What changed in this filing

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Item 1. Financial Statements

2024-11-12 compared with 2024-08-12 · 145 added, 126 removed, 432 unchanged (39% of the section changed)

4 unchanged sentences

(In thousands, except par value)

September 30,

2024 (unaudited)

2023 (Note 1)

Current assets:

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300,000 shares authorized;

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

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

Additional paid-in-capital

Accumulated other comprehensive (loss) income

Accumulated other comprehensive income

Accumulated deficit

4 unchanged sentences

and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

(In thousands, except per share data)

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Licensing revenue

4 unchanged sentences

Loss from operations

Loss before income tax expense

Income tax expense

Net loss per share - basic and diluted

1 unchanged sentence

Other comprehensive loss:

Unrealized loss on marketable securities

Unrealized gain (loss) on marketable securities

Comprehensive loss

2 unchanged sentences

and Subsidiaries

Condensed Consolidated Statements of Stockholders ’ Equity

Compass Therapeutics, Inc.

and Subsidiaries

Condensed Consolidated Statements of Stockholders ’ Equity (Unaudited)

(In thousands)

11 unchanged sentences

Balance at June 30, 2024

Stock-based compensation

Unrealized gain on marketable securities

Balance at September 30, 2024

Balance at December 31, 2022

9 unchanged sentences

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

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

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

For the Six Months

Ended June 30,

For the Nine Months

Ended September 30,

Cash flows from operating activities:

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Net cash provided by financing activities

Net change in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Net change in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

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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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 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.

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

Operating results for the nine months ended September 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.

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

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.

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

As of September 30, 2024, we had cash and marketable securities of $ 135 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.

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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 June 30, 2024 (000's):

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

Quoted Prices in

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Asset-backed securities

Cash equivalents

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

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

Fair Value Measurements as of June 30, 2024 Using:

Fair Value Measurements as of September 30, 2024 Using:

Amortized Cost

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Asset-backed securities

June 30, 2024

September 30, 2024

December 31, 2023

3 unchanged sentences

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

September 30,

Leasehold improvements

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Property and equipment, net

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.

Depreciation and amortization expense for the nine months ended September 30, 2024 and 2023 was $ 0.5 million.

Accrued Expenses

Accrued expenses consist of the following (in thousands):

September 30,

Project expenses

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Total accrued expenses

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

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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.

Therefore, the Company used its incremental borrowing rate of 6.25 % 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.

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The Facility lease has an initial term of four years and five months, beginning on January 1, 2021.

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 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 terms of the Facility lease were modified effective September 27, 2024 through the execution of a new lease.

The modified terms extended the non-cancelable lease term through May 2031.

The modified terms also included the right to use an additional 10,724 square feet that is expected to commence and be available for the Company’s use in May 2025.

The classification and incremental borrowing rate for the lease did not change as a result of this lease modification.

Right-of-use assets obtained in exchange for new operating lease liabilities due to the lease modification were $ 6.1 million for a total right-of-use assets as of September 30, 2024 of $ 7.0 million.

The remaining lease term of the Facility lease is 6.7 years as of September 30, 2024.

The Company has $ 568 thousand of restricted cash associated with an irrevocable letter of credit required by the landlord to enter into this lease.

Lease costs related to the Facility were $ 0.3 million for the three months ending September 30, 2024 and 2023 and $ 1.0 million for the nine months ending September 30, 2024 and 2023.

Cash payments related to the Facility were $ 0.3 million for the three months ending September 30, 2024 and 2023 and $ 1.0 million for the nine months ending September 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 $ 0.2 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.

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

The Company made matching contributions of $ 0.3 million and $ 0.2 million for the nine months ended September 30, 2024 and 2023, respectively.

Stock-Based Compensation

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,

Stock-based compensation expense for the three and nine months ended September 30, 2024 and 2023 was classified in the condensed consolidated statement of operations as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development

General and administrative

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

As of September 30, 2024, remaining unrecognized stock-based compensation cost from all plans to be recognized in future periods totaled $ 19.2 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 June 30, 2024, 4.5 million shares remain available for grant.

As of September 30, 2024, 2.2 million shares remain available for grant.

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

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Forfeited/canceled

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,

Outstanding at September 30, 2024

Vested at September 30, 2024

For the nine months ended September 30, 2024, the weighted average grant date fair value for options granted was $ 1.13 .

The outstanding options had an intrinsic value as of September 30, 2024 of $ 1.8 million.

