Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2023 | Jul. 31, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-39522 | |
Entity Registrant Name | COMPASS Pathways plc | |
Entity Incorporation, State or Country Code | X0 | |
Entity Address, Address Line One | 33 Broadwick Street | |
Entity Address, City or Town | London | |
Entity Address, Postal Zip Code | W1F 0DQ | |
Entity Address, Country | GB | |
City Area Code | 716 | |
Local Phone Number | 676-6461 | |
Title of 12(b) Security | American Depositary Shares, each representing one ordinary share, par value of £0.008 per share | |
Trading Symbol | CMPS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 45,783,171 | |
Entity Central Index Key | 0001816590 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 148,234 | $ 143,206 |
Restricted cash | 251 | 175 |
Prepaid income tax | 0 | 575 |
Prepaid expenses and other current assets | 45,116 | 47,695 |
Total current assets | 193,601 | 191,651 |
NON-CURRENT ASSETS: | ||
Investment | 469 | 469 |
Property and equipment, net | 482 | 617 |
Operating lease right-of-use assets | 4,784 | 2,006 |
Deferred tax assets | 3,054 | 2,224 |
Long-term prepaid expenses and other assets | 7,444 | 327 |
Total assets | 209,834 | 197,294 |
CURRENT LIABILITIES: | ||
Accounts payable | 1,982 | 4,761 |
Accrued expenses and other liabilities | 8,617 | 9,325 |
Operating lease liabilities - current | 2,176 | 1,510 |
Total current liabilities | 12,775 | 15,596 |
NON-CURRENT LIABILITIES | ||
Long-term debt | 28,124 | 0 |
Operating lease liabilities - non-current | 2,539 | 418 |
Total liabilities | 43,438 | 16,014 |
Commitments and contingencies (Note 11) | ||
SHAREHOLDERS' EQUITY: | ||
Additional paid-in capital | 496,342 | 458,825 |
Accumulated other comprehensive loss | (16,728) | (16,867) |
Accumulated deficit | (313,689) | (261,146) |
Total shareholders' equity | 166,396 | 181,280 |
Total liabilities and shareholders' equity | 209,834 | 197,294 |
Ordinary shares | ||
SHAREHOLDERS' EQUITY: | ||
Ordinary and deferred shares | 471 | 440 |
Deferred shares | ||
SHAREHOLDERS' EQUITY: | ||
Ordinary and deferred shares | $ 0 | $ 28 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - £ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
Ordinary shares | ||
Shares, par value (in GBP per share) | £ 0.008 | £ 0.008 |
Shares, authorized (in shares) | 45,760,250 | 42,631,794 |
Shares, issued (in shares) | 45,760,250 | 42,631,794 |
Shares, outstanding (in shares) | 45,760,250 | 42,631,794 |
Deferred shares | ||
Shares, par value (in GBP per share) | £ 21,921.504 | £ 21,921.504 |
Shares, authorized (in shares) | 0 | 1 |
Shares, issued (in shares) | 0 | 1 |
Shares, outstanding (in shares) | 0 | 1 |
Condensed Statements of Operati
Condensed Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
OPERATING EXPENSES: | ||||
Research and development | $ 19,818 | $ 15,920 | $ 38,853 | $ 31,282 |
General and administrative | 12,846 | 11,336 | 25,599 | 21,394 |
Total operating expenses | 32,664 | 27,256 | 64,452 | 52,676 |
LOSS FROM OPERATIONS: | (32,664) | (27,256) | (64,452) | (52,676) |
OTHER INCOME, NET: | ||||
Other income, net | 627 | 240 | 1,336 | 374 |
Foreign exchange gains | 1,376 | 1,958 | 4,061 | 3,291 |
Benefit from R&D tax credit | 2,520 | 4,077 | 6,836 | 6,999 |
Total other income, net | 4,523 | 6,275 | 12,233 | 10,664 |
Loss before income taxes | (28,141) | (20,981) | (52,219) | (42,012) |
Income tax expense | (194) | (56) | (324) | (196) |
Net loss | (28,335) | (21,037) | (52,543) | (42,208) |
Other comprehensive (loss) income: | ||||
Foreign exchange translation adjustment | 717 | (17,134) | 139 | (24,327) |
Comprehensive loss | $ (27,618) | $ (38,171) | $ (52,404) | $ (66,535) |
Net loss per share attributable to ordinary shareholders - basic (in dollars per share) | $ (0.62) | $ (0.50) | $ (1.19) | $ (1) |
Net loss per share attributable to ordinary shareholders - diluted (in dollars per share) | $ (0.62) | $ (0.50) | $ (1.19) | $ (1) |
Weighted average ordinary shares outstanding - basic (in shares) | 45,565,991 | 42,474,987 | 44,153,772 | 42,110,161 |
Weighted average ordinary shares outstanding - diluted (in shares) | 45,565,991 | 42,474,987 | 44,153,772 | 42,110,161 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Shareholders’ Equity $ in Thousands | USD ($) shares | COMMON STOCK USD ($) | ADDITIONAL PAID-IN CAPITAL USD ($) | ACCUMULATED OTHER COMPREHENSIVE (LOSS)/ INCOME USD ($) | ACCUMULATED DEFICIT USD ($) | Ordinary shares £ / shares shares | Ordinary shares COMMON STOCK USD ($) shares | Deferred shares £ / shares shares | Deferred shares COMMON STOCK USD ($) shares |
Shares, par value (in GBP per share) | £ / shares | £ 0.008 | £ 21,921.504 | |||||||
Beginning balance (in shares) at Dec. 31, 2021 | shares | 42,019,874,000 | 1,000 | |||||||
Beginning balance at Dec. 31, 2021 | $ 284,412 | $ 444,750 | $ 8,840 | $ (169,641) | $ 435 | $ 28 | |||
Exercise of share options (in shares) | shares | 376,158,000 | ||||||||
Exercise of share options | 397 | 393 | $ 4 | ||||||
Vesting of restricted stock units (in shares) | shares | 68,534,000 | ||||||||
Vesting of restricted stock units | 1 | $ 1 | |||||||
Share-based compensation expense | 3,128 | 3,128 | |||||||
Unrealized loss on foreign currency translation | (7,193) | (7,193) | |||||||
Net loss | (21,171) | (21,171) | |||||||
Ending balance (in shares) at Mar. 31, 2022 | shares | 42,464,566,000 | 1,000 | |||||||
Ending balance at Mar. 31, 2022 | 259,574 | 448,271 | 1,647 | (190,812) | $ 440 | $ 28 | |||
Beginning balance (in shares) at Dec. 31, 2021 | shares | 42,019,874,000 | 1,000 | |||||||
Beginning balance at Dec. 31, 2021 | 284,412 | 444,750 | 8,840 | (169,641) | $ 435 | $ 28 | |||
Exercise of share options (in shares) | shares | 431,855 | ||||||||
Vesting of restricted stock units (in shares) | shares | 12,763 | ||||||||
Net loss | (42,208) | ||||||||
Ending balance (in shares) at Jun. 30, 2022 | shares | 42,522,397,000 | 1,000 | |||||||
Ending balance at Jun. 30, 2022 | 224,585 | 451,453 | (15,487) | (211,849) | $ 440 | $ 28 | |||
Shares, par value (in GBP per share) | £ / shares | £ 0.008 | 21,921.504 | |||||||
Beginning balance (in shares) at Mar. 31, 2022 | shares | 42,464,566,000 | 1,000 | |||||||
Beginning balance at Mar. 31, 2022 | 259,574 | 448,271 | 1,647 | (190,812) | $ 440 | $ 28 | |||
Exercise of share options (in shares) | shares | 55,727,000 | ||||||||
Exercise of share options | 4 | 4 | |||||||
Vesting of restricted stock units (in shares) | shares | 2,104,000 | ||||||||
Share-based compensation expense | 3,178 | 3,178 | |||||||
Unrealized loss on foreign currency translation | (17,134) | (17,134) | |||||||
Net loss | (21,037) | (21,037) | |||||||
Ending balance (in shares) at Jun. 30, 2022 | shares | 42,522,397,000 | 1,000 | |||||||
Ending balance at Jun. 30, 2022 | 224,585 | 451,453 | (15,487) | (211,849) | $ 440 | $ 28 | |||
Shares, par value (in GBP per share) | £ / shares | 0.008 | 21,921.504 | |||||||
Shares, par value (in GBP per share) | £ / shares | £ 0.008 | £ 21,921.504 | |||||||
Beginning balance (in shares) at Dec. 31, 2022 | shares | 42,631,794 | 42,631,794,000 | 1 | 1,000 | |||||
Beginning balance at Dec. 31, 2022 | 181,280 | 458,825 | (16,867) | (261,146) | $ 440 | $ 28 | |||
Exercise of share options (in shares) | shares | 3,790,000 | ||||||||
Issuance of ordinary shares under ATM offering, net of issuance costs (in shares) | shares | 113,420,000 | ||||||||
Issuance of ordinary shares under ATM facility, net of issuance costs | 1,188 | 1,187 | $ 1 | ||||||
Vesting of restricted stock units (in shares) | shares | 30,481,000 | ||||||||
Vesting of restricted stock units | 0 | (1) | $ 1 | ||||||
Shares tendered for withholding taxes | (109) | (109) | |||||||
Share-based compensation expense | 4,071 | 4,071 | |||||||
Unrealized loss on foreign currency translation | (578) | (578) | |||||||
Net loss | (24,208) | (24,208) | |||||||
Ending balance (in shares) at Mar. 31, 2023 | shares | 42,779,485,000 | 1,000 | |||||||
Ending balance at Mar. 31, 2023 | 161,644 | 463,973 | (17,445) | (285,354) | $ 442 | $ 28 | |||
Beginning balance (in shares) at Dec. 31, 2022 | shares | 42,631,794 | 42,631,794,000 | 1 | 1,000 | |||||
Beginning balance at Dec. 31, 2022 | $ 181,280 | 458,825 | (16,867) | (261,146) | $ 440 | $ 28 | |||
Exercise of share options (in shares) | shares | 128,869 | 128,869 | |||||||
Vesting of restricted stock units (in shares) | shares | 29,220 | ||||||||
Net loss | $ (52,543) | ||||||||
Ending balance (in shares) at Jun. 30, 2023 | shares | 45,760,250 | 45,760,250,000 | 0 | 0 | |||||
Ending balance at Jun. 30, 2023 | 166,396 | 496,342 | (16,728) | (313,689) | $ 471 | $ 0 | |||
Shares, par value (in GBP per share) | £ / shares | £ 0.008 | £ 21,921.504 | |||||||
Beginning balance (in shares) at Mar. 31, 2023 | shares | 42,779,485,000 | 1,000 | |||||||
Beginning balance at Mar. 31, 2023 | 161,644 | 463,973 | (17,445) | (285,354) | $ 442 | $ 28 | |||
Exercise of share options (in shares) | shares | 125,079,000 | ||||||||
Exercise of share options | 1 | $ 1 | |||||||
Issuance of ordinary shares under ATM offering, net of issuance costs (in shares) | shares | 2,824,202,000 | ||||||||
Issuance of ordinary shares under ATM facility, net of issuance costs | 26,932 | 26,904 | $ 28 | ||||||
Vesting of equity awards under the employee purchase plan (in shares) | shares | 23,843,000 | ||||||||
Vesting of equity awards under the employee purchase plan | 189 | 189 | |||||||
Cancellation of deferred share (in shares) | shares | (1,000) | ||||||||
