What changed in this filing

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Item 1. Financial Statements

2024-05-13 compared with 2023-11-09 · 145 added, 243 removed, 357 unchanged (52% of the section changed)

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(In thousands, except par value)

September 30,

Current assets:

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300,000 shares authorized;

127,476 and 126,495 shares issued at September 30, 2023 and December 31, 2022, respectively;

127,445 and 126,302 shares outstanding at September 30, 2023 and December 31, 2022, respectively

137,589 and 127,668

shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Additional paid-in-capital

Accumulated other comprehensive loss

Accumulated other comprehensive (loss) income

Accumulated deficit

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Three Months Ended

September 30,

Nine Months Ended

September 30,

Operating expenses:

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Other comprehensive loss:

Unrealized gain (loss) on marketable securities

Unrealized (loss) gain on marketable securities

Comprehensive loss

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and Subsidiaries

Condensed Consolidated Statements of Stockholders ’

Equity (Unaudited)

Condensed Consolidated Statements of Stockholders ’ Equity (Unaudited)

(In thousands)

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Stockholders'

(Loss) Income

Balance at December 31, 2023

Vesting of share-based awards

Stock-based compensation

Common stock issued upon exercise of options

Unrealized gain on marketable securities

Balance at March 31, 2023

Common shares issued, net of issuance costs of $ 0.5 million

Vesting of share-based awards

Share-based awards, net of tax remittance

Stock-based compensation

Unrealized loss on marketable securities

Balance at June 30, 2023

Vesting of share-based awards

Stock-based compensation

Exercise of common stock options

Unrealized gain on marketable securities

Balance at September 30, 2023

Balance at March 31, 2024

Balance at December 31, 2022

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Stock-based compensation

Common stock issued upon exercise of options

Unrealized gain on marketable securities

Balance at March 31, 2023

Vesting of share-based awards

Stock-based compensation

Unrealized loss on marketable securities

Balance at June 30, 2022

Vesting of share-based awards

Stock-based compensation

Exercise of common stock options

Unrealized loss on marketable securities

Balance at September 30, 2022

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

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(In thousands)

For the Nine Months

Ended September 30,

For the Three Months

Ended March 31,

Cash flows from operating activities:

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Depreciation and amortization

Stock-based compensation

Share-based compensation

Amortization of premium and discount on marketable securities

ROU asset amortization

Gain on disposal of equipment

Changes in operating assets and liabilities:

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Cash flows from investing activities:

Purchases of property and equipment

Purchases of marketable securities

Proceeds from sale or maturities of marketable securities

Proceeds from sale of equipment

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Proceeds from exercise of stock options

Proceeds from issuance of common stock

Issuance costs from issuance of common stock

Taxes paid related to net shares settlement of RSUs

Proceeds from exercise of stock options

Net cash provided by financing activities

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Supplemental disclosure of cash flow information

Unrealized loss on marketable securities

Unrealized (loss) gain on marketable securities

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

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Notes to Unaudited Condensed Consolidated Financial Statements

Nature of Business and Basis of Presentation

Compass Therapeutics, Inc.

(“Compass”

or the “Company”) is a clinical-stage, oncology-focused biopharmaceutical company developing proprietary antibody-based therapeutics to treat multiple human diseases.

(“Compass” or the “Company”) is a clinical-stage, oncology-focused biopharmaceutical company developing proprietary antibody-based therapeutics to treat multiple human diseases.

Our scientific focus is on the relationship between angiogenesis and the immune system.

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and alleviation of immunosuppressive mechanisms used by tumors to evade immune surveillance.

We plan to advance our product candidates through clinical development as both standalone therapies and in combination with our proprietary product candidates as long as their continued development is supported by clinical and nonclinical data.

We plan to advance our product candidates through clinical development as both standalone therapies and in combination with our proprietary drug candidates as long as their continued development is supported by clinical and nonclinical data.

References to Compass or the Company herein include Compass Therapeutics, Inc.

and its wholly-owned subsidiaries.

The Company was incorporated as Olivia Ventures, Inc.

(“Olivia”) in the State of Delaware on March 20, 2018.

