What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-27 compared with 2024-03-21 · 72 added, 72 removed, 465 unchanged (24% of the section changed)

16 unchanged sentences

and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows each of the two years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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Melville, New York

March 21, 2024

February 27, 2025

Compass Therapeutics, Inc.

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137,820 shares issued and outstanding at December 31, 2024;

126,495 shares issued and 126,302 shares outstanding at December 31, 2022

127,668 shares issued and outstanding at December 31, 2023

Additional paid-in-capital

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Accumulated deficit

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Year Ended December 31,

Licensing revenue

Operating expenses:

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Loss from operations

Loss before income tax expense

Income tax expense

Net loss per share - basic and diluted

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Other comprehensive loss:

Unrealized gain (loss) on marketable securities

Unrealized gain on marketable securities

Comprehensive loss

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Balance at December 31, 2022

Common shares issued in PIPE Offering, net

Common shares issued in ATM Offering, net

Common stock issued upon exercise of options

Share-based awards

Share-based awards, net of tax remittance

Stock-based compensation

Cancelled shares

Unrealized loss on marketable securities

Unrealized gain on marketable securities

Balance at December 31, 2023

Common shares issued in ATM Offering, net

Common stock issued upon exercise of options

Common shares issued, net of $ 0.5 million costs

Share-based awards, net of tax remittance

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Depreciation and amortization

Gain on disposal of equipment

Share-based compensation

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Purchases of property and equipment

Proceeds from sale of equipment

Net cash provided by (used) in investing activities

Net cash provided by in investing activities

Cash flows from financing activities:

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Supplemental disclosure of cash flow information

Unrealized (gain) loss on marketable securities

Unrealized gain on marketable securities

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

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The Company has incurred recurring losses since its inception and had an accumulated deficit of $ 365 million on December 31, 2024.

The Company expects to continue o generate operating losses for the foreseeable future.

The Company expects that its cash, cash equivalents and marketable securities will be sufficient to fund its operating expenses and capital expenditure requirements into mid-2026.

The Company expects to continue to generate operating losses for the foreseeable future.

The Company expects that its cash, cash equivalents and marketable securities will be sufficient to fund its operating expenses and capital expenditure requirements into the first quarter of 2027.

The future viability of the Company beyond that point is dependent on its ability to raise additional capital to finance its operations.

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Research and development expenses include costs for salaries, employee benefits, subcontractors, facility-related expenses, depreciation and amortization, stock-based compensation, third-party license fees, laboratory supplies, and external costs of outside vendors engaged to conduct discovery, preclinical and clinical development activities and clinical trials as well as to manufacture clinical trial materials and other costs.

The Company recognizes external research and development costs based on an evaluation of the progress to completion of specific tasks using information provided to the Company by its service providers.

The Company recognizes external research and development costs based on an evaluation of the progress of specific tasks using information provided to the Company by its service providers.

Nonrefundable advance payments 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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When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted costs.

Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period.

Significant judgments and estimates are made to determine the accrued balances at the end of any reporting period.

Actual results could differ materially from the Company’s estimates.

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Stock options

Nonvested restricted stock

Income taxes are accounted for under the asset and liability method.

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New Accounting Pronouncements

In December 2023, the FASB issued ASU No.

In December 2023, the FASB issued Accounting Standards Update (“ASU”) No.

2024-09, Income Taxes (Topic 740) :

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Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which is intended to simplify the accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

The new standard was effective beginning January 1, 2022.

The adoption of ASU 2019-12 did not have a material impact on the Company’s financial position and results of operations upon adoption.

The Company adopted Accounting Standards Update ASU No.

2016-13, Financial Instruments — Credit Losses (Topic 326):

Measurement of Credit Losses of Financial Instruments on January 1, 2023.

Marketable debt securities for which the estimated fair value is below amortized cost are evaluated for credit impairment.