Cancellation of deferred share | 0 | 28 | $ (28) | ||||||
Issuance of warrant to purchase ordinary shares | 687 | 687 | |||||||
Vesting of restricted stock units (in shares) | shares | 7,641,000 | ||||||||
Share-based compensation expense | 4,561 | 4,561 | |||||||
Unrealized loss on foreign currency translation | 717 | 717 | |||||||
Net loss | (28,335) | (28,335) | |||||||
Ending balance (in shares) at Jun. 30, 2023 | shares | 45,760,250 | 45,760,250,000 | 0 | 0 | |||||
Ending balance at Jun. 30, 2023 | $ 166,396 | $ 496,342 | $ (16,728) | $ (313,689) | $ 471 | $ 0 | |||
Shares, par value (in GBP per share) | £ / shares | £ 0.008 | £ 21,921.504 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (52,543) | $ (42,208) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 158 | 147 |
Loss on disposal of property and equipment | 46 | 0 |
Non-cash (loss)/gain on foreign currency remeasurement | (2,251) | 2,174 |
Non-cash share-based compensation | 8,632 | 6,306 |
Non-cash lease expenses | 1,018 | 1,078 |
Changes in operating assets and liabilities | ||
Prepaid expenses and other current assets | 4,662 | (5,461) |
Deferred and prepaid tax assets | (255) | (896) |
Long-term prepaid expenses and other assets | (7,099) | (409) |
Operating lease liabilities | (955) | (1,049) |
Accounts payable | (2,899) | 1,115 |
Accrued expenses and other liabilities | (1,050) | (1,925) |
Net cash used in operating activities | (52,536) | (41,128) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (48) | (494) |
Proceeds from disposal of property and equipment | 2 | 0 |
Net cash used in investing activities | (46) | (494) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of ordinary shares, net of issuance costs | 28,120 | 0 |
Payments of tax withholding on stock award | (109) | 0 |
Net proceeds from issuance of long term debt | 29,585 | 0 |
Payment of issuance cost of long term debt | (778) | 0 |
Proceeds from exercise of share options | 1 | 401 |
Net cash provided by financing activities | 57,008 | 402 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 678 | (24,846) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 5,104 | (66,066) |
Cash, cash equivalents and restricted cash, beginning of the period | 143,381 | 273,347 |
Cash, cash equivalents and restricted cash, end of the period | 148,485 | 207,281 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Right of use assets obtained in exchange for new operating lease liabilities | 3,645 | 822 |
Issuance of warrants together with the long-term debt | 687 | 0 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | ||
Cash and cash equivalents | 148,234 | 207,177 |
Restricted cash | 251 | 104 |
Total cash, cash equivalents and restricted cash | 148,485 | 207,281 |
Employee stock | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of shares under the employee share purchase plan and vesting of restricted share units | 189 | 0 |
Restricted Stock Units (RSUs) | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of shares under the employee share purchase plan and vesting of restricted share units | $ 0 | $ 1 |
Nature of Business
Nature of Business | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | Nature of Business COMPASS Pathways plc, or the Company, is a biotechnology company dedicated to accelerating patient access to evidence-based innovation in mental health. The Company is developing its investigational COMP360 psilocybin treatment through late-stage clinical trials in Europe and North America for patients with treatment-resistant depression. The Company is subject to risks and uncertainties common to clinical stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary intellectual property and technology, compliance with government regulations and the ability to secure additional capital to fund operations. Therapeutic candidates currently under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s therapeutic development efforts are successful, it is uncertain when, if ever, the Company will realize revenue from sales. The Company has funded its operations primarily with proceeds from the sale of its convertible preferred shares, the issuance of convertible notes, and through the sale of American Depository Shares, or ADSs, in connection with the Company’s initial public offering, or the IPO, in September 2020, and its May 2021 follow-on offering. On October 8, 2021, the Company entered into a Sales Agreement with Cowen and Company, LLC, or Cowen, under which the Company may issue and sell from time to time up to $150.0 million of its ADSs, each representing one ordinary share, through Cowen as the sales agent. Sales of the Company’s ADSs, if any, will be made at market prices. Through June 30, 2023, the Company sold 2,982,038 ADSs, resulting in $28.6 million in net proceeds. On June 30, 2023 (the “Effective Date”), the Company entered into a Loan Agreement with Hercules, which provided for aggregate maximum borrowings of up to $50.0 million, consisting of (i) a term loan of $30.0 million, which was funded on the Effective Date, (ii) subject to the Company achieving certain performance milestones and available until December 15, 2024, an additional term loan of $10.0 million, and (iii) subject to the approval of Hercules’ investment committee in its sole discretion, and available during the interest-only period, as described in the Loan Agreement, an additional term loan of $10.0 million. The Loan Agreement includes a financial covenant requiring the Company to maintain a minimum level of $22.5 million of cash during the period commencing on January 1, 2024, of which the initial commencement date is subject to adjustment if certain performance milestones are met. If the Company meets the performance milestones, the minimum cash covenant will not apply if its market capitalization is at least $750.0 million. The Company has incurred recurring losses since its inception, including net losses of $52.5 million and $42.2 million for the six months ended June 30, 2023 and 2022, respectively. In addition, as of June 30, 2023, the Company had an accumulated deficit of $313.7 million. The Company expects to continue to generate operating losses for the foreseeable future. The Company believes the cash and cash equivalents on hand as of June 30, 2023 of $148.2 million will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next twelve months, including progressing its Phase 3 clinical program, its Phase 2 studies in anorexia nervosa and PTSD and costs associated with operating as a public company. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. We will need substantial additional funding to complete the development and commercialization of our Phase 3 clinical program, and our Phase 2 studies in anorexia nervosa and PTSD. Further, changing circumstances, some of which may be beyond our control, such as fluctuating inflation and interest rates, could cause us to consume capital significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned. The Company’s inability to raise capital as and when needed could have a negative impact on its financial condition and ability to pursue its business strategies. There can be no assurance that the current operating plan will be achieved or that additional funding will be available on terms acceptable to the Company, or at all. The future viability of the Company is dependent on its ability to raise additional capital to finance its operations. The Company may raise additional capital through a combination of equity offerings, debt financings, collaborations, and other strategic transactions, including marketing, distribution or licensing arrangements. There can be no assurance that additional funding will be available on terms acceptable to the Company, on a timely basis or at all. The failure of the Company to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Company’s business, results of operations, and financial conditions. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, or U.S. GAAP. The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements as of and for the year ended December 31, 2022, and, in the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2023, the results of its operations and comprehensive loss for the three months and six months ended June 30, 2023 and 2022 and its cash flows for the six months ended June 30, 2023 and 2022. The results for the three months and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, any other interim periods, or any future years or periods. These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2022, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K that was filed with the SEC, on February 28, 2023. The condensed consolidated balance sheet at December 31, 2022, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated on consolidation. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of income and expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, the prepayment and accrual for research and development expenses, share-based compensation and the research and development tax credit. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ materially from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments that have maturities of three months or less when acquired to be cash equivalents. The Company does not currently have any material cash equivalents. Restricted Cash Restricted cash as of June 30, 2023 and December 31, 2022 represents a collateral deposit for employee credit cards. Investment The investment does not have readily determinable fair value and it is carried at cost, less impairment, adjusted for subsequent changes to estimated fair value up to the original cost, in circumstances where the Company does not have the ability to exercise significant influence or control over the operating and financial policies of the investee. Concentration of Credit Risk Financial instruments that subject the Company to credit risk consist primarily of cash and cash equivalents. The Company places cash and cash equivalents in diversified and established financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. The Company has cash and cash equivalents in excess of the FDIC insured limit. The Company has no significant off-balance-sheet risk or concentration of credit risk, such as foreign exchange contracts, options contracts, or other foreign hedging arrangements. Property and Equipment Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the respective assets, which are as follows: Estimated Useful Life Lab equipment 5 years Office equipment 3-5 years Furniture and fixtures 3 years Leasehold improvements Shorter of useful life or remaining lease term Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the condensed consolidated statements of operations and comprehensive loss. Expenditures for repairs and maintenance are charged to expense as incurred. Impairment of Long-Lived Assets The Company evaluates assets for potential impairment when events or changes in circumstances indicate the carrying value of the assets may not be recoverable. Recoverability is measured by comparing the book values of the assets to the expected future net undiscounted cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the book values of the assets exceed their fair value. The Company has not recognized any impairment losses or had triggering events related to its underlying assets for the six months ended June 30, 2023. Segment Information Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker in deciding how to allocate resources and assess performance. The Company and the Company’s chief operating decision maker, the Company’s Chief Executive Officer, view the Company’s operations and manage its business as a single operating segment; however, the Company operates in two geographic regions: the United Kingdom, or UK, and the United States. The Company’s fixed assets are primarily located in the UK. The Company’s singular concentration is focused on accelerating patient access to evidence-based innovation in mental health. Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred in performing research and development activities, including salaries, share-based compensation and benefits, travel, and external costs of outside vendors engaged to conduct clinical development activities, clinical trials and the cost to manufacture clinical trial materials. Research Contract Costs, Prepayments and Accruals The Company has entered into various research and development-related contracts with research institutions and other companies. These agreements are generally cancellable, and related payments are recorded as research and development expenses as incurred. The Company records prepayments and accruals for estimated ongoing research costs and receives updated estimates of costs and amounts owed on a monthly basis from its third-party service providers. When evaluating the adequacy of the prepayments and accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted cost estimates from third-party service providers. Estimates are made in determining the prepaid and accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates. The Company’s historical prepayments and accrual estimates have not been materially different from the actual costs. Share-Based Compensation The Company accounts for all share-based payment awards granted to employees and non-employees as share-based compensation expense at fair value. The Company grants equity awards under its share-based compensation programs, which may include share options and restricted share units. The measurement date for employee and non-employee awards is the date of grant, and share-based compensation costs are recognized as an expense over the requisite service period, which is the vesting period, on a straight-line basis. Share-based compensation expense is classified in the accompanying condensed consolidated statements of operations and comprehensive loss based on the function to which the related services are provided. The Company recognizes share-based compensation expense for the portion of awards that have vested. Forfeitures are recorded as they occur. On October 1, 2021, the Company launched the Share Incentive Plan, or the SIP, and Employee Share Purchase Plan, or the ESPP, through which employees can purchase shares at a discounted price. The Company estimates the fair value of stock options and shares to be issued under the SIP and ESPP using the Black-Scholes option-pricing model on the date of grant. The fair value of shares to be issued under these plans are recognized and amortized on a straight-line basis over the purchase period, which is generally six months. There have been no performance conditions attached to the share options granted by the Company to date. The fair value of each share option grant is estimated on the date of grant using the Black-Scholes option pricing model. See Note 8 for the Company’s assumptions used in connection with option grants made during the periods covered by these condensed consolidated financial statements. Assumptions used in the option pricing model include the following: Expected volatility . The Company lacks sufficient company-specific historical and implied volatility information for its ordinary shares. Therefore, it estimates its expected share volatility based on the historical volatility of publicly traded peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded share price. Expected term. The expected term of the Company’s share options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. Risk-free interest rate . The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods that are approximately equal to the expected term of the award. Expected dividend. Expected dividend yield of zero is based on the fact that the Company has never paid cash dividends on ordinary shares and does not expect to pay any cash dividends in the foreseeable future. In addition, the Loan Agreement with Hercules currently prohibits dividends that may be declared or paid on our ordinary shares. Fair value of ordinary shares. The fair value of ordinary shares is determined by reference to the closing price of ADSs on the Nasdaq Global Select Market on the day prior to or day of the grant. Leases At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and current and non-current lease liabilities, as applicable. Entities may elect not to separate lease and non-lease components. The Company has elected to account for lease and non-lease components together as a single lease component for all underlying assets and to allocate all the contract consideration to the lease component only. All the Company’s leases are classified as operating leases. Lease liabilities and their corresponding right-of-use assets are initially recorded based on the present value of lease payments over the expected remaining lease term. Certain adjustments to the right-of-use asset may be required for items such as incentives received. The interest rate implicit in lease contracts has historically not been readily determinable. As a result, the Company utilizes its incremental borrowing rate to discount lease payments, which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. As the Company does not have a rating agency-based credit rating, quotes were obtained from lenders to establish an estimated secured rate to borrow based on Company and market-based factors as of the respective lease measurement dates. The Company has elected not to recognize leases with an original term of one year or less on the balance sheets. The Company typically only includes the non-cancelable lease term in its assessment of a lease arrangement unless there is an option to extend the lease that is reasonably certain of exercise. Prospectively, the Company will adjust the right-of-use assets for straight-line rent expense or any incentives received and remeasure the lease liability at the net present value using the same incremental borrowing rate that was in effect as of the lease commencement or transition date. Operating lease costs are recognized on a straight-line basis over the lease term, and they are categorized within research and development and general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss. The operating lease cash flows are categorized under net cash used in operating activities in the condensed consolidated statements of cash flows. Foreign Currency Translation The functional currency is the currency of the primary economic environment in which an entity’s operations are conducted. On January 1, 2023, COMPASS Pathways plc and its wholly owned subsidiary COMPASS Pathfinder Holdings Limited changed their functional currency to the U.S. dollar. COMPASS Pathways plc and COMPASS Pathfinder Holdings Limited have no operating activities and their primary functions are to serve as a financing vehicle to fund the operations of the Company’s operating entities, to serve as the listing company needed to access U.S. capital markets, and to hold investments. Therefore, its