Prior to the Company’s reverse merger with Compass Therapeutics LLC (the “Merger”), Olivia was a “shell company”

(as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended).

The Company is subject to risks and uncertainties common to companies in the biotechnology and pharmaceutical industries.

There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s technology will be obtained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable.

The Company operates in an environment of rapid change in technology and substantial competition from pharmaceutical and biotechnology companies.

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 September 30, 2023 and its consolidated results of operations, comprehensive loss and changes in stockholders’

equity for the three and nine months ended September 30, 2023 and 2022 and cash flows for the nine months ended September 30, 2023 and 2022.

Operating results for the three and nine months ended September 30, 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 March 31, 2024 and its consolidated results of operations, comprehensive loss and changes in stockholders’ equity for the three months ended March 31, 2024 and 2023 and cash flows for the three months ended March 31, 2024 and 2023.

Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

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

and its subsidiaries, and have been prepared by the Company in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements.

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, 2023 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”).

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

As of September 30, 2023, we had cash, cash equivalents and marketable securities of $ 164 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.

COVID-19 Update

We continue to monitor 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.

Through March 31, 2024, we have received $ 430 million in gross proceeds from the sale of equity securities.

As of March 31, 2024, we had cash, cash equivalents and marketable securities of $ 156 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 late 2026.

Summary of Significant Accounting Policies

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

Fair Value Measurements

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 September 30, 2023 Using:

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, 2024 (000's):

Quoted Prices in

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Asset-backed securities

Fair Value Measurements as of December 31, 2022 Using:

Cash equivalents

Fair Value Measurements as of December 31, 2023 (000's):

Quoted Prices in

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Certificates of deposit

government treasuries

Asset-backed securities

Cash equivalents

Money market funds (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.

The Company invests its excess cash in securities issued by financial institutions, commercial companies, and government agencies that management believes to be of high credit quality in order to limit the amount of its credit exposure.

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 other 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) income, 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.

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

As of September 30, 2023

Amortized Cost

Fair Value Measurements as of March 31, 2024 Using:

Unrealized gains

Unrealized Losses

Corporate bonds

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Asset-backed securities

As of December 31, 2022

Amortized Cost

Fair Value Measurements as of December 31, 2023 Using:

Unrealized gains

Unrealized Losses

Corporate bonds

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Certificates of deposit

government treasuries

Asset-backed securities

September 30, 2023

March 31, 2024

December 31, 2023

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Maturing after one year through two years

Property and Equipment

Property and equipment consist of the following (in thousands):

September 30,

Leasehold improvements

Furniture and fixtures

Total property and equipment–at cost

Accumulated depreciation

Property and equipment, net

Depreciation and amortization expense for the nine months ended September 30, 2023 and 2022 was $ 0.5 million and $ 0.6 million respectively.   

Depreciation and amortization expense for each of the three months ended March 31, 2024 and 2023 was $ 0.2 million.

Accrued Expenses

Accrued expenses consist of the following (in thousands):

September 30,

Project expenses

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Total accrued expenses

Project expenses consist of $ 2.9 million of accrued manufacturing expenses and $ 0.9 million of accrued clinical expenses.

Included in accrued manufacturing expenses are $ 2.1 million of minimum contractual obligations related to CTX-009.

Project expenses includes $ 0.5 million of accrued manufacturing expenses and $ 0.2 million of accrued clinical expenses related to CTX-009.

Commitments and Contingencies

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.

When available, the Company will use the rate implicit in the lease to discount lease payments to present value;

however, the Company’s current lease does not provide an implicit rate.

Therefore, the Company used its incremental borrowing rate to discount the lease payments based on the date of the lease commencement.

The Company has one operating lease for its corporate office and laboratory facility (“Facility”) that was signed in December 2020.

The Company moved into the Facility in January 2021.

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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 one year and eight months as of September 30, 2023.

Cash payments related to the Facility were $ 0.3 million for the three months ending September 30, 2023 and 2022 and $ 1.0 million for the nine months ending September 30, 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 two months as of March 31, 2024.

Cash payments related to the Facility were $ 0.3 million for the three months ending March 31, 2024 and 2023.

