Compass Therapeutics, Inc 10-Q for FY2023 Q3
Compass Therapeutics, Inc. (CMPX)
About this 10-Q
Compass Therapeutics, Inc filed this 10-Q on November 9, 2023, covering the quarter ended September 30, 2023 (FY2023 Q3).
Headline figures
Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $9.96M
- compared with a net loss of $11.98M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________________ to _________________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 3, 2023, the registrant had
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Auditor Firm Id: 596 |
Auditor Name: CohnReznick LLP |
Auditor Location: Melville, NY U.S.A. |
Table of Contents
Compass Therapeutics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except par value)
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September 30, (unaudited) |
December 31, (Note 1) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | $ | ||||||
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Marketable securities |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease, right-of-use ("ROU") asset |
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Other assets |
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Total assets |
$ | $ | ||||||
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Liabilities and Stockholders' Equity |
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Current liabilities: |
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Accounts payable |
$ | $ | ||||||
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Accrued expenses |
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Operating lease obligations, current portion |
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Total current liabilities |
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Operating lease obligations, long-term portion |
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Total liabilities |
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Commitments and contingencies (Note 7) |
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Stockholders' equity: |
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Common stock, $ |
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Additional paid-in-capital |
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Accumulated other comprehensive loss |
( |
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Accumulated deficit |
( |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
$ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Compass Therapeutics, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
(In thousands, except per share data)
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Three Months Ended |
Nine Months Ended |
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2023 |
2022 |
2023 |
2022 |
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Operating expenses: |
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Research and development |
$ | $ | $ | $ | ||||||||||||
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General and administrative |
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Total operating expenses |
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Loss from operations |
( |
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Other income |
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Loss before income tax expense |
( |
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Income tax expense |
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Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
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Net loss per share - basic and diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
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Basic and diluted weighted average shares outstanding |
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Other comprehensive loss: |
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Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
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Unrealized gain (loss) on marketable securities |
( |
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Comprehensive loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Compass Therapeutics, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
(In thousands)
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Common Stock |
Additional |
Accumulated Other Comprehensive |
Accumulated |
Total |
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Shares |
Amount |
Capital |
Loss |
Deficit |
Equity |
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Balance at December 31, 2022 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
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Vesting of share-based awards |
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Stock-based compensation |
— | |||||||||||||||||||||||
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Common stock issued upon exercise of options |
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Unrealized gain on marketable securities |
— | |||||||||||||||||||||||
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Net loss |
— | ( |
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Balance at March 31, 2023 |
( |
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Common shares issued, net of issuance costs of $ |
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Vesting of share-based awards |
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Stock-based compensation |
— | |||||||||||||||||||||||
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Unrealized loss on marketable securities |
— | ( |
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Net loss |
— | ( |
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Balance at June 30, 2023 |
( |
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Vesting of share-based awards |
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Stock-based compensation |
— | |||||||||||||||||||||||
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Exercise of common stock options |
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Unrealized gain on marketable securities |
— | |||||||||||||||||||||||
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Net loss |
— | ( |
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Balance at September 30, 2023 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
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Balance at December 31, 2021 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
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Vesting of share-based awards |
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Stock-based compensation |
— | |||||||||||||||||||||||
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Net loss |
— | ( |
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Balance at March 31, 2022 |
( |
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Vesting of share-based awards |
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Stock-based compensation |
— | |||||||||||||||||||||||
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Unrealized loss on marketable securities |
— | ( |
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Net loss |
— | ( |
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Balance at June 30, 2022 |
( |
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Vesting of share-based awards |
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Stock-based compensation |
— | |||||||||||||||||||||||
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Exercise of common stock options |
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Unrealized loss on marketable securities |
— | ( |
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Net loss |
— | ( |
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Balance at September 30, 2022 |
$ | $ | $ | ( |
) | $ | ( |
) | $ |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Compass Therapeutics, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
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For the Nine Months |
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2023 |
2022 |
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Cash flows from operating activities: |
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Net loss |
$ | ( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Stock-based compensation |
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Amortization of premium and discount on marketable securities |
( |
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ROU asset amortization |
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Gain on disposal of equipment |
( |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other current assets |
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Accounts payable |
( |
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Accrued expenses |
( |
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Operating lease liability |
( |
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Net cash used in operating activities |
( |
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Cash flows from investing activities: |
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Purchases of property and equipment |
( |
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Purchases of marketable securities |
( |
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Proceeds from sale or maturities of marketable securities |
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Proceeds from sale of equipment |
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Net cash provided by (used in) investing activities |
( |
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Cash flows from financing activities: |
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Proceeds from exercise of stock options |
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Proceeds from issuance of common stock |
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Issuance costs from issuance of common stock |
( |
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Net cash provided by financing activities |
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Net change in cash and cash equivalents |
( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
$ | $ | ||||||
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Supplemental disclosure of cash flow information |
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Unrealized loss on marketable securities |
$ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Compass Therapeutics, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
1. Nature of Business and Basis of Presentation
Compass Therapeutics, Inc. (“Compass” or the “Company”) is a clinical-stage, oncology-focused biopharmaceutical company developing proprietary antibody-based therapeutics to treat multiple human diseases. Our scientific focus is on the relationship between angiogenesis and the immune system. Our pipeline includes novel product candidates that leverage our understanding of the tumor microenvironment, including both angiogenesis-targeted agents and immune-oncology focused agents. These product candidates are designed to optimize critical components required for an effective anti-tumor response to cancer. These include modulation of the microvasculature via angiogenesis-targeted agents; induction of a potent immune response via activators on effector cells in the tumor microenvironment; and alleviation of immunosuppressive mechanisms used by tumors to evade immune surveillance. We plan to advance our product candidates through clinical development as both standalone therapies and in combination with our proprietary product candidates as long as their continued development is supported by clinical and nonclinical data. References to Compass or the Company herein include Compass Therapeutics, Inc. and its wholly-owned subsidiaries. The Company was incorporated as Olivia Ventures, Inc. (“Olivia”) in the State of Delaware on March 20, 2018. Prior to the Company’s reverse merger with Compass Therapeutics LLC (the “Merger”), Olivia was a “shell company” (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended).
