COMPASS Pathways - Earnings Call - Q2 2025

Executive Summary

• Q2 2025 delivered a pivotal clinical milestone (Phase 3 COMP005 met the 6‑week primary endpoint with a −3.6 MADRS delta vs placebo; p<0.001) and maintained FY25 cash burn guidance, but EPS missed consensus primarily due to a non-cash warrant fair value loss.
• EPS (basic/diluted) was $(0.41) vs S&P Global consensus of $(0.37), a miss of $(0.04); net loss was $38.4M vs $38.1M in Q2 2024, with variance driven by a $2.5M non‑cash loss on warrant revaluation partially offset by $2.3M FX gains.
• Liquidity improved year to date; cash was $221.9M at 6/30/25 (up from $165.1M at 12/31/24 on Q1 financing) and runway extended into 2027; full‑year net cash used in operations guidance held at $120–$145M.
• Strategic setup strengthened: DSMB observed no unexpected safety issues or suicidality imbalance across Phase 3 programs; commercialization groundwork continued with CPT-3 psychedelic administration codes supporting hourly reimbursement; provider infrastructure viewed as ready to adopt.
• Near-term catalysts: FDA engagement on potential acceleration/rolling NDA; COMP006 enrollment progressing well; 26‑week COMP005 data to follow COMP006 Part A completion (updated post‑Q2: company now plans to disclose COMP006 9‑week and COMP005 26‑week together in Q1 2026).

What Went Well and What Went Wrong

What Went Well

• Statistically robust efficacy: Single 25mg dose of COMP360 achieved a clinically meaningful −3.6 MADRS difference vs placebo at 6 weeks in COMP005 (p<0.001); DSMB reported no unexpected safety findings and no clinically meaningful suicidality imbalance across COMP005/006.
• Commercial and regulatory momentum: Management is pursuing accelerated pathways (including applying for the Commissioner’s National Priority Review Voucher) and planning FDA meetings to explore rolling/accelerated submission routes.
• Liquidity and runway: Cash of $221.9M at 6/30/25 with runway into 2027; FY25 net cash used in operations expected at $120–$145M; Q2 operating cash outflow was $38.7M.

Selected quote

• “We have now delivered clinically meaningful and highly statistically significant top‑line results after a single dose of COMP360 in two late‑stage studies in treatment‑resistant depression” — Kabir Nath, CEO.
• “Cash and cash equivalents of $222 million… we expect to fund our operations into 2027… net cash used in operations for the full year 2025 to be within the range of $120 million–$145 million” — Teri Loxam, CFO.

What Went Wrong

• EPS miss versus consensus: Q2 GAAP EPS (basic/diluted) $(0.41) vs S&P Global consensus $(0.37), primarily due to a $2.5M non‑cash loss from warrant liability fair value changes; FX gains of $2.3M partially offset the impact.
• Continued elevated R&D intensity: R&D expenses increased YoY to $30.3M (vs $29.1M) as Phase 3 programs progressed; total opex remained high at $42.9M despite lower G&A.
• Lack of revenue: Company remains pre‑commercial with no reported revenue, leaving P&L fully driven by opex and non‑cash items (warrants, FX, R&D tax credits).

Transcript

Speaker 6

Hello everyone, and welcome to COMPASS Pathways' second quarter 2025 earnings conference call. Please note that this call is being recorded. After the speakers prepare remarks, there will be a question and answer session. If you'd like to ask a question during that time, please press star followed by one on your telephone keypad. Thank you. I'd now like to hand the call over to Stephen Schultz, Senior Vice President of Investor Relations. You may now go ahead, please.

Speaker 7

Welcome all of you, and thank you for joining us today for our second quarter 2025 results conference call. Again, my name is Steve Schultz, Senior Vice President of Investor Relations at COMPASS Pathways. Today, I'm joined by Kabir Nath, our Chief Executive Officer, and Teri Loxam, our Chief Financial Officer, who will have prepared remarks. In addition, Dr. Guy Goodwin, our Chief Medical Officer, Dr. Steve Levine, our Chief Patient Officer, and Lori Englebert, our Chief Commercial Officer, will be available for the Q&A. The call is being recorded and will be available on the COMPASS Pathways Investor Relations website shortly after the conclusion of the call and will be available for a period of 30 days.

Before we begin, let me remind everyone that during the call today, the team will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended. You should not place undue reliance on these forward-looking statements. Actual events or results could differ materially from those expressed or implied in any forward-looking statements as a result of various risks, uncertainties, and other factors, including those risks and uncertainties described under the heading Risk Factors in our most recent quarterly report on Form 10-Q filed with the U.S. Securities and Exchange Commission and in subsequent filings made by COMPASS with the SEC. Additionally, these forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date.

