Executive Summary / Key Takeaways

• Differentiated Bispecific Pipeline: Compass Therapeutics (NASDAQ:CMPX) is a clinical-stage oncology biopharmaceutical company focused on developing proprietary bispecific antibodies that target critical pathways in the tumor microenvironment, including angiogenesis and immune checkpoints, offering a potentially more potent approach than traditional monotherapies.
• Positive Clinical Momentum: The company recently reported significant clinical progress, with its lead candidate, tovecimig, meeting the primary endpoint in a Phase 2/3 BTC study (17.1% ORR vs. 5.3% for paclitaxel alone, p=0.031), and CTX-8371 showing deep responses in its Phase 1 study for NSCLC and TNBC.
• Extended Financial Runway: A recently priced $120 million public offering, combined with existing cash, cash equivalents, and marketable securities of $101 million as of June 30, 2025, is expected to fund operations into 2027, providing crucial capital for advancing its pipeline through key milestones.
• Upcoming Catalysts: Investors should closely watch for the overall survival (OS) and progression-free survival (PFS) analyses for tovecimig in Q1 2026, the initiation of CTX-8371 cohort expansions in Q4 2025 with data in 2026, and the IND submission for CTX-10726 in Q4 2025, also with clinical data expected in 2026.
• High-Risk, High-Reward Profile: As a clinical-stage company with no product revenue, CMPX faces substantial R&D costs, intense competition from larger pharmaceutical companies, and regulatory uncertainties, but its innovative pipeline and recent clinical successes present significant upside potential.

The Genesis of a Targeted Oncology Strategy

Compass Therapeutics, founded in 2014, emerged with a clear vision: to revolutionize cancer treatment through a deep understanding of the tumor microenvironment. The company's scientific foundation rests on the intricate interplay between angiogenesis (the formation of new blood vessels) and the immune system, recognizing these as critical pathways for effective anti-tumor responses. This foundational strategy has guided its development of proprietary antibody-based therapeutics, designed to modulate microvasculature, induce potent immune responses, and alleviate immunosuppressive mechanisms employed by tumors.

From its early collaboration with Adimab, LLC in 2014 for antibodies like CTX-471, to its 2018 exclusive global license agreement with ABL Bio for tovecimig, Compass has strategically built a pipeline aimed at differentiated, multi-pronged attacks on cancer. This approach positions Compass as an innovator in the highly competitive oncology biopharmaceutical landscape, where it seeks to carve out a niche against established giants like Merck & Co., Inc. (MRK), Bristol-Myers Squibb Company (BMY), and AstraZeneca PLC (AZN). While these larger players boast extensive commercialized portfolios and robust R&D budgets, Compass's agility and focused development on novel bispecific antibodies represent its core competitive advantage.

Technological Edge: Bispecifics and Combination Therapies

Compass Therapeutics' investment thesis is fundamentally tied to its differentiated technology, particularly its bispecific antibody platform. These engineered antibodies are designed to simultaneously target two distinct biological pathways, offering a potentially more comprehensive and potent therapeutic effect than traditional monoclonal antibodies that target a single pathway. This multi-target approach is critical in oncology, where tumors often employ redundant mechanisms to evade treatment.

The company's lead product candidate, tovecimig (DLL4 x VEGF-A bispecific antibody), exemplifies this strategy. It targets both Delta-like ligand 4 (DLL4) and vascular endothelial growth factor A (VEGF-A). The simultaneous blockade of these pathways is known to convert productive angiogenesis, which feeds tumors, into non-productive angiogenesis, leading to tumor shrinkage and apoptosis. This mechanism offers a distinct advantage by disrupting the tumor's blood supply while also potentially sensitizing it to other therapies.

Another key asset is CTX-471, an agonistic antibody targeting CD137 (TNFRSF9), a co-stimulatory receptor on activated T-cells and NK cells. Activating CD137 can significantly boost the immune system's ability to attack cancer cells. Preclinical data presented at AACR demonstrated that combining CTX-471 with tovecimig enhanced efficacy in checkpoint-refractory models, where conventional immune checkpoint inhibitors show reduced activity. Mechanistically, this combination appears to enhance inflammasome activation, pyroptosis, and interferon-mediated signaling, offering a strategic path to treat patients who have failed prior immune checkpoint therapies.

In the competitive immune-oncology space, Compass is developing CTX-8371 (PD-1 x PD-L1 bispecific antibody), directly engaging two validated immune checkpoint targets. Furthermore, CTX-10726 (PD-1 x VEGF-A bispecific antibody), currently in IND-enabling studies, represents a significant technological differentiator. Preclinical studies showed CTX-10726 demonstrated superiority in both PD-1 potency and anti-tumor response compared to ivonescimab in mouse models. This head-to-head preclinical advantage highlights the potential for a best-in-class profile. The in-house discovery of CTX-10726, leveraging existing components from tovecimig and CTX-8371, has also enabled the company to achieve commercial-scale manufacturing yields early in the development process, an operational benefit that could accelerate its path to market.

The "so what" for investors is clear: these technological differentiators aim to create a competitive moat by developing therapies that are potentially more effective, especially in difficult-to-treat or resistant cancers. By addressing multiple pathways simultaneously or enhancing immune responses in novel ways, Compass seeks to command premium pricing and capture significant market share in specific oncology indications, driving future revenue growth and improved margins.

Clinical Progress and Operational Momentum

Compass Therapeutics has demonstrated tangible progress in advancing its pipeline, translating its scientific focus into meaningful clinical milestones. The most recent quarter, ending June 30, 2025, brought forth critical updates that underscore the company's operational effectiveness.