As of September 30, 2024, the total unrecognized compensation cost related to outstanding options was $ 12.0 million, to be recognized over a weighted average period of 1.5 years.

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.

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, 2024 and 2023 were as follows:

Nine Months Ended September 30,

Expected term (in years)

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Forfeited or canceled

Unvested, June 30, 2024

Unvested, September 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 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.

As of September 30, 2024, remaining unrecognized compensation cost related to RSUs to be recognized in future periods totaled $ 7.2 million, which is expected to be recognized over a weighted average period of 1.5 years.

Related Parties and Related-Party Transactions

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

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

Other income consists exclusively of interest income of $ 1.8 million and $ 2.0 million for the three months ended September 30, 2024 and 2023, respectively.

Interest income was $ 5.7 million and $ 5.9 million for the nine months ended September 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 six months of 2024.

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

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

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

Elpiscience Agreement

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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.

The Company did not sell shares through the ATM in the quarter ended September 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 and six months ended June 30, 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 nine months ended September 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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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.

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

In September 2024, we signed a new lease on its existing facility extending the term six years to May 2031.

In addition to our pre-clinical antibody candidates, we currently have three product candidates in the clinical stage of development:

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

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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.

a Phase 2 trial of CTX-009 as monotherapy in patients with metastatic colorectal cancer (“CRC”) who received two or three prior treatment regimens (this trial, as discussed further below, is in the process of being discontinued) 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.

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

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

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

We have completed the first stage of a Simon Two-Stage adaptive 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.

We are not, however, advancing to the second stage because the first stage did not achieve the pre-determined response criteria for advancement.

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.

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

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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.

Based on the data from the first stage, we are discontinuing the current Phase 2 monotherapy trial and planning to initiate a new second-line trial in patients with metastatic colorectal cancer combined with chemotherapy whose tumors express DLL4 in mid-2025.

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.

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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.

This trial was fully enrolled in August 2024 and top line data from this study is expected at the end of the first quarter of 2025.

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

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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.

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.

Additionally, we are considering the combination of CTX-009 with our novel CD137 agonistic antibody, CTX-471, which is currently in a Phase 1b clinical trial in patients with advanced solid tumors.

CTX-471 - a monoclonal antibody agonist of CD137

This study is expected to be open in the fourth quarter of 2024.

The trial can be found on www.clinicaltrials.gov (Identifier NCT 06548412).

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.

Additional indications may include ovarian cancer, liver cancer, gastric cancer, pancreatic cancer, renal cell cancer, neuroendocrine cancer and others.

In addition, we are developing a plan to study the combination of CTX-009 with bispecific checkpoint blockers, including our CTX-8371, as well as combining with our novel CD137 agonistic antibody, CTX-471, which is currently in a Phase 1b clinical trial in patients with advanced solid tumors.

CTX-471 - a monoclonal antibody agonist of CD137 (4-1BB)

CTX-471, our monoclonal antibody product candidate, is a fully human, IgG4 monoclonal antibody that is an agonist of CD137, a key co-stimulatory receptor on immune cells.

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Long after the completion of the treatment with CTX-471, a period described as eight half-lives of the antibody, treated mice exhibited immune memory that prevented re-establishment of the same tumor.

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 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.

Encouragingly, treatment of tumors in mice with CTX-471 led to a marked reprogramming of the immune component of the tumor microenvironment.

We also observed that tumors treated with CTX-471 had an approximate two-fold reduction in the number of immunosuppressive tumor-associated macrophages.

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 the Phase 1b monotherapy study, CTX-471 was evaluated in patients with solid tumors that had progressed after at least three months on an approved PD-1 or PD-L1 inhibitor.

Initial results reported from the study included five clinical responses, including a durable partial response (“PR”) in a patient with small-cell lung cancer that converted to a complete response (as confirmed by PET scan) and four additional PRs (one unconfirmed) in patients with melanoma and mesothelioma.

The ORR in the subset of patients with advanced melanoma was 27% (3 of 11).

Data were presented at the American Society of Clinical Oncology (ASCO) Annual Meeting in June 2024.

In the fourth quarter of 2022, we initiated a clinical trial in collaboration with Merck & Co.

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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.

In the second quarter of 2024, we reported that the combination study will be discontinued.

In November 2024, we presented novel biomarker data for CTX-471 at the 39th Society for Immunotherapy of Cancer (SITC) Annual Meeting.

Our research showed a correlation between the levels of neural cell adhesion molecule (NCAM or CD56) in baseline tumor cell biopsies and disease control in patients treated with CTX-471.