We specifically disclaim any obligation to update or revise any forward-looking statement, even if our estimates or assumptions change. I'll now hand the call over to Kabir Nath.

Speaker 9

Thank you, Steve. Good day, everyone, and thank you for joining us. Let me begin by welcoming Justin Gover to the COMPASS Pathways Board of Directors. Justin was the CEO and one of the founders of GW Pharmaceuticals, and we're truly excited to have access to his expertise. Under Justin's leadership, Epidiolex, the first cannabis plant-derived medicine to be approved by the FDA, had a successful commercial launch. I look forward to leveraging his expertise as we embark on a similar path to gain FDA approval and launch COMP360 for TRD. In addition to announcing the addition of Justin to the board earlier this week, we announced that Dr. Linda McGoldrick will be retiring from the board at the end of October after a transition period.

I'd like to thank Linda for her service on the board over the last five years, where she was instrumental in supporting the growth of the company through the IPO and subsequent developments. Turning now to our operations, this has been an exciting quarter for COMPASS Pathways. In late June, we announced the successful achievement of the primary endpoint of the COMP360-005 trial, the first of our two pivotal Phase III trials. The positive results were highly statistically significant, demonstrating a clinically meaningful reduction in depression and no unexpected safety findings based on the latest data reviewed by the independent DSMB. This assessment included all data reviewed by the DSMB to date from both the 005 and 006 trials, going beyond the six-week time point for 005 alone.

There was a 3.6-point difference in change from baseline in MADRS between the 25 milligram and the placebo arms at six weeks, exceeding the three-point difference that is both clinically meaningful and commercially viable. While cross-trial comparisons are always challenging, this difference, sustained to six weeks with a single administration of COMP360, is similar to the difference seen at four weeks in the pivotal trials for the blockbuster drug Spravato, which required eight administrations. We believe the result that we have seen at six weeks with COMP360 is both clinically and commercially compelling. With this positive data, COMPASS Pathways has delivered two for two, announcing positive, highly statistically significant results from two robust late-stage studies of over 230 patients each in a very difficult-to-treat patient population in depression.

Given the track record of previous studies in psychiatry, particularly in severe depression, our achievement of two positive late-stage studies is remarkable and provides important clinical validation for COMP360's treatment potential in TRD. We plan to meet with the FDA to discuss these results and explore next steps in getting COMP360 to patients as rapidly as possible, patients who so desperately need new treatment options. The second pivotal Phase III trial, COMP006, continues to recruit well, and we confirm that we're on track to disclose the 26-week data in the second half of next year. As a reminder, the protocol for this trial has a second dose after three weeks, with the six-week primary endpoint assessment therefore only three weeks after the second administration.

We should also get some good information on the effects of a second dose as part of the 26-week 005 data, given that subject to specific retreatment criteria, participants can get another dose in Part B, which runs from the six-week time point through 26 weeks. To prepare for a potential commercial launch, our team continues to work with a broad array of mental healthcare providers, both through our strategic collaborations and through our field medical team, to refine our understanding of how COMP360 treatment will fit into existing settings of care. We're frequently asked by investors how COMP360 will be viewed by providers who are used to the approximately three-hour Spravato treatment window. Through our discussions with these providers, we know that patient preference will be a driving factor in treatment selection.

As you're well aware, Spravato patients need to be driven to the clinic frequently, which is a burden to the patient and caregiver, and generally, they're not able to return to work that day. In addition, we believe that the added administrative burden and the work required to turn a room potentially multiple times may actually favor COMP360 from a practice standpoint. Finally, the CPT-3 codes specific to psychedelics that were put in place back in early 2024 provide for hourly reimbursement, so regardless of the length of the administration for COMP360, the provider will be covered. Steve and Lori can go into much more detail on all of this. Beyond TRD, we're also excited about the potential for COMP360 in PTSD.

We're in the final steps of designing a late-stage clinical program in PTSD, and we look forward to updating you when that design is finalized and once we've reviewed it with the FDA. Given the high unmet need and limited current treatment options, we see a significant commercial opportunity in PTSD. In addition, as you know, we had been running a small Phase II study in anorexia. This was a double-blind, randomized, controlled Phase II clinical trial investigating the safety and efficacy of COMP360 psilocybin treatment in participants with anorexia nervosa. It was a multicenter study which enrolled 32 participants. The study has now completed, and we recently received the data. From an efficacy standpoint, there was an encouraging positive signal in the reduction of eating disorder and depressive symptoms in the 25 milligram arm, which was sustained through 12 weeks.

