The following discussion of the financial condition and results of operations of Compass Therapeutics, Inc. should be read in conjunction with the financial statements and the notes to those statements included in this Quarterly Report on Form 10-Q for the three and six months ended June 30, 2026. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risk, uncertainties and assumptions. You should read the “Risk Factors” section of this Quarterly Report on Form 10-Q and the “Risk Factors” section included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We are a clinical-stage, oncology-focused biopharmaceutical company developing proprietary antibody-based therapeutics to treat multiple human diseases. Our scientific focus is on the relationship between angiogenesis, the immune system, and tumor growth. Our pipeline of novel product candidates is designed to target multiple components required for an effective anti-tumor response. These include modulation of the microvasculature via angiogenesis-targeted agents, induction of a potent immune response via activators on effector cells in the tumor microenvironment, and alleviation of immunosuppressive mechanisms used by tumors to evade immune surveillance. We plan to advance our product candidates through clinical development as both standalone therapies and in combination with proprietary pipeline antibodies based on supportive clinical and nonclinical data.
Our pipeline comprises four clinical product candidates. Our lead product candidate, tovecimig (formerly known as CTX-009), is a bispecific antibody targeting Delta-like ligand 4 (“DLL4”), a ligand of Notch-1, and vascular endothelial growth factor A (“VEGF-A”). Simultaneous blockade of the VEGF-A and the Notch pathways is known to turn productive angiogenesis into non-productive angiogenesis, which leads to tumor shrinkage and apoptosis. CTX-471 is an agonistic antibody targeting a member of the tumor necrosis factor receptor superfamily (TNFRSF9), also known as CD-137, a co-stimulatory receptor which is mostly expressed on activated, but not on resting, T-cells and NK cells. CTX-8371 is a bispecific antibody targeting the programmed cell death protein-1 (“PD-1”), an inhibitory immune checkpoint receptor and its ligand PD-L1, two validated immune-oncology targets. CTX-10726 is a bispecific antibody targeting PD-1 and VEGF-A, also two validated immune-oncology targets. For a more detailed description, see our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Recent Developments
Tovecimig Results in COMPANION-002 Phase 2/3 Study in the Second Line Setting for Patients with BTC
In April 2026, we announced survival and safety data from our Phase 2/3 randomized trial of tovecimig in combination with paclitaxel in patients with biliary tract cancer (“BTC”) treated in the second-line setting. We expect feedback from the FDA in the third quarter regarding the COMPANION-002 Phase 2/3 data, prior to a potential BLA filing later this year.
The study met the primary endpoint of overall response rate (“ORR”) with 18.0% in the tovecimig combination arm compared to 5.3% in the paclitaxel control arm, including one complete response in the tovecimig arm. In the final data analysis, the ORR improved to 18.0% (20/111 patients) in the tovecimig combination arm from a previously reported 17.1%. One patient initially characterized as “Non-CR / Non-PD” due to target lesion characteristics was ultimately adjudicated by blinded independent central review to be a partial response. With this change, the p-value also improved to 0.0228 compared to paclitaxel alone (vs previously reported p=0.031). The tovecimig combination arm also demonstrated a highly statistically significant improvement versus paclitaxel alone in the secondary endpoint of median progression-free survival (PFS) of 4.7 months versus 2.6 months, providing a 56% reduction in the risk of progression (hazard ratio=0.44, p<0.0001). Secondary endpoint analyses of overall survival (OS) were confounded by both high crossover (54%) and notably prolonged survival in crossover patients randomized to the control arm then treated with tovecimig and, therefore, did not meet statistical significance.
In July 2026, we announced data from this study has been selected for a proffered paper oral presentation at the 2026 ESMO Congress.
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Tovecimig Investigator Sponsored Trials
The previously disclosed investigator sponsored trial (“IST”) of tovecimig in combination with the current first-line, standard-of-care regimen of gemcitabine, cisplatin, and durvalumab in patients with BTC (NCT06548412) is ongoing with expansion to additional sites expected.
Two additional ISTs have been initiated, including a study of tovecimig plus FOLFIRI in patients with colorectal cancer in the second line setting (NCT07662031) and a study of tovecimig plus CTX-471 in patients with glioblastoma in the second line setting (NCT07392957). We are evaluating additional studies for tovecimig in other indications, including both ISTs and Company-sponsored studies.