The Company is subject to risks and uncertainties common to companies in the biotechnology and pharmaceutical industries. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s technology will be obtained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. The Company operates in an environment of rapid change in technology and substantial competition from pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees and consultants.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s consolidated financial position as of September 30, 2023 and its consolidated results of operations, comprehensive loss and changes in stockholders’ equity for the three and nine months ended September 30, 2023 and 2022 and cash flows for the nine months ended September 30, 2023 and 2022. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.
The unaudited condensed consolidated financial statements include the accounts of Compass Therapeutics, Inc. and its subsidiaries, and have been prepared by the Company in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. Accordingly, these condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “Annual Report”).
Liquidity
Since our inception, we have devoted substantially all of our efforts to organizing and staffing our Company, business planning, raising capital, research and development activities, building our intellectual property portfolio and providing general and administrative support for these operations. We have funded our operations with proceeds from the sale of our equity securities and borrowing from debt arrangements. Through September 30, 2023, we have received $
COVID-19 Update
We continue to monitor the COVID-19 pandemic and its potential impact on our business. There have been delays in sourcing of selected supplies required for the manufacturing of material to be used in our clinical trials, and these delays have impacted and may impact the timing of our future clinical trials. It is possible that COVID-19 may continue to impact the timeline for our ongoing clinical trials and potential future trials. We are continuing to assess the potential impact of the COVID-19 pandemic on our current and future business and operations, including our expenses and clinical trials, as well as on our industry and the healthcare system.
2. Summary of Significant Accounting Policies
There have been no material changes to the significant accounting policies previously disclosed in the Company’s Annual Report.
3. Fair Value Measurements
The following tables represent the Company’s financial assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):
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Fair Value Measurements as of September 30, 2023 Using: |
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Quoted Prices in |
Significant Other |
Significant |
Fair Value |
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Assets |
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Corporate bonds |
$ | $ | $ | $ | ||||||||||||
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Commercial paper |
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Certificates of deposit |
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U.S. government treasuries |
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Asset-backed securities |
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Total assets |
$ | $ | $ | $ | ||||||||||||
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Fair Value Measurements as of December 31, 2022 Using: |
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Quoted Prices in |
Significant Other |
Significant |
Fair Value |
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Assets |
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Corporate bonds |
$ | $ | $ | $ | ||||||||||||
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Commercial paper |
— | |||||||||||||||
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Certificates of deposit |
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Asset-backed securities |
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Cash equivalents |
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Total assets |
$ | $ | $ | $ | ||||||||||||
4. Marketable Securities
The objectives of the Company’s investment policy are to ensure the safety and preservation of invested funds, as well as to maintain liquidity sufficient to meet cash flow requirements. The Company invests its excess cash in securities issued by financial institutions, commercial companies, and government agencies that management believes to be of high credit quality in order to limit the amount of its credit exposure. The Company has not realized any net losses from its investments.
Unrealized gains and losses on investments that are available for sale are recognized in accumulated other comprehensive loss, unless an unrealized loss is considered to be other than temporary, in which case the unrealized loss is charged to operations. The Company periodically reviews its investments for other than temporary declines in fair value below cost basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
The Company believes the individual unrealized losses represent temporary declines primarily resulting from interest rate changes. Realized gains and losses are included in other income in the condensed consolidated statements of operations and comprehensive loss and are determined using the specific identification method with transactions recorded on a trade date basis. The Company classifies marketable securities that are available for use in current operations as current assets on the condensed consolidated balance sheet.
