Compass points to job cuts as it defers trial readouts

Shares in psychedelic drug developer Compass Pathways are sliding today after it announced that it will slash its headcount by 30% and focus all its efforts on its treatment-resistant depression (TRD) candidate.

In its third-quarter results update, Compass also caused jitters amongst its investors as it revealed that it will shift the data readout for phase 3 trials of the psilocybin-based COMP360 therapy until after the 26-week time point "as a result of the increased regulatory scrutiny on functional unblinding."

That decision – which follows the FDA's rejection of Lykos' MDMA-based drug midomafetamine for post-traumatic stress disorder (PTSD) with reference to the functional unblinding issue – is thought to have contributed to pressure on Compass' share price, which was down 16% at the time of writing.

Functional unblinding refers to treatments whose effects are almost impossible to mistake, so people who are assigned them in studies will likely know if they received the active study drug rather than a control. Compass said it would defer data release until the blinded portion of the study is completed for all patients "to protect against the risk of unblinding."

The FDA's decision on Lykos' drug has raised serious concerns about the future of psychedelic treatments and their path to regulatory approval.

"Ensuring the success of our lead COMP360 programme is our absolute priority," said Compass' chief executive, Kabir Nath, in the company's third-quarter statement, adding that he remains "confident that COMP360 can be an effective therapy for patients with serious mental illness."

The decision to reduce the company's workforce and pause other pipeline activities to focus entirely on COMP360 has been forced by the changed timeline for the pivotal trial, according to Nath, who said the cutbacks are "necessary strategic decisions that we believe will position the COMP360 programme for success."

A phase 2 trial of the drug reported in 2022 showed that a single administration of the drug in tandem with psychotherapy achieved a response rate of 40% for the highest dose tested (25mg) in TRD patients, compared to 10% for the control group.

The subjects in the trial had severe TRD, with symptoms of depression persisting despite being previously treated with between two and four antidepressant therapies.

The phase 3 COMP005 and COMP006 trials are now expected to read out in the second quarter of 2025 and the second half of 2026, respectively, introducing a significant delay to the programme.

Compass recorded a net loss of $38.5 million in the third quarter, with R&D expenses of almost $33 million, with cash reserves standing at $207 million at the end of the period.