However, the low overall numbers of participants and the high number of dropouts in the control arm limited statistical power. The safety profile was aligned with the high-risk patient population in anorexia, and no unexpected safety signals were reported. As we've discussed before, this is a difficult condition to study. We're proud of the data that we've been able to generate, and we'll publish or present the full data set in the future. With that, let me now hand the call to Teri to go through some financial updates before we move on to Q&A.

Speaker 0

Thank you, Kabir. At the end of June, we had cash and cash equivalents of $222 million, which we expect to fund our operations into 2027. This compares with $260 million that we had at the end of the first quarter. Debt under the Hercules loan facility was $30.9 million at the end of the second quarter. Cash used in operations for the second quarter was $38.7 million, and we expect net cash used in operations for the full year 2025 to be within the range of $120 to $145 million. We're energized by the positive 005 primary result, which we believe has de-risked the company from a regulatory and commercial perspective, and we look forward to the upcoming 26-week data from both Phase III trials. We are finalizing a PTSD study and look forward to updating you soon on that design and timeline.

2025 has already been an important year for the company, and the remainder of this year and 2026 is shaping up to be even more exciting. We are heads down, focused on continuing to execute on our pivotal program while exploring all opportunities to get COMP360 to patients suffering from hard-to-treat depression and PTSD as quickly as possible. As mentioned in the beginning of the call, Dr. Guy Goodwin, Dr. Steve Levine, and Lori Englebert will also be available for Q&A. Thank you, and I'll now turn the call over to the operator for a Q&A.

Speaker 6

Now opening the floor for question and answer session. If you'd like to ask a question, please press star followed by one on your telephone keypad. That's star followed by one on your telephone keypad. Your first question comes from the line of Paul Matteis of Stifel. Your line is now open.

Hey, good morning. Paul Matteis from Stifel here. Thanks for taking my question. I was curious if you could expand upon the engagement you've had with the FDA since the data. What do you think the scenarios are here where you could have an accelerated path for a filing? Within these scenarios, do you think you actually could move quickly enough where the second Phase III study wouldn't read out before you submit or during the review? Is there a real way to actually move ahead of that data, or are we going to ultimately, of course, get that data before there's any sort of regulatory decision in any scenario? Thank you.

Speaker 9

Thanks very much, Paul. It's Kabir. I'm just checking you can hear me clearly. Yes, thank you. All right. Thanks, Paul. Thank you for the question. As we've said, we have requested and we will be meeting with the FDA in this quarter. As we said on the call, we are two for two now in treatment-resistant depression. The Phase IIb with over 230 patients, this Phase III with the primary endpoint data, 250 patients, and importantly, consistent data across the trials. While the IIb, of course, the primary endpoint was at three weeks, as you know, at six weeks, we did see a statistically significant difference, and actually, it's a pretty similar difference to what we've seen here in the Phase III. We are two for two, we believe, in a very hard-to-treat patient population and one in urgent need of new interventions.

To your point, it clearly is the right thing to ask what accelerated pathways may be available, and that's exactly what we are planning to do. I'm not at this stage going to handicap the chances, and obviously, we need to have that meeting with the agency in quarter three, see what their view is. We're obviously encouraged by the fact that there are other leaders within the administration more broadly who seem to share our view in the potential and share our view that there are grounds to move this more quickly. In terms of specifically which elements of COMP005 or whether part of COMP006 will be needed, that really depends on our discussions with the agency.

Kabir, just on your last comment there, understanding your request to meet and meet with folks at the Psychiatry Division, are there plans or expectations of you engaging with others that are more senior at the FDA or within HHS as well?

Yes, but I'm not going to go into details of those. Yes, absolutely. We recognize that this needs to be a concerted approach using whatever levers we can. I might just ask Lori to comment on some of the work we have been doing around the broader engagement of stakeholders, not just in the administration, but actually in the political environment as well, because we recognize that's also a critical part of this.

Yeah, thanks, Kabir, and hi, Paul. We are very encouraged by statements that have been made by Secretary Kennedy as well as the Commissioner. They, as Kabir stated, are very clearly viewing psychedelics as a potential to treat these patients who have otherwise limited options. We've seen that through examples of them appointing Matt Zorn, Mike Davis. This seems all very positive for the industry in and of itself. We also have been spending quite a bit of time in D.C. as the potential first-to-market company in the psychedelic space. We do take it very seriously that we want to make sure that everyone is well educated and informed. We've been spending quite a bit of time there.

What we're finding is that members of Congress are also highly receptive, not only to the VA sector, which, of course, they care very much about and gets a lot of commentary, but also for the broader patient population. We are encouraged by the conversations that we're having and want to continue our efforts there.

