What changed in this filing

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Item 1. Financial Statements

2023-08-03 compared with 2023-05-04 · 221 added, 115 removed, 453 unchanged (43% of the section changed)

23 unchanged sentences

$ 3,382  

Accrued expenses

3 unchanged sentences

16,169  

Operating lease obligations, long-term portion

6 unchanged sentences

300,000 shares authorized;

126,507 and 126,495 shares issued at March 31, 2023 and December 31, 2022, respectively;

126,375 and 126,302 shares outstanding at March 31, 2023 and December 31, 2022, respectively

127,459 and 126,495 shares issued at June 30, 2023 and December 31, 2022, respectively;

127,388 and 126,302 shares outstanding at June 30, 2023 and December 31, 2022, respectively

Additional paid-in-capital

17 unchanged sentences

Three Months Ended

Six Months Ended

Operating expenses:

8 unchanged sentences

Other comprehensive loss:

Unrealized gain on marketable securities

Unrealized loss on marketable securities

Comprehensive loss

8 unchanged sentences

Balance at December 31, 2022

126,302  

$ 454,741  

$ ( 302 )  

$ ( 272,814 )  

$ 181,638  

Vesting of share-based awards

2 unchanged sentences

Unrealized gain on marketable securities

( 7,837 )  

Balance at March 31, 2023

126,375  

$ 456,049  

$ ( 146 )  

$ ( 280,651 )  

$ 175,265  

Common shares issued, net of issuance costs of $ 0.1 million

$ 3,032  

Vesting of share-based awards

Stock-based compensation

Unrealized loss on marketable securities

( 361 )  

( 11,278 )  

Balance at June 30, 2023

127,388  

$ 460,709  

$ ( 507 )  

$ ( 291,929 )  

$ 168,286  

Balance at December 31, 2021

100,832  

$ 373,657  

$ ( 233,589 )  

$ 140,078  

Vesting of share-based awards

Stock-based compensation

( 7,162 )  

Balance at March 31, 2022

100,905  

$ 375,231  

$ ( 240,751 )  

$ 134,490  

Vesting of share-based awards

Stock-based compensation

Unrealized loss on marketable securities

( 512 )  

( 8,494 )  

Balance at June 30, 2022

100,968  

$ 376,675  

$ ( 512 )  

$ ( 249,245 )  

$ 126,928  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3 unchanged sentences

(In thousands)

For the Three Months

Ended March 31,

For the Six Months

Ended June 30,

Cash flows from operating activities:

1 unchanged sentence

Depreciation and amortization

Share-based compensation

Stock-based compensation

Amortization of premium and discount on marketable securities

ROU asset amortization

Gain on disposal of equipment

Changes in operating assets and liabilities:

12 unchanged sentences

Proceeds from exercise of stock options

Proceeds from issuance of common stock

Issuance costs from issuance of common stock

Net cash provided by financing activities

3 unchanged sentences

Supplemental disclosure of cash flow information

Unrealized gain on marketable securities

Acquisition of equipment included in accrued expenses

Unrealized loss on marketable securities

Purchase of securities included in accrued expenses

Fixed asset costs included in accounts payable

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

Notes to Unaudited Condensed Consolidated Financial Statements

Nature of Business and Basis of Presentation

Compass Therapeutics, Inc.

18 unchanged sentences

In addition, the Company is dependent upon the services of its employees and consultants.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s consolidated financial position as of March 31, 2023 and its consolidated results of operations, comprehensive loss and changes in stockholders’

equity for the three months ended March 31, 2023 and 2022 and cash flows for the three months ended March 31, 2023 and 2022.

Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s consolidated financial position as of June 30, 2023 and its consolidated results of operations, comprehensive loss and changes in stockholders’

equity for the three and six months ended June 30, 2023 and 2022 and cash flows for the six months ended June 30, 2023 and 2022.

Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

The unaudited condensed consolidated financial statements include the accounts of Compass Therapeutics, Inc.