CTX-8371 (PD-1 x PD-L1 bispecific) Phase 1 Expansion Cohorts Enrolling
Phase 1 cohort expansions are actively enrolling patients with triple-negative breast cancer (“TNBC”), Hodgkin lymphoma (“HL”) and non-small cell lung cancer (“NSCLC”) at two dose levels: 3.0 mg/kg and 10.0 mg/kg. The evaluation of an RP2D for further development. Additional data from the cohort expansions are expected in the fourth quarter of 2026.
At the ASCO Annual Meeting in May 2026, we presented data from the dose-escalation portion of this Phase 1, open-label, first-in-human study evaluating CTX-8371 in patients with metastatic or locally advanced malignancies.
● 15 patients completed the dose-limiting toxicity (“DLT”) evaluation period and had at least one post-baseline disease assessment in the dose escalation cohort.
● There were three responses: one patient with TNBC achieved > 90% reduction in target tumor lesions at Week 8, one patient with HL achieved a decrease in metabolic activity of target lesions at Week 24 (partial metabolic response), and one patient with NSCLC achieved complete resolution of target lesions at Week 16 after initial pseudo-progression.
● At the two highest dose levels (3.0 and 10.0 mg/kg), the ORR was 33% (2 of 6 evaluable patients). The responses at the two highest dose levels were durable: 10.5+ months for TNBC and 7.5+ months HL as of May 2026.
● CTX-8371 was generally well tolerated with no DLTs. All treatment-related adverse events were mild Grade 1 or Grade 2, with the exception of one asymptomatic Grade 3 lipase increase.
CTX-10726 (PD-1 x VEGF-A bispecific) Phase 1 Dose-Escalation Study Enrolling
The first patients have been dosed in the Phase 1 dose-escalation study of CTX-10726 with locally advanced, unresectable or metastatic renal cell carcinoma, gastroesophageal cancer, hepatocellular carcinoma, or endometrial cancer, in whom standard of care therapies have failed. Clinical data from the dose-escalation cohort is expected in the fourth quarter of 2026.
OPERATING ACTIVITIES
We have funded our operations primarily with proceeds from the sale of our equity securities. Through June 30, 2026, we have received $568 million in gross proceeds from the sale of equity securities.
We have incurred significant operating losses since inception and have not generated any revenue from the sale of products and we do not expect to generate any revenue from the sale of products in the near future, if at all. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of our therapies and any future product candidates. Our net losses were $25.2 million and $19.9 million for the three months ended June 30, 2026 and 2025, respectively. Our net losses were $43.5 million and $36.5 million for the six months ended June 30, 2026 and 2025, respectively. We had an accumulated deficit of $475 million on June 30, 2026. We expect to continue to incur significant expenses for at least the next several years as we advance through clinical development, develop additional product candidates and seek regulatory approval of any product candidates that complete clinical development. In addition, if we obtain marketing approval for any product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. We may also incur expenses in connection with the in-licensing or acquisition of additional product candidates.
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As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through equity and debt financings, or other capital sources, which may include collaborations with other companies or other strategic transactions. As of June 30, 2026, we had $180 million in cash, cash equivalents and marketable securities. We expect that such cash resources will enable us to fund our operating expenses and capital expenditure requirements into 2028. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, reduce or eliminate the development and commercialization of one or more of our product candidates or delay our pursuit of potential in-licenses or acquisitions.
Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
At-The-Market (“ATM”) Offering
In the first six months of 2026, there were no issuances of common stock through our Open Market Sale AgreementSM with Jefferies LLC (“Jefferies ATM Agreement”). In December 2025, we entered into a Sales Agreement for our ATM offering with Leerink Partners LLC and Cantor Fitzgerald & Co. (the “2026 ATM Agreement”), and the prior Jefferies ATM Agreement was terminated. In the first six months of 2026, we did not sell any shares of common stock under the 2026 ATM Agreement.
Components of Results of Operations
Research and Development
Research and development expenses consist primarily of costs incurred in connection with the development of our product candidates, tovecimig, CTX-471, CTX-8371 and CTX-10726. We expense research and development costs as incurred. These expenses include:
● clinical expenses including Contract Research Organizations (“CRO”), consultants that conduct our clinical trials, as well as investigative sites;
● manufacturing expenses including Contract Manufacturing Organizations (“CMO”), consultants that are primarily engaged to develop and manufacture drug substance and product for our clinical trials, as well as the cost of acquiring and manufacturing clinical trial materials, including manufacturing registration and validation batches;
● employee-related expenses including salaries, related benefits and equity-based compensation expense for employees engaged in research and development functions;
● other research and development expenses including pre-clinical study costs and expenses incurred under agreements with organizations that support our platform program development;
● costs related to compliance with quality and regulatory requirements; and
● facilities and equipment expenses.
Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered.
Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will increase substantially in connection with our planned clinical development activities in the future. At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the clinical development of any future product candidates.
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Our clinical development costs may vary significantly based on factors such as:
● per patient trial costs;
● the number of trials required for approval;
● the number of sites included in the trials;
● the location where the trials are conducted;
● the length of time required to enroll eligible patients;
● the number of patients that participate in the trials;
● the number of doses that patients receive;
● the drop-out or discontinuation rates of patients;
● potential additional safety monitoring requested by regulatory agencies;
● the duration of patient participation in the trials and follow-up;
● the cost and timing of manufacturing our product candidates;
● the phase of development of our product candidates; and
● the efficacy and safety profile of our product candidates.
The successful development and commercialization of product candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with product development and commercialization.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and related costs for personnel in executive, finance, business development and administrative functions. General and administrative expenses also include legal fees relating to patent and corporate matters, professional fees for accounting, auditing, tax, insurance, administrative travel expenses and other operating costs.
We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our business operations.
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Interest Income
Interest income consists of interest income on marketable securities.
Results of Operations
Comparison of the Three Months Ended June 30, 2026 and 2025
The following table summarizes our results of operations for the three months ended June 30, 2026 and 2025 (in thousands):
Three Months Ended June 30,
2026 2025 Change
Operating expenses:
Research and development $ 19,576 $ 16,415 $ 3,161
General and administrative 7,403 4,651 2,752
Total operating expenses 26,979 21,066 5,913
Loss from operations (26,979 ) (21,066 ) (5,913 )
Interest income 1,825 1,185 640
Net loss $ (25,154 ) $ (19,881 ) $ (5,273 )
Research and Development Expenses
Research and development expenses increased by $3.2 million, or 19%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was primarily driven by $2.6 million related to non-personnel project expenses for tovecimig.
We track outsourced development, personnel costs and other research and development costs of specific programs. Research and development expenses are summarized by program in the table below (in thousands):
Three Months Ended June 30,
2026 2025
Tovecimig $ 12,261 $ 8,112
CTX-471 1,532 2,854
CTX-8371 1,676 1,512
CTX-10726 1,257 2,133
Unallocated research and development expenses 2,850 1,804
Total research and development expenses $ 19,576 $ 16,415
General and Administrative Expenses
General and administrative expenses increased by $2.8 million, or 59%, for the three months ended June 30, 2026 as compared to the same period in 2025. The increase was primarily due to an increase of $1.4 million of pre-commercialization expenses and an increase of $0.8 million of stock-based compensation expense.
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Comparison of the Six Months Ended June 30, 2026 and 2025
The following table summarizes our results of operations for the six months ended June 30, 2026 and 2025 (in thousands):
Six Months Ended June 30,
2026 2025 Change
Operating expenses:
Research and development $ 32,968 $ 29,476 $ 3,492
General and administrative 14,310 9,556 4,754
Total operating expenses 47,278 39,032 8,246
Loss from operations (47,278 ) (39,032 ) (8,246 )
Interest income 3,807 2,518 1,289
Net loss $ (43,471 ) $ (36,514 ) $ (6,957 )
Research and Development Expenses
Research and development expenses increased by $3.5 million, or 12%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. This was primarily driven by an increase of $2.5 million of stock-based compensation expense and $1.3 million of manufacturing expense.
We track outsourced development, personnel costs and other research and development costs of specific programs. Research and development expenses are summarized by program in the table below (in thousands):
Six Months Ended June 30,
2026 2025
Tovecimig $ 18,941 $ 15,045
CTX-471 3,018 4,759
CTX-8371 3,013 2,451
CTX-10726 2,707 3,410
Unallocated research and development expenses 5,289 3,811
Total research and development expenses $ 32,968 $ 29,476
General and Administrative Expenses
General and administrative expenses increased by $4.8 million, or 50%, for the six months ended June 30, 2026 as compared to the same period in 2025. This was primarily driven by an increase of $1.8 million of pre-commercialization expenses, an increase of $1.3 million of personnel expenses related to commercialization and an increase of $2.1 million of stock-based compensation expense.
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Liquidity and Capital Resources
Since our inception, we have devoted substantially all of our efforts to organizing and staffing our Company, business planning, raising capital, research and development activities, building our intellectual property portfolio and providing general and administrative support for these operations. We have funded our operations primarily with proceeds from the sale of our equity securities. Through June 30, 2026, we have received $568 million in gross proceeds from the sale of equity securities. As of June 30, 2026, we had cash, cash equivalents and marketable securities of $180 million.
