With the results of Phase 2 to be delivered in 2021, Compass (CMPS) is a stock that should be followed closely. The company is making all the good moves. CMPS did not only announce a new Centre of Excellence associated with the Sheppard Pratt Institute. Thanks to the IPO, CMPS also shows a significant amount of cash in the balance sheet. Hence, I would not expect the company to increase its share count in the following months.
Compass Business Model And The New Centre of Excellence
Compass is a mental health care company developing a drug for treatment-resistant depression. CMPS uses a polymorphic crystalline formulation of psilocybin called COMP360.
Today, I am writing about Compass because of the announcement of a new Centre of Excellence. There is a lot to discover about the new facility. However, let me point out that Compass will own psychedelic therapy rooms, and diverse facilities for research. Investors know that more research and development usually leads to addition of intellectual property. With this in mind, I expect the share price to increase when investors get to know the new centre. Read more about the new information below:
COMPASS Pathways plc is establishing its first Centre of Excellence in collaboration with The Sheppard Pratt Institute for Advanced Diagnostics and Therapeutics in Baltimore, Maryland, United States. The new centre will include at least four state-of-the-art psychedelic therapy rooms, as well as facilities for research and training. In addition to a capital investment to support the design and building work, COMPASS will fund research studies into psilocybin therapy and other therapies, led by Dr Aaronson. Source: George Goldsmith, CEO and Co‑founder, COMPASS Pathways plc
The company also pointed out that the collaboration with Sheppard Pratt Institute will be very beneficial. According to the CEO, Sheppard Pratt has a significant amount of expertise in offering clinical services. Notice that the The Sheppard and Enoch Pratt Hospital was founded in 1853. It appears to be one of the oldest private psychiatric hospitals in the United States. It means that COMPASS will not only obtain a significant amount of know-how from doctors in Sheppard Pratt Hospital. In my opinion, with the new collaboration, the company will most likely receive a good amount of business contacts:
We want to transform mental health care, which today is not good enough for far too many people. Sheppard Pratt has a long history of excellence in clinical service delivery and commitment to its community of patients. Our Centres of Excellence, beginning with this centre led by the distinguished team at Sheppard Pratt, will help to accelerate our combined work so that we can bring evidence-based innovation, on a large scale, to the people who need it the most. Source: George Goldsmith, CEO and Co‑founder, COMPASS Pathways plc
The Stock Catalyst Is The Phase 2
The company is currently working on a Phase IIb clinical trial, which will most likely interest investors. In the following months, 216 patients with treatment-resistant depression will be treated with COMP360. According to a document released a few months ago, the results of the Phase 2 will be delivered in late 2021. This is very important. If the company obtains good results, the market will be expecting a spike in the stock price:
We are currently conducting a randomized controlled Phase IIb clinical trial in 216 patients suffering with TRD, in 20 sites across North America and Europe. The primary endpoint of this clinical trial is to evaluate the efficacy of COMP360, as assessed by the change in the Montgomery-Åsberg depression rating scale, or MADRS, a widely accepted scale for depression that has been used as a primary endpoint in pivotal trials of other depression treatments. This trial has been designed to capture a statistically significant reduction in MADRS. We plan to report data from this trial in late 2021.
Currently trading with a market capitalization of $1.5-2 billion and $196 million in cash, Compass has enough financing to operate until 2023. In our opinion, the market will appreciate the company’s financial statements. It is very good that the Compass does not report a significant amount of liabilities. It appears very clear that the company will not need to sell a lot of equity in the near future. I like it. Shareholders only need to wait to see whether the FDA accepts the new treatment.
Stay tuned. We will soon deliver more information about Compass.
Disclosure: I don’t own Compass shares.
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