1 unchanged sentence

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

Accordingly, these condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements in the Company’s Annual Report on Form 10 -K for the fiscal year ended December 31, 2022 (the “Annual Report”).

The condensed consolidated balance sheet at December 31, 2022 has been deri ved from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

Accordingly, these condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements in the Company’s 

Annual Report on Form 10 -K for the fiscal year ended December 31, 2022  

(the “Annual Report”).

Since our inception, we have devoted substantially all of our efforts to organizing and staffing our Company, business planning, raising capital, research and development activities, building our intellectual property portfolio and providing general and administrative support for these operations.

We have funded our operations with proceeds from the sale of our equity securities and borrowing from debt arrangements.

Through March 31, 2023, we have received $ 409 million in gross proceeds from the sale of equity securities.

As of March 31, 2023, we had cash, cash equivalents and marketable securities of $ 175 million.

Through June 30, 2023, we have received $ 412 million in gross proceeds from the sale of equity securities.

As of June 30, 2023, we had cash, cash equivalents and marketable securities of $ 169 million.

Based on our research and development plans, we expect that such cash resources will enable us to fund our operating expenses and capital expenditure requirements into 2026.

4 unchanged sentences

We are continuing to assess the potential impact of the COVID- 19 pandemic on our current and future business and operations, including our expenses and clinical trials, as well as on our industry and the healthcare system.

Summary of Significant Accounting Policies

There have been no material changes to the significant accounting policies previously disclosed in the Company’s Annual Report.

1 unchanged sentence

The following tables represent the Company’s financial assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):

Fair Value Measurements as of March 31, 2023 Using:

Fair Value Measurements as of June 30, 2023 Using:

Quoted Prices in

18 unchanged sentences

Cash equivalents

Marketable Securities

The objectives of the Company’s investment policy are to ensure the safety and preservation of invested funds, as well as to maintain liquidity sufficient to meet cash flow requirements.

1 unchanged sentence

The Company has not realized any net losses from its investments.

Unrealized gains and losses on investments that are available for sale are recognized in accumulated comprehensive loss, unless an unrealized loss is considered to be other than temporary, in which case the unrealized loss is charged to operations.

Unrealized gains and losses on investments that are available for sale are recognized in accumulated other comprehensive loss, unless an unrealized loss is considered to be other than temporary, in which case the unrealized loss is charged to operations.

The Company periodically reviews its investments for other than temporary declines in fair value below cost basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The Company believes the individual unrealized losses represent temporary declines primarily resulting from interest rate changes.

Realized gains and losses are included in other income (loss) in the consolidated statements of operations and comprehensive loss and are determined using the specific identification method with transactions recorded on a trade date basis.

The Company classifies marketable securities that are available for use in current operations as current assets on the consolidated balance sheet.

Realized gains and losses are included in other income in the condensed consolidated statements of operations and comprehensive loss and are determined using the specific identification method with transactions recorded on a trade date basis.

The Company classifies marketable securities that are available for use in current operations as current assets on the condensed consolidated balance sheet.

The following tables summarize marketable securities held (in thousands):

As of March 31, 2023

As of June 30, 2023

Amortized Cost

14 unchanged sentences

Asset-backed securities

March 31, 2023

June 30, 2023

December 31, 2022

13 unchanged sentences

$ 1,567  

Depreciation expense for each of three months ended March 31, 2023 and 2022 was $ 0.2 million.

Accrued Expenses

Depreciation and amortization expense for the six months ended June 30, 2023 and 2022 was $ 0.4 million.

 Accrued Expenses

Accrued expenses consist of the following (in thousands):

Project expenses

$ 6,583  

$ 10,038  

Compensation and benefits

Total accrued expenses

$ 7,827  

$ 11,690  

Project expenses are primarily from $ 6.5 million of accrued manufacturing expenses.

