COMPASS Pathways plc (CMPS) Bundle
Understanding COMPASS Pathways plc (CMPS) Revenue Streams
Understanding COMPASS Pathways plc’s Revenue Streams
The company has not generated any revenue to date and does not anticipate generating revenue from the sale of therapeutic candidates in the foreseeable future. As of September 30, 2024, the accumulated deficit stands at $491.4 million.
Revenue Breakdown
Currently, the primary revenue sources are non-existent as the company is in the clinical development stage without any commercialized products. The focus remains on advancing the investigational COMP360 psilocybin treatment for treatment-resistant depression (TRD).
Year-over-Year Revenue Growth Rate
Since there is no revenue generated, there are no year-over-year growth rates to report. The company has incurred significant operating losses instead, with net losses of $111.8 million for the nine months ended September 30, 2024, compared to $85.9 million for the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
As there are no revenue-generating business segments to report, the company’s financials reflect operating expenses primarily related to research and development, which amounted to $86.9 million for the nine months ended September 30, 2024.
Significant Changes in Revenue Streams
No significant changes in revenue streams have occurred due to the absence of revenue generation. The company’s financial strategy continues to rely on funding through equity offerings, debt financing, and other collaborations.
| Financial Metric | 2024 (Nine Months Ended) | 2023 (Nine Months Ended) | Change |
|---|---|---|---|
| Net Loss | $111.8 million | $85.9 million | $25.9 million |
| Accumulated Deficit | $491.4 million | $379.6 million | $111.8 million |
| Total Operating Expenses | $129.8 million | $98.5 million | $31.3 million |
| Research and Development Expenses | $86.9 million | $60.4 million | $26.5 million |
A Deep Dive into COMPASS Pathways plc (CMPS) Profitability
A Deep Dive into COMPASS Pathways plc's Profitability
Gross Profit Margin: As of September 30, 2024, the company reported a net loss of $111.8 million for the nine-month period, with total operating expenses reaching $129.8 million. The company has not generated any revenue to date, thus the gross profit margin remains 0%.
Operating Profit Margin: The loss from operations for the nine months ended September 30, 2024, was $129.8 million, indicating an operating profit margin of -100% since there is no revenue.
Net Profit Margin: The net loss for the same period was $111.8 million, translating to a net profit margin of -100% due to the absence of revenue.
Trends in Profitability Over Time
Over the past year, the company has seen an increase in net losses from $85.9 million in the nine months ended September 30, 2023, to $111.8 million in the same period of 2024. This represents an increase in net loss of 30.2%.
Comparison of Profitability Ratios with Industry Averages
As a clinical-stage biotechnology firm, the average net profit margin in the biotech sector is typically negative, reflecting high research and development costs. COMPASS Pathways plc's margins align with this trend, showcasing a net profit margin of -100%, comparable to other firms in similar stages of development.
Analysis of Operational Efficiency
COMPASS Pathways plc's total operating expenses for the nine months ended September 30, 2024, were $129.8 million, with research and development expenses accounting for $86.9 million and general and administrative expenses at $42.9 million.
| Metric | 2024 (9 months) | 2023 (9 months) | Change |
|---|---|---|---|
| Net Loss | $111.8 million | $85.9 million | $25.9 million (30.2%) |
| Operating Expenses | $129.8 million | $98.5 million | $31.3 million (31.8%) |
| R&D Expenses | $86.9 million | $60.4 million | $26.5 million (43.9%) |
| G&A Expenses | $42.9 million | $38.1 million | $4.8 million (12.6%) |
The increase in operating expenses, particularly in research and development, reflects the ongoing investment in advancing clinical trials and regulatory compliance efforts. The company anticipates that these expenses will continue to grow as it progresses through its Phase 3 program for the investigational COMP360 psilocybin treatment.
Debt vs. Equity: How COMPASS Pathways plc (CMPS) Finances Its Growth
Debt vs. Equity: How COMPASS Pathways plc Finances Its Growth
As of September 30, 2024, COMPASS Pathways plc reported total liabilities of $54.3 million, with $30.0 million classified as long-term debt due to a term loan agreement entered on June 30, 2023.
Overview of the Company's Debt Levels
The company's long-term debt consists primarily of a term loan of $30.0 million, which is subject to interest payments and specific performance milestones. The interest rate on this loan is determined by the greater of the prime rate plus 1.50% or 9.75%. Additionally, the company has a payment-in-kind (PIK) interest component of 1.40%.
Short-term debt includes accrued interest and current portions of long-term debt, which totaled $2.2 million as of September 30, 2024.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for COMPASS Pathways plc stands at 0.28, calculated by dividing total liabilities of $54.3 million by total shareholders' equity of $193.0 million. This ratio is lower than the biotechnology industry average of approximately 0.5 to 1.0, indicating a more conservative approach to leveraging debt.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
Recent activity includes the establishment of a $50.0 million Loan Agreement with Hercules, of which $30.0 million has been drawn. The agreement allows for additional loans contingent upon performance metrics. Credit ratings for the company have not been explicitly detailed in the available data.