The lead product candidate, tovecimig, achieved a significant milestone in its Phase 2/3 study for advanced biliary tract cancer (BTC). The study met its primary endpoint, with tovecimig in combination with paclitaxel achieving a 17.1% overall response rate (ORR), including one complete response and three additional patients with 100% reduction in target tumor burden. This compared favorably to a 5.3% ORR for paclitaxel alone (p=0.031), demonstrating a statistically significant improvement. Furthermore, the progressive disease (PD) rates were notably lower in the combination arm (16.2% vs. 42.1% for paclitaxel alone), and fewer deaths have been observed than originally modeled, suggesting a potential positive impact on overall survival (OS). This clinical validation is a crucial de-risking event for tovecimig.

Beyond tovecimig, the company's broader pipeline is also gaining traction. The Phase 1 dose-escalation study for CTX-8371 has yielded promising early results, with two deep responses observed: one non-small cell lung cancer (NSCLC) patient achieved complete resolution of all measurable target tumor lesions, and one triple-negative breast cancer (TNBC) patient experienced over 90% reduction in target tumor lesions. These early signals support the planned initiation of cohort expansions in NSCLC and TNBC in Q4 2025.

CTX-471 continues its Phase 1b clinical trial in solid tumors that have progressed after PD-1 or PD-L1 inhibitors, with initial monotherapy results showing partial responses in melanoma, small cell lung cancer, and mesothelioma, alongside a generally well-tolerated safety profile. The preclinical data supporting its combination with tovecimig further expands its potential.

Financial Health and Strategic Capitalization

As a clinical-stage biopharmaceutical company, Compass Therapeutics operates with significant research and development expenses and has not yet generated revenue from product sales. For the three months ended June 30, 2025, the company reported a net loss of $19.9 million, an increase from $13.1 million in the same period of 2024. The net loss for the six months ended June 30, 2025, was $36.5 million, compared to $23.9 million in the prior year period. This reflects the substantial investment required to advance its pipeline, with an accumulated deficit reaching $401.2 million as of June 30, 2025.

Research and development expenses saw a notable increase, rising by $5.2 million (47%) to $16.4 million for the three months ended June 30, 2025, and by $8.8 million (42%) to $29.5 million for the six-month period. This surge was primarily driven by increased manufacturing expenses for tovecimig and CTX-10726, indicating active progression of these programs. General and administrative expenses remained stable quarter-over-quarter but increased by $1.6 million (20%) to $9.6 million for the six months, mainly due to share-based compensation.

Despite these losses, Compass has consistently funded its operations through equity financings. Through June 30, 2025, the company had raised $430 million in gross proceeds from equity sales. As of June 30, 2025, Compass held $101 million in cash, cash equivalents, and marketable securities. Critically, the company announced the pricing of an upsized $120 million public offering on August 12, 2025, shortly after its Q2 earnings report. This significant capital infusion is expected to extend the company's cash runway into 2027, providing essential funding to reach upcoming clinical and operational milestones without immediate dilution concerns. This strategic capitalization is vital for a company at this stage, allowing it to continue its aggressive R&D efforts.

Outlook, Catalysts, and Inherent Risks

The immediate future for Compass Therapeutics is rich with potential catalysts. For tovecimig, the market awaits the crucial overall survival (OS) and progression-free survival (PFS) analyses from the BTC study, now expected in Q1 2026. These data will be pivotal in determining the full clinical benefit and regulatory path for the drug. For CTX-8371, the planned initiation of cohort expansions in NSCLC and TNBC in Q4 2025, with data expected in 2026, represents another significant opportunity to validate its early promise. The detailed results from the Phase 1 dose-escalation study are also anticipated at a medical meeting in Q4 2025. Furthermore, the IND submission for CTX-10726 in Q4 2025, followed by expected clinical data in 2026, could introduce a highly differentiated bispecific into the clinic, building on its preclinical superiority to ivonescimab.

However, investing in a clinical-stage biopharmaceutical company like Compass Therapeutics carries inherent risks. The company operates in an environment of rapid technological change and substantial competition. While its bispecific approach offers differentiation, it competes with well-established players like Merck, Bristol-Myers Squibb, and AstraZeneca, who possess vast resources, commercial infrastructures, and diversified pipelines. These larger competitors often benefit from economies of scale in R&D and manufacturing, potentially leading to more efficient development cycles.

Specific risks include the high cost and uncertainty of clinical development, where trials can fail or be delayed, impacting timelines and financial projections. Regulatory approvals are never guaranteed, and even successful products face market acceptance challenges. The company will require substantial additional funding beyond its current runway to complete clinical development, pay developmental milestones, and eventually commercialize any approved product candidates. Moreover, adverse global economic conditions, supply chain weaknesses, and governmental actions on drug pricing, such as Executive Orders aiming to reduce drug costs, could negatively impact future revenue and profitability.

Conclusion

Compass Therapeutics stands at a critical juncture, poised to potentially transform oncology treatment with its innovative bispecific antibody pipeline. The recent positive clinical data for tovecimig in biliary tract cancer, coupled with promising early responses for CTX-8371 and the preclinical superiority of CTX-10726, underscore the potential of its differentiated technological approach. The successful $120 million public offering significantly bolsters its financial runway, providing the necessary capital to advance these programs through a series of high-impact clinical milestones expected in late 2025 and 2026.

While the path forward in biopharmaceutical development is fraught with challenges, including intense competition and the inherent risks of clinical trials, Compass's strategic focus on multi-pathway targeting and its demonstrated ability to progress novel candidates offer a compelling narrative for investors. The company's ability to execute on its upcoming clinical readouts and leverage its technological leadership will be paramount in establishing its competitive position and realizing the long-term value embedded in its pipeline. Investors with a high-risk tolerance and a long-term view may find CMPX an intriguing opportunity as it moves closer to potentially bringing new, effective therapies to patients.