1 unchanged sentence

Commitments and Contingencies

The Company adopted ASU 2016 - 02, Leases (Topic 842 ) (“ASU 2016 - 02”

), effective January 1, 2021, using the modified retrospective transition method, in which the new standard is applied as of the date of initial adoption.

The Company recognized and measured agreements executed prior to the date of initial adoption that were considered leases on January 1, 2021.

No cumulative effect adjustment of initially applying the standard to the opening balance of retained earnings was made upon adoption.

The Company elected the package of practical expedients permitted under the transition guidance that will retain the lease classification and initial direct costs for any leases that exist prior to adoption of the standard.

In addition, the Company elected the accounting policy of not recording short-term leases with a lease term at the commencement date of 12 months or less on the condensed consolidated balance sheet as permitted by the new standard.

The Company has evaluated its leases and determined that it has one lease that is classified as an operating lease.

The Company has evaluated its leases under ASC 842, Leases , and determined that it has one lease that is classified as an operating lease.

The classification of this lease is consistent with the Company’s determination under the previous accounting standard.

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The Facility lease contains scheduled rent increases over the lease term.

The discount rate used for the Facility lease is 6.25 %, and the remaining lease term of the Facility lease is two years and two months as of March 31, 2023. 

Cash payments related to the Facility were $ 0.3 million for the periods ending March 31, 2023 and 2022.

The discount rate used for the Facility lease is 6.25 %, and the remaining lease term of the Facility lease is one year and eleven months as of June 30, 2023.

Cash payments related to the Facility were $ 0.3 million for the three months ending June 30, 2023 and 2022 and $ 0.7 million for the six months ending June 30, 2023 and 2022.

The table below presents the undiscounted cash flows for the lease term.

The undiscounted cash flows are reconciled to the operating lease liabilities recorded on the condensed consolidated balance sheet ( 000's ):

The undiscounted cash flows are reconciled to the operating lease liabilities recorded on the condensed consolidated balance sheet (in thousands):

Remainder of 2023

9 unchanged sentences

See Note 11 for additional information on the ABL Bio Agreement.

Stock-Based Compensation

Stock-based compensation expense for the three months ended March 31, 2023 and 2022 was classified in the condensed consolidated statement of operations as follows:

Three Months Ended March 31,

(000’s)

 Stock-Based Compensation

Stock-based compensation expense for the three and six months ended June 30, 2023 and 2022 was classified in the condensed consolidated statement of operations as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Research and development

General and administrative

As of March 31, 2023, remaining unrecognized stock-based compensation cost from all plans to be recognized in future periods totaled $ 18.2 million.

$ 1,628  

$ 1,444  

$ 2,895  

$ 3,018  

As of June 30, 2023, remaining unrecognized stock-based compensation cost from all plans to be recognized in future periods totaled $ 17.4 million.

Restricted Stock:

Prior to the adoption of the 2020 Plan, the Company issued restricted stock.

A summary of the Company’s restricted stock activity during the three months ended March 31, 2023 is as follows:

A summary of the Company’s restricted stock activity during the three and six months ended June 30, 2023 is as follows:

Weighted Average Fair Value

(000 ’

(In thousands)

Unvested, December 31, 2022

$ 1.74  

( 122 )  

$ 1.71  

Forfeited or canceled

Unvested, March 31, 2023

As of March 31, 2023, the total unrecognized compensation cost related to stock compensation expense for restricted stock is $ 0.2 million, expected to be recognized over a weighted average period of 0.6 years.

Unvested, June 30, 2023

$ 1.79  

As of June 30, 2023, the total unrecognized compensation cost related to stock compensation expense for restricted stock is $ 0.1 million, expected to be recognized over a weighted average period of 0.5 years.

In June 2020, the Company’s board of directors adopted the 2020 Stock Option and Incentive Plan (the “2020 Plan”) and reserved 2.9 million shares of common stock for issuance under this plan.

1 unchanged sentence

The increase on January 1, 2023 was 5.1 million shares.