Credit impairment is recorded through the statements of operations via an allowance for credit losses and any remaining unrealized gains and losses are reported as a component of other comprehensive income (loss) within the statements of operations and comprehensive loss and as a separate component of stockholders’ equity.

For all marketable securities which the estimated fair value was below amortized cost as of December 31, 2023 and 2022, the decline in fair value was not driven by credit impairment.

The Company adopted ASU No.

2023-07, Segment Reporting — Improvements to Reportable Segment Disclosures (Topic 280) as of January 1, 2024.

The amendments in ASU 2023-07 improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses.

ASU 2023-07 requires a public entity to report a measure of segment profit or loss that the chief operating decision maker (CODM) uses to assess segment performance and make decisions about allocating resources.

ASU 2023-07 also requires other specified segment items and amounts, such as depreciation, amortization, and depletion expense, to be disclosed under certain circumstances.

The amendments in ASU 2023-07 do not change or remove those disclosure requirements.

The amendments in ASU 2023-07 also do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments.

The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, adopted retrospectively.

The adoption of ASU 2023-07 did not have a material effect on the Company’s consolidated financial statements or disclosures.

There are no other pending accounting pronouncements that are expected to have a material impact on the Company’s consolidated financial statements.

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Corporate bonds

Commercial paper

Certificates of deposit

Commercial paper

government treasuries

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Corporate bonds

Commercial paper

Certificates of deposit

Commercial paper

government treasuries

Asset-backed securities

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Corporate bonds

Commercial paper

Certificates of deposit

government treasuries

Commercial paper

Asset-backed securities

government treasuries

Fair Value Measurements as of December 31, 2023 Using:

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Corporate bonds

Commercial paper

Certificates of deposit

Commercial paper

Asset-backed securities

government treasuries

As of December 31,

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Total accrued expenses

Project expenses in 2022 were primarily made up of $ 8.8 million of accrued manufacturing expenses including $ 6.4 million of minimum contractual obligations which were paid in 2023.

Project expenses in 2024 were primarily made up of $ 2.6 million of accrued manufacturing expenses related to minimum contractual obligations.

Compensation and benefits primarily increased from 2023 based on accrued payroll related to the departure of the CEO of $ 0.7 million.

Stockholders ’ Equity

In November 2022, the Company sold through a Private Investment in Public Entity (“PIPE”) offering of 25,000,000 shares of our common stock at a purchase price of $ 3.21 per share.

The gross proceeds to us from the PIPE were $ 80.3 million.

In connection with the PIPE, the Company paid $ 4.5 million to the underwriters (and for other legal and accounting costs), for net proceeds of $ 75.7 million.

In June 2023, the Company sold, through its ATM program pursuant to its Open Market Sale Agreement SM 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 in ATM offerings.

In the first quarter of 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.

In the second quarter of 2023, the Company sold through its 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.

Stock-Based Compensation

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General and administrative

Restricted Stock

A summary of the Company’s restricted share activity during the years ended December 31, 2023 and 2022 is as follows:

Shares (000's)

Unvested, December 31, 2021

Forfeited or canceled

Unvested, December 31, 2022

Forfeited or canceled

Unvested, December 31, 2023

As of December 31, 2023, there was no remaining unrecognized compensation cost related to restricted stock awards.

No restricted share awards were granted for the years ended December 31, 2023 and 2022.

In June 2020, the Company’s board of directors adopted the 2020 Plan and reserved 2.9 million shares of common stock for issuance under this plan.

The 2020 Plan provides that the number of shares reserved and available for issuance under the 2020 Plan will automatically increase each January 1, beginning on January 1, 2021, by the lesser of (i) 4% of the outstanding number of shares of our common stock on the immediately preceding December 31 or (ii) such number of shares as determined by the plan administrator no later than the immediately preceding December 31.

The 2020 Plan provides that the number of shares reserved and available for issuance under the 2020 Plan will automatically increase each January 1, beginning on January 1, 2021, by the lesser of 4% of the outstanding number of shares of our common stock on the immediately preceding December 31 or such number of shares as determined by the plan administrator no later than the immediately preceding December 31.