Cash Flows
The following table shows a summary of our cash flows for the periods indicated (in thousands):
Six Months Ended June 30,
2026 2025
Cash used in operating activities $ (32,007 ) $ (25,040 )
Cash provided by investing activities 33,452 5,228
Cash provided by (used in) financing activities 3,365 (815 )
Net change in cash and cash equivalents $ 4,810 $ (20,627 )
Operating Activities
During the six months ended June 30, 2026, we used $32.0 million of cash in operating activities, resulting from our net loss of $43.5 million, partially offset by the change in operating assets and liabilities of $1.2 million and non-cash charges of $10.2 million (primarily from share-based compensation expense of $9.9 million).
During the six months ended June 30, 2025, we used $25.0 million of cash in operating activities, resulting from our net loss of $36.5, million partially offset by the change in operating assets and liabilities of $5.5 million and non-cash charges of $5.9 million (primarily from share-based compensation expense of $5.3 million).
Investing Activities
During the six months ended June 30, 2026, $33.5 million of cash was provided by investing activities related to the net sales of marketable securities. During the six months ended June 30, 2025, $5.2 million of cash was provided by investing activities related to the net sale of marketable securities.
Financing Activities
During the six months ended June 30, 2026, $3.9 million of cash was provided by financing activities due to the exercise of stock options, partially offset by $0.5 million of taxes paid by us for settlement of RSU shares. During the six months ended June 30, 2025, $0.8 million of cash was used in financing activities due to taxes paid by us for settlement of RSU shares.
Future Funding Requirements
We expect our expenses to increase substantially in connection with our ongoing activities. The timing and amount of our operating expenditures will depend largely on:
● the initiation, progress, timing, costs and results of clinical trials for our product candidates or any future product candidates we may develop;
● the initiation, progress, timing, costs and results of nonclinical studies for our product candidates or any future product candidates we may develop;
● our ability to maintain our relationships with key collaborators;
● the outcome, timing and cost of seeking and obtaining regulatory approvals from the FDA and comparable foreign regulatory authorities, including the potential for such authorities to require that we perform more nonclinical studies or clinical trials than those that we currently expect or change their requirements on studies that had previously been agreed to;
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● the cost to establish, maintain, expand, enforce and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with licensing, preparing, filing, prosecuting, defending and enforcing any patents or other intellectual property rights;
● the effect of competing technological and market developments;
● the costs of continuing to grow our business, including hiring key personnel and maintaining or acquiring operating space;
● market acceptance of any approved product candidates, including product pricing, as well as product coverage and the adequacy of reimbursement by third-party payors;
● the cost of acquiring, licensing or investing in additional businesses, products, product candidates and technologies;
● the cost and timing of selecting and validating a manufacturing site for commercial-scale manufacturing; and
● the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval and that we determine to commercialize.
We believe that our existing cash, cash equivalents and marketable securities as of filing of this Quarterly Report on Form 10-Q will enable us to fund our operating expenses and capital expenditure requirements into 2028. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. Our current plans, which may change based on clinical or pre-clinical results, include studies for tovecimig, CTX-471, CTX-8371 and CTX-10726. We expect that we will require additional funding to complete the clinical development of these programs including the payment of developmental milestones, commercializing our product candidates, if we receive regulatory approval, and pursuing in-licenses or acquisitions of other product candidates. If we receive regulatory approval for tovecimig, CTX-471, CTX-8371, CTX-10726 or other product candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize these product candidates ourselves.
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity and debt financings, collaborations, strategic alliances, and marketing, distribution or licensing arrangements with third parties. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interest may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specified actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, reduce or eliminate our product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Critical Accounting Estimates
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenue and expenses during the reporting period. We base our estimates on historical experience, known trends and events, and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
During the six months ended June 30, 2026, there were no material changes to our critical accounting estimates described under "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the Annual Report.
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Recently Issued and Adopted Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2, “Summary of Significant Accounting Policies” to our condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Smaller Reporting Company Status
We are a “smaller reporting company” as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250 million as of the last business day of the most recently completed second fiscal quarter or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates was less than $700 million as of the last business day of the most recently completed second fiscal quarter. As a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and have reduced disclosure obligations regarding executive compensation, and if we are a smaller reporting company with less than $100 million in annual revenue, we would not be required to obtain an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.
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