As of March 31, 2023, 5.5 million shares remain available for grant.

As of June 30, 2023, 5.2 million shares remain available for grant.

The 2020 Plan authorizes the board of directors or a committee of the board to grant incentive stock options, nonqualified stock options, restricted stock awards and restricted stock units ("RSUs") to eligible officers, employees, consultants and directors of the Company.

2 unchanged sentences

The following table summarizes the stock option activity for the 2020 Plan:

(In thousands)

Term (In years)

(In thousands)

Outstanding at December 31, 2022

$ 3.89  

$ 6,316  

$ 3.80  

( 12 )  

$ 2.43  

Forfeited/canceled

Outstanding at March 31, 2023

Vested at March 31, 2023

For the three months ended March 31, 2023, the weighted average grant date fair value for options granted was $ 2.95 .

The intrinsic value for options vested as of March 31, 2023, was $ 0.5 million.

As of March 31, 2023, the total unrecognized compensation cost related to outstanding options was $ 11.5 million, to be recognized over a weighted average period of 3.2 years.

For the three months ended March 31, 2022, the weighted average grant date fair value for options granted was $ 1.77 .

There was no intrinsic value for options vested as of March 31, 2022.

The weighted average assumptions used in the Black-Scholes pricing model to determine the fair value of stock options granted during the three months ended March 31, 2023 and 2022 were as follows:

Three Months Ended March 31,

( 228 )  

$ 4.75  

Outstanding at June 30, 2023

$ 3.84  

$ 1,814  

Vested at June 30, 2023

$ 4.34  

For the six months ended June 30, 2023, the weighted average grant date fair value for options granted was $ 2.85 .

The intrinsic value for options vested as of June 30, 2023, was $ 0.6 million.

As of June 30, 2023, the total unrecognized compensation cost related to outstanding options was $ 11.3 million, to be recognized over a weighted average period of 3 years.

For the six months ended June 30, 2022, the weighted average grant date fair value for options granted was $ 2.29 .

The intrinsic value for options vested as of June 30, 2022, was $ 47 thousand.

The weighted average assumptions used in the Black-Scholes pricing model to determine the fair value of stock options granted during the six months ended June 30, 2023 and 2022 were as follows:

Six Months Ended June 30,

Expected term (in years)

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The following table summarizes the RSU activity for the 2020 Plan:

(In thousands)

Average Price

Average Fair Value ($000's)

Average Fair Value (In thousands)

Unvested, December 31, 2022

$ 3.83  

$ 3,447  

Forfeited or canceled

Unvested, March 31, 2023

Unvested, June 30, 2023

$ 3.88  

$ 6,984  

The weighted average price per share is the weighted grant price based on the closing market price of each of the stock grants.

The weighted average fair value is the weighted average share price times the number of shares.

As of March 31, 2023, remaining unrecognized compensation cost related to RSUs to be recognized in future periods totaled $ 6.4 million, which is expected to be recognized over a weighted average period of 3.3 years.

As of June 30, 2023, remaining unrecognized compensation cost related to RSUs to be recognized in future periods totaled $ 5.9 million, which is expected to be recognized over a weighted average period of 3 years.

Related Parties and Related-Party Transactions

There were no material related party transactions during the quarters ended March 31, 2023 and 2022.

Other income consisted of interest income on marketable securities.

Interest income was $ 1.9 million and $ 20 thousand for the three months ended March 31, 2023 and 2022, respectively.

There were no material related party transactions during the six months ended June 30, 2023 and 2022.

The following table summarizes other income (in thousands):

Three Months Ended

Six Months Ended

Interest income

Realized gain on disposal of equipment

Total other income

License, Research and Collaboration Agreements

11 unchanged sentences

The agreement includes provisions for payment of royalties at rates ranging in the single digits as a percentage of future net sales within a specified term from the first commercial sale for certain antibodies, including our product candidate, CTX- 471.