As of December 31, 2024, 1.4 million shares remain available for future grant.

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For the year ended December 31, 2024, the weighted average grant date fair value for options granted was $ 1.13 .

The aggregate intrinsic value for options vested and outstanding as of December 31, 2023 and 2022 was $ 11 thousand and $ 6.3 million, respectively.

The aggregate intrinsic value for options vested and outstanding as of December 31, 2024 and 2023 was $ 579 thousand and $ 11 thousand, respectively.

As of December 31, 2024, the unrecognized compensation cost related to outstanding options was $ 11.1 million, expected to be recognized over a weighted average period of approximately 1.5 years.

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ABL Bio Corporation ("ABL Bio") Agreements

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.

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 tovecimig (ABL001), ABL Bio’s bispecific antibody targeting DLL4 and VEGF-A.

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

ABL Bio received a $ 5 million upfront payment and $ 6 million development milestone payment.

In addition, ABL Bio is eligible to receive up to $ 96 million of development and regulatory milestone payments, and up to $ 303 million of commercial milestone payments and tiered single-digit royalties on net sales of CTX-009 in oncology.

ABL Bio is also eligible to receive up to $ 75 million in development and regulatory milestones and up to $ 110 million in commercial milestone payments and tiered, single-digit royalties on net sales of CTX-009 in ophthalmology.

In May 2021, TRIGR and ABL Bio terminated license agreements to several preclinical assets.

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For leases with a term of 12 months or less, we recognize lease expense on a straight-line basis over the lease term.

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 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.

1 unchanged sentence

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 one year and five months as of December 31, 2023.

As this lease does not provide an implicit rate, the Company used its incremental borrowing rate to discount the lease payments based on the date of the lease commencement.

Cash paid for this lease was $ 1.3 million for the years ended December 31, 2023 and 2022.

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 December 31, 2024 of $ 6.7 million.

The remaining lease term of the Facility lease is 6.4 years as of December 31, 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 $ 1.1 million and $ 1.3 million for the years ending December 31, 2024 and 2023, respectively.

Cash paid for this lease was $ 1.4 million and $ 1.3 million for the years ended December 31, 2024 and 2023, respectively.

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

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The Company made matching contributions of $ 0.3 million and $0.2 million for the years ended December 31, 2024 and 2023, respectively.

Other income consisted of the following:

Interest income, net

Realized gain on disposal of equipment

Total other income

Other income consisted of interest income from investments on marketable securities of $ 7.3 million and $ 7.9 million for the years ended December 31, 2024 and 2023, respectively.

The Company had no income tax for the years ended December 31, 2024 and 2023.

11 unchanged sentences

As of December 31, 2024, the Company has U.S.

federal and state net operating loss carryforwards (“NOLs”) of $ 65.5 million and $ 58.8 million, respectively.

federal and state net operating loss carryforwards (“NOLs”) of $ 79.8 .

million and $ 80.0 million, respectively.

As of December 31, 2024, the Company has federal and state research and development credit carryforwards (“R&D credits”) of $ 7.3 million and $ 2.4 million, respectively.

27 unchanged sentences

Net deferred tax assets

Subsequent Events

In the first quarter of 2024, the Company sold, through its Open Market Sale Agreement SM 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.

Segment Information

Segment reporting is prepared on the same basis that our chief executive officer, who is our CODM, manages the business, makes operating decisions and assesses performance.

The Company operates in one segment.

The Company’s business is research and development of drug candidates.

Costs, including supplies, outsourced development, personnel costs and other research and development costs are tracked to reported by major program.

Facility and equipment costs are not allocated to programs.

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

Year Ended December 31,

Licensing revenue

Research and development

Stock-based compensation

General and administrative

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

1 unchanged sentence

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-K

Item 8. Financial Statements and Supplementary Data