 $ 19,235 $ 5,442

For the year ended December 31, 2024 , the increase in other income, net, as compared to the same period in 2023, was primarily attributable to the following:

• an increase in the benefit from R&D tax credit primarily due to higher R&D expenditures claimed at the enhanced research intensive rate in the current year;

• an increase in interest income primarily due to higher interest rates earned on higher cash deposit levels.

• a decrease due to foreign exchange losses following remeasurement of foreign currency denominated assets and liabilities;

• an increase in interest expense related to the Loan Agreement with Hercules entered into on June 30, 2023, as well as the payment-in-kind (PIK) interest on the loan.

Comparison For The Years Ended December 31, 2023 and 2022

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We have not yet commercialized any therapeutic candidates and we do not expect to generate revenue from sales of any therapeutic candidates for the foreseeable future, if at all.

We have funded our operations to date primarily with proceeds from the sale of convertible preferred shares, convertible loan notes and ADSs in our IPO and our Follow-On Offering.

In 2021 , we entered into a Sales Agreement with Cowen and Company, LLC, or Cowen, under which we may issue and sell from time to time up to $150.0 million of our ADSs, each representing one ordinary share, through Cowen as the sales agent.

Sales of our ADSs, if any, will be made at market prices.

Through December 31, 2023, we sold 2,982,038 ADSs under the Sales Agreement, resulting in $28.6 million in net proceeds.

On June 30, 2023, we entered into the Loan Agreement with Hercules, which provided for aggregate maximum borrowings of up to $50.0 million, consisting of a fully drawn term loan of $30.0 million, which was funded on June 30, 2023 and two additional tranches of $10.0 million each, which subject to certain conditions may become available to us.

On August 16, 2023, we entered into a securities purchase agreement pursuant to which we agreed to issue and sell in a private placement ADSs and warrants to purchase additional ADSs.

We received $125.0 million in gross proceeds, before deducting placement agent commissions and offering expenses, from the private placement of ADSs and accompanying PIPE Warrants, and will receive up to an additional approximately $159.6 million in gross proceeds if the PIPE Warrants are fully exercised for cash.

The PIPE Warrants have an exercise price of $9.93 will be exercisable at the election of the investors beginning in February 2024 for a three-year period.

The PIPE Warrants may be exercised on a cashless basis if there is no effective registration statement registering the shares underlying the PIPE Warrants.

We believe our existing cash balance of $220.2 million at December 31, 2023, together with the net proceeds raised to date during the first quarter, will be sufficient for us to fund our operating expenses and capital expenditure requirements into late 2025.

We currently have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years, other than our operating, lease, and debt obligations under our Loan Agreement with Hercules described below in the footnotes to our consolidated financial statements.

We have primarily funded our operations with proceeds from the sale of our ordinary shares, ADSs, including our ATM offering program, proceeds from the Hercules Loan Agreement, and proceeds from the PIPE.

The ATM offering program allows us to issue and sell from time to time up to $150.0 million of our ADSs.

Since the establishment of the ATM offering program, t hrough December 31 , 2024 , we sold 5,491,836 ADSs under our ATM offering program, resulting in $54.8 million in net proceeds.

The Hercules Loan Agreement provided for aggregate maximum borrowings of up to $50.0 million, of which we have funded $30.0 million.

Within the PIPE agreement, we agreed to sell and issue PIPE Warrants to purchase up to 16,076,750 ADSs.

Each PIPE Warrant has an exercise price of $9.93 per ADS and is exercisable for a three year period beginning in February 2024.

Through December 31, 2024, PIPE Warrants were exercised for 3,752,050 ADS, resulting in $37.3 million in exercise proceeds.

We will receive up to an additional approximately $122.4 million in gross proceeds if the PIPE Warrants are fully exercised.

In January 2025, the Company completed the 2025 Financing in which it issued and sold ADSs and, in lieu of ADSs, pre-funded warrants to certain investors along with accompanying 2025 ADS Warrants to purchase ADSs.

