What changed in this filing

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Item 1. Financial Statements

2024-08-12 compared with 2024-05-13 · 161 added, 105 removed, 397 unchanged (40% of the section changed)

23 unchanged sentences

300,000 shares authorized;

137,589 and 127,668

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

137,589 and 127,668 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in-capital

6 unchanged sentences

and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except per share data)

Three Months Ended

Six Months Ended

Licensing revenue

Operating expenses:

8 unchanged sentences

Other comprehensive loss:

Unrealized (loss) gain on marketable securities

Unrealized loss on marketable securities

Comprehensive loss

2 unchanged sentences

and Subsidiaries

Condensed Consolidated Statements of Stockholders ’ Equity (Unaudited)

Condensed Consolidated Statements of Stockholders ’ Equity

(In thousands)

8 unchanged sentences

Balance at March 31, 2024

Stock-based compensation

Unrealized loss on marketable securities

Balance at June 30, 2024

Balance at December 31, 2022

4 unchanged sentences

Balance at March 31, 2023

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

Vesting of share-based awards

Stock-based compensation

Unrealized loss on marketable securities

Balance at June 30, 2023

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

1 unchanged sentence

and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

Condensed Consolidated Statements of Cash Flows

(In thousands)

For the Three Months

Ended March 31,

For the Six Months

Ended June 30,

Cash flows from operating activities:

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Proceeds from sale or maturities of marketable securities

Net cash (used in) provided by investing activities

Purchases of property and equipment

Net cash provided by investing activities

Cash flows from financing activities:

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Supplemental disclosure of cash flow information

Unrealized (loss) gain on marketable securities

Unrealized loss on marketable securities

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

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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, 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.

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, 2024 and its consolidated results of operations, comprehensive loss and changes in stockholders’ equity for the three and six months ended June 30, 2024 and 2023 and cash flows for the six months ended June 30, 2024 and 2023.

Operating results for the six months ended June 30, 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.

5 unchanged sentences

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

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.

Through June 30, 2024, we have received $ 430 million in gross proceeds from the sale of equity securities.

As of June 30, 2024, we had cash, cash equivalents and marketable securities of $ 146 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 the first quarter of 2027.

Summary of Significant Accounting Policies

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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):

Fair Value Measurements as of June 30, 2024 (000's):

Quoted Prices in

23 unchanged sentences

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) income, 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.

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

Fair Value Measurements as of March 31, 2024 Using:

Fair Value Measurements as of June 30, 2024 Using:

Amortized Cost

Unrealized gains

Unrealized Losses

Corporate bonds

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Fair Value Measurements as of December 31, 2023 Using:

Amortized Cost

Unrealized gains

Unrealized Losses

Corporate bonds

3 unchanged sentences

Asset-backed securities

March 31, 2024

June 30, 2024

December 31, 2023

8 unchanged sentences

Property and equipment, net

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

Depreciation and amortization expense for the six months ended June 30, 2024 was $ 0.3 million as compared to $ 0.4 million for the same period in 2023.

Accrued Expenses

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Total accrued expenses

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

Project expenses are from $ 4.6 million of accrued manufacturing expenses.

These expenses are mostly for the manufacture of drug product for CTX-009 including $ 4.5 million of minimum contractual obligations.

Commitments and Contingencies

8 unchanged sentences

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 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 discount rate used for the Facility lease is 6.25 %, and the remaining lease term of the Facility lease is eleven months as of June 30, 2024.

Cash payments related to the Facility were $ 0.3 million for the three months ending June 30, 2024 and 2023 and $ 0.7 million for the six months ending June 30, 2024 and 2023.

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

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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.

The Company made matching contributions of $ 0.2 million and $ 0.1 million for the three months ended June 30, 2024 and 2023, respectively.

The Company made matching contributions of $ 0.2 million and $ 0.1 million for the six months ended June 30, 2024 and 2023, respectively.

Stock-Based Compensation

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,

Stock-based compensation expense for the three and six months ended June 30, 2024 and 2023 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, 2024, the remaining unrecognized stock-based compensation cost from all plans to be recognized in future periods totaled $ 21.5 million.

As of June 30, 2024, remaining unrecognized stock-based compensation cost from all plans to be recognized in future periods totaled $ 19.4 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.

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

As of March 31, 2024, 4.5 million shares remain available for grant.

As of June 30, 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 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,

Outstanding at June 30, 2024

Vested at June 30, 2024

For the six months ended June 30, 2024, the weighted average grant date fair value for options granted was $ 1.82 .

The options had no intrinsic value as of June 30, 2024.

As of June 30, 2024, the total unrecognized compensation cost related to outstanding options was $ 11.4 million, to be recognized over a weighted average period of 1.5 years.