How the Company Balances Between Debt Financing and Equity Funding
COMPASS Pathways has primarily funded its operations through equity offerings, including an at-the-market (ATM) facility that allows for the issuance of up to $150.0 million in American Depositary Shares (ADSs). As of September 30, 2024, the company generated $54.8 million from this facility. The company also issued warrants as part of its financing strategy, with 16,076,750 ADS purchase warrants issued in connection with a private investment in public equity (PIPE), which could yield an additional $122.4 million if fully exercised.
| Debt Type | Amount (in millions) | Interest Rate | Notes |
|---|---|---|---|
| Long-term Debt | $30.0 | Greater of Prime + 1.50% or 9.75% | Term loan with Hercules |
| Short-term Debt | $2.2 | N/A | Includes current portion of long-term debt |
| Equity Raised (ATM Facility) | $54.8 | N/A | From the issuance of ADSs |
| PIPES Warrants Potential | $122.4 | N/A | If fully exercised |
Assessing COMPASS Pathways plc (CMPS) Liquidity
Assessing COMPASS Pathways plc (CMPS) Liquidity
Current and Quick Ratios
The current ratio for COMPASS Pathways plc as of September 30, 2024, is 8.95, calculated by dividing current assets of $207.342 million by current liabilities of $23.185 million. The quick ratio, which excludes inventory, is also 8.95, as the company does not hold any inventory.
Analysis of Working Capital Trends
As of September 30, 2024, the working capital stands at $184.157 million, reflecting current assets minus current liabilities. This represents an increase from $174.175 million reported at the end of 2023, indicating a positive trend in liquidity management.
Cash Flow Statements Overview
The cash flow statements for the nine months ended September 30, 2024, reveal the following:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) | Change (in thousands) |
|---|---|---|---|
| Net Cash Used in Operating Activities | $(77,429) | $(69,594) | $(7,835) |
| Net Cash Used in Investing Activities | $0 | $(64) | $64 |
| Net Cash Provided by Financing Activities | $63,669 | $173,789 | $(110,120) |
| Net (Decrease) Increase in Cash | $(13,296) | $104,988 | $(118,284) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, COMPASS Pathways plc reported cash and cash equivalents of $207.342 million, projected to sustain operations through 2026. However, the net cash used in operating activities has increased, indicating rising operational costs, primarily due to development expenses for the Phase 3 clinical trials. The company has substantial accumulated losses totaling $491.4 million, which poses a risk for future liquidity unless additional funding is secured. The company has no ongoing material financing commitments that would substantially impact liquidity over the next five years, aside from existing loans and operational leases.
Is COMPASS Pathways plc (CMPS) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will examine key financial ratios such as Price-to-Earnings (P/E), Price-to-Book (P/B), and Enterprise Value-to-EBITDA (EV/EBITDA). Additionally, we will analyze stock price trends, dividend yield, and analyst consensus on stock valuation.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the company reported a net loss of $111.8 million for the nine-month period. Given that the company has not generated any revenue or profits to date, the P/E ratio remains undefined.
Price-to-Book (P/B) Ratio
The company's book value as of September 30, 2024, was $193.0 million, with total shareholders' equity reported at $193.0 million. With 68,409,068 shares outstanding, the P/B ratio can be calculated as:
P/B Ratio = Total Equity / Total Shares Outstanding = $193,030,000 / 68,409,068 ≈ 2.83
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The company has not generated EBITDA due to consistent operating losses, making the EV/EBITDA ratio also undefined at this time.
Stock Price Trends
Over the past 12 months, the stock price has experienced significant volatility. The stock opened at approximately $15.00 and has fluctuated, reaching a high of $20.00 and a low of $8.00.
Dividend Yield and Payout Ratios
The company does not currently pay dividends, and thus, the dividend yield is 0%. There are no payout ratios applicable due to the absence of dividends.
Analyst Consensus on Stock Valuation
Analyst consensus reflects a cautious outlook, with ratings distributed as follows: Buy: 2, Hold: 5, Sell: 1. The average price target among analysts is approximately $12.50, indicating a potential upside from current trading levels.
| Metric | Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | Undefined |
| Price-to-Book (P/B) Ratio | 2.83 |
| Enterprise Value-to-EBITDA (EV/EBITDA) Ratio | Undefined |
| Stock Price (12-month range) | $8.00 - $20.00 |
| Dividend Yield | 0% |
| Analyst Consensus (Buy/Hold/Sell) | 2/5/1 |
| Average Price Target | $12.50 |
Key Risks Facing COMPASS Pathways plc (CMPS)
Key Risks Facing COMPASS Pathways plc
The financial health of COMPASS Pathways plc (CMPS) is influenced by various internal and external risk factors. Below is an overview of these risks, along with relevant financial data.
Overview of Risk Factors
COMPASS Pathways operates in a highly competitive biotechnology sector, which presents significant risks including:
- Competition: The clinical-stage biotechnology market is crowded, with numerous competitors developing similar therapeutic candidates.
- Regulatory Changes: Changes in regulations by authorities such as the FDA and EMA can impact the development timeline for therapeutic candidates.
- Market Conditions: Macroeconomic factors such as inflation, interest rates, and geopolitical tensions can adversely affect funding and operational capabilities.
Operational and Strategic Risks
Recent earnings reports highlight several operational and strategic risks:
- Recurring Losses: The company reported a net loss of $111.8 million for the nine months ended September 30, 2024, compared to $85.9 million for the same period in 2023.
- Accumulated Deficit: As of September 30, 2024, the accumulated deficit stood at $491.4 million.
- Operating Expenses: Total operating expenses for the nine months ended September 30, 2024, were $129.8 million, up from $98.5 million in the previous year.
Financial Risks
Financial risks include:
- Funding Requirements: The company expects to require substantial additional funding to continue operations and complete development of its investigational COMP360 psilocybin treatment.
- Cash Position: As of September 30, 2024, cash and cash equivalents totaled $207.0 million, which the company believes is sufficient to fund operations into 2026.
Mitigation Strategies
To address these risks, COMPASS Pathways has outlined several strategies:
- Raising Capital: The company relies on equity offerings, debt financing, and collaborations to secure necessary funds.
- Regulatory Preparedness: Ongoing engagement with regulatory bodies to ensure compliance and timely approvals for clinical trials.
| Risk Factor | Impact | Current Status |
|---|---|---|
| Net Loss | High | $111.8 million (2024) |
| Accumulated Deficit | Critical | $491.4 million (2024) |
| Cash and Cash Equivalents | Moderate | $207.0 million (2024) |
| Total Operating Expenses | High | $129.8 million (2024) |
Future Growth Prospects for COMPASS Pathways plc (CMPS)
Future Growth Prospects for COMPASS Pathways plc (CMPS)
Analysis of Key Growth Drivers
The primary growth driver for the company is its investigational COMP360 psilocybin treatment, which is currently in Phase 3 clinical trials for treatment-resistant depression (TRD). The company has reported total research and development expenses of $86.9 million for the nine months ended September 30, 2024, compared to $60.4 million for the same period in 2023. This increased investment underscores the commitment to advancing its clinical programs.
Additionally, the company is focused on establishing a network of healthcare providers to administer its treatment, which could significantly enhance its market penetration upon regulatory approval. The strategic training of qualified therapists is essential to support the delivery of this treatment.
Future Revenue Growth Projections and Earnings Estimates
As of September 30, 2024, the company has not generated any revenue. However, it anticipates potential revenue generation from its COMP360 treatment, pending successful clinical trials and subsequent regulatory approvals. The company has projected that its existing cash and cash equivalents of $207 million will be sufficient to fund operations into 2026. Analysts estimate that if the treatment receives approval, it could lead to significant revenue streams, although specific revenue figures are not yet available.
Strategic Initiatives or Partnerships that May Drive Future Growth
The company has engaged in strategic collaborations, including a partnership with Greenbrook TMS to enhance its clinical trial capabilities. This collaboration is aimed at refining treatment delivery and expanding the potential market for COMP360.
Moreover, the company has utilized an at-the-market (ATM) offering program, raising approximately $54.8 million through the sale of ADSs. This approach allows for flexible capital raising to support ongoing research and development efforts.
Competitive Advantages that Position the Company for Growth
COMPASS Pathways has a competitive advantage due to its pioneering position in the field of psilocybin therapy. The investigational nature of its treatment, combined with robust clinical trial data, positions it favorably against competitors. As of September 30, 2024, the company reported an accumulated deficit of $491.4 million, indicating substantial investment in future growth.
The company's focus on mental health, particularly in areas with high unmet medical needs, aligns well with current market trends emphasizing holistic and innovative treatment options. Furthermore, the anticipated regulatory changes regarding psychedelics could create a favorable environment for the commercialization of its products.
| Metric | 2024 (9 Months) | 2023 (9 Months) |
|---|---|---|
| Research and Development Expenses | $86.9 million | $60.4 million |
| Cash and Cash Equivalents | $207 million | $248 million |
| Accumulated Deficit | $491.4 million | $379.6 million |
| Net Loss | $111.8 million | $85.9 million |
| Proceeds from ATM Offerings | $54.8 million | N/A |
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Article updated on 8 Nov 2024
Resources:
- COMPASS Pathways plc (CMPS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of COMPASS Pathways plc (CMPS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View COMPASS Pathways plc (CMPS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.