The 2025 ADS Warrants have an exercise price of $5.7960 per ADS and are exercisable following a specified data milestone.

The 2025 ADS Warrants will expire after three years.

We currently have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years, other than our operating leases, and debt obligations under our Loan Agreement with Hercules described in the footnotes to our consolidated financial statements.

The following table summarizes our cash flows for each of the periods (in thousands):

Year Ended December 31,

2024 2023 Change

Net cash used in operating activities $ (119,186) $ (97,376) $ (21,810)

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Effect of exchange rate changes on cash, cash equivalents and restricted cash 194 867 (673)

Net increase/(decrease) in cash, cash equivalents and restricted cash

Net (decrease)/increase in cash, cash equivalents and restricted cash

$ (55,168) $ 77,257 $ (132,425)

Net Cash Used in Operating Activities

During the year ended December 31, 2023, net cash used in operating activities was $97.4 million, primarily resulting from our net loss of $118.5 million offset by a non-cash gain on foreign currency remeasurement of $2.6 million, non-cash share-based compensation expenses of $17.3 million, depreciation and amortization of $0.2 million, non-cash interest of $0.6 million and non-cash lease expenses of $2.0 million.

The net loss was also adjusted by $3.5 million related to changes in components of working capital, including a $10.5 million decrease in prepaid expenses and other current assets which primarily related to prepaid research and development expenses, an increase in deferred and prepaid tax assets of $1.7 million, a $5.8 million increase in long-term prepaid and other assets related to prepaid clinical trial costs and a $2.0 million decrease in operating lease liabilities, offset by a $2.5 million increase in accounts payable and accrued expenses which primarily relates to research and development expenses.

During the year ended December 31, 2022, net cash used in operating activities was $105.5 million, primarily resulting from our net loss of $91.5 million offset by a non-cash gain on foreign currency remeasurement of $1.1 million, non-cash share-based compensation expenses of $13.1 million, depreciation and amortization of $0.3 million, and non-cash lease expenses of $2.1 million.

The net loss was also adjusted by $30.7 million related to changes in components of working capital, including a $28.8 million increase in prepaid expenses and other current assets which primarily related to the R&D tax credit receivable and prepaid research and development expense, an increase in deferred and prepaid tax assets of $1.7 million, a $0.3 million increase in other assets related to increased implementation costs, a $0.3 million decrease in accrued expenses and other liabilities and a $2.1 million decrease in operating lease liabilities, offset by a $2.5 million increase in accounts payable which primarily related to research and development invoices received in the quarter.

During the year ended December 31, 2021, net cash used in operating activities was $67.7 million, primarily resulting from our net loss of $71.7 million, offset by non-cash share-based compensation expenses of $8.6 million, depreciation and amortization of $0.2 million and non-cash lease expenses of $1.8 million.

The net loss was also adjusted by $6.6 million related to changes in components of working capital, including a $9.0 million increase in prepaid expenses and other current assets which primarily related to the R&D tax credit receivable and prepaid research and development expense, a $0.2 million increase in other assets which primarily related to the security deposit for our new London office lease and a $0.9 million increase in deferred and prepaid tax assets, offset by a $5.3 million increase in accounts payable and accrued expenses primarily related to an increase in clinical trial costs and legal and professional fees.

Also included in this increase was a non-cash operating lease liability of $1.9 million in relation to our adoption of ASC 842.

Net cash used in operating activities increased during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to a $36.7 million increase in our net loss which was offset by favorable working capital related activities of $8.2 million, primarily attributable to the timing of $28.5 million cash received in 2024 relating to the 2022 and 2023 R&D tax credit, as well as an increase of $6.6 million of non-cash adjustments.

Net Cash Used in Investing Activities

During the years ended December 31, 2023, 2022 and 2021, net cash used in investing activities was $0.1 million, $0.6 million and $0.3 million respectively, primarily driven by our purchases of property and equipment, which largely consisted of lab and office equipment.