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.

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, 2024 and 2023 were as follows:

Six Months Ended June 30,

Expected term (in years)

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Expected dividend yield

As of January 2024, 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:

3 unchanged sentences

Forfeited or canceled

Unvested, March 31, 2024

Unvested, June 30, 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 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.

As of June 30, 2024, remaining unrecognized compensation cost related to RSUs to be recognized in future periods totaled $ 8.0 million, which is expected to be recognized over a weighted average period of 1.8 years.

Related Parties and Related-Party Transactions

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.

There were no material related party transactions during the six months ended June 30, 2024 and 2023.

Other income consists exclusively of interest income of $ 2.0 million and $ 2.1 million for the three months ended June 30, 2024 and 2023, respectively.

Interest income was $ 4.0 million and $ 3.9 million for the six months ended June 30, 2024 and 2023, respectively

License, Research and Collaboration Agreements

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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 the first quarter of 2024.

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

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

As of June 30, 2024, future potential milestone payments in connection with this agreement amounted to $ 2.0 million.

Elpiscience Agreement

The Company entered into a license agreement with Elpiscience Biopharmaceuticals Co., Limited (“Elpiscience”) on January 16, 2021.

Under the agreement, the Company granted certain rights, including to develop, manufacture and commercialize CTX-009, to Elpiscience for the territory of Mainland China, Hong Kong, Taiwan and Macau in exchange for royalties and milestones.

In April 2024, Elpiscience completed its phase 1 clinical trial which required a $ 1 million milestone payment due to the Company.

Per the ABL Bio Agreement noted in this footnote, sub-licensing revenue is subject to a 15 % royalty.

License revenue reflects the $ 1 million, net of the ABL Bio royalty.

License revenue is shown net of this royalty.

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.

In the quarter ended March 31, 2024, the Company sold through its 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.

The Company did not sell shares through the ATM in the quarter ended June 30, 2024.

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 months ended March 31, 2024.

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 months ended June 30, 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.

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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, 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.

CTX-009 is currently undergoing clinical studies as a monotherapy and in combination with chemotherapy in the United States.

We currently have two ongoing U.S.

clinical trials with CTX-009:

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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 partial responses observed in 37 patients enrolled in Part A 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.

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

Based on the Simon Two-Stage design, if the criteria for the first stage are met, the trial progresses to the second stage.

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 first stage of the trial enrolled 41 patients in the United States, of which 26 (63%) were treated in the fourth line.

As of August 2024, preliminary data associated with the first stage of this trial are as follows:

overall response rate (“ORR”) of 5% (2 out of 41), the disease control rate (“DCR”) of 71% (29 out of 41), median progression free survival (“PFS”) of 3.9 months and median overall survival (“OS”) is currently 10.2 months.

The safety profile was consistent with the prior clinical trials with hypertension as the most common adverse event.

Based on this data, we are evaluating a second-line trial in patients with metastatic colorectal cancer combined with chemotherapy whose tumors express DLL4 and we are not going to enroll the second stage of the Phase 2 monotherapy trial.

We are also 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”).

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

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

This trial was fully enrolled in August 2024 and 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).

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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.

We also recently approved the initiation of an Investigator Sponsored Trial (“IST”) for the study of CTX-009 in the first-line setting in patients with BTC to be conducted at the University of Texas MD Anderson Cancer Center.

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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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.

In the fourth quarter of 2022, we initiated a clinical trial in 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.

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

This combination arm is enrolling 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.

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

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.

Prior to completing enrollment of this trial, we observed an unexpected suppression of proinflammatory cytokines that was not observed with CTX-471 as a monotherapy.

As a result, the combination study will be discontinued.

We have initiated planning of a Phase 2 monotherapy study of CTX-471 in patients with a set of tumors that express a newly identified biomarker of CTX-471 activity.

We plan to present data on CTX-471 activity in patients whose tumors express this biomarker at a scientific conference later this year.

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

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

The first cohort of this trial was completed in June 2024 with no dose limiting toxicities observed.

We initiated the second cohort in July 2024.

OPERATING ACTIVITIES

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

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

Through June 30, 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 $10.8 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.

Our net losses were $13.1 million and $11.3 million for the three months ended June 30, 2024 and 2023, respectively.

Our net losses were $23.9 million and $19.1 million for the six months ended June 30, 2024 and 2023, respectively.

We had an accumulated deficit of $339 million on June 30, 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 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.

As of June 30, 2024, we had $146 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 the first quarter of 2027.

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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Components of Results of Operations

Licensing Revenue

Licensing revenue consists of a milestone payment received from a license agreement with Elpiscience Biopharmaceuticals Co., Limited (“Elpiscience”) for CTX-009 in China.