The following tables summarize marketable securities held (in thousands):
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As of September 30, 2023 |
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Amortized Cost |
Unrealized gains |
Unrealized Losses |
Fair Value |
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Assets |
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Corporate bonds |
$ | $ | $ | ( |
) | $ | ||||||||||
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Commercial paper |
( |
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Certificates of deposit |
( |
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U.S. government treasuries |
( |
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Asset-backed securities |
( |
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Total assets |
$ | $ | $ | ( |
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As of December 31, 2022 |
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Amortized Cost |
Unrealized gains |
Unrealized Losses |
Fair Value |
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Assets |
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Corporate bonds |
$ | $ | $ | ( |
) | $ | ||||||||||
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Commercial paper |
( |
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Certificates of deposit |
( |
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Asset-backed securities |
( |
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Total assets |
$ | $ | $ | ( |
) | $ | ||||||||||
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As of |
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September 30, 2023 |
December 31, 2022 |
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Maturing in one year or less |
$ | $ | ||||||
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Maturing after one year through two years |
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Total |
$ | $ | ||||||
5. Property and Equipment
Property and equipment consist of the following (in thousands):
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September 30, |
December 31, |
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Equipment |
$ | $ | ||||||
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Leasehold improvements |
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Software |
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Furniture and fixtures |
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Total property and equipment–at cost |
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Less: Accumulated depreciation |
( |
) | ( |
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Property and equipment, net |
$ | $ | ||||||
Depreciation and amortization expense for the nine months ended September 30, 2023 and 2022 was $
6. Accrued Expenses
Accrued expenses consist of the following (in thousands):
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September 30, |
December 31, |
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2023 |
2022 |
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Project expenses |
$ | $ | ||||||
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Compensation and benefits |
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Other |
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Total accrued expenses |
$ | $ | ||||||
Project expenses consist of $
7. Commitments and Contingencies
Leases
The Company has evaluated its leases under ASC 842, Leases, and determined that it has one lease that is classified as an operating lease. The classification of this lease is consistent with the Company’s determination under the previous accounting standard.
When available, the Company will use the rate implicit in the lease to discount lease payments to present value; however, the Company’s current lease does not provide an implicit rate. Therefore, the Company used its incremental borrowing rate to discount the lease payments based on the date of the lease commencement.
The Company has operating lease for its corporate office and laboratory facility (“Facility”) that was signed in December 2020. The Company moved into the Facility in January 2021. The Facility lease has an initial term of 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
The table below presents the undiscounted cash flows for the lease term. The undiscounted cash flows are reconciled to the operating lease liabilities recorded on the condensed consolidated balance sheet (in thousands):
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Remainder of 2023 |
$ | |||
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Years ending December 31, |
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2024 |
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2025 |
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Total minimum lease payments |
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Less: amount of lease payments representing interest |
( |
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Present value of future minimum lease payments |
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Less: operating lease obligations, current portion |
( |
) | ||
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Operating lease obligations, long-term portion |
$ |
Milestone payments
As part of the ABL Bio Agreement, the Company is obligated to pay certain development milestone payments. See Note 11 for additional information on the ABL Bio Agreement.
8. Stock-Based Compensation
Stock-based compensation expense for the three and nine months ended September 30, 2023 and 2022 was classified in the condensed consolidated statement of operations as follows (in thousands):
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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2023 |
2022 |
2023 |
2022 |
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Research and development |
$ | $ | $ | $ | ||||||||||||
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General and administrative |
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Total |
$ | $ | $ | $ | ||||||||||||
As of September 30, 2023, the remaining unrecognized stock-based compensation cost from all plans to be recognized in future periods totaled $
Restricted Stock:
Prior to the adoption of the 2020 Plan, the Company issued restricted stock. A summary of the Company’s restricted stock activity during the nine months ended September 30, 2023 is as follows:
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Shares |
Fair Value |
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Weighted Average Fair Value |
(In thousands) |
Per Share |
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Unvested, December 31, 2022 |
$ | |||||||
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Granted |
$ | |||||||
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Vested |
( |
) | $ | |||||
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Forfeited or canceled |
$ | |||||||
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Unvested, September 30, 2023 |
$ | |||||||
As of September 30, 2023, the total unrecognized compensation cost related to stock compensation expense for restricted stock is $
2020 Plan
In June 2020, the Company’s board of directors adopted the 2020 Stock Option and Incentive Plan (the “2020 Plan”) and reserved
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. Options generally vest over a period of years and have a contractual life of years from the date of grant.
Stock Options:
The following table summarizes the stock option activity for the 2020 Plan:
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Weighted |
Weighted |
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Number of |
Average |
Average |
Aggregate |
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Unvested |
Exercise |
Remaining |
Intrinsic |
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Options |
Price |
Contractual |
Value |
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(000's) |
Per Share |
Term (In years) |
(000's) |
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Outstanding at December 31, 2022 |
$ | $ | ||||||||||||||
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Granted |
$ | |||||||||||||||
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Exercised |
( |
) | $ | |||||||||||||
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Forfeited/canceled |
( |
) | $ | |||||||||||||
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Outstanding at September 30, 2023 |
$ | $ | ||||||||||||||
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Vested at September 30, 2023 |
$ | $ | ||||||||||||||
For the nine months ended September 30, 2023, the weighted average grant date fair value for options granted was $
For the nine months ended September 30, 2022, the weighted average grant date fair value for options granted was $
The weighted average assumptions used in the Black-Scholes pricing model to determine the fair value of stock options granted during the nine months ended September 30, 2023 and 2022 were as follows:
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Nine Months Ended September 30, |
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2023 |
2022 |
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Expected term (in years) |
||||||||
|
Risk-free rate |
% | % | ||||||
|
Expected volatility |
% | % | ||||||
|
Expected dividend yield |
— | — | ||||||
As of January 2023, the Company used the historical price of only its own stock to determine the expected volatility. Prior to this, a group of industry peers including the Company’s stock price was used.