One thing I should have said, to add, you'll be aware that last week, the formal application process for the Commissioner's National Priority Review Voucher, the one that promises a very accelerated timeline, opened. We have submitted our application for that, along, I'm sure, with many other companies, but we did do that as well.

Okay, very good. Thanks for taking the question.

Speaker 6

For our next question, from the line of Patrick Trucchio of H.C. Wainwright, your line is now open.

Hello, good morning. This is Louise. For Patrick, I would like to ask a little bit on the collaboration, the strategic collaborations that you are putting in place for the interventional psychiatry treatment centers. How are they progressing? What feedback have you received about readiness for COMP360 delivery if approved? How confident that the existing network of centers that you've already engaged with will support the delivery of COMP360 if approved? Thank you so much.

Speaker 9

Louise, I'll pass to Steve to answer that.

Speaker 10

Thanks. Hi, Louise. Thanks for the question. Yes, we have been engaged now in the work with these collaborations for the past couple of years. As a reminder, they are representative of the broad swath of sites of mental healthcare delivery in this country, including hospital systems, interventional psychiatry networks, community behavioral health, and others. What we are finding in this work, and as a reminder, some of them deliver Spravato today, and those that do are highly representative of the 6,000 centers that are currently delivering Spravato around the country. One thing is abundantly clear. It's that this work is reinforcing our conviction that COMP360, if approved, fits directly into the infrastructure that is delivering Spravato today. If you look at a Spravato room, it looks like what is necessary for COMP360. The staffing of these centers is what we believe will be required to deliver COMP360.

We are very confident that the network is ready if and when we get approval, and even if that approval is accelerated, it is waiting.

Thank you.

Speaker 6

Your next question comes from the line of Gavin Clark-Gartner of Evercore ISI. Your line is now open.

Hey, guys. Congrats on the progress, and thanks for taking the questions. First, I was just curious if you've seen a pickup in COMP006 enrollment following the COMP005 data. Secondly, just following off your last point on the commercial side of things, do you have an estimate for what % of Spravato use is given in single rooms versus group room settings where multiple people can be monitored at the same time? Thank you.

Speaker 9

Thanks, Gavin. I'll take the first one. The 005 data has been viewed very positively by investigators, not only in 005 and 006. We're now in that really steep % of the 006 recruitment, and it's going extremely well, which is why we're able to reconfirm our guidance for data in the second half of next year. I would say in general, the reception from investigators to the data has been very positive and has reinforced their belief in the potential of 006 and, frankly, the de-risking both from a clinical and regulatory perspective. I'll hand this to Steve for the second question.

Speaker 10

Hi, Gavin. Regarding your question about whether Spravato is currently delivered in individual rooms versus in group settings, it is primarily in individual rooms, and that is another reason why we believe that infrastructure is in place. There is the likelihood that as these products mature in the market and they are commonly delivered, sites may look at various models to deliver them. Again, currently today, it's primarily in individual rooms and ready to deliver COMP360 when available.

Speaker 6

Question comes from the line of Ritu Baral of TD Cowen. Your line is now open.

Speaker 5

Hi, guys. Thanks for taking my question. This is Athena Chin on for Ritu Baral. Are you guys pursuing the commissioner's national priority voucher, and what is your understanding of the criteria to meet eligibility? Thank you.

Speaker 9

Hi, Athena. Yes, I did actually just confirm that in an earlier question. We did submit our application. We also do, as part of our briefing book for the meeting with the FDA, raise that question. In terms of the criteria, I believe there were five priorities listed, and they include significant need, public health crisis, both of which we clearly hit, innovative treatments also. There are also ones around manufacturing and global pricing, which are less relevant to us, but it's clear that the criteria don't expect a company to hit all five of those, and we believe on three of them, we very clearly tick those boxes. It also requires you to be ready to start submitting elements of a filing package, and we clearly are in terms of CMC and some of our other preclinical and so on. We're in very good shape with that.

We think we're a great candidate. We recognize that there are, in theory, only five pilots that were being taken forward, and we also recognize that the decisions were due to be made by the CMO, but it appears that the CMO at the FDA is currently a vacant position as of Monday night. What the process is, we don't know, but we believe we absolutely meet the criteria, and that's why we've submitted.

Speaker 5

Understood. Thank you.

Speaker 6

The next question comes from the line of Judah Farmer of Morgan Stanley. Your line is now open.

Yeah, hi. Thanks for taking the question. Just following up on your commentary regarding interactions with the agency, it seems like there is some high-level connectivity, but are you able to comment on consistency of interaction with mid and lower-level members at the agency? I'm just curious if there's been consistency within team makeup in the teams that you're talking to. Thank you.