Net cash used in investing activities remained consistent during the year ended December 31, 2024, compared to the same period in 2023.

Net Cash Provided by Financing Activities

During the year ended December 31, 2023, net cash provided by financing activities was $173.8 million, primarily related to proceeds from the issuance of ordinary shares through our ATM facility of $28.1 million, net proceeds from our PIPE offering of $116.8 million, net proceeds from issuance of long term debt of $29.6 million and $0.4 million proceeds from issuance of shares under the employee share purchase plan.

The net cash provided was offset by $0.8 million payment of issuance cost of long term debt and $0.3 million in relation to withholding tax on stock awards in 2023.

During the year ended December 31, 2022, net cash provided by financing activities was $1.0 million, primarily related to proceeds from exercise of options of $0.4 million, proceeds from the issuance of ordinary shares through our ATM facility of $0.4 million and proceeds from the issuance of shares under the employee share purchase plan of $0.2 million.

During the year ended December 31, 2021, net cash provided by financing activities was $156.6 million, primarily related to the net proceeds from the Follow-On Offering of $154.8 million and options exercises of $1.8 million.

Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash

During the year ended December 31, 2023 the effect of exchange rate changes on cash, cash equivalents and restricted cash resulted in an exchange gain of $0.9 million compared with a loss of $25.0 million in the same period in the prior year and a loss of $5.6 million in 2021, primarily driven by movements in exchange rates from period to period, resulting in exchange gains or losses on cash balances which are held in an entity with Pound Sterling functional currency that is translated to U.S.

dollars, the reporting currency.

Net cash provided by financing activities decreased during the year ended December 31, 2024, compared to the same period in 2023.

During the year ended December 31, 2023, net cash provided by financing activities primarily consisted of net proceeds from the issuance of ordinary shares through our ATM facility of $28.1 million, net proceeds from the issuance of long-term debt of $29.6 million, and net proceeds from the issuance of shares under our PIPE offering of $116.8 million.

Net cash provided by financing activities during the year ended December 31, 2024 primarily consisted of net proceeds from the issuance of ordinary shares through our ATM facility of $26.2 million and proceeds from the issuance of o rdinary shares to settle warrants exercised of $37.3 million.

Funding Requirements

We expect our expenses to continue to increase substantially in connection with our ongoing activities, particularly as we advance our Phase 3 clinical program of COMP360 in TRD and continue to advance the preclinical activities, manufacturing and Phase 2 clinical trials of COMP360.

In addition, we expect to continue to incur significant costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses.

We expect our expenses to continue to increase substantially in connection with our ongoing activities, particularly as we continue to advance our Phase 3 program of COMP360 in TRD and clinical and preclinical activities supporting studies and related preparatory work for an NDA filing, as well as manufacturing activities and commercial preparedness activities.

addition, we expect to continue to incur significant costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses.

Our expenses will also increase as we:

• continue the clinical development of our investigational COMP360 psilocybin treatment in active clinical trial sites across Europe and North America, including costs associated with conducting our Phase 3 program in TRD;

• establish relationships with the network of public healthcare institutions and private clinics that will administer our investigational COMP360 psilocybin treatment, if approved;

• continue the training of qualified therapists, psychiatrists and other healthcare professionals to deliver our investigational COMP360 psilocybin treatment in our clinical trials;

• establish a sales, marketing and distribution infrastructure and scale-up manufacturing capabilities to commercialize any therapeutic candidates, therapy sessions, or digital support, for which we may obtain regulatory approval, including COMP360;

• advance our commercialization strategy in the United States and Europe, including using digital technologies and solutions to enhance our therapeutic offering;

• continue the research and development program for our other preclinical stage therapeutic candidates and discovery-stage programs;

• discover and/or develop additional therapeutic candidates;

