COMPASS Pathways Financial Analysis: Road to Profitability | Psychedelic Invest

COMPASS Pathways has been making waves since its inception, and this year is no exception. The company released its second-quarter financial report and business update on August 3. It provides a visual road map of where the company is and its pathway to profitability. 

During the second quarter of 2023, COMPASS obtained $55.9 million through non-dilutive financing— a good option for keeping investors happy. The additional capital left the company with $148.2 million on June 30, 2023.

Given the current cash on hand and burn rate, COMPASS has enough money to make it roughly to the end of 2024. The company recently announced that it expects to commercialize COMP360 in 2027. So, it will need about $250-$300 million in additional capital— best case scenario.

While most psychedelic biotech companies are cutting down on excess cash burn, COMPASS has been doing the opposite. There have been a lot of layoffs in the psychedelic sector this year, but not at COMPASS. In Q2, the company increased the number of people in its employment. 

The Q2 net loss was $4.1 million higher than the net loss in Q1 of 2023. Expenses for the company in 2023 are also higher than in 2022. However, that is to be expected. COMPASS currently has two phase 3 pivotal trials underway, which require a significant amount of capital. 

Both trials are testing the efficacy of COMP360 for treatment-resistant depression. One is a single-dose trial with 255 patients. Results for this trial are expected next summer. The other trial is testing a repeat dosage strategy on 568 patients, and results will be available in mid-2025. 

Given previous trials of COMP360, as well as other psychedelics, the repeat-dosage trial is more likely to provide significant results. It will also offer the company a bigger revenue opportunity while making treatment more expensive for patients.

In addition to the company’s highly-anticipated phase 3 trials, COMPASS Pathway has had several promising trial results come out during the first six weeks of Q3. 

An initial feasibility trial showed that COMP360 may be beneficial for treating anorexia nervosa. The results are preliminary, but they are enough for additional trials. 

There was also a study testing the safety and efficacy of psilocybin-assisted therapy in tandem with SSRIs. This is a major study, given that many of the people who will be eligible for psychedelic treatment are currently being treated with this common class of anti-depressants. 

Once again, the results are preliminary, and the study only looked at a small sample group. However, the treatment was well tolerated and suggested that psilocybin treatment may be more beneficial if patients are not forced to withdraw from their medication prior to being dosed. 

We can expect additional fundraising efforts over the next year to ensure a path to profitability for the company. It may be wise to cut back on spending, though that doesn’t seem to be part of their strategy. Given that COMPASS Pathways is able to raise the additional capital and the phase 3 trials are successful, it is on its way to profitability in the next five or six years.