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

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Remainder of 2024

Years ending December 31,

Total minimum lease payments

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Operating lease obligations, long-term portion

Milestone payments

As part of the ABL Bio Agreement, the Company is obligated to pay certain development milestone payments.

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

Defined Contribution Plan

The Company has a 401(k) defined contribution plan (the “401(k) Plan”) for substantially all its employees.

Eligible employees may make pre-tax or post-tax (Roth) contributions to the 401(k) Plan up to statutory limits.

Since January 1, 2020, the Company has been matching employee contributions to the plan up to 4 % of salary.

On July 1, 2023, the Company increased the employee matching contribution from 4 % to 6 %.

The Company made matching contributions of $ 0.1 million and $ 0.1 million for the three months ended March 31, 2024 and 2023, respectively.

Stock-Based Compensation

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

Three Months Ended September 30,

Nine Months Ended September 30,

Stock-based compensation expense for the three months ended March 31, 2024 and 2023 was classified in the condensed consolidated statement of operations as follows (in thousands):

Three Months Ended March 31,

Research and development

General and administrative

As of September 30, 2023, the remaining unrecognized stock-based compensation cost from all plans to be recognized in future periods totaled $ 15.8 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 nine months ended September 30, 2023 is as follows:

Weighted Average Fair Value

(In thousands)

Unvested, December 31, 2022

Forfeited or canceled

Unvested, September 30, 2023

As of September 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 0.3 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.

As of March 31, 2024, the remaining unrecognized stock-based compensation cost from all plans to be recognized in future periods totaled $ 21.5 million.

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.

The 2020 Plan includes automatic annual increases.

The increase on January 1, 2024 was 5.1 million shares.

As of September 30, 2023, 5.1 million shares remain available for grant.

As of March 31, 2024, 4.5 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.

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Forfeited/canceled

Outstanding at September 30, 2023

Vested at September 30, 2023

For the nine months ended September 30, 2023, the weighted average grant date fair value for options granted was $ 2.82 .

The intrinsic value for options vested as of September 30, 2023, was $ 34 thousand.

As of September 30, 2023, the total unrecognized compensation cost related to outstanding options was $ 10.4 million, to be recognized over a weighted average period of 2.8 years.

For the nine months ended September 30, 2022, the weighted average grant date fair value for options granted was $ 2.30 .

The intrinsic value for options vested as of September 30, 2022, was $ 19 thousand.

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

Nine Months Ended September 30,

Outstanding at March 31, 2024

Vested at March 31, 2024

For the three months ended March 31, 2024, the weighted average grant date fair value for options granted was $ 1.30 .

The intrinsic value for options vested as of March 31, 2024, was $ 0.6 million.

As of March 31, 2024, the total unrecognized compensation cost related to outstanding options was $ 12.7 million, to be recognized over a weighted average period of 1.5 years.

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.

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, 2024 and 2023 were as follows:

Three Months Ended March 31,

Expected term (in years)

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Expected dividend yield

As of January 2023, the Company used the historical price of only its own stock to determine the expected volatility.

Prior to this, a group of industry peers including the Company’s stock price was used.

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

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Forfeited or canceled

Unvested, September 30, 2023

Unvested, March 31, 2024

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 September 30, 2023, the remaining unrecognized compensation cost related to RSUs to be recognized in future periods totaled $ 5.4 million, which is expected to be recognized over a weighted average period of 2.8 years.

As of March 31, 2024, the remaining unrecognized compensation cost related to RSUs to be recognized in future periods totaled $ 8.7 million, which is expected to be recognized over a weighted average period of 2.0 years.

Related Parties and Related-Party Transactions

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

The following table summarizes other income (in thousands):

Three Months Ended

Nine Months Ended

September 30,

Interest income

Realized gain on disposal of equipment

Total other income

There were no material related party transactions during the three months ended March 31, 2024 and 2023.

Other income consists exclusively of interest income of $ 2.0 million and $ 1.9 million for the three months ended March 31, 2024 and 2023, respectively.

License, Research and Collaboration Agreements

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ABL Bio Corporation ("ABL Bio") Agreement

In November 2018, the Company and ABL Bio, a South Korean biotechnology company, entered into an exclusive global (excluding South Korea) license agreement which granted the Company a license to CTX-009 (ABL001), ABL Bio’s bispecific antibody targeting DLL4 and VEGF-A.