• seek regulatory approvals for any therapeutic candidates that successfully complete clinical trials;

• pursue necessary scheduling-related decisions to enable us to commercialize any therapeutic candidates containing controlled substances for which we may obtain regulatory approval, including COMP360;

• continue to advance our Phase 3 program for investigational COMP360 psilocybin treatment in TRD and clinical and preclinical supporting studies and related preparatory work for the NDA filing ;

• initiate a late-stage development program in PTSD;

• continue the training of qualified healthcare professionals to monitor and safeguard participants receiving investigational COMP360 psilocybin treatment in our Phase 3 program and other clinical trials;

• service our outstanding indebtedness;

• may in the future resume and pursue research and development programs for our other preclinical stage therapeutic candidates and discovery-stage programs;

• may in the future invest in further discovery efforts and/or develop additional therapeutic candidates;

• establish a sales, marketing and distribution infrastructure and scale-up manufacturing capabilities to commercialize any therapeutic candidates for which we may obtain regulatory approval, including COMP360;

• advance our commercialization strategy;

• establish and expand the network of public healthcare institutions and private clinics that administer our investigational COMP360 psilocybin treatment in conjunction with psychological support if approved;

• seek regulatory approvals for any future therapeutic candidates that successfully complete clinical trials;

• experience heightened regulatory scrutiny;

• pursue necessary scheduling-related decisions by the U.S.

Drug Enforcement Administration, or the DEA, and various state governments to enable us to commercialize any therapeutic candidates containing controlled substances for which we may obtain regulatory approval, including COMP360;

• obtain, maintain, expand and protect our intellectual property portfolio, including litigation costs associated with defending against alleged patent or other intellectual property infringement claims;

• add clinical, scientific, operational, financial and management information systems and personnel, including personnel to support our therapeutic development and potential future commercialization efforts;

• expand our operations in the United States and Europe

• incur additional legal, accounting and other expenses associated with operating as a public company listed in the United States;

• work to accelerate research of emerging psychedelic therapies through our partnership with our Centers of Excellence.

We believe our existing cash of $220.2 million at December 31, 2023, together with the net proceeds raised to date during the first quarter, will be sufficient for us to fund our operating expenses and capital expenditure requirements into late 2025.

• experience any delays or encounter any issues with respect to any of the above, including failed studies, ambiguous trial results, safety issues or other regulatory challenges, including, for example, delays and other impacts as a result of pandemics or other public health crises;

• expand our operations in the U.S.

and Europe in the future;

• incur additional legal, accounting and other expenses associated with operating as an English-domiciled public company listed in the U.S.

As of December 31, 2024, we had cash and cash equivalents of $165.1 million.

We believe that our existing cash and cash equivalents , together with the net proceeds raised to date during the first quarter of 2025 of $140.4 million, will be sufficient for us to fund our operating expenses and capital expenditure requirements at least through the planned 26-week data read-out from our COMP006 study, which is expected in the second half of 2026.

We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.

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Our future funding requirements will depend on and could increase significantly as a result of many factors, including:

• the progress, timing and completion of our Phase 3 clinical program for COMP360 for the treatment of TRD, our clinical trials in other indications, and our preclinical activities and clinical trials for future indications or any future therapeutic candidates;

• the progress, timing and completion of our Phase 3 program for our current investigational COMP360 psilocybin treatment program for TRD, and clinical and preclinical supporting studies and related preparatory work for the NDA filing;

• the outcome, timing and cost of seeking and obtaining regulatory approvals from the FDA, the EMA, the MHRA and comparable foreign regulatory authorities, including the potential for such authorities to require that we perform more nonclinical studies or clinical trials than those that we currently expect or change their requirements on studies that had previously been agreed to;

• the outcome and timing of any scheduling-related decisions by the United States Drug Enforcement Agency, or DEA, individual states, and comparable foreign authorities;