There were no milestone payments made during the first three months of 2023.

As of March 31, 2023, future potential milestone payments in connection with this agreement amounted to $ 2.0 million.

There were no milestone payments made during 

As of June 30, 2023, future potential milestone payments in connection with this agreement amounted to $ 2.0 million.

Stockholders ’

Through June 2023, we sold through our at-the-market (“ATM”) agreement with Jefferies LLC, 951,873 shares of common stock at an average price of $ 3.28 for total proceeds of $ 3.1 million and net proceeds of $ 3.0 million.

Management ’

1 unchanged sentence

The following discussion of the financial condition and results of operations of Compass Therapeutics, Inc.

should be read in conjunction with the financial statements and the notes to those statements included in this Quarterly Report on Form 10-Q for the period ended March 31, 2023.

should be read in conjunction with the financial statements and the notes to those statements included in this Quarterly Report on Form 10-Q for the three and six month periods ended June 30, 2023.

Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risk, uncertainties and assumptions.

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Risk Factors ”

section included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 , for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

section included in our 

Annual Report on Form 10-K for the fiscal year ended December 31, 2022 , for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

We are a clinical-stage, oncology-focused biopharmaceutical company developing proprietary antibody-based therapeutics to treat multiple human diseases.

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Food and Drug Administration (the “FDA”) in December 2021 for CTX-009 and the FDA cleared our IND application in January 2022.

The following trials are being conducted in the United States under this IND.

Following conversations with the FDA, we initiated a randomized Phase 2/3 trial for CTX-009 in combination with paclitaxel in adult patients with unresectable, advanced, metastatic or recurrent biliary tract cancers (“BTC”

or “cholangiocarcinoma”) who have received one prior systemic chemotherapy regimen.

The trial is designed to assess the safety and efficacy of the combination of CTX-009 and paclitaxel versus paclitaxel alone.

The trial will enroll 150 patients, who will be randomized in a 2:1 ratio to receive CTX-009 plus paclitaxel (n=100) or paclitaxel alone (n=50).

The primary endpoint of the trial is overall response rate and the secondary endpoints include progression free survival, disease control rate, duration of response and overall survival.

The trial can be found on www.clinicaltrials.gov (Identifier NCT 05506943).

In addition, we initiated a Phase 2 monotherapy clinical trial to assess the safety and efficacy of CTX-009 in patients with metastatic colorectal cancer who have received two or three prior systemic therapies.

The trial utilizes a Simon Two-Stage adaptive design where the criteria to advance to the second stage of the trial is three partial responses observed in 37 patients enrolled in Part A of the trial.

All of our CTX-009 trials are being conducted in the United States under this IND.

We are conducting a Phase 2 monotherapy clinical trial of CTX-009 in patients with metastatic colorectal cancer who have received two or three prior systemic therapies irrespective of their KRAS mutation status.

The trial is designed to assess the safety and efficacy of CTX-009 as a monotherapy in patients with colorectal cancer treated in the third and fourth-line settings and utilizes a Simon Two-Stage adaptive design where the criteria to advance to the second stage of the trial is three confirmed partial responses observed in 37 patients enrolled in Stage 1 of the trial.

Based on the Simon Two-Stage design, when the criteria for the first stage are met, the trial progresses to the second stage, at which time 47 additional patients will be enrolled.

We expect the first interim data readout from the trial in the second half of 2023.

The trial can be found on www.clinicaltrials.gov (identifier NCT 05513742).

In addition, we are conducting a randomized Phase 2/3 trial for CTX-009 in combination with paclitaxel in adult patients with unresectable, advanced, metastatic or recurrent biliary tract cancers (“BTC”

or “cholangiocarcinoma”) who have received one prior systemic chemotherapy regimen.

The trial is designed to assess the safety and efficacy of the combination of CTX-009 and paclitaxel versus paclitaxel alone in patients treated in the second-line settings.

