COMPASS Pathways plc 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the consolidated financial statements and the related notes to those statements included in this Annual Report on Form 10-K. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, beliefs and expectations that involve risks and uncertainties. Our actual results and the timing of events could differ materially from those discussed in these forward-looking statements. Important factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in Part I, Item 1A. “Risk Factors” and the section titled “Special Note Regarding Forward-Looking Statements.” References to “we,” “our,” “us” and “the Company” refer to Compass Pathways plc. Overview 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 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 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 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. The Phase 3 program is composed of two pivotal trials, each with a long-term follow-up component. The pivotal program design is as follows: • Pivotal trial 1 (COMP005) (n=255): a single dose (25mg) monotherapy compared with placebo. • Pivotal trial 2 (COMP006) (n= 568): a fixed repeat dose monotherapy using three dose arms: 25mg, 10mg and 1mg. 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. 153 Table of Contents 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 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. 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. 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. As a result, we will need substantial additional funding in the longer term to support our continuing operations and pursue our growth strategy. 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. 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 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, 154 Table of Contents 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 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 Revenue To date, we have not generated any revenue and do not expect to generate any revenue from the sale of therapeutic candidates in the foreseeable future. If our development efforts for our investigational COMP360 psilocybin treatment are successful and result in regulatory approval of COMP360, we may generate revenue in the future. Operating Expenses Research and Development 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 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. This is due to the numerous risks and uncertainties associated with development and commercialization, including the following: • 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, including our Phase 3 clinical trials in TRD, and our ability to raise capital on favorable terms or at all; 155 Table of Contents • 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 patient populations; • receipt and maintenance of regulatory and marketing approvals from applicable regulatory authorities; • establishing and scaling up, through third-party manufacturers, manufacturing capabilities of clinical supply for our clinical trials and commercial manufacturing, if any therapeutic candidates are approved; • entry into collaborations to further the development of our investigational COMP360 psilocybin treatment and our future therapeutic candidates; • obtaining and maintaining patent and trade secret protection or regulatory exclusivity for COMP360 and any future therapeutic candidates; • successfully launching commercial sales of our investigational COMP360 psilocybin treatment and any future therapeutic candidates, if approved; • acceptance of our current and future therapeutic candidates’ benefits and uses, if approved, by patients, the medical community and third-party payors; and • maintaining a continued acceptable safety profile of our investigational COMP360 psilocybin treatment and our future therapeutic candidates following approval. 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 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 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 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 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 to be eligible for R&D incentives in the future although there may be some limitations on expenditure on activities undertaken outside the UK. 156 Table of Contents 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. 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. The amount that can be offset each year is limited to £5.0 million plus an incremental 50% of UK taxable profits. 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, 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, 2024 and 2023 (in thousands): Year ended December 31, 2024 2023 OPERATING EXPENSES: Research and development $ 119,039 $ 87,518 General and administrative 59,166 49,401 Total operating expenses 178,205 136,919 LOSS FROM OPERATIONS (178,205) (136,919) OTHER INCOME, NET: Benefit from R&D tax credit 21,097 12,875 Interest income 8,268 4,623 Interest expense (4,479) (2,204) Foreign exchange (losses) gains (1,032) 3,686 Other income 823 255 Total other income, net 24,677 19,235 Loss before income taxes (153,528) (117,684) Income tax expense (1,594) (780) Net loss $ (155,122) $ (118,464) 157 Table of Contents Comparison For The Years Ended December 31, 2024 and 2023 Research and Development Research and development expenses consist of the following (in thousands): Year ended December 31, 2024 2023 Change Development expenses $ 76,993 $ 48,306 $ 28,687 Personnel expenses 26,707 23,533 3,174 Non-cash share-based compensation expense 10,309 8,910 1,399 Facilities and other expenses 5,030 6,769 (1,739) Total research and development expenses $ 119,039 $ 87,518 $ 31,521 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; and • an increase in non-cash share-based compensation expense primarily due to the accounting for certain equity-based awards. Offset by: • 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 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 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 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; and • an increase in non-cash share-based compensation expense, primarily due to the accounting for certain equity-based awards. Offset by: 158 Table of Contents • a decrease in facilities and other expenses, primarily due to a decrease in banking fees and reduced insurance premiums. 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 activities. Other Income, Net 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 (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; and • an increase in interest income primarily due to higher interest rates earned on higher cash deposit levels. Offset by: • a decrease due to foreign exchange losses following remeasurement of foreign currency denominated assets and liabilities; and • 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 Please refer to the Annual Report on Form 10-K filed for December 31, 2023 for details on the comparisons for the years ended December 31, 2023 and 2022. Liquidity and Capital Resources We are a clinical-stage biotechnology company and we have not yet generated any revenue to date. We have incurred significant operating losses since our formation. 