RSUs:
The following table summarizes the RSU activity for the 2020 Plan:
|
Shares |
Weighted |
Weighted |
||||||||||
|
Unvested, December 31, 2022 |
$ | $ | ||||||||||
|
Granted |
||||||||||||
|
Vested |
— | |||||||||||
|
Forfeited or canceled |
— | |||||||||||
|
Unvested, September 30, 2023 |
$ | $ | ||||||||||
The weighted average price per share is the weighted grant price based on the closing market price of each of the stock grants. The weighted average fair value is the weighted average share price times the number of shares.
As of September 30, 2023, the remaining unrecognized compensation cost related to RSUs to be recognized in future periods totaled $
9. Related Parties and Related-Party Transactions
There were no material related party transactions during the nine months ended September 30, 2023 and 2022.
10. Other Income
The following table summarizes other income (in thousands):
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
|
September 30, |
September 30, |
|||||||||||||||
|
2023 |
2022 |
2023 |
2022 |
|||||||||||||
|
Interest income |
$ | $ | $ | $ | ||||||||||||
|
Realized gain on disposal of equipment |
||||||||||||||||
|
Total other income |
$ | $ | $ | $ | ||||||||||||
11. License, Research and Collaboration Agreements
Collaboration Agreements
ABL Bio Corporation ("ABL Bio") Agreement
In November 2018, the Company and ABL Bio, a South Korean biotechnology company, entered into an exclusive global (excluding South Korea) license agreement which granted the Company a license to CTX-009 (ABL001), ABL Bio’s bispecific antibody targeting DLL4 and VEGF-A. Under the terms of the agreement, the two companies would jointly develop CTX-009, with ABL Bio responsible for development of CTX-009 throughout the end of Phase 1 clinical trials and the Company responsible for the development of CTX-009 from Phase 2 and onward. ABL Bio received a $
In May 2021, the Company and ABL Bio terminated license agreements to several preclinical assets. As a result of the return of these assets to ABL Bio and termination of the license agreements, the Company is eligible to receive royalty payments if ABL Bio develops or licenses two bispecific antibodies that were previously licensed to the Company.
Adimab Agreement
The Company entered into a collaboration agreement with Adimab, LLC on October 16, 2014. 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
12. Stockholders’ Equity
Through September 30, 2023, we sold through our at-the-market (“ATM”) agreement with Jefferies LLC,
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion of the financial condition and results of operations of Compass Therapeutics, Inc. should be read in conjunction with the financial statements and the notes to those statements included in this Quarterly Report on Form 10-Q for the three and nine month periods ended September 30, 2023. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risk, uncertainties and assumptions. You should read the “Risk Factors” section of this Quarterly Report on Form 10-Q and the “Risk Factors” section included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We are a clinical-stage, oncology-focused biopharmaceutical company developing proprietary antibody-based therapeutics to treat multiple human diseases. Our scientific focus is on the relationship between angiogenesis, the immune system, and tumor growth. Our pipeline of novel product candidates is designed to target multiple critical biological pathways required for an effective anti-tumor response. These include modulation of the microvasculature via angiogenesis-targeted agents, induction of a potent immune response via activators on effector cells in the tumor microenvironment, and alleviation of immunosuppressive mechanisms used by tumors to evade immune surveillance. We plan to advance our product candidates through clinical development as both standalone therapies and in combination with proprietary pipeline antibodies based on supportive clinical and nonclinical data.
In January 2023, we redirected our internal research activities from early-stage discovery to translational research and preclinical development support. Our research group is now focused on further and more detailed characterization of our three product candidates, development of additional assays to facilitate regulatory filings, assessment of combinations of our product candidates with other drugs, assessment of additional indications for our product candidates and various pre-clinical studies further expanding our understanding of mechanisms of action, synergistic activities and optimal combinations of the product candidates. We believe that these activities will allow us to focus our resources on our three product candidate programs, unlock the therapeutic potential of these programs and combinations thereof, and subsequently enhance the return on investment for our shareholders.
We currently have two product candidates in the clinical stage of development: CTX-009 and CTX-471. In addition, the IND to our third product candidate, CTX-8371, has been cleared in October, and is expected to enter the clinic in the fourth quarter of 2023. A summary of these product candidates is presented below. For a more detailed description, see our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
CTX-009(a.k.a. ABL001) - anti-DLL4 x VEGF-A bispecific antibody
CTX-009 is an investigational bispecific antibody that is designed to simultaneously block DLL4 and VEGF-A signaling pathways, which are critical to angiogenesis and tumor vascularization. Preclinical and early clinical data of CTX-009 as a monotherapy and in combination with chemotherapy suggest that blockade of both pathways provides robust anti-tumor activity across several solid tumors, including colorectal, gastric, cholangiocarcinoma, pancreatic and non-small cell lung cancer.
CTX-009 is undergoing clinical development in patients with advanced solid tumors in the United States, South Korea and China. A Phase 1 dose escalation and dose expansion monotherapy trial in patients with solid tumors and a Phase 1b trial of CTX-009 in combination with chemotherapy was completed in South Korea. In addition, a Phase 2 trial of CTX-009 in combination with chemotherapy in patients with advanced biliary tract cancer is ongoing in South Korea. The first part of the Phase 2 trial is complete and data from that study were presented at ASCO GI in January 2023.