Under the terms of the agreement, the two companies would jointly develop CTX-009, with ABL Bio responsible for development of CTX-009 throughout the end of Phase 1 clinical trials and the Company responsible for the development of CTX-009 from Phase 2 and onward.

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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 2023.

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

Stockholders ’

Through September 30, 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 ’

s Discussion and Analysis of Financial Condition and Results of Operations.

There were no milestone payments made during the first quarter of 2024.

As of March 31, 2024, future potential milestone payments in connection with this agreement amounted to $ 2.0 million.

Stockholders ’ Equity

In the quarter ended March 31, 2024, we sold through our at-the-market (“ATM”) agreement with Jefferies LLC, 9,790,577 shares of common stock at an average price of $ 1.85 for total proceeds of $ 18.1 million and net proceeds of $ 17.6 million.

Subsequent Events

In January 2021, the Company licensed certain rights to Elpiscience Biopharmaceuticals Co., Limited (“Elpiscience”) to develop, manufacture, commercialize or otherwise exploit CTX-009 in mainland China, Hong Kong, Taiwan and Macau (the “Elpiscience Agreement”).

In April 2024, Elpiscience notified the Company that it achieved a milestone pursuant to the Elpiscience Agreement for completion of its phase 1 clinical trial with CTX-009, which triggered a $ 1.0 million milestone payment due to the Company.

This milestone payment is subject to a sublicensing revenue payment of 15 %, or $ 150 thousand, due to ABL Bio.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations.

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 three and nine month periods ended September 30, 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 months ended March 31, 2024.

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.

You should read the “

Risk Factors ”

section of this Quarterly Report on Form 10-Q and the “

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.

You should read the “ Risk Factors ” section of this Quarterly Report on Form 10-Q and the “ Risk Factors ” section included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 , 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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We plan to advance our product candidates through clinical development as both standalone therapies and in combination with proprietary pipeline antibodies based on supportive clinical and nonclinical data.

In January 2023, we redirected our internal research activities from early-stage discovery to translational research and preclinical development support.

Our research group is now focused on further and more detailed characterization of our three product candidates, development of additional assays to facilitate regulatory filings, assessment of combinations of our product candidates with other drugs, assessment of additional indications for our product candidates and various pre-clinical studies further expanding our understanding of mechanisms of action, synergistic activities and optimal combinations of the product candidates.

We believe that these activities will allow us to focus our resources on our three product candidate programs, unlock the therapeutic potential of these programs and combinations thereof, and subsequently enhance the return on investment for our shareholders.

We currently have two product candidates in the clinical stage of development:

CTX-009 and CTX-471.

In addition, the IND to our third product candidate, CTX-8371, has been cleared in October, and is expected to enter the clinic in the fourth quarter of 2023.

We currently have three product candidates in the clinical stage of development:

CTX-009, CTX-471 and CTX-8371.

A summary of these product candidates is presented below.

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Preclinical and early clinical data of CTX-009 as a monotherapy and in combination with chemotherapy suggest that blockade of both pathways provides robust anti-tumor activity across several solid tumors, including colorectal, gastric, cholangiocarcinoma, pancreatic and non-small cell lung cancer.

CTX-009 is undergoing clinical development in patients with advanced solid tumors in the United States, South Korea and China.

A Phase 1 dose escalation and dose expansion monotherapy trial in patients with solid tumors and a Phase 1b trial of CTX-009 in combination with chemotherapy was completed in South Korea.

In addition, a Phase 2 trial of CTX-009 in combination with chemotherapy in patients with advanced biliary tract cancer is ongoing in South Korea.

The first part of the Phase 2 trial is complete and data from that study were presented at ASCO GI in January 2023.

We currently have two open clinical trials in the United States:

a Phase 2 trial of CTX-009 in patients with advanced colorectal cancer (“CRC”) and a Phase 2/3 trial of CTX-009 in combination with paclitaxel in patients with advanced biliary tract cancer (“BTC”).

CTX-009, our bispecific antibody targeting DLL4 and VEGF-A, is currently undergoing clinical studies as a monotherapy and in combination with chemotherapy in the United States.

