Compass Pathways (CMPS -3.62%), a pioneer in psychedelic therapies, released its third-quarter results on Oct. 31. The report featured a slightly narrower-than-expected net loss of $0.56 per share; analysts' consensus prediction had been for a loss of about $0.57 per share. The company, currently focused on the clinical development of COMP360, its psilocybin therapy for treatment-resistant depression, reported no revenue -- normal, given that it is a developmental-stage pharma business. Its bottom-line loss of $38.5 million compared unfavorably with its $33.4 million loss in Q3 2023, as R&D spending increased by 53% to support phase 3 trials. The company's net loss per share contracted solely because the number of shares outstanding increased by close to 38% year over year. However, Compass maintained a steady clinical momentum and ended with a cash reserve sufficient to support its operations through 2026 without further moves to raise funds.
| Metric | Q3 2024 Results | Q3 2024 Analyst Estimates | Q3 2023 Results | % Change (YOY) |
|---|---|---|---|---|
| Earnings Per Share (EPS) | ($0.56) | ($0.57) | ($0.67) | N/A |
| Net earnings | ($38.5 million) | N/A | ($33.4 million) | N/A |
| R&D expenses | $32.9 million | N/A | $21.5 million | 53% |
Source: Analyst estimates for the quarter provided by FactSet.
Compass Pathways Plc Overview
Compass Pathways is seeking to redefine approaches to treatment-resistant depression through psilocybin therapy. Management believes its leading compound, COMP360, can offer a new option for patients who have not found traditional antidepressants effective. The company is undergoing a strategic refocusing, putting all of its resources into the COMP360 program and pausing other preclinical efforts. It is also laying off about 30% of its workforce.
Compass' emphasis remains on executing milestones en route to hoped-for regulatory approval. The FDA has granted Breakthrough Therapy status for COMP360 in treatment-resistant depression.
Quarterly Performance and Strategic Developments
In the third quarter report, Compass Pathways booked a net loss of $38.5 million, up from a $33.4 million net loss in the prior-year period. The increase in red ink was largely attributed to an escalation in R&D expenses, which swelled by 53% to $32.9 million, driven by the higher costs around the COMP360 program as it moved into phase 3 trials.
Current liquidity stands at $207 million, compared to an end-of-2023 level of $220.2 million. Based on management's fiscal plan, Compass should maintain viability at least into 2026 without the need for additional financing rounds immediately. Careful fiscal stewardship remains paramount as the company navigates the ongoing COMP360 trials for not only treatment-resistant depression but also for post-traumatic stress disorder and anorexia nervosa.
These additional clinical trials aim to exploit synergies within the mental health sector, potentially yielding new therapeutic avenues if the previous efficacy indices hold. Management's timeline suggests that critical COMP360 data releases from the COMP005 trial will come in mid-2025, with additional data from the COMP006 trial arriving in the second half of 2026.
Looking Forward
Compass Pathways forecasts that it will use between $37 million and $43 million in net cash for operating activities in Q4, and projects that it will use a total of $114 million to $120 million for the full year.
While potential headwinds lie ahead, management's streamlining of operations will enhance Compass' stability in this pre-revenue period.