We currently have two open clinical trials in the United States: a Phase 2 trial of CTX-009 in patients with advanced colorectal cancer (“CRC”) and a Phase 2/3 trial of CTX-009 in combination with paclitaxel in patients with advanced biliary tract cancer (“BTC”).
We licensed the exclusive global rights to CTX-009, outside of South Korea, from ABL Bio, Inc. (“ABL Bio”), a South Korea-based clinical-stage company focused on developing antibody therapeutics. South Korean rights are held by Handok Pharmaceuticals, Inc. (“Handok”) and China rights were out-licensed from the Company to Elpiscience Biopharmaceuticals Co., Limited (“Elpiscience”).
Our strategy is to develop CTX-009 in all of the indications in which patients have a need for effective and novel therapeutic agents and data supports the potential therapeutic benefit of CTX-009. We chose BTC and CRC as our lead indications based on a number of factors, including CTX-009 activity observed in the Phase 1, 1b and 2 clinical trials, lack of effective therapies for these patient populations in the targeted lines of therapy and the potential for a straight-forward regulatory route to approval.
We submitted an Investigational New Drug (“IND”) application to the U.S. Food and Drug Administration (the “FDA”) in December 2021 for CTX-009 and the FDA cleared our IND application in January 2022. All of our CTX-009 trials are being conducted in the United States under this IND.
We are conducting a Phase 2 monotherapy clinical trial of CTX-009 in patients with metastatic colorectal cancer who have received two or three prior systemic therapies irrespective of their KRAS mutation status. 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. We expect the first interim data readout from the trial in the fourth quarter of 2023. The trial can be found on www.clinicaltrials.gov (identifier NCT 05513742).
In addition, we are conducting a randomized Phase 2/3 trial for CTX-009 in combination with paclitaxel in adult patients with unresectable, advanced, metastatic or recurrent biliary tract cancers (“BTC” or “cholangiocarcinoma”) who have received one prior systemic chemotherapy regimen. The trial is designed to assess the safety and efficacy of the combination of CTX-009 and paclitaxel versus paclitaxel alone in patients treated in the second-line settings. The trial is designed to enroll 150 patients, who will be randomized in a 2:1 ratio to receive CTX-009 plus paclitaxel (n=100) or paclitaxel alone (n=50). The primary endpoint of the trial is overall response rate (“ORR”) and the secondary endpoints include progression free survival (“PFS”), disease control rate (“DCR”), duration of response (“DOR”) and overall survival (“OS”).
In the first nine months of this year, we opened 29 clinical sites and started enrolling patients in this study. Enrollment in the third quarter increased relative to the first half of the year, in part due to the opening of several clinical sites at large medical centers across the country that have high enrollment rate relative to the smaller medical centers. Top line data from this study is expected in the second half of 2024. The trial can be found on www.clinicaltrials.gov (Identifier NCT 05506943).
We intend to explore the potential of CTX-009 in additional indications, based on data from pre-clinical models, potential biomarkers such as DLL4, and clinical data from CTX-009 trials providing signs of potential activity of CTX-009 in additional indications such as ovarian cancer, liver cancer, gastric cancer, pancreatic cancer, renal cell cancer, neuroendocrine cancer and others.
In addition, we are developing a plan to study the combination of CTX-009 with our novel bispecific checkpoint blocker, CTX-8371, and with other checkpoint blockers, such as pembrolizumab and atezolizumab. 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
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. Binding of CTX-471 to CD137 has been observed to lead to ligand-stimulated activation of T-cells and NK cells. In treated mice, dosing with CTX-471 led to extensive reprogramming of the tumor microenvironment, including increased recruitment of immune cells, reversion of exhausted cytotoxic CD8+ T-cells, reductions in immunosuppressive regulatory T-cells and reductions in immunosuppressive tumor-associated macrophages. 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 FcgRI and FcgRIIb to facilitate CD137 cross-linking while avoiding binding to FcgRIIIa 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 October 2022, we announced a clinical collaboration with Merck & Co. (“Merck”, known as MSD outside the United States and Canada) to evaluate CTX-471 in combination with KEYTRUDA® (pembrolizumab). Compass is the study sponsor and Merck provides the clinical supply of KEYTRUDA®. Additionally, we formed a joint development committee (“JDC”) with Merck to review the results of this clinical trial.
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.
In the third quarter of 2023, the dose escalation portion of the study was completed with no dose limiting toxicities (“DLTs”) observed. We are currently planning for cohort expansion which we expect to begin in the first quarter of 2024.
CTX-8371 - a bispecific antibody that simultaneously targets both PD-1 and PD-L1
CTX-8371 is a bispecific antibody that binds to both PD-1 and PD-L1, the targets of well-known and widely used checkpoint inhibitor antibodies and in addition acts via differentiated mechanism-of-action that involves cleavage of cell surface PD-1. Preclinical studies demonstrate that CTX-8371 has the ability to outperform PD-1, PD-L1, and combinations of the two to activate T-cells in in vitro assays. In mouse xenografts, treatment with CTX-8371 led to significantly greater tumor growth control and longer survival than treatment with a PD-1 inhibitor alone, a PD-L1 inhibitor alone or the combination of PD-1 and PD-L1 inhibitors.