We currently have two open U.S.

clinical trials with CTX-009:

a Phase 2 trial of CTX-009 as monotherapy in patients with metastatic colorectal cancer (“CRC”) who received two or three prior treatment regimens and a randomized Phase 2/3 trial of CTX-009 in combination with paclitaxel in patients with biliary tract cancer (“BTC”) who received one prior treatment regimen.

We licensed the exclusive global rights to CTX-009, outside of South Korea, from ABL Bio, Inc.

(“ABL Bio”), a South Korea-based clinical-stage company focused on developing antibody therapeutics.

South Korean rights are held by Handok Pharmaceuticals, Inc.

(“Handok”) and China rights were out-licensed from the Company to Elpiscience Biopharmaceuticals Co., Limited (“Elpiscience”).

Our strategy is to develop CTX-009 in all of the indications in which patients have a need for effective and novel therapeutic agents and data supports the potential therapeutic benefit of CTX-009.

We chose BTC and CRC as our lead indications based on a number of factors, including CTX-009 activity observed in the Phase 1, 1b and 2 clinical trials, lack of effective therapies for these patient populations in the targeted lines of therapy and the potential for a straight-forward regulatory route to approval.

We submitted an Investigational New Drug (“IND”) application to the U.S.

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

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.

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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 fourth quarter of 2023.

Initial results from Stage 1 of this trial are expected by mid-year 2024.

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 nine months of this year, we opened 29 clinical sites and started enrolling patients in this study. 

Enrollment in the third quarter increased relative to the first half of the year, in part due to the opening of several clinical sites at large medical centers across the country that have high enrollment rate relative to the smaller medical centers.

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

Top line data from this study is expected in the first quarter of 2025.

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

In April 2024, the U.S.

Food and Drug Administration (FDA) granted Fast Track Designation to CTX-009 in combination with paclitaxel for the treatment of patients with metastatic or locally advanced BTC that have been previously treated.

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.

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The CD137 antigenic site recognized by CTX-471 does not block the binding of CD137 ligand and is differentiated from the site recognized by CD137 antibodies from competitors.

We designed the antibody using different backbones and chose to use a human IgG4 backbone for CTX-471 to enable engagement of Fc receptors FcgRI and FcgRIIb to facilitate CD137 cross-linking while avoiding binding to FcgRIIIa and depletion of immune effector cells through ADCC.

We designed the antibody using different backbones and chose to use a human IgG4 backbone for CTX-471 to enable engagement of Fc receptors FcɣRI and FcɣRIIb to facilitate CD137 cross-linking while avoiding binding to FcɣRIIIa and depletion of immune effector cells through ADCC.

Immune cell depletion experiments showed that the activity of CTX-471 required the presence of CD4+ T-cells, CD8+ T-cells, and NK cells, indicating a coordinated involvement of both innate and adaptive immune cells.

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In addition, we have observed potent activity in other syngeneic tumor models including tumor eradication in the A20 model of lymphoma, the MC38 model of colon carcinoma and in the EMT6 model of breast cancer.

We believe that the ability of CTX-471 to transform the tumor microenvironment through the combined action of immune cell recruitment, alleviation of T-cell exhaustion, suppression of Tregs, and reduction of tumor suppressing macrophages leads to CTX-471’s antitumor activity in mouse models.

In October 2022, we announced a clinical collaboration with Merck & Co.

(“Merck”, known as MSD outside the United States and Canada) to evaluate CTX-471 in combination with KEYTRUDA®

(pembrolizumab).

Compass is the study sponsor and Merck provides the clinical supply of KEYTRUDA®.

Additionally, we formed a joint development committee (“JDC”) with Merck to review the results of this clinical trial.

(“Merck”, known as MSD outside the United States and Canada) to evaluate CTX-471 in combination with KEYTRUDA® (pembrolizumab).

Compass is the study sponsor and Merck provides the clinical supply of KEYTRUDA®.

Additionally, we formed a joint development committee (“JDC”) with Merck to review the results of this clinical trial.

In November 2022, we announced the first patient was dosed in the combination arm of the Phase 1 trial.