To measure pharmacodynamic effects, comparisons were made between pre- and post-CTX-471 treatment.

To survey response biomarkers, values from baseline samples obtained from patients with tumors showing complete or partial responses as well as stable disease were compared with tumors showing progressive disease.

We hypothesize that NCAM facilitates responses to CTX-471 by enriching for activated NK cells expressing the CTX-471 target, CD137.

The dataset shows these effects to be specific for NCAM expressing lymphocytes such as NK cells and is not observed in other lymphocyte subsets such as CD8 T cells.

These findings are novel in a clinical setting and support potential use of NCAM as a selection marker.

The company is currently evaluating the design for its next study of CTX-471 using NCAM as a biomarker, which it expects to initiate in mid-2025.

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.

As of October 2024, the second cohort of this trial was completed with no dose limiting toxicities observed.

We plan to initiate the third cohort by the end of 2024.

OPERATING ACTIVITIES

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

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

Through September 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 $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.

Our net losses were $10.5 million and $10.0 million for the three months ended September 30, 2024 and 2023, respectively.

Our net losses were $34.3 million and $29.1 million for the nine months ended September 30, 2024 and 2023, respectively.

We had an accumulated deficit of $350 million on September 30, 2024.

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

In addition, if we obtain marketing approval for any product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution.

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

As of September 30, 2024, we had $135 million in cash 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.

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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.

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

Research and Development

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Results of Operations

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,

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

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

Three Months Ended September 30,

Licensing Revenue

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Loss from operations

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 $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.

Research and development expenses decreased by $0.2 million, or 2%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

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

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

Three Months Ended June 30,

Three Months Ended September 30,

Unallocated research and development expenses

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General and Administrative Expenses

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,

General and administrative expenses increased $0.5 million, or 17% for the three months ended September 30, 2024 as compared to the same period in 2023.

This increase primarily came from an additional $0.5 million of stock compensation costs as compared to 2023.

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

Comparison of the Nine Months Ended September 30, 2024 and 2023

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

Nine Months Ended September 30,

Licensing Revenue

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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.

Licensing revenue was $850 thousand for the nine months ended September 30, 2024.

There was no licensing revenue for the nine months ended September 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).

This license revenue is reported net of a 15% sublicense royalty due ABL Bio (see note 11 of the condensed consolidated 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.

Research and development expenses increased by $3.6 million, or 14%, for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

This increase was primarily attributable to a $5.3 million increase in clinical costs, primarily related to the COMPANION-002 trial (CTX-009 – BTC), partially offset by $3.8 million less in manufacturing expense, primarily related to CTX-009.

In addition, there was an additional $1.2 million of stock compensation expense for the nine months ended September 30, 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):

Six Months Ended June 30,

Nine Months Ended September 30,

Unallocated research and development expenses

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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.

General and administrative expenses increased $2.3 million, or 25% for the nine months ended September 30, 2024 as compared to the same period in 2023.

This increase primarily came from personnel costs including expenses associated with our previously announced CEO transition and additional stock compensation expense.

For the nine months ended September 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 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.

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

As of September 30, 2024, we had cash and marketable securities of $135 million.

For the first nine 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):

Six Months Ended June 30,

Nine Months Ended September 30,

Cash used in operating activities

Cash provided by (used in) investing activities

Cash provided by investing activities

Cash provided by financing activities

Net change in cash and cash equivalents

Net change in cash, cash equivalents and restricted cash

Operating Activities

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).

During the nine months ended September 30, 2024, we used $35.7 million of cash in operating activities, resulting from our net loss of $34.3 million minus the change in operating assets and liabilities of $7.7 million, partially offset by non-cash charges of $6.3 million (primarily from share-based compensation expense of $6.3 million).

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).

Investing Activities

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.

During the nine months ended September 30, 2024, $31.4 million of cash was provided by investing activities, related to the net sale of marketable securities.

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

Financing Activities

During the six months ended June 30, 2024, $17.4 million of cash was provided by financing activities.

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

During the nine months ended September 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.

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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.

If we receive regulatory approval for CTX-009, CTX-471 or CTX-8371 or other product candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize these product candidates ourselves.

We expect that we will require additional funding to complete the clinical development of these three programs and commercialize our product candidates, if we receive regulatory approval.

If we receive regulatory approval for CTX-009, CTX-471 or CTX-8371 or other product candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on if and how we choose to commercialize these product candidates ourselves.

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

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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