IND-enabling studies on CTX-8371, including GLP toxicology studies in non-human primates were completed in the first quarter of 2023. An IND was submitted CTX-8371 to the FDA in the third quarter of 2023. This IND was accepted and cleared by the FDA in October 2023 and we plan on initiating a clinical trial in the fourth quarter of 2023.
OPERATING ACTIVITIES
We have funded our operations primarily with proceeds from the sale of our equity securities. Through September 30, 2023, we have received $412 million in gross proceeds from the sale of equity securities.
We have incurred significant operating losses since inception and have not generated any revenue from the sale of products and we do not expect to generate any revenue from the sale of products in the near future, if at all. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of our treatments and any future product candidates. Our net losses were $10.0 million and $12.0 million for the three months ended September 30, 2023 and 2022, respectively. Our net losses were $29.1 million and $27.6 million for the nine months ended September 30, 2023 and 2022, respectively. We had an accumulated deficit of $301.9 million on September 30, 2023. 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. 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. We may also incur expenses in connection with the in-licensing or acquisition of additional product candidates.
Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through equity and debt financings, or other capital sources, which may include collaborations with other companies or other strategic transactions. As of September 30, 2023, we had $164 million in cash, cash equivalents and marketable securities. We expect that such cash resources will enable us to fund our operating expenses and capital expenditure requirements into 2026.
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. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Components of Results of Operations
Research and Development
Research and development expenses consist primarily of costs incurred in connection with the development of our product candidates, CTX-471, CTX-8371 and CTX-009. We expense research and development costs as incurred. These expenses include:
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● |
clinical expenses including Contract Research Organizations (“CRO”), consultants that conduct our clinical trials, as well as investigative sites; |
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● |
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; |
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● |
employee-related expenses including salaries, related benefits and equity-based compensation expense for employees engaged in research and development functions; |
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other research and development expenses including pre-clinical study costs and expenses incurred under agreements with organizations that support our platform program development; |
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● |
costs related to compliance with quality and regulatory requirements; and |
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facilities and equipment expenses. |
Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered.
Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will increase substantially in connection with our planned clinical development activities in the future. At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the clinical development of any future product candidates.
The successful development and commercialization of product candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with product development and commercialization.
General and Administrative Expenses
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.
Other Income
Other income consists of interest income on marketable securities.
Results of Operations
Comparison of the Three months ended September 30, 2023 and 2022
The following table summarizes our results of operations for the three months ended September 30, 2023 and 2022 (in thousands):
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Three Months Ended September 30, |
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2023 |
2022 |
Change |
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Operating expenses: |
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Research and development |
$ | 8,831 | $ | 9,791 | $ | (960 | ) | |||||
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General and administrative |
3,095 | 2,807 | 288 | |||||||||
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Total operating expenses |
11,926 | 12,598 | (672 | ) | ||||||||
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Loss from operations |
(11,926 | ) | (12,598 | ) | 672 | |||||||
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Other income |
1,962 | 623 | 1,339 | |||||||||
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Loss before income tax expense |
(9,964 | ) | (11,975 | ) | 2,011 | |||||||
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Income tax expense |
— | — | — | |||||||||
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Net loss |
$ | (9,964 | ) | $ | (11,975 | ) | $ | 2,011 | ||||
Research and Development Expenses
Research and development expenses decreased by $1.0 million, or 10%, for the three months ended September 30, 2023 compared to the three months ended September 30, 2022. The decrease primarily came from $1.1 million spent in 2022 for toxicological studies related to CTX-8371, which were not incurred in 2023. We spent $0.3 million more on CTX-009 primarily for manufacturing and clinical costs, and $0.6 million less for the other two programs (CTX-471 and CTX-8371) for the three months ended September 30, 2023 as compared to the same period in 2022.
We track outsourced development, personnel costs and other research and development costs of specific programs. Research and development expenses are summarized by program in the table below (in thousands):
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Three Months Ended September 30, |
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2023 |
2022 |
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CTX-009 |
$ | 5,859 | $ | 5,523 | ||||
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CTX-471 |
632 | 1,074 | ||||||
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CTX-8371 |
1,159 | 1,324 | ||||||
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Unallocated research and development expenses |
1,181 | 1,870 | ||||||
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Total research and development expenses |
$ | 8,831 | $ | 9,791 | ||||
General and Administrative Expenses
General and administrative expenses increased by $0.3 million or 10% for the three months ended September 30, 2023 as compared to the same period in 2022, which is from additional stock compensation expense.
Other income
For the three months ended September 30, 2023 and 2022, other income consists primarily of interest income.
Income Tax Expense
During the three months ended September 30, 2023 and 2022, we recognized no income tax expense.