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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 the third quarter of 2023, the dose escalation portion of the study was completed with no dose limiting toxicities (“DLTs”) observed.

We are currently planning for cohort expansion which we expect to begin in the first quarter of 2024.

The dose-escalation portion of the study enrolled patients with metastatic or locally advanced non-small cell lung cancer, melanoma, small cell lung cancer, mesothelioma and head and neck cancer that have progressed after treatment with a PD-1 or PD-L1 checkpoint inhibitor.

At the end of 2023, the dose-escalation portion of the study was fully enrolled and this portion of the study is near completion.

No dose-limiting toxicities were observed.

There have been no responses observed in the dose escalation portion of the Phase 1 combination study.

In the expansion cohort, we plan on enrolling 60 patients with melanoma, NSCLC and SCLC, who will be randomly receive one of two doses of CTX-471:

0.3 (mg/Kg) every two weeks or 0.6 (mg/Kg) every two weeks in combination with a fixed dose of pembrolizumab (400 mg) every six weeks.

Enrollment in the dose expansion cohorts began in the fourth quarter of 2023.

In March 2024, we announced that we initiated planning of a Phase 2 monotherapy study of CTX-471 in patients with advanced melanoma whose tumors express a newly identified biomarker of CTX-471 activity.

We plan to initiate this study in the United States in the second half of 2024.

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

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In mouse xenografts, treatment with CTX-8371 led to significantly greater tumor growth control and longer survival than treatment with a PD-1 inhibitor alone, a PD-L1 inhibitor alone or the combination of PD-1 and PD-L1 inhibitors.

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

An IND was submitted CTX-8371 to the FDA in the third quarter of 2023.

This IND was accepted and cleared by the FDA in October 2023 and we plan on initiating a clinical trial in the fourth quarter of 2023.

An IND was accepted and cleared by the FDA in October 2023 and the first patient was dosed in April 2024.

OPERATING ACTIVITIES

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

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

Through March 31, 2024, we have received $430 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 $10.0 million and $12.0 million for the three months ended September 30, 2023 and 2022, respectively.

Our net losses were $29.1 million and $27.6 million for the nine months ended September 30, 2023 and 2022, respectively.

We had an accumulated deficit of $301.9 million on September 30, 2023.

Our net losses were $10.8 million and $7.8 million for the three months ended March 31, 2024 and 2023, respectively.

We had an accumulated deficit of $326.1 million on March 31, 2024.

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 September 30, 2023, we had $164 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. 

As of March 31, 2024, we had $156 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 late 2026.

Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability.

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These expenses include:

clinical expenses including Contract Research Organizations (“CRO”), consultants that conduct our clinical trials, as well as investigative sites;

manufacturing expenses including Contract Manufacturing Organizations (“CMO”), consultants that are primarily engaged to develop and manufacture drug substance and product for our clinical trials, as well as the cost of acquiring and manufacturing clinical trial materials, including manufacturing registration and validation batches;

clinical expenses including Contract Research Organizations (“CRO”), consultants that conduct our clinical trials, as well as investigative sites;

employee-related expenses including salaries, related benefits and equity-based compensation expense for employees engaged in research and development functions;

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costs related to compliance with quality and regulatory requirements;

facilities and equipment expenses.  

Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses.

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Results of Operations

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

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

Three Months Ended September 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 decreased by $1.0 million, or 10%, for the three months ended September 30, 2023 compared to the three months ended September 30, 2022.

The decrease primarily came from $1.1 million spent in 2022 for toxicological studies related to CTX-8371, which were not incurred in 2023.

We spent $0.3 million more on CTX-009 primarily for manufacturing and clinical costs, and $0.6 million less for the other two programs (CTX-471 and CTX-8371) for the three months ended September 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 September 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 10% for the three months ended September 30, 2023 as compared to the same period in 2022, which is from additional stock compensation expense.      

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

Income Tax Expense

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

Comparison of the Nine Months Ended September 30, 2023 and 2022

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

Nine Months Ended September 30,

Comparison of the Three months ended March 31, 2024 and 2023

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

Three Months Ended March 31,

Operating expenses:

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Research and Development Expenses

Research and development expenses increased by $5.6 million, or 28%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

The increase primarily came from an increase in clinical costs of $3.8 million and personnel costs of $1.3 million. 

