London-based COMPASS Pathways, a biotech company that accelerates patient access to evidence-based innovation in mental health, announced on Wednesday, August 16, that it has secured $285M (nearly €261.89M) in private funding.
The company entered a securities purchase agreement with healthcare specialist investors for the funding and will issue 16.1 million American Depositary Shares (ADSs) and accompanying warrants with a purchase price of around $7.78 per ADS.
The warrants allow the purchase of up to the same number of ADSs at an exercise price of $9.93 each, representing a 30 per cent premium. The deal is expected to close on August 18, 2023.
Investors in this round
The investment was led by TCGX and Aisling Capital.
New and existing institutional investors Vivo Capital, RA Capital, Surveyor Capital (a Citadel company), Paradigm BioCapital Advisors LP, Soleus Capital, Armistice Capital, Logos Capital, PFM Health Sciences, and Laurion Capital Management also participated in the round.
Kabir Nath, CEO of COMPASS Pathways, says, “We are grateful for the support of this group of leading healthcare investors for our work to bring potentially transformative treatment for mental health conditions to patients urgently in need of better options.”
“We thank these investors for their confidence in our rigorous approach to building a strong base of evidence for the potential of COMP360 psilocybin treatment to help people with treatment-resistant depression (TRD), post-traumatic stress disorder and anorexia nervosa,” adds Nath.
Capital utilisation
COMPASS Pathways says it will use the funds to support its phase 3 clinical programme for treatment-resistant depression, commercial planning, phase 2 trials, digital technology development, and research, covering expenses until around late 2025.
“We expect that the net proceeds will allow us to advance our pivotal phase 3 programme in TRD and achieve important milestones in the development of COMP360. We view this investment as a validation of the potential of psychedelic medicine and the importance of a rigorous and evidence-based approach,” adds Nath.
Transaction Overview
COMPASS Pathways is engaging in a private placement that will bring in about $125M (before expenses). If investors fully exercise the accompanying Warrants, an additional $160M could be raised. The Warrants can be exercised over three years.
The securities, including ADSs underlying Warrants, in the private placement have not been registered under the Securities Act of 1933 or state securities laws. They can’t be sold in the US unless through a registered statement or exemption.
The company says it will submit a registration statement to the US Securities and Exchange Commission (SEC) to register the resale of ADSs from the private placement and ADSs from Warrant exercises.
About COMPASS Pathways
Founded in 2016, COMPASS Pathways is a biotech company dedicated to advancing mental health solutions.
The company focuses on innovating psilocybin therapy with its proprietary synthetic psilocybin, COMP360, coupled with psychological support, aiming to assist individuals who don’t benefit from current treatments.
COMPASS Pathways claims that COMP360 has earned Breakthrough Therapy status from the US Food and Drug Administration (FDA) and Innovative Licensing and Access Pathway (ILAP) designation in the UK for treatment-resistant depression.
The company has begun the largest-ever phase 3 clinical programme for COMP360 psilocybin therapy in treatment-resistant depression (TRD), employing a randomised, controlled, double-blind approach.
Previously, COMPASS Pathways conducted a phase 2b study showing significant improvement in depressive symptoms with a 25mg dose of COMP360 psilocybin and psychological support.
They are also conducting phase 2 trials for COMP360 psilocybin therapy in post-traumatic stress disorder (PTSD) and anorexia nervosa.
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