Comparison of the Nine Months Ended September 30, 2023 and 2022
The following table summarizes our results of operations for the nine months ended September 30, 2023 and 2022 (in thousands):
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Nine Months Ended September 30, |
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2023 |
2022 |
Change |
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Operating expenses: |
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Research and development |
$ | 25,694 | $ | 20,069 | $ | 5,625 | ||||||
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General and administrative |
9,276 | 8,698 | 578 | |||||||||
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Total operating expenses |
34,970 | 28,767 | 6,203 | |||||||||
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Loss from operations |
(34,970 | ) | (28,767 | ) | (6,203 | ) | ||||||
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Other income |
5,891 | 1,136 | 4,755 | |||||||||
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Loss before income tax expense |
(29,079 | ) | (27,631 | ) | (1,448 | ) | ||||||
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Income tax expense |
— | — | — | |||||||||
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Net loss |
$ | (29,079 | ) | $ | (27,631 | ) | $ | (1,448 | ) | |||
Research and Development Expenses
Research and development expenses increased by $5.6 million, or 28%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. The increase primarily came from an increase in clinical costs of $3.8 million and personnel costs of $1.3 million. We spent $9.6 million more on CTX-009 primarily for manufacturing and clinical costs, and $2.8 million less for the other two programs (CTX-471 and CTX-8371) for the nine months ended September 30, 2023 as compared to the same period in 2022.
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):
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Nine Months Ended September 30, |
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2023 |
2022 |
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CTX-009 |
$ | 16,636 | $ | 6,991 | ||||
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CTX-471 |
2,519 | 3,788 | ||||||
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CTX-8371 |
2,737 | 4,277 | ||||||
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Unallocated research and development expenses |
3,802 | 5,013 | ||||||
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Total research and development expenses |
$ | 25,694 | $ | 20,069 | ||||
General and Administrative Expenses
General and administrative expenses increased by $0.6 million, or 7%, to $9.3 million for the nine months ended September 30, 2023, as compared to the same period in 2022, which is from additional stock compensation expense.
Other income
For the nine months ended September 30, 2023 and 2022, other income consists primarily of interest income.
Income Tax Expense
During the nine months ended September 30, 2023 and 2022, we recognized no income tax expense.
Liquidity and Capital Resources
Since our inception, we have devoted substantially all of our efforts to organizing and staffing our Company, business planning, raising capital, research and development activities, building our intellectual property portfolio and providing general and administrative support for these operations. We have funded our operations primarily with proceeds from the sale of our equity securities. Through September 30, 2023, we have received $412 million in gross proceeds from the sale of equity securities. As of September 30, 2023, we had cash, cash equivalents and marketable securities of $164 million.
Through September 30, 2023, we sold through our at-the-market (“ATM”) agreement with Jefferies LLC, 951,873 shares of common stock at an average price of $3.28 for total proceeds of $3.1 million and net proceeds of $3.0 million.
Funding Requirements
Our primary use of cash is to fund operating expenses, primarily research and development expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses and prepaid expenses. Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:
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the scope, timing, progress and results of discovery, preclinical development, laboratory testing and clinical trials for our product candidates; |
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the costs of manufacturing our product candidates for clinical trials and in preparation for marketing approval and commercialization; |
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the extent to which we enter into collaborations or other arrangements with additional third parties in order to further develop our product candidates; |
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the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; |
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the costs and fees associated with the discovery, acquisition or in-license of additional product candidates or technologies; |
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our ability to establish additional collaborations on favorable terms, if at all; |
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the costs required to scale up our clinical, regulatory and manufacturing capabilities; |
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the costs of future commercialization activities, if any, including establishing sales, marketing, manufacturing and distribution capabilities, for any of our product candidates for which we receive marketing approval; and |
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revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval. |
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, current stockholders’ interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect rights of common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Cash Flows
The following table shows a summary of our cash flows for the periods indicated (in thousands):
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Nine Months Ended September 30, |
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2023 |
2022 |
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Cash used in operating activities |
$ | (28,264 | ) | $ | (23,484 | ) | ||
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Cash provided by (used in) investing activities |
20,651 | (104,554 | ) | |||||
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Cash provided by financing activities |
3,093 | 5 | ||||||
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Net change in cash and cash equivalents |
$ | (4,520 | ) | $ | (128,033 | ) | ||
Operating Activities
During the nine months ended September 30, 2023, we used $28.3 million of cash in operating activities, resulting from our net loss of $29.1 million plus the change in operating assets and liabilities of $2.7 million, partially offset by non-cash charges of $3.5 million.
During the nine months ended September 30, 2022, we used $23.5 million of cash in operating activities, resulting from our net loss of $27.6 million plus the change in operating assets and liabilities of $1.3 million, partially offset by non-cash charges of $5.4 million.
Investing Activities
During the nine months ended September 30, 2023, $20.7 million of cash was provided by investing activities, primarily related to the net sale of marketable securities. During the nine months ended September 30, 2022, we used $104.6 million of cash in investing activities which primarily related to the net purchase of marketable securities.
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. We had $5 thousand of financing activities during the nine months ended September 30, 2022 resulting from the exercise of stock options.