The revenue is shown net of a royalty due on the licensing revenue as it is not material to the statement of operations.

See footnote 11 of the financial statements in this Quarterly Report on Form 10-Q for further information on the license agreement.

Research and Development

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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;

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

other research and development expenses including pre-clinical study costs and expenses incurred under agreements with organizations that support our platform program development;

expenses incurred under agreements with organizations that support our platform program development;

Contract Manufacturing Organizations (“CMO”) that are primarily engaged to provide drug substance and product for our clinical trials, research and development programs, as well as investigative sites and consultants that conduct our clinical trials, nonclinical studies and other scientific development services;

the cost of acquiring and manufacturing nonclinical and clinical trial materials, including manufacturing registration and validation batches;

costs related to compliance with quality and regulatory requirements;

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General and administrative expenses consist primarily of salaries and related costs for personnel in executive, finance, business development and administrative functions.

General and administrative expenses also include legal fees relating to patent and corporate matters, professional fees for accounting, auditing, tax, insurance, administrative travel expenses and other operating costs.

We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our business operations.

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Results of Operations

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,

Comparison of the Three Months Ended June 30, 2024 and 2023

The following table summarizes our results of operations for the three months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30,

Licensing Revenue

Operating expenses:

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Loss from operations

Loss before income tax expense

Income tax expense

Licensing Revenue

Licensing revenue was $850 thousand for the three months ended June 30, 2024.

There was no licensing revenue for the three months ended June 30, 2023.

The licensing revenue consisted of a $1 million milestone payment from Elpiscience for completing the Phase 1 trial in China.

This license revenue is reported net of a 15% sublicense royalty due to ABL Bio (see footnote 11 of the financial statements in this Quarterly Report on Form 10-Q for further information on this sublicense agreement).

Research and Development Expenses

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.

Research and development expenses increased by $1.0 million, or 9%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

This increase was primarily attributable to a $2.5 million increase in clinical costs related to the COMPANION-002 trial (CTX-009), partially offset by $1.8 million less in manufacturing expense for the same program.

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 March 31,

Three Months Ended June 30,

Unallocated research and development expenses

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General and Administrative Expenses

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 three months ended March 31, 2024 and 2023, we recognized no income tax expense.

General and administrative expenses increased $1.6 million, or 52% for the three months ended June 30, 2024 as compared to the same period in 2023.

This increase primarily came from costs related to the accrual of expenses associated with our previously announced CEO transition.

For the three months ended June 30, 2024 and 2023, other income consisted primarily of interest income.

Comparison of the Six Months Ended June 30, 2024 and 2023

The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023 (in thousands):

Six Months Ended June 30,

Licensing Revenue

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Licensing Revenue

Licensing revenue was $850 thousand for the six months ended June 30, 2024.

There was no licensing revenue for the six months ended June 30, 2023.

The licensing revenue consisted of a $1 million milestone payment from Elpiscience for completing a Phase 1 trial in China.

This license revenue is reported net of a 15% sublicense royalty due ABL Bio (see footnote 11 of the financial statements in this Quarterly Report on Form 10-Q for further information on this sublicense agreement).

Research and Development Expenses

Research and development expenses increased by $3.8 million, or 23%, for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023.

This increase was primarily attributable to a $4.8 million increase in clinical costs related to the COMPANION-002 trial (CTX-009 – BTC), partially offset by $2.1 million less in manufacturing expense for the same program.

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 $1.8 million, or 29% for the six months ended June 30, 2024 as compared to the same period in 2023.

This increase primarily came from costs related to the accrual of expenses associated with our previously announced CEO transition.

For the six months ended June 30, 2024 and 2023, other income consisted primarily of interest income.

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, 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.

Through June 30, 2024, we have received $430 million in gross proceeds from the sale of equity securities.

As of June 30, 2024, we had cash, cash equivalents and marketable securities of $146 million.

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

Three Months Ended March 31,

Six Months Ended June 30,

Cash used in operating activities

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Operating Activities

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).

During the six months ended June 30, 2024, we used $24.6 million of cash in operating activities, resulting from our net loss of $23.9 million minus the change in operating assets and liabilities of $4.7 million, partially offset by non-cash charges of $3.9 million (primarily from share-based compensation expense of $4.1 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 minus 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).

Investing Activities

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.

During the six months ended June 30, 2024, $2.4 million of cash was provided by investing activities, related to the net sale of marketable securities.

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

Financing Activities

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

During the six months ended June 30, 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.

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

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.

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 late 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 this Quarterly Report on Form 10-Q will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2027 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.

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