The trial is designed to enroll 150 patients, who will be randomized in a 2:1 ratio to receive CTX-009 plus paclitaxel (n=100) or paclitaxel alone (n=50).

The primary endpoint of the trial is overall response rate (“ORR”) and the secondary endpoints include progression free survival (“PFS”), disease control rate (“DCR”), duration of response (“DOR”) and overall survival (“OS”).

In the first half of this year we opened 20 clinical sites and started enrolling patients in this study.

Top line data from this study is expected in the second half of 2024.

The trial can be found on www.clinicaltrials.gov (Identifier NCT 05506943).

DEVELOPMENT PLANS FOR CTX-009

We intend to explore the potential of CTX-009 in additional indications, based on data from pre-clinical models, potential biomarkers such as DLL4, and clinical data from CTX-009 trials providing signs of potential activity of CTX-009 in additional indications such as ovarian cancer, gastric cancer, pancreatic cancer, renal cell cancer, liver cancer, neuroendocrine cancer and others.

We intend to explore the potential of CTX-009 in additional indications, based on data from pre-clinical models, potential biomarkers such as DLL4, and clinical data from CTX-009 trials providing signs of potential activity of CTX-009 in additional indications such as ovarian cancer, liver cancer, gastric cancer, pancreatic cancer, renal cell cancer, neuroendocrine cancer and others.

In addition, we are developing a plan to study the combination of CTX-009 with our novel bispecific checkpoint blocker, CTX-8371, and with other checkpoint blockers, such as pembrolizumab and atezolizumab.

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Patients enrolled in the trial will be treated with CTX-471 in combination with pembrolizumab with the goal of restoring response.

In July 2023, enrollment in the dose escalation portion of the study was completed.

We expect the first interim data from the trial in the second half of 2023.

CTX-8371 - a bispecific antibody that simultaneously targets both PD-1 and PD-L1

CTX-8371 is a bispecific antibody that binds to both PD-1 and PD-L1, the targets of well-known and widely used checkpoint inhibitor antibodies.

CTX-8371 is a bispecific antibody that binds to both PD-1 and PD-L1, the targets of well-known and widely used checkpoint inhibitor antibodies and in addition acts via differentiated mechanism-of-action that involves cleavage of cell surface PD-1.

Preclinical studies demonstrate that CTX-8371 has the ability to outperform PD-1, PD-L1, and combinations of the two to activate T-cells in in vitro assays.

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IND-enabling studies on CTX-8371, including GLP toxicology studies in non-human primates were completed in the first quarter of 2023.

We are currently targeting an IND submission for CTX-8371 to the FDA in the third quarter of 2023 and initiating a clinical trial in the second half of 2023.

We are currently targeting an IND submission for CTX-8371 to the FDA in the third quarter of 2023 and initiating a clinical trial in the fourth quarter of 2023.

OPERATING ACTIVITIES

We have funded our operations primarily with proceeds from the sale of our equity securities.

Through March 31, 2023, we have received $409 million in gross proceeds from the sale of equity securities.

Through June 30, 2023, we have received $412 million in gross proceeds from the sale of equity securities.

We have incurred significant operating losses since inception and have not generated any revenue from the sale of products and we do not expect to generate any revenue from the sale of products in the near future, if at all.

Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of our treatments and any future product candidates.

Our net losses were $7.8 million and $7.2 million for the three months ended March 31, 2023 and 2022, respectively.

We had an accumulated deficit of $281 million at March 31, 2023.

Our net losses were $11.3 million and $8.5 million for the three months ended June 30, 2023 and 2022, respectively.

Our net losses were $19.1 million and $15.7 million for the six months ended June 30, 2023 and 2022, respectively.

We had an accumulated deficit of $292 million on June 30, 2023.

We expect to continue to incur significant expenses for at least the next several years as we advance through clinical development, develop additional product candidates and seek regulatory approval of any product candidates that complete clinical development.

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Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through equity and debt financings, or other capital sources, which may include collaborations with other companies or other strategic transactions.