We spent $9.6 million more on CTX-009 primarily for manufacturing and clinical costs, and $2.8 million less for the other two programs (CTX-471 and CTX-8371) for the nine months ended September 30, 2023 as compared to the same period in 2022.

Research and development expenses increased by $2.9 million, or 43%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

The increase primarily came from $2.6 million more in clinical expenses related to CTX-009 and CTX-8371.

Activity related to the clinical trial for CTX-8371 increased significantly in the first quarter as the trial was initiated with the first patient dosed in April 2024.

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):

Nine Months Ended September 30,

Three Months Ended March 31,

Unallocated research and development expenses

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General and Administrative Expenses

General and administrative expenses increased by $0.6 million, or 7%, to $9.3 million for the nine months ended September 30, 2023, as compared to the same period in 2022, which is from additional stock compensation expense.    

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

General and administrative expenses increased by $0.2 million or 6% for the three months ended March 31, 2024 as compared to the same period in 2023.

Other income increased by $0.1 million or 7% for the three months ended March 31, 2024 as compared to the same period in 2023.

Other income consisted exclusively of interest income.

Income Tax Expense

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

During the three months ended March 31, 2024 and 2023, 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 September 30, 2023, we have received $412 million in gross proceeds from the sale of equity securities.

As of September 30, 2023, we had cash, cash equivalents and marketable securities of $164 million. 

Through September 30, 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.

Through March 31, 2024, we have received $430 million in gross proceeds from the sale of equity securities.

As of March 31, 2024, we had cash, cash equivalents and marketable securities of $156 million.

In the first quarter of 2024, we sold through our at-the-market (“ATM”) agreement with Jefferies LLC, 9,790,577 shares of common stock at an average price of $1.85 for total proceeds of $18.1 million and net proceeds of $17.6 million.

Funding Requirements

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Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, current stockholders’

interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect rights of common stockholders.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, current stockholders’ interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect rights of common stockholders.

Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends.

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

Nine Months Ended September 30,

Three Months Ended March 31,

Cash used in operating activities

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Operating Activities

During the nine months ended September 30, 2023, we used $28.3 million of cash in operating activities, resulting from our net loss of $29.1 million plus the change in operating assets and liabilities of $2.7 million, partially offset by non-cash charges of $3.5 million.

During the nine months ended September 30, 2022, we used $23.5 million of cash in operating activities, resulting from our net loss of $27.6 million plus the change in operating assets and liabilities of $1.3 million, partially offset by non-cash charges of $5.4 million.

During the three months ended March 31, 2024, we used $13.9 million of cash in operating activities, resulting from our net loss of $10.8 million plus the change in operating assets and liabilities of $5.2 million, partially offset by non-cash charges of $2.1 million (primarily from share-based compensation expense of $2.0 million).

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).

Investing Activities

During the nine months ended September 30, 2023, $20.7 million of cash was provided by investing activities, primarily related to the net sale of marketable securities.

During the nine months ended September 30, 2022, we used $104.6 million of cash in investing activities which primarily related to the net purchase of marketable securities.

During the three months ended March 31, 2024, $4.1 million of cash was used in investing activities related to the net sale of marketable securities.

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

Financing Activities

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

During the three months ended March 31, 2024, $17.4 million of cash was provided by financing activities.

This primarily included $17.6 million of net cash from sale of common stock under an ATM Agreement, after issuance costs.

We had $5 thousand of financing activities during the nine months ended September 30, 2022 resulting from the exercise of stock options.

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

Future Funding Requirements

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the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval and that we determine to commercialize.

We believe that our existing cash, cash equivalents and marketable securities as of filing of the Form 10-Q will enable us to fund our operating expenses and capital expenditure requirements into 2026 based on our current plans, which may change based on clinical or pre-clinical results.

We believe that our existing cash, cash equivalents and marketable securities as of filing of the Form 10-Q will enable us to fund our operating expenses and capital expenditure requirements into late 2026 based on our current plans, which may change based on clinical or pre-clinical results.

These plans include:

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 these 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