Compass widens Q4 loss as patient hurdles slow trials

Compass Pathways (Nasdaq: CMPS) reported its financial outcomes for the fourth quarter of 2023 ended Dec. 31, 2023, noting advancements in its clinical trials despite enrollment challenges.

The London-based biotech firm posted a net loss of $118.5 million, up from a net loss of $91.5 million for the same period in 2022. The nearly 30% increase was primarily due to rising research and development costs, according to the company.

Those R&D costs jumped to $87.5 million in 2023, from $65.1 million in 2022, as the company intensified efforts to advance COMP360 through late-stage clinical trials. General and administrative costs rose modestly to $49.4 million in 2023 from $45.4 million the previous year.

Despite the deficit, Compass had a solid cash position, finishing the year with $220.2 million in reserves, significantly up from $143.2 million at the end of 2022. That rise is partly due to additional fundraising activities, which have netted the company an extra $31.4 million in the first quarter of 2024 alone.

The firm plans to spend between $17 million and $23 million on business operations in the first quarter. For the whole year, management expects to spend between $110 million and $130 million.

Enrollment hiccups

On a call to discuss the latest results, Compass executives broke down recent challenges in enrolling patients for its major Phase III trial, COMP005, which is aimed at addressing treatment-resistant depression (TRD).

Management said that strict procedures for verifying TRD diagnoses have led to slower than expected patient enrollment.

The difficulties stem primarily from the decentralized and varied nature of health care record management across the U.S., versus more centralized health care systems in Europe, where patient records are generally more accessible.

“I should say there’s no shortage of patients, but the issues around verification have been real and that those are what have caused the problem,” Guy Goodwin, the firm’s chief medical officer, said.

Despite those setbacks, the company remains confident that the trial’s completion timeline will not be significantly impacted, with top-line data expected by the end of 2024. It also maintained that the timeline for the COMP006 trial remains unchanged with results expected by mid-2025.

CEO Kabir Nath said that the company is actively trying mitigate the enrollment issues by tapping specialized vendors to assist with verification of participants’ medical histories.

Learning from Spravato

Compass has also been gleaning different logistical and medical frameworks of existing treatments, such as Johnson & Johnson’s FDA-approved esketamine nasal spray, Spravato, to inform market introduction and patient care protocols for its flagship oral psilocybin-based treatment, COMP360.

Nath explained that Spravato must be taken several times a month under a doctor’s supervision, and patients need to be watched for a couple of hours after each treatment because of possible side effects.

He noted that COMP360 might only need to be administered a few times a year, which would be less often than Spravato. That could make it more convenient for patients and health care centers, as it would require less time in a medical facility and help reduce the need for a caregiver’s presence.

Objectively, the opportunity in the mental health space is bearing out to be enormous, especially as looming Food and Drug Administration approval of MDMA-assisted treatment is expected to catalyze new growth. Spravato raked in nearly $700 million in global sales in 2023, now that clinical infrastructure has finally caught up with its commercialization.

“A big part of the reason we’ve signed these collaborations with entities such as Greenberg and Hackensack – and we’ll do more – is exactly to understand how we are going to integrate psilocybin differentially from Spravato into those workflows and think of how they address reimbursement,” Nath said.