Speaker 9

Thanks, Judah. Nice to meet you, and the answer is absolutely. As a reminder, we have critical designation, and as we've always said, we have consistently had excellent engagement with the psychiatry division. Currently, we've seen no change to either the staffing, the level of engagement, the responsiveness, and so on. At the day-to-day level with the FDA, we remain very tightly aligned with a good relationship, so no changes.

Speaker 6

James comes from the line of Lean Lead Initiative of RBC Capital Markets. Your line is now open.

Hey, guys. Thanks for taking my question. I had one on safety, especially as it relates to re-dosing. How are you guys thinking about the risk of suicidality or any elevations in suicidal ideation? Are you thinking that's after every dose of COMP360 or potentially every dose of placebo, or is it just something that occurs after the first dose on the study? Do you have any data that you can speak to with respect to that? Relatedly, I know in the anorexia study, you said there were no unexpected safety signals. I wonder if you could just talk a little bit more about what you saw in terms of safety from the anorexia study, especially on suicidality. Thanks.

Speaker 9

Thanks, Leo. I'll pass to Guy in a moment. Just as we always said, the statement we made last month from the DSMB did refer to all data they were seeing today from both 005 and 006, including the study that has the second doses. Let me hand to Guy for a more broader discussion about Guy, please.

Speaker 3

Yes, I think we have to be a bit, we don't have detail on the time course of the suicidality that is being seen in COMP005 and COMP006. All we know is that there's no imbalance between the arms. I can't really comment on directly to your question except to sort of be reassuring about the fact that there isn't a clear effect of the drug. It's much more likely to be an effect of the illness, and that will depend, obviously, on how people have responded and how the response is maintained. We will certainly have all that information in due course, but not at the moment. It's a good question about the anorexia group. This was a small study, remember, but it was clear that we saw higher rates of suicidality than we are used to seeing, just measured as events in that group.

That was true in both the arm receiving 1 milligram and the arm receiving 25 milligrams. We had no imbalance between the arms, but higher overall rates, reflecting the fact that it's a more dangerous condition from the point of view of mortality. It has the highest mortality of any psychiatric disorder, and suicide is one of the leading causes, along with the physical problems that patients also encounter. The relative safety of our treatment in this high-risk group is, again, a reassuring thing, really, for the whole program.

Speaker 6

Next question comes from the line of Sumant Kulkarni of Canaccord Genuity, LLC. Your line is now open.

Speaker 1

Thanks for taking my questions. What is the earliest that you could file a new drug application for COMP360, and how should we think about when you might announce a timeline for reporting Part B from the COMP005 trial? I have a follow-up.

Speaker 9

Thanks, Sumant. I'll refer you to my earlier answer. Until we've met with the agency, it's premature to speculate on exactly what that could be because we really need to reach alignment on what data they would like to see and the process for that. As we have said before, we will, in due course, announce the full enrollment of COMP006. As and when we do, that will be the point at which we can all look at our calendars and project forward because, as a reminder, we have said 26 weeks of COMP005, Part B of COMP005, we will only release once all patients are through Part A of COMP006 in order to avoid any potential suggestion that there's a confound between those two sets of data.

Speaker 1

Got it. How onerous is the process to submit an application for the Commissioner's Pilot Review Program in terms of any trial data necessary? Is there any Phase III-related efficacy or durability data in that application or your briefing book that investors have not seen yet?

Speaker 9

In terms of what was required to submit for it, it's a 350-word abstract. I could safely say that there was no data included in that. I think, as we're all aware, it's unclear what the selection criteria are actually going to be for the pilots. To confirm, we have no more Phase III data than is out in the public domain and that we have already released.

Speaker 6

I'd now like to hand the call back over to the management for final remarks.

Speaker 9

Thank you very much. Thanks, everyone, for your attention this morning. We're excited about the progress that we have made and the progress we're continuing to make. We've delivered two positive late-stage studies in treatment-resistant depression, which is remarkable and likely a unique achievement. With that, we're also very encouraged by the signals we're hearing from within the administration and more broadly about them sharing our belief in the potential for these transformative treatments for patients who have so few options. We're committed to working with the appropriate regulatory and administration authorities to see what we can do to advance COMP360 for treatment-resistant depression. In addition, we will be, in due course, announcing the design of a PTSD study.

I think, particularly with recent events again at the agency, it's very clear that there is an urgent need for new treatments for PTSD, and we're excited to move COMP360 forward in that as well. Thanks again for your attention this morning. I wish everyone a good day.

Speaker 6

This concludes today's call. You may now disconnect. Goodbye.