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 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. 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. 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. 159 Table of Contents 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. 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. 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. Cash Flows 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) Net cash used in investing activities — (64) 64 Net cash provided by financing activities 63,824 173,830 (110,006) Effect of exchange rate changes on cash, cash equivalents and restricted cash 194 867 (673) Net (decrease)/increase in cash, cash equivalents and restricted cash $ (55,168) $ 77,257 $ (132,425) Net Cash Used in Operating Activities 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 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 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 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. In 160 Table of Contents 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 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; • 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; and • 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. As we progress with our development programs and the regulatory review process, we expect to incur significant commercialization expenses related to product manufacturing, pre-commercial activities and commercialization. 161 Table of Contents Because of the numerous risks and uncertainties associated with research, development and commercialization of therapeutic candidates and programs, we are unable to estimate the exact amount of our working capital requirements. 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 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 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 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 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; • selling and marketing activities undertaken in connection with the potential commercialization of our investigational COMP360 psilocybin treatment or any future therapeutic candidates, if approved, and costs involved in the creation of an effective sales and marketing organization; • 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, fluctuating inflation and interest rates, fluctuations in foreign exchange rates, and the risk of economic slowdown or recession in the U.S.; and 162 Table of Contents • the costs of operating as a public company. Until such time, if ever, that we can generate product revenue sufficient to achieve profitability, we expect to finance our cash needs through equity offerings, debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements. Additional financing may not be available at all or on acceptable terms. To the extent that we raise additional capital through the sale of equity, current ownership interests will be diluted. If we raise additional funds through government or third-party funding, collaboration agreements, strategic alliances, licensing arrangements or marketing and distribution arrangements, we may have to relinquish future revenue streams, research programs or therapeutic candidates or grant licenses on terms that may not be favorable to us. Debt financing, if available, may involve high interest rates or agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market products or therapeutic candidates that we would otherwise prefer to develop and market ourselves. Critical Accounting Policies and Significant Judgments and Estimates Our consolidated financial statements are prepared in accordance with U.S. GAAP. 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. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions. 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 We are subject to corporate taxation in the UK. Due to the nature of our business, we have generated losses since our inception. The benefit from research and development, or R&D, tax credit is recognized in our consolidated statements of operations and comprehensive loss as a component of other income (expense), net, and represents the sum of our R&D tax credits recoverable in the UK. Each reporting period, we evaluate which UK R&D tax credit programs we expect to be eligible for, that we plan to submit a claim for, and we have reasonable assurance that the amount will ultimately be realized. 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 R&D tax credit as a benefit which is included in our net loss before income tax and accordingly, not reflected as part of our 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 (expense), net. As a company we carry out extensive R&D activities and, therefore, benefit from the UK R&D tax credit regime under the scheme for SMEs. We have assessed our research and development activities and expenditures to determine whether the nature of the activities and expenditures will qualify for credit under the SME regime and whether the claim will ultimately be realized based on the allowable reimbursable expense criteria established by the UK government. 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 163 Table of Contents 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. Qualifying expenditures largely comprise employment costs for research staff for which an estimate of time spent directly or indirectly supporting the pursuit of R&D activities is made, consumables, outsourced contract research organization costs, which are considered to be subcontracted costs, and utilities costs incurred as part of our research projects. 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 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 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 $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, 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 We are a “smaller reporting company” as defined in the Securities Exchange Act of 1934, as amended, or the Exchange Act. As a result, we may take advantage of certain of the scaled disclosures available to smaller reporting companies. These include, but are not limited to, reduced disclosure obligations regarding executive compensation and an exemption from the requirement to provide a compensation discussion and analysis describing compensation practices and procedures. As a smaller reporting company with annual revenues of less than $100.0 million and a non-accelerated filer, we are also not required to provide an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. We will be able to take advantage of these scaled disclosures and exemptions for so long as (i) our voting and non-voting shares held by non-affiliates is less than $250.0 million measured on the last business day of our most recent second fiscal quarter or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting shares held by non-affiliates is less than $700.0 million measured on the last business day of our most recent second fiscal quarter.