• the number of potential new therapeutic candidates we identify and decide to develop, either internally through our research and development efforts or externally through acquisitions, licensing or other collaboration agreements;

• the costs involved in growing our organization to the size needed to prepare for the potential commercialization of our investigational COMP360 psilocybin treatment and future therapeutic candidates;

• the outcome and timing of any scheduling-related decisions by the DEA, individual states, and comparable foreign authorities;

• the number of potential new therapeutic candidates we may choose to pursue and identify in the future and decide to develop, either internally through our research and development efforts or externally through acquisitions, licensing or other collaboration agreements;

• the costs involved in growing our organization in the long-term to the size needed to prepare for the potential commercialization of our investigational COMP360 psilocybin treatment and future therapeutic candidates, including increases to personnel costs;

• the costs of developing sales and marketing capabilities to target public and private healthcare providers and clinic networks in major markets;

• the costs of training and certifying therapists to administer our investigational COMP360 psilocybin treatment in our Phase 3 program and other clinical trials;

• the costs of establishing research collaborations, such as our research collaboration with Greenbrook TMS, and our Centers of Excellence and the Center for Mental Health Research, which includes conducting clinical trials, including proof of concept studies, to refine our treatment delivery model;

• the costs of training and qualifying healthcare professionals to monitor and safeguard participants receiving our investigational COMP360 psilocybin treatment in our Phase 3 program and other clinical trials;

• the costs of establishing research collaborations, such as our Centers of Excellence and the Center for Mental Health Research, which includes conducting clinical trials, including proof of concept studies, to refine our treatment delivery model;

• the time and costs involved in generating and collecting data and advancing and defending our intellectual property portfolio, including the costs involved in filing patent applications and maintaining and enforcing patents or defending against claims of infringements or invalidity raised by third parties;

• the costs of developing, testing and deploying digital technology solutions to improve the patient experience and therapeutic process;

• the costs of developing, testing and deploying digital technology solutions or paying a third-party to provide such digital technology solutions to improve the patient experience and therapeutic process via third-party vendors or internally;

• the time and costs involved in obtaining regulatory approval for COMP360 or any future therapeutic candidates, and any delays we may encounter as a result of evolving regulatory requirements or adverse results with respect to COMP360 or any future therapeutic candidates;

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• the amount of revenue, if any, we may derive either directly or in the form of royalty, milestone or other payments from future sales of our investigational COMP360 psilocybin treatment and any future therapeutic candidates, if approved;

• the impact of macroeconomic events, including, among others, heightened and fluctuating inflation and interest rates, fluctuations in foreign exchange rates, and the risk of economic slowdown or recession in the United States;

• the impact of macroeconomic events, including, among others, fluctuating inflation and interest rates, fluctuations in foreign exchange rates, and the risk of economic slowdown or recession in the U.S.;

• the costs of operating as a public company.

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Our consolidated financial statements are prepared in accordance with U.S.

The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses, and the disclosure of contingent assets and liabilities in our consolidated financial statements.

The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, income and expenses, and the disclosure of contingent assets and liabilities in our consolidated financial statements.

We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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Our actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.

Research and Development Expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate our research and development expenses.

This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs.

We make estimates of our expenses as of each balance sheet date in the consolidated financial statements based on facts and circumstances known to us at that time.

We periodically confirm the accuracy of these estimates with the service providers and make adjustments if necessary.

To date, such adjustments have not been material.

The estimate of the research and development expense is dependent, in part, upon the receipt of timely and accurate reporting from CROs, CMOs, and other third-party service providers.

Examples of estimated research and development expenses include fees paid to:

• vendors in connection with preclinical development activities;

• CROs and investigative sites in connection with preclinical studies and clinical trials;

• CMOs in connection with drug substance and drug product formulation of preclinical study and clinical trial materials.

We base our expenses related to preclinical studies and clinical trials on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple research institutions and CROs that conduct and manage preclinical studies and clinical trials on our behalf.

