Compass Pathways Faces Challenges in Phase 3 Trial

Shares of Compass Pathways took a hit on Thursday as the company revealed setbacks in one of its trials. The stock plummeted by 18% to $10.10 during midday trading, despite seeing a 69% increase over the last three months.

The London-based biotech firm disclosed enrollment delays in its single-dose Phase 3 trial, COMP005, aimed at studying psilocybin as a treatment for depression. As a result, the company now anticipates top-line results to be available in the fourth quarter of 2024, contrary to its previous projection of less than a year from November's third-quarter earnings call.

Future Prospects and Financial Outlook

Compass reassured investors that its second Phase 3 trial, COMP006, focusing on psilocybin in treating depression, remains on schedule to deliver top-line data by mid-2025.

In terms of financials, the company foresees utilizing between $17 million to $23 million in net cash for operating activities in the initial quarter. With the current cash reserves as of year-end and additional funds raised in the first quarter, Compass expects to cover both operating expenses and capital spending obligations through late 2025.

Financial Performance and Analyst Expectations

During the quarter that concluded on December 31, Compass recorded a loss of $32.5 million, or 53 cents per share, as opposed to a loss of $30.9 million, or 73 cents per share, from a year earlier. This figure fell short of the forecasted per-share loss of 36 cents according to analysts surveyed by FactSet.

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