Future Funding Requirements
We expect our expenses to increase substantially in connection with our ongoing activities. The timing and amount of our operating expenditures will depend largely on:
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the initiation, progress, timing, costs and results of clinical trials for our product candidates or any future product candidates we may develop; |
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the initiation, progress, timing, costs and results of nonclinical studies for our product candidates or any future product candidates we may develop; |
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our ability to maintain our relationships with key collaborators; |
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the outcome, timing and cost of seeking and obtaining regulatory approvals from the FDA and comparable foreign regulatory authorities, including the potential for such authorities to require that we perform more nonclinical studies or clinical trials than those that we currently expect or change their requirements on studies that had previously been agreed to; |
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the cost to establish, maintain, expand, enforce and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with licensing, preparing, filing, prosecuting, defending and enforcing any patents or other intellectual property rights; |
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the effect of competing technological and market developments; |
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the costs of continuing to grow our business, including hiring key personnel and maintain or acquiring operating space; |
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market acceptance of any approved product candidates, including product pricing, as well as product coverage and the adequacy of reimbursement by third-party payors; |
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the cost of acquiring, licensing or investing in additional businesses, products, product candidates and technologies; |
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the cost and timing of selecting and validating a manufacturing site for commercial-scale manufacturing; and |
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the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval and that we determine to commercialize. |
We believe that our existing cash, cash equivalents and marketable securities as of filing of the Form 10-Q will enable us to fund our operating expenses and capital expenditure requirements into 2026 based on our current plans, which may change based on clinical or pre-clinical results. These plans include: A Phase 2/3 and two Phase 2 clinical trials of CTX-009, a Phase 1b combination trial for CTX-471 and a Phase 1 trial of CTX-8371. We expect that we will require additional funding to complete the clinical development of these three programs, commercialize our product candidates, if we receive regulatory approval, and pursue in-licenses or acquisitions of other product candidates. 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.
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. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interest may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specified actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, reduce or eliminate our product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable since we are a smaller reporting company.
Item 4. Controls and Procedures.
Management’s Evaluation of Our Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Operating Officer (Principal Financial Officer), evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of September 30, 2023. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2023, our Chief Executive Officer and Chief Operating Officer (Principal Financial Officer) concluded that, as of such date, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that occurred during the quarter ended September 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
As of the date of this Quarterly Report on Form 10-Q, we are not involved in any material legal proceedings. However, from time to time, we could be subject to various legal proceedings and claims that arise in the ordinary course of our business activities. Regardless of the outcome, legal proceedings can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which could materially affect our business, financial condition, or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
The following disclosure is provided pursuant to Item 5.02 (Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers) of Form 8-K:
On November 08, 2023, the board of directors of Compass Therapeutics, Inc. (the “Company”) approved a plan of succession with respect to Thomas J. Schuetz, M.D., Ph.D., the Company’s current Chief Executive Officer, and Vered Bisker-Leib, Ph.D., M.B.A., the Company’s President and Chief Operating Officer. Under this succession plan, effective as of January 9, 2024, Dr. Bisker-Leib has agreed to succeed Dr. Schuetz as Chief Executive Officer, while Dr. Schuetz has agreed to transition to the role of President of Research and Development. In connection with this succession plan, the Company has entered transition agreements with each individual, pursuant to which, among other things, Dr. Schuetz has also agreed to be appointed as Vice Chair of the Company’s board of directors, and Dr. Bisker-Leib has agreed to join the Company’s board of directors, in each case effective as of January 9, 2024. In addition, the Company intends to negotiate new or amended employment agreements for each individual, to take effect from and after January 9, 2024, in such individual’s new role. Information required by Items 401(b), (d), (e) and Item 404(a) of Regulation S-K with respect to Dr. Bisker-Leib and Dr. Schuetz is included in the Company’s Annual Report on Form 10-K filed on March 15, 2023, and incorporated herein by reference, as applicable.
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Exhibit Number |
Description |
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101.INS |
Inline XBRL Instance Document – the instance document does not appear in Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document |
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101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
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101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
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101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
_____________
* Filed herewith.
** These exhibits are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act or the Exchange Act, except as otherwise stated in such filing.
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Company Name |
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Date: November 9, 2023 |
By: |
/s/ Thomas Schuetz |
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Thomas Schuetz, MD |
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Chief Executive Officer (Principal Executive Officer) |
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Date: November 9, 2023 |
By: |
/s/ Vered Bisker-Leib |
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Vered Bisker-Leib, PhD |
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President and Chief Operating Officer (Principal Financial Officer) |
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Date: November 9, 2023 |
By: |
/s/ Neil Lerner |
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Neil Lerner, CPA |
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Vice President - Finance |
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Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Thomas Schuetz, certify that:
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1. |
I have reviewed this Quarterly Report on Form 10-Q of Compass Therapeutics, Inc.; |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
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5. |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
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Date: November 9, 2023 |
By: |
/s/ Thomas Schuetz |
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Thomas Schuetz |
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Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Vered Bisker-Leib, certify that:
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1. |
I have reviewed this Quarterly Report on Form 10-Q of Compass Therapeutics, Inc.; |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
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5. |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
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Date: November 9, 2023 |
By: |
/s/ Vered Bisker-Leib |
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Vered Bisker-Leib |
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President and Chief Operating Officer (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Compass Therapeutics, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
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Date: November 9, 2023 |
By: |
/s/ Thomas Schuetz |
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Thomas Schuetz |
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Chief Executive Officer (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Compass Therapeutics, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
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Date: November 9, 2023 |
By: |
/s/ Vered Bisker-Leib |
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Vered Bisker-Leib |
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President and Chief Operating Officer (Principal Financial Officer) |