The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows.

There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense.

Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones.

In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period.

If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or the amount of prepaid expenses accordingly.

Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period.

To date, there have not been any material adjustments to our prior estimates of research and development expenses.

We do not have any significant judgments or estimates.

Critical Accounting Policies

While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements, we believe that the following accounting policies are those most critical to the preparation of our consolidated financial statements.

Research and Development Incentives and Receivables

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Under the SME regime, in effect through December 31, 2024, the Company is able to surrender some of its trading losses that arise from qualifying research and development activities for a cash rebate of a portion of such qualifying research and development expenditure.

Up until April 1, 2023, the effective rate was 33.3% on in-house expenditures and 21.7% on work that was contracted out (to unconnected subcontractors).

Up until April 1, 2023, the effective rate was 33.3% on in-house expenditures and 21.7% on work

that was contracted out (to unconnected subcontractors).

On and after April 1, 2023, the effective rates reduced to 18.6% and 12.1%, respectively.

New rules were introduced by the Finance Act 2024 for an enhanced effective rate of relief for loss making research intensive SMEs, which are approximately 27.0% for qualifying in-house expenditures and approximately 17.5% for qualifying subcontracted expenditures (to unconnected subcontractors).

To be eligible as a research intensive company (the R&D intensity condition), the qualifying R&D expenditure for tax purposes must be at least 40% of the aggregate expenditure across the consolidated group.

The threshold has decreased from 40% to 30% from January 1, 2025.

For the year ended December 31, 2023, the Company has accounted for its R&D tax credit on the basis that it was not research intensive.

For the year ended December 31, 2024 the Company believes that it meets the R&D intensity condition and has therefore calculated its R&D tax credit at the enhanced rate on the basis that it is research intensive.

The enhanced rate for a payable credit is 14.5% compared to the standard rate of 10%, which when applied to qualifying expenditure enhanced by 86% to 186%, gives an effective rate of 27% on qualifying in house expenditure and 17.5% for qualifying subcontracted expenditure (to unconnected subcontractors).

We currently meet the conditions of the SME regime.

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A large portion of costs relating to R&D, clinical trials and manufacturing activities are eligible for inclusion within our tax credit cash rebate claims.

Included in the total employment costs are judgements and estimates relating to the allocation of time spent on R&D activities by individual.

Included in the total employment costs are estimates relating to the allocation of time spent on R&D activities by individuals.

These estimates are based on real time data such as time spent by various team members, considerations given for non-R&D related events and general day to day activities.

The estimates are based on the most accurate representation of the total time spent on qualifying R&D activities.

The classification of consumables, outsourced contract research organization costs and utilities costs are based on judgements made by management relating to the direct nature of such costs.

The classification of consumables, outsourced contract research organization costs and utilities costs are based on analysis undertaken by management relating to the direct nature of such costs.

The costs incurred relate directly to the pursuit of R&D activities by the company.

We have recorded a benefit from the R&D tax credit in other income, net of $12.9 million, $14.4 million and $9.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.

We have recorded a benefit from the R&D tax credit in other income, net of $21.1 million and $12.9 million for the years ended December 31, 2024 and 2023, respectively.

The refund is denominated in pounds sterling and, therefore, the receivable is remeasured into U.S.

dollars as of each reporting date.

As of December 31, 2023 and 2022, our tax incentive receivable from the UK government was $27.8 million, $14.0 million, respectively.

The Company received confirmation from the UK government in January 2024 that the 2022 credit claimed was approved to be paid in full.

As of the reporting date, the Company has not yet received the 2022 credit claimed.

As of December 31, 2024 and 2023, our tax incentive receivable from the UK government was $20.7 million and $27.8 million, respectively.

During the year ended December 31, 2024, the Company received $14.9 million and $13.6 million from the UK government for the 2022 and 2023 R&D tax credit, respectively.

Smaller Reporting Company Status

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis