The Compass Therapeutics IPO is set to hit the market. The company saw successful preclinical trials and hopes to have its products approved by 2022. Now investors are interested in Compass Therapeutics stock.

But is Compass Therapeutics a good investment? Here’s what we know…

Compass Therapeutics IPO: The Business

Thomas Schuetz, M.D., who also has a doctorate in genetics, co-founded Compass Therapeutics in 2014. At the time, he was a venture partner at OrbiMed, Compass’ largest shareholder. Compass is a clinical-stage biopharmaceutical company. Compass’ goal is to support the role of the immune system using antibody-based therapies to fight cancer. It claims its approach can be used for both solid tumors and hematologic malignancies.

According to Compass’ prospectus:

Our approach is based on the observation that traditional methods of antibody discovery are slow, inefficient, and limited by lack of diversity of antigenic sites, or epitopes, that are recognized using these methods. We believe these limitations impair drug developers’ ability to identify the best product candidates. We have created several technological solutions that are designed to address the key challenges in antibody development with the goal of incorporating our solutions into bispecific product candidates.

The Compass Therapeutics IPO is one of many biopharmaceutical companies to go public in 2020. As the company plans to submit two investigational new drug (IND) applications in 2021, it’s not surprising it’s selling Compass Therapeutics stock to raise more capital.

Compass Therapeutics Stock to Fund Leading Products

Compass’ lead product candidate is CTX-471. The company noticed the product killed large tumors in mice, resulting in increased survival and long-term immune protection. Compass initiated a Phase 1 trial in July 2019. The first patient was dosed in September 2020. The company hopes to conduct Part 2 of the Phase 1 trial in the first half of 2021, with a Phase 2/3 trial following in the second half.

Compass also plans to start a second Phase 1 trial for CTX-471. In this trial, the product will be combined with trastuzumab (sold under the brand name Herceptin), an antibody used for breast and stomach cancer. Compass plans to submit an IND application by early 2021 and expects data in 2022.

The company has another product, called CTX-837. It’s another antibody used in the treatment of tumors. It targets the PD-1 and PD-L1 checkpoints of the immune system. By blocking these checkpoints, it allows the immune system to overcome cancer’s resistance to the body’s defenses. Compass also notes that this therapy includes some of the highest-revenue-generating therapeutics.

The company hopes to provide the first treatment to target both checkpoints together. Studies showed CTX-837 produced greater antitumor activity than any singular or combined therapy. An IND study of CTX-837 started in August 2020. Compass plans to submit a second IND in the third quarter of 2021, have its first patient visit in the second half of 2021 and deliver data in 2022.

However, like many clinical-stage biopharmaceutical companies, Compass has no revenue. And it’s possible the company will never be profitable. That’s one reason the Compass Therapeutics IPO is happening: to raise capital.

The Financial Data

The first part of Compass’ financial summary is its statement of operations. Since 2018, Compass’ expenses have decreased. In 2018, the company’s total operating expenses were just over $38.3 million. Expenses decreased to $34 million in 2019. For the year 2020, Compass provides financial data for the nine months ended September 30, and operating expenses were $19.9 million. For the same timeframe in 2019, the company recorded operating expenses of about $27.7 million.

Additionally, Compass’ net loss is also decreasing. It was almost $38.3 million in 2018 and was down to $34.7 million in 2019. For the nine months ended September 30, net loss was $28.1 million in 2019. That decreased to $21.1 million for 2020.

The second part of its financial summary is Compass’ balance sheet, where investors can see that the company has debt. According to the prospectus, total debt equals about $11.2 million. Compass also has a good sum of cash, pre-IPO. Currently, cash and cash equivalents total $55.5 million. But after the sale of Compass Therapeutics stock, cash is expected to total about $101 million.

Compass states:

We intend to use the net proceeds from this offering, together with our existing cash and cash equivalents, (i) to fund clinical trials for CTX-471, including a second Phase 1 trial of CTX-471 in combination with Herceptin and/or Erbitux, as well as manufacturing of clinical trial material, and pre-commercialization manufacturing process development and validation, (ii) to advance our other pipeline candidates, including CTX-8371 and CTX-8573, (iii) to fund new and ongoing research activities for our portfolio of bispecific antibody product candidates, and (iv) for working capital purposes, including general operating expenses, to the extent of any remainder amounts.

So if you’re interested in the Compass Therapeutics IPO, let’s take a look at the details.

Compass Therapeutic IPO Details

Compass filed to go public on October 29, 2020. The Compass Therapeutics IPO date is November 13, 2020. The price range is $5 to $6, and the offer includes 9 million shares of stock. The company expects to raise $50 million, for a market cap of $337 million.

Compass Therapeutics stock will trade on the Nasdaq under the ticker symbol CMPX.

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The Compass Therapeutics IPO is smaller than the average IPO, but it could be the boost Compass needs to bring its products to market in the future. And with a quiet IPO market after election week, Compass Therapeutics stock should make a smooth debut.