As of March 31, 2023, we had $175 million in cash, cash equivalents and marketable securities.

As of June 30, 2023, we had $169 million in cash, cash equivalents and marketable securities.

We expect that such cash resources will enable us to fund our operating expenses and capital expenditure requirements into 2026.

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Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

COVID-19 Update

We have been monitoring the COVID-19 pandemic and its potential impact on our business.

There have been delays in sourcing of selected supplies required for the manufacturing of material to be used in our clinical trials, and these delays have impacted and may impact the timing of our future clinical trials.

It is possible that COVID-19 may continue to impact the timeline for our ongoing clinical trials and potential future trials.

We are continuing to assess the potential impact of the COVID-19 pandemic on our current and future business and operations, including our expenses and clinical trials, as well as on our industry and the healthcare system.

Components of Results of Operations

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Results of Operations

Comparison of the Three Months Ended March 31, 2023 and 2022

The following table summarizes our results of operations for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

(000’s)

Comparison of the Three months ended June 30, 2023 and 2022

The following table summarizes our results of operations for the three months ended June 30, 2023 and 2022 (in thousands):

Three Months Ended June 30,

Operating expenses:

3 unchanged sentences

Loss from operations

Other income 

Loss before income tax expense

1 unchanged sentence

Research and Development Expenses

Research and development expenses increased by $2.2 million, or 50%, for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

The increase came from a $2.5 million increase in program-related expenses which inherently change over time.

We spent $3.3 million more on CTX-009 and $0.8 million less for the other two programs (CTX-471 and CTX-8371) for the three months ended March 31, 2023 as compared to the same period in 2022.

We track outsourced development, outsourced personnel costs and other research and development costs of specific programs.

Research and development expenses are summarized by program in the table below:

Three Months Ended March 31,

(000’s)

Research and development expenses increased by $4.4 million, or 74%, for the three months ended June 30, 2023 compared to the three months ended June 30, 2022.

The increase primarily came from a $4.6 million increase in program-related expenses, which inherently change over time. 

We spent $5.9 million more on CTX-009 primarily for manufacturing and clinical costs, and $1.3 million less for the other two programs (CTX-471 and CTX-8371) for the three months ended June 30, 2023 as compared to the same period in 2022. 

We track outsourced development, personnel costs and other research and development costs of specific programs.

Research and development expenses are summarized by program in the table below (in thousands):

Three Months Ended June 30,

Unallocated research and development expenses

1 unchanged sentence

General and Administrative Expenses

General and administrative expenses increased by $0.3 million, or 11%, to $3.1 million for the three months ended March 31, 2023 as compared to the same period in 2022.

For the three months ended March 31, 2023 and 2022, other income consists exclusively of interest income.

General and administrative expenses remained consistent at $3.1 million for the three months ended June 30, 2023 as compared to the same period in 2022.

For the three months ended June 30, 2023 and 2022, other income consists primarily of interest income.

Income Tax Expense

During the three months ended March 31, 2023 and 2022, we recognized no income tax expense.

During the three months ended June 30, 2023 and 2022, we recognized no income tax expense.

Comparison of the Six Months Ended June 30, 2023 and 2022

The following table summarizes our results of operations for the six months ended June 30, 2023 and 2022 (in thousands):

Six Months Ended June 30,

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Loss before income tax expense

Income tax expense

Research and Development Expenses

Research and development expenses increased by $6.6 million, or 64%, for the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

The increase primarily came from an increase in program-related expenses of $7.1 million, which inherently change over time.

We spent $9.3 million more on CTX-009 primarily for manufacturing and clinical costs, and $2.2 million less for the other two programs (CTX-471 and CTX-8371) for the six months ended June 30, 2023 as compared to the same period in 2022.

We track outsourced development, personnel costs and other research and development costs of specific programs.

