Compass Pathways Streamlines Operations with Workforce Reduction and Shift in Research Focus

Compass Pathways (NASDAQ: CMPS) has announced plans to reduce its workforce by approximately 30% and halt early-stage research programs, as the company intensifies its focus on the late-stage development of its lead candidate, the COMP360 psilocybin therapy.

The London-based mental health company revealed its restructuring strategy alongside its third-quarter financial results, which highlighted an increased net loss of $38.5 million, up from $33.4 million in the same period last year. The job reductions, which will include cuts to certain senior management roles, underscore Compass’s intent to allocate maximum resources toward the advancement of COMP360, according to a Thursday statement from the company.

“Our absolute priority is ensuring the success of the COMP360 program,” stated CEO Kabir Nath. “The adjusted timeline for our Phase 3 pivotal program required us to reevaluate our operations to ensure every resource is directed toward this critical goal.”

Compass has set a new timeline for its COMP360 program, with initial Phase 3 results anticipated by the second quarter of 2025. Additionally, results from another late-stage trial, COMP006, are now expected in the latter half of 2026.

The company cited heightened “regulatory scrutiny” regarding the maintenance of blinding in psychedelic trials as a reason for the delay, stating it will now hold off on data release until after a 26-week follow-up period to uphold trial integrity.

The strategic restructuring comes on the heels of positive analyst feedback, including a report from RBC Capital Markets in July which initiated coverage of Compass with an “Outperform” rating and a price target of $23. Analyst Leonid Timashev noted the program’s potential peak revenue of $2.3 billion, supported by a “high likelihood of a positive Phase 3 readout.”

Founded in 2016, Compass was an early pioneer among psychedelic drug developers, becoming publicly traded on the Nasdaq in 2020. Over the past year, the company has experienced significant shifts, including the departure of its co-founders from the board as Compass transitioned from a founder-led to a late-stage biotech company.

Recent filings detail additional structural changes, including a share sale by co-founder George Goldsmith to fellow former co-founder Lars Wilde. This sale of 776,565 shares, part of a pre-established call option arrangement from 2020, was finalized in late October. Goldsmith’s spouse, Dr. Ekaterina Malievskaia, also sold an equivalent number of shares through an indirect transaction. Goldsmith retains over 3 million shares in Compass, despite stepping away from board responsibilities in March.

In September, Compass named Gino Santini as board chairman, following the appointment of Lori Englebert as chief commercial officer in July, both moves aimed at strengthening its leadership for the final stages of COMP360’s development.

Compass is operating in an increasingly competitive landscape, with rivals such as Cybin Inc. (NYSE: CYBN) and the nonprofit Usona Institute, which recently launched its own Phase 3 trial for psilocybin in major depressive disorder. Despite Compass’s primary focus on depression, the company is also exploring potential applications for COMP360 in treating post-traumatic stress disorder and anorexia nervosa. However, with the new restructuring plan, Compass will pause all non-COMP360 preclinical work.

R&D expenses for the third quarter rose significantly to $32.9 million from $21.5 million in the prior year, primarily due to increased clinical trial activity. The company reported $207 million in cash and cash equivalents as of September 30, an amount expected to sustain operations into 2026.

Compass Pathways’ stock saw a decline of over 30% in early trading following the announcements.