Research and development expenses are summarized by program in the table below (in thousands):

Six Months Ended June 30,

Unallocated research and development expenses

Total research and development expenses

General and Administrative Expenses

General and administrative expenses increased by $0.3 million, or 5%, to $6.2 million for the six months ended June 30, 2023, as compared to the same period in 2022.

For the six months ended June 30, 2023 and 2022, other income consists primarily of interest income.

Income Tax Expense

During the six months ended June 30, 2023 and 2022, we recognized no income tax expense.

Liquidity and Capital Resources

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We have funded our operations primarily with proceeds from the sale of our equity securities.

Through March 31, 2023, we have received $409 million in gross proceeds from the sale of equity securities.

As of March 31, 2023, we had cash, cash equivalents and marketable securities of $175 million.

Through June 30, 2023, we have received $412 million in gross proceeds from the sale of equity securities.

As of June 30, 2023, we had cash, cash equivalents and marketable securities of $169 million.

Through June 2023, we sold through our at-the-market (“ATM”) agreement with Jefferies LLC, 951,873 shares of common stock at an average price of $3.28 for total proceeds of $3.1 million and net proceeds of $3.0 million.

Funding Requirements

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If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

The following table shows a summary of our cash flows for the periods indicated:

Three Months Ended March 31,

(000’s)

The following table shows a summary of our cash flows for the periods indicated (in thousands):

Six Months Ended June 30,

Cash used in operating activities

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Operating Activities

During the three months ended March 31, 2023, we used $12.2 million of cash in operating activities, resulting from our net loss of $7.8 million plus the change in operating assets and liabilities of $5.6 million, partially offset by non-cash charges of $1.2 million (primarily from share-based compensation expense of $1.3 million).

During the three months ended March 31, 2022, we used $7.9 million of cash in operating activities, resulting from our net loss of $7.2 million plus the change in operating assets and liabilities of $2.8 million, partially offset by non-cash charges of $2.0 million (primarily from share-based compensation expense of $1.6 million).  

During the six months ended June 30, 2023, we used $22.3 million of cash in operating activities, resulting from our net loss of $19.1 million plus the change in operating assets and liabilities of $5.4 million, partially offset by non-cash charges of $2.2 million (primarily from share-based compensation expense of $2.9 million).

During the six months ended June 30, 2022, we used $12.5 million of cash in operating activities, resulting from our net loss of $15.7 million plus the change in operating assets and liabilities of $0.9 million, partially offset by non-cash charges of $4.0 million (primarily from share-based compensation expense of $3.0 million).

Investing Activities

During the three months ended March 31, 2023, $4.3 million of cash was provided by investing activities related to marketable securities.

During the three months ended March 31, 2022, we used $0.2 million of cash in investing activities which primarily related to leasehold improvements.

During the six months ended June 30, 2023, $3.6 million of cash was provided by investing activities, primarily related to the net sale of marketable securities.

During the six months ended June 30, 2022, we used $105.7 million of cash in investing activities which primarily related to the purchase of marketable securities.

Financing Activities

During the three months ended March 31, 2023, we had $41 thousand in proceeds from the exercise of stock options.

We had no financing activities during the three months ended March 31, 2022.

During the six months ended June 30, 2023, $3.1 million of cash was provided by financing activities.

This primarily included $3.0 million of net cash from sale of common stock under an ATM Agreement, after issuance costs.

We had no financing activities during the six months ended June 30, 2022.

Future Funding Requirements

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These plans include:

three Phase 2 clinical trials of CTX-009, a Phase 1b combination trial for CTX-471 and a Phase 1 trial of CTX-8371.

A Phase 2/3 and two Phase 2 clinical trials of CTX-009, a Phase 1b combination trial for CTX-471 and a Phase 1 trial of CTX-8371. 

We expect that we will require additional funding to complete the clinical development of the three programs, commercialize our product candidates, if we receive regulatory approval, and pursue in-licenses or acquisitions of other product candidates.

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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-Q

Item 1. Financial Statements