financing source is the primary indicator of its cash flows and its functional currency. The change in functional currency from the British Pound Sterling is due to a change in the source of the Company’s financing and cash flows going forward, which will now primarily be U.S. Dollars (“USD”). The functional currency of COMPASS Pathfinder Holdings Limited’s wholly owned non-U.S. subsidiary, COMPASS Pathfinder Limited, is British Pound Sterling and the functional currency of its U.S. subsidiary, COMPASS Pathways Inc. is USD. The functional currency of these subsidiaries is the same as the local currency. The translated balances of monetary and non-monetary assets and liabilities recorded in the reporting entity’s condensed consolidated financial statements as of the end of the prior reporting period become the new accounting basis for those assets and liabilities in the period of the change. To the extent that the distinct and separable operation has monetary assets and liabilities denominated in the old functional currency, such balances will create transaction gains and losses subsequent to the change in functional currency. The balance recorded in the cumulative translation adjustment account for prior periods is not reversed upon the change in functional currency. The Company translates the assets and liabilities of COMPASS Pathfinder Limited into USD at the exchange rate in effect on the balance sheet date. Income and expenses are translated at the average exchange rate in effect during the period. Unrealized translation gains and losses are recorded as a cumulative translation adjustment, which is included in the condensed consolidated statements of shareholders’ equity as a component of accumulated other comprehensive (loss)/income. Income Taxes The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the condensed consolidated financial statements or in its tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that deferred tax assets will be recovered in the future to the extent management believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. The Company accounts for uncertainty in income taxes in the condensed consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed as the amount of benefit to recognize in the condensed consolidated financial statements. The amount of benefit that may be used is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate, as well as the related net interest and penalties. As of June 30, 2023 and December 31, 2022, the Company has not identified any uncertain tax positions. The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying condensed consolidated statements of operations and comprehensive loss. As of June 30, 2023 and December 31, 2022 no accrued interest or penalties are included on the related tax liability line in the condensed consolidated balance sheets. Benefit from Research and Development Tax Credit As a company that carries out extensive research and development activities, the Company benefits from the UK research and development tax credit regime under the scheme for small or medium-sized enterprises, or SME. Under the SME regime, in effect through June 30, 2023, the Company is able to surrender some of its trading losses that arise from qualifying research and development activities for a cash rebate of a portion of such qualifying research and development expenditure. Up until April 1, 2023 the rate was 33.3% on in-house expenditures and 21.7% on work that was contracted out. From that point, the rates reduced to 18.6% and 12.1%, respectively. New rules were announced in the UK Parliament Finance Act 2023 for an enhanced rate of relief for loss making research intensive SMEs, which would be 27.0% for qualifying expenditure and 17.5% for qualifying subcontracted expenditure. The legislation is not yet final, and therefore the Company is unable to determine whether it would meet the criteria for the enhanced rate of relief until the legislation and more detailed guidance has been published. The Company meets the conditions of the SME regime. A large portion of costs relating to research and development, clinical trials and manufacturing activities are eligible for inclusion within these tax credit cash rebate claims. The Company is subject to corporate taxation in the UK. Due to the nature of the business, the Company has generated losses since inception. The benefit from research and development, or R&D, tax credits is recognized in the condensed consolidated statements of operations and comprehensive loss as a component of other income, net, and represents the sum of the research and development tax credits recoverable in the UK. The UK research and development tax credit is fully refundable to the Company and is not dependent on current or future taxable income. As a result, the Company has recorded the entire benefit from the UK research and development tax credit as a benefit which is included in net loss before income tax and accordingly, not reflected as part of the income tax provision. If, in the future, any UK research and development tax credits generated are needed to offset a corporate income tax liability in the UK, that portion would be recorded as a benefit within the income tax provision and any refundable portion not dependent on taxable income would continue to be recorded within other income, net. The Company may not be able to continue to claim research and development tax credits under the SME regime in the future because it may no longer qualify as a small or medium-sized company. In addition, the EU State Aid cap limits the total aid claimable in respect of a given project to €7.5 million which may impact the Company’s ability to claim R&D tax credits in future. Further, the U.K. Finance Act of 2021 introduced a cap on credit claims under the SME Program in excess of £20,000 with effect from April 2021 by reference to, broadly, three times the total Pay As You Earn, or PAYE, and National Insurance Contributions, or NICs, liability of the company, subject to an exception which prevents the cap from applying. That exception requires the company to be creating, taking steps to create or managing intellectual property, as well as having qualifying research and development expenditure in respect of connected parties, which does not exceed 15% of the total claimed. If such exception does not apply, this could restrict the amount of payable credit that we claim. Unsurrendered UK losses may be carried forward indefinitely to be offset against future taxable profits, subject to numerous utilization criteria and restrictions. The amount that can be offset each year is limited to £5.0 million plus an incremental 50% of UK taxable profits. Comprehensive Loss Comprehensive loss includes net loss as well as other changes in shareholders’ equity that result from transactions and economic events other than those with shareholders. For the six months ended June 30, 2023 and 2022, the only component of accumulated other comprehensive loss is foreign currency translation adjustment. Net Loss per Share The Company has reported losses since inception and has computed basic net loss per share attributable to ordinary shareholders by dividing net loss attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding for the period, without consideration for potentially dilutive securities. The Company computes diluted net loss per ordinary share after giving consideration to all potentially dilutive ordinary shares, including unvested restricted shares and outstanding options. Because the Company has reported net losses since inception, these potential ordinary shares have been anti-dilutive and basic and diluted loss per share were the same for all periods presented. The Company enters into foreign currency contracts to reduce the risk that its cash flows and earnings will be adversely affected by foreign currency exchange rate fluctuations. The Company does not enter into foreign currency contracts for speculative purposes. The Company recognizes derivative instruments, which do not qualify for hedge accounting, as either assets or liabilities on the balance sheet at fair value. The Company records changes in the fair value (gains or losses) of the derivatives in the accompanying condensed consolidated statements of operations and comprehensive loss as other income, net. The Company did not enter into any contracts during the six months ended June 30, 2023 and 2022. Long-term Debt On June 30, 2023, the Company entered into the Loan Agreement with Hercules. The Company assessed all terms and features of the Loan Agreement in order to identify any potential embedded features that would require bifurcation. As part of this analysis, the Company assessed the economic characteristics and risks of the debt. The Company determined that all features of the Loan Agreement are clearly and closely associated with a debt host and, as such, do not require separate accounting as a derivative liability. Debt issuance costs consist of costs incurred in obtaining long-term financing. These costs are classified on the consolidated balance sheet as a direct deduction from the carrying amount of the related debt liability. These expenses are deferred and amortized as part of interest expense in the consolidated statement of operations using the effective interest rate method over the term of the debt agreement. Warrants On June 30, 2023, the Company entered into a warrant agreement with Hercules. The Company assessed all terms and features of the Warrant Agreement in order to determine accounting classification of the warrants as equity or liability. As part of this analysis, the Company determined it appropriate to account for the warrants issued under the Loan Agreement as equity. The Company measures the warrants at fair value using the Black-Scholes valuation model. Assumptions used in the warrant pricing model include the following: Expected volatility . The Company lacks sufficient company-specific historical and implied volatility information for its ordinary shares. Therefore, it estimates its expected share volatility based on the historical volatility of publicly traded peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded share price. Expected term. The expected term of the warrants is ten years. Risk-free interest rate . The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of the issuance for time periods that are approximately equal to the expected term of the warrant. Expected dividend. Expected dividend yield of zero is based on the fact that the Company has never paid cash dividends on ordinary shares and does not expect to pay any cash dividends in the foreseeable future. In addition, the Loan Agreement with Hercules currently prohibits, and any future debt financing arrangements may contain terms prohibiting or limiting the amount of, dividends that may be declared or paid on our ordinary shares. Fair value of ordinary shares. The fair value of the warrants is determined by reference to the closing price of ADSs on the Nasdaq Global Select Market on the day of issuance. Recently adopted accounting pronouncements |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 6 Months Ended |
Jun. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): June 30, December 31, 2023 2022 UK R&D tax credit $ 21,589 $ 13,972 Prepaid insurance premium 1,011 2,818 Prepaid research and development 9,143 28,211 VAT recoverable 1,428 1,652 Vendor receivable 9,795 — Other current assets 2,150 1,042 $ 45,116 $ 47,695 |
Long-term Prepaid Expenses and
Long-term Prepaid Expenses and Other Assets | 6 Months Ended |
Jun. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Long-term Prepaid Expenses and Other Assets | Long-term Prepaid Expenses and Other Assets Long-term prepaid expenses and other assets consisted of the following (in thousands): June 30, December 31, 2023 2022 Prepaid research and development - long-term 7,271 — Other assets 173 327 $ 7,444 $ 327 |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 6 Months Ended |
Jun. 30, 2023 | |
Other Liabilities Disclosure [Abstract] | |
Accrued Expenses and Other Liabilities | Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following (in thousands): June 30, December 31, 2023 2022 Accrued research and development expense $ 2,521 $ 1,684 Accrued professional expenses 1,807 1,284 Accrued compensation and benefit costs 3,582 5,534 Payroll tax payable 7 167 Income taxes payable 72 — Other liabilities 628 656 $ 8,617 $ 9,325 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt On June 30, 2023, the Company entered into the Loan Agreement with Hercules, which provided for aggregate maximum borrowings of up to $50.0 million, consisting of (i) a term loan of $30.0 million, which was funded on the Effective Date, (ii) subject to the Company achieving certain performance milestones and available until December 15, 2024, an additional term loan of $10.0 million, and (iii) subject to the approval of Hercules’ investment committee in its sole discretion, and available during the interest-only period, an additional term loan of $10.0 million. The term loan will mature on July 1, 2027. The outstanding principal balance of the term loan bears interest at an annual rate equal to the greater of either (i) the prime rate as reported in The Wall Street Journal plus 1.50% or (ii) 9.75%. Accrued interest is payable monthly following the funding of each term loan. In addition to accrued interest, payment-in-kind (PIK) interest of 1.40% will be added to the balance of the loan. The Company incurred fees and transaction costs totaling $3.3 million associated with the initial term loan, which are recorded as a reduction to the carrying value of the long-term debt in the condensed consolidated balance sheet. These fees included $0.4 million of facility fees, $0.8 million of company fees, $0.7 million in warrants, and $1.4 million of end of term charges. The fees, transaction costs, and the end of term charge are amortized to interest expense through the maturity date using the effective interest method. The effective interest rate of the Loan Agreement was 15.1% as of June 30, 2023. The Company issued warrants to Hercules to purchase shares of the Company’s Ordinary Shares equal to the quotient derived by dividing (i) the amount equal to (a) 2.5% times (b) the aggregate principal amount of term loan advances made and funded under the Loan Agreement by (ii) the exercise price of the warrants. Upon receipt of the first term loan, 94,222 shares became exercisable to Hercules with a fair market value of $0.7 million. The Loan Agreement includes a financial covenant requiring us to maintain a minimum level of $22.5 million of cash during the period commencing on January 1, 2024, of which the initial commencement date is subject to adjustment if certain performance milestones are met. If the Company meets the performance milestones, the minimum cash covenant will not apply if its market capitalization is at least $750.0 million. The Company was in compliance with all covenants of the Loan Agreement as of June 30, 2023. Long-term debt consisted of the following (in thousands): June 30, 2023 Term loan payable $ 30,000 End of term charge 1,426 Future principal payments and end of term charge $ 31,426 Unamortized debt issuance costs (3,302) Carrying value of long-term debt $ 28,124 Future principal payments, including End of Term Charge, are as follows (in thousands): December 31, 2023 — December 31, 2024 — December 31, 2025 6,587 December 31, 2026 14,173 December 31, 2027 10,666 Total $ 31,426 |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholder’s Equity Ordinary Shares On October 8, 2021, the Company entered into a Sales Agreement with Cowen and Company, LLC, or Cowen, under which the Company may issue and sell from time to time up to $150.0 million of its ADSs, each representing one ordinary share, through Cowen as the sales agent. Sales of the Company’s ADSs, if any, will be made at market prices. Through June 30, 2023, we sold 2,982,038 ADSs, resulting in $28.6 million in net proceeds. During the six months ended June 30, 2023, the Company issued in total 128,869 ordinary shares to settle share options exercised by employees and non-employees compared to 431,855 in the six months ended June 30, 2022. During the six months ended June 30, 2023, a total of 42,518 restricted share units vested, of which 29,220 were issued and 13,298 were settled. During the six months ended June 30, 2023, a total of 38,122 ordinary shares were issued in settlement of restricted share units, of which 8,902 were vested and not issued at December 31, 2022 and 29,220 vested and were issued during the six months ended June 30, 2023. During the six months ended June 30, 2022, a total of 70,638 ordinary shares were issued in settlement of restricted share units, of which 57,875 were vested and not issued at December 31, 2022 and 12,763 vested and were issued during the six months ended June 30, 2023. Deferred Shares Immediately prior to the completion of the Company’s IPO in September 2020, the different classes of issued share capital of COMPASS Pathways plc were reorganized by way of a reverse share split, which was retroactively restated in our consolidated financial statements. As part of this reverse share split, the nominal value of COMPASS Pathways plc’s ordinary shares changed from £0.001 per share to £0.008 per share and a single, non-voting deferred share with a nominal value of £21,921.504 in the capital of the Company was created and transferred to the Company. On June 28, 2023, the single deferred share was cancelled. Warrants On June 30, 2023, the Company entered into a Warrant Agreement with Hercules, which provides Hercules with the right to purchase a number of shares of the Company’s Ordinary Shares equal to the quotient derived by dividing (i) the amount equal to (a) 2.5% times (b) the aggregate principal amount of term loan advances made and funded under the Loan Agreement by (ii) the exercise price. Upon receipt of each term loan, the Warrant will automatically become exercisable and will expire in 10 years (on June 30, 2033). On June 30, 2023, with the receipt of the first term loan, 94,222 shares became exercisable to Hercules with a fair market value of $0.7 million. |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-Based Compensation | Share-Based Compensation 2017 Equity Incentive Plan Under the Company’s historical shareholder and subscription agreements, the Company was authorized to issue restricted shares, restricted share units, as well as options, as incentives to its employees, non-employees and members of its board of directors. To the extent such incentives were in the form of share options, the options were granted pursuant to the terms of the 2017 Equity Incentive Plan, or the 2017 Plan. In July 2019, the Company’s board of directors adopted the 2017 Plan. The 2017 Plan provided for the grant of Enterprise Management Incentive, or EMI, options, to its UK employees, for the grant of options to its U.S. employees and non-employees of the Company. The 2017 Plan was administered by the board of directors. As of June 30, 2023, the Company was authorized to issue a total of 1,475,250 ordinary shares underlying outstanding options granted under the 2017 Plan prior to the IPO. Options granted under the 2017 Plan, typically vest over a three The options granted on June 30, 2020 were subject to 25% vesting upon the earlier occurrence of (i) the one year anniversary of the date of grant, or (ii) the date of the listing of the Company's ordinary shares on any stock exchange, followed by straight line vesting for three years for the remaining 75% of the allocation until vested in full. The restricted share units granted on June 30, 2020 are subject to 25% vesting upon the earlier of (i) the one year anniversary of the date of grant, or (ii) the first day following the six-month anniversary of the listing of the Company's ordinary shares on any stock exchange on which the closing price of the shares is 20% higher than the listing price for at least five consecutive trading days. 2020 Employee Share Purchase Plan The Company’s 2020 Employee Share Purchase Plan, or the ESPP, was adopted by the Board in September 2020 and approved by shareholders in September 2020 and became effective upon the effectiveness of the Company’s Registration Statement on Form F-1 in connection with the IPO. The ESPP initially reserved and authorized the issuance of up to a total of 340,053 ordinary shares to participating employees. The ESPP provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2022 and each January 1 thereafter through termination of the 2020 Plan, by the lesser of (i) 1% of the outstanding number of ordinary shares on the immediately preceding December 31, (ii) 510,080 ordinary shares or (iii) such lesser number of ordinary shares as determined by the plan administrator. The number of shares reserved under the ESPP is subject to change in the event of a share split, share dividend or other change in capitalization. On October 1, 2021, the Company launched the SIP and the ESPP, through which employees can purchase shares at a discounted price. At the end of six months, shares will automatically be purchased at the lower of the opening and closing price of the shares for the saving period minus a 15% discount. 2020 Share Option Plan In September 2020, the Company’s board of directors adopted, and the Company’s shareholders approved, the 2020 Share Option and Incentive Plan, or the 2020 Plan, which became effective upon the effectiveness of the Company’s Registration Statement on Form F-1 in connection with the IPO. The 2020 Plan allows the compensation and leadership development committee to make equity-based and cash-based incentive awards to the Company’s officers, employees, directors and other key persons (including consultants). Options granted under the 2020 Plan generally expire 10 years from the date of grant and typically vest over a 4 year service period with 25% of the options vesting on the first anniversary of the commencement date and the balance vesting monthly over the remaining years. The Company initially reserved 2,074,325 of its ordinary shares for the issuance of awards under the 2020 Plan. The 2020 Plan provides that the number of shares reserved and available for issuance under the plan will automatically increase each January 1, beginning on January 1, 2022, by up to 4% of the outstanding number of ordinary shares on the immediately preceding December 31, or such lesser number of shares as determined by the compensation and leadership development committee. This number is subject to adjustment in the event of a sub-division, consolidation, share dividend or other change in our capitalization. The total number of ordinary shares that may be issued under the 2020 Plan is 5,460,391 shares as of June 30, 2023, of which 181,038 shares remained available for future grant. The options granted in 2022 under the 2020 Plan to employees generally expire 10 years from the date of grant. There are three potential vesting conditions for the 2022 grants including: (i) 25% per year over four year service period, (ii) four year service period with 25% of the vesting on the first anniversary of the commencement date and the balance vesting monthly over the remaining years; and (iii) monthly vesting over four year service period. During the six months ended June 30, 2023 and 2022, the Company granted options to purchase 2,365,866 and 1,217,818 ordinary shares to employees and non-employees, respectively. 2022 Inducement Option Award On August 1, 2022, the Company granted to its new chief executive officer a non-qualified share option to purchase up to 600,000 ordinary shares as an inducement grant. The non-qualified share option has a 10 year term and vests one-fourth on August 1, 2023 and the remaining three-fourths in equal monthly installments over the following 36 months. The non-qualified share option has other terms that mirror those of non-qualified share options granted under the Company’s 2020 Plan and the Company’s standard form of non-qualified share option agreement. A summary of the changes in the Company’s unvested restricted share units during the six months ended June 30, 2023 are as follows: Number of Shares Weighted Average Grant Date Fair Value Unvested and Outstanding as of December 31, 2022 271,135 $ 12.23 Granted 175,750 $ 10.85 Vested (42,518) $ 11.84 Forfeited (11,506) $ 11.79 Unvested and Outstanding as of June 30, 2023 392,861 $ 11.67 As of June 30, 2023 and December 31, 2022, there was $3.9 million and $2.6 million of unrecognized compensation cost related to unvested restricted share units, respectively, which is expected to be recognized over a weighted-average period of 3.0 years and 3.0 years, respectively. The exercise price of restricted share units is at a nominal value less than $0.01 per share. The following table summarizes the Company’s share options activity for the six months ended June 30, 2023: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Outstanding as of December 31, 2022 5,092,732 $ 13.55 8.38 $ 13,013 Granted 2,365,866 $ 9.83 Exercised (128,869) $ 0.01 Forfeited (345,895) $ 17.90 Outstanding as of June 30, 2023 6,983,834 $ 13.24 8.45 $ 13,553 Exercisable as of June 30, 2023 2,803,031 $ 11.60 7.45 $ 11,744 Unvested as of June 30, 2023 4,180,803 $ 14.35 9.11 $ 1,809 The aggregate intrinsic value of options exercised during the six months ended June 30, 2023 and 2022 was $1.1 million and $5.3 million, respectively. The aggregate intrinsic value of share options is calculated as the difference between the exercise price of the share options and the fair value of the Company’s ordinary shares for those share options that had exercise prices lower than the fair value of the Company’s ordinary shares. The weighted average grant-date fair value of share options granted was $7.92 and $10.67 per share during the six months ended June 30, 2023, and 2022, respectively. As of June 30, 2023 and 2022, there was $38.5 million and $29.7 million of unrecognized compensation cost related to unvested share options, which is expected to be recognized over a weighted-average period of 2.8 years and 2.9 years, respectively. Share Option Valuation The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the share options granted to employees and directors during the six months ended June 30, 2023, and 2022 were as follows: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Expected option life (years) 3.99 years 5.50 years 5.80 years 5.85 years Expected volatility 91.82 % 81.17 % 87.70 % 80.29 % Risk-free interest rate 4.16 % 3.35 % 3.55 % 1.80 % Expected dividend yield — % — % — % — % Fair value of underlying ordinary shares $ 7.93 $ 10.08 $ 10.49 $ 15.01 Share-based Compensation Expense Share-based compensation expense recorded as research and development and general and administrative expenses is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Research and development 2,198 1,830 4,442 3,622 General and administrative 2,363 1,348 4,190 2,684 Total share based compensation expense $ 4,561 $ 3,178 $ 8,632 $ 6,306 |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss Per Share Basic and diluted net loss per share attributable to ordinary shareholders was calculated as follows (in thousands, except share and per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Numerator Net loss $ (28,335) $ (21,037) $ (52,543) $ (42,208) Net loss attributable to ordinary shareholders - basic and diluted $ (28,335) $ (21,037) $ (52,543) $ (42,208) Denominator Weighted-average number of ordinary shares used in net loss per share - basic and diluted 45,565,991 42,474,987 44,153,772 42,110,161 Net loss per share - basic and diluted $ (0.62) $ (0.50) $ (1.19) $ (1.00) The Company’s potentially dilutive securities, which include unvested ordinary shares, unvested restricted share units, and options granted, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of ordinary shares outstanding used to calculate both basic and diluted net loss per share attributable to ordinary shareholders is the same. The Company excluded the following potential ordinary shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to ordinary shareholders for the six months ended June 30, 2023 and 2022 because including them would have had an anti-dilutive effect: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Unvested restricted share units 392,861 186,411 392,861 186,411 Share options 6,983,834 4,340,885 6,983,834 4,340,885 Warrants 94,222 — 94,222 — 7,470,917 4,527,296 7,470,917 4,527,296 |
Right of use of assets
Right of use of assets | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Right of use assets | Right of use of assets New York, NY In August 2022, the Company entered into a membership agreement with WeWork for rentable office space. The membership is cancellable with 90 days’ notice. This agreement is accounted for as a short-term lease as the Company is not reasonably certain to extend the lease beyond twelve months and is therefore not recognized on the Company’s condensed consolidated balance sheets. Soho, London, UK In July 2021, the Company entered into a two-year operating lease with Fora Space Limited commencing on September 1, 2021. The noncancellable term is 24 months and there is no option to extend the lease. The recurring residency fee per month is £136,200, and the Company paid a refundable deposit of £136,200 at the execution of the agreement. Additionally, at the start of each calendar year, the monthly residency fee is subject to an automatic inflation linked increase of the previous year’s amount. In April 2023, the Company entered into a two-year operating lease with Fora Space Limited commencing on September 1, 2023. The noncancellable term is 24 months and there is no option to extend the lease. The recurring residency fee per month is £130,000, and the Company paid a refundable deposit of £156,000 at the execution of the agreement. Denmark Hill, London, UK In March 2022, the Company entered into an agreement for a lease with South London and Maudsley NHS Foundation Trust for land and buildings at 5 Windsor Walk, Maudsley Hospital, Denmark Hill, London, UK. The lease commenced on June 21, 2022 and has a contractual term of five years. The rent is £180,000 per year, with no deposit payable, and payment dates occurring once per quarter. The following table summarizes the Company’s costs included in its condensed consolidated statements of operations and comprehensive loss related to right of use lease assets we have entered into through June 30, 2023 (in thousands): Six months ended June 30, 2023 2022 Lease cost Operating lease cost $ 1,136 $ 1,151 Short-term lease cost 163 86 $ 1,299 $ 1,237 Other information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used in operating leases $ 1,123 $ 1,122 Right of use assets obtained in exchange for new operating lease liabilities 3,645 822 Weighted average remaining lease term (in years) 2.4 1.8 Weighted average discount rate 8.49 % 5.52 % The following table summarizes the future minimum lease payments due under operating leases as of June 30, 2023, (in thousands): December 31, 2023 1,132 December 31, 2024 2,247 December 31, 2025 1,541 December 31, 2026 227 December 31, 2027 57 Total future minimum lease payments $ 5,204 Less: imputed interest $ (489) Total $ 4,715 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Proceedings From time to time, the Company may be a party to litigation or subject to claims incident to the ordinary course of business. The Company was not a party to any material litigation and did not have material contingency reserves established for any liabilities as of June 30, 2023 or 2022. Indemnification In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future as a result of these indemnification obligations. In accordance with its Articles of Association, the Company has indemnification obligations to its officers and directors for certain events or occurrences, subject to certain limits, while they are serving at the Company’s request in such capacity. There have been no claims to date, and the Company has director and officer insurance that may enable it to recover a portion of any amounts paid for future potential claims. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, or U.S. GAAP. The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements as of and for the year ended December 31, 2022, and, in the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2023, the results of its operations and comprehensive loss for the three months and six months ended June 30, 2023 and 2022 and its cash flows for the six months ended June 30, 2023 and 2022. |
Principles of Consolidation | Principles of ConsolidationThe accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated on consolidation. |
Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of income and expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, the prepayment and accrual for research and development expenses, share-based compensation and the research and development tax credit. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ materially from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments that have maturities of three months or less when acquired to be cash equivalents. The Company does not currently have any material cash equivalents. |
Restricted Cash | Restricted CashRestricted cash as of June 30, 2023 and December 31, 2022 represents a collateral deposit for employee credit cards. |
Investment | InvestmentThe investment does not have readily determinable fair value and it is carried at cost, less impairment, adjusted for subsequent changes to estimated fair value up to the original cost, in circumstances where the Company does not have the ability to exercise significant influence or control over the operating and financial policies of the investee. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that subject the Company to credit risk consist primarily of cash and cash equivalents. The Company places cash and cash equivalents in diversified and established financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. The Company has cash and cash equivalents in excess of the FDIC insured limit. The Company has no significant off-balance-sheet risk or concentration of credit risk, such as foreign exchange contracts, options contracts, or other foreign hedging arrangements. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the respective assets, which are as follows: Estimated Useful Life Lab equipment 5 years Office equipment 3-5 years Furniture and fixtures 3 years Leasehold improvements Shorter of useful life or remaining lease term |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company evaluates assets for potential impairment when events or changes in circumstances indicate the carrying value of the assets may not be recoverable. Recoverability is measured by comparing the book values of the assets to the expected future net undiscounted cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the book values of the assets exceed their fair value. The Company has not recognized any impairment losses or had triggering events related to its underlying assets for the six months ended June 30, 2023. |
Segment Information | Segment Information Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker in deciding how to allocate resources and assess performance. The Company and the Company’s chief operating decision maker, the Company’s Chief Executive Officer, view the Company’s operations and manage its business as a single operating segment; however, the Company operates in two geographic regions: the United Kingdom, or UK, and the United States. The Company’s fixed assets are primarily located in the UK. The Company’s singular concentration is focused on accelerating patient access to evidence-based innovation in mental health. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred in performing research and development activities, including salaries, share-based compensation and benefits, travel, and external costs of outside vendors engaged to conduct clinical development activities, clinical trials and the cost to manufacture clinical trial materials. |
Research Contract Costs, Prepayments and Accruals | Research Contract Costs, Prepayments and Accruals The Company has entered into various research and development-related contracts with research institutions and other companies. These agreements are generally cancellable, and related payments are recorded as research and development expenses as incurred. The Company records prepayments and accruals for estimated ongoing research costs and receives updated estimates of costs and amounts owed on a monthly basis from its third-party service providers. When evaluating the adequacy of the prepayments and accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted cost estimates from third-party service providers. Estimates are made in determining the prepaid and accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates. The Company’s historical prepayments and accrual estimates have not been materially different from the actual costs. |
Share-Based Compensation | Share-Based Compensation The Company accounts for all share-based payment awards granted to employees and non-employees as share-based compensation expense at fair value. The Company grants equity awards under its share-based compensation programs, which may include share options and restricted share units. The measurement date for employee and non-employee awards is the date of grant, and share-based compensation costs are recognized as an expense over the requisite service period, which is the vesting period, on a straight-line basis. Share-based compensation expense is classified in the accompanying condensed consolidated statements of operations and comprehensive loss based on the function to which the related services are provided. The Company recognizes share-based compensation expense for the portion of awards that have vested. Forfeitures are recorded as they occur. On October 1, 2021, the Company launched the Share Incentive Plan, or the SIP, and Employee Share Purchase Plan, or the ESPP, through which employees can purchase shares at a discounted price. The Company estimates the fair value of stock options and shares to be issued under the SIP and ESPP using the Black-Scholes option-pricing model on the date of grant. The fair value of shares to be issued under these plans are recognized and amortized on a straight-line basis over the purchase period, which is generally six months. There have been no performance conditions attached to the share options granted by the Company to date. The fair value of each share option grant is estimated on the date of grant using the Black-Scholes option pricing model. See Note 8 for the Company’s assumptions used in connection with option grants made during the periods covered by these condensed consolidated financial statements. Assumptions used in the option pricing model include the following: Expected volatility . The Company lacks sufficient company-specific historical and implied volatility information for its ordinary shares. Therefore, it estimates its expected share volatility based on the historical volatility of publicly traded peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded share price. Expected term. The expected term of the Company’s share options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. Risk-free interest rate . The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods that are approximately equal to the expected term of the award. Expected dividend. Expected dividend yield of zero is based on the fact that the Company has never paid cash dividends on ordinary shares and does not expect to pay any cash dividends in the foreseeable future. In addition, the Loan Agreement with Hercules currently prohibits dividends that may be declared or paid on our ordinary shares. Fair value of ordinary shares. The fair value of ordinary shares is determined by reference to the closing price of ADSs on the Nasdaq Global Select Market on the day prior to or day of the grant. |
Leases | Leases At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and current and non-current lease liabilities, as applicable. Entities may elect not to separate lease and non-lease components. The Company has elected to account for lease and non-lease components together as a single lease component for all underlying assets and to allocate all the contract consideration to the lease component only. All the Company’s leases are classified as operating leases. Lease liabilities and their corresponding right-of-use assets are initially recorded based on the present value of lease payments over the expected remaining lease term. Certain adjustments to the right-of-use asset may be required for items such as incentives received. The interest rate implicit in lease contracts has historically not been readily determinable. As a result, the Company utilizes its incremental borrowing rate to discount lease payments, which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. As the Company does not have a rating agency-based credit rating, quotes were obtained from lenders to establish an estimated secured rate to borrow based on Company and market-based factors as of the respective lease measurement dates. The Company has elected not to recognize leases with an original term of one year or less on the balance sheets. The Company typically only includes the non-cancelable lease term in its assessment of a lease arrangement unless there is an option to extend the lease that is reasonably certain of exercise. Prospectively, the Company will adjust the right-of-use assets for straight-line rent expense or any incentives received and remeasure the lease liability at the net present value using the same incremental borrowing rate that was in effect as of the lease commencement or transition date. Operating lease costs are recognized on a straight-line basis over the lease term, and they are categorized within research and development and general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss. The operating lease cash flows are categorized under net cash used in operating activities in the condensed consolidated statements of cash flows. |
Foreign Currency Translation | Foreign Currency Translation The functional currency is the currency of the primary economic environment in which an entity’s operations are conducted. On January 1, 2023, COMPASS Pathways plc and its wholly owned subsidiary COMPASS Pathfinder Holdings Limited changed their functional currency to the U.S. dollar. COMPASS Pathways plc and COMPASS Pathfinder Holdings Limited have no operating activities and their primary functions are to serve as a financing vehicle to fund the operations of the Company’s operating entities, to serve as the listing company needed to access U.S. capital markets, and to hold investments. Therefore, its financing source is the primary indicator of its cash flows and its functional currency. The change in functional currency from the British Pound Sterling is due to a change in the source of the Company’s financing and cash flows going forward, which will now primarily be U.S. Dollars (“USD”). The functional currency of COMPASS Pathfinder Holdings Limited’s wholly owned non-U.S. subsidiary, COMPASS Pathfinder Limited, is British Pound Sterling and the functional currency of its U.S. subsidiary, COMPASS Pathways Inc. is USD. The functional currency of these subsidiaries is the same as the local currency. The translated balances of monetary and non-monetary assets and liabilities recorded in the reporting entity’s condensed consolidated financial statements as of the end of the prior reporting period become the new accounting basis for those assets and liabilities in the period of the change. To the extent that the distinct and separable operation has monetary assets and liabilities denominated in the old functional currency, such balances will create transaction gains and losses subsequent to the change in functional currency. The balance recorded in the cumulative translation adjustment account for prior periods is not reversed upon the change in functional currency. The Company translates the assets and liabilities of COMPASS Pathfinder Limited into USD at the exchange rate in effect on the balance sheet date. Income and expenses are translated at the average exchange rate in effect during the period. Unrealized translation gains and losses are recorded as a cumulative translation adjustment, which is included in the condensed consolidated statements of shareholders’ equity as a component of accumulated other comprehensive (loss)/income. |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the condensed consolidated financial statements or in its tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that deferred tax assets will be recovered in the future to the extent management believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. The Company accounts for uncertainty in income taxes in the condensed consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed as the amount of benefit to recognize in the condensed consolidated financial statements. The amount of benefit that may be used is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate, as well as the related net interest and penalties. As of June 30, 2023 and December 31, 2022, the Company has not identified any uncertain tax positions. The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying condensed consolidated statements of operations and comprehensive loss. As of June 30, 2023 and December 31, 2022 no accrued interest or penalties are included on the related tax liability line in the condensed consolidated balance sheets. |
Benefit from Research and Development Tax Credit | Benefit from Research and Development Tax Credit As a company that carries out extensive research and development activities, the Company benefits from the UK research and development tax credit regime under the scheme for small or medium-sized enterprises, or SME. Under the SME regime, in effect through June 30, 2023, the Company is able to surrender some of its trading losses that arise from qualifying research and development activities for a cash rebate of a portion of such qualifying research and development expenditure. Up until April 1, 2023 the rate was 33.3% on in-house expenditures and 21.7% on work that was contracted out. From that point, the rates reduced to 18.6% and 12.1%, respectively. New rules were announced in the UK Parliament Finance Act 2023 for an enhanced rate of relief for loss making research intensive SMEs, which would be 27.0% for qualifying expenditure and 17.5% for qualifying subcontracted expenditure. The legislation is not yet final, and therefore the Company is unable to determine whether it would meet the criteria for the enhanced rate of relief until the legislation and more detailed guidance has been published. The Company meets the conditions of the SME regime. A large portion of costs relating to research and development, clinical trials and manufacturing activities are eligible for inclusion within these tax credit cash rebate claims. The Company is subject to corporate taxation in the UK. Due to the nature of the business, the Company has generated losses since inception. The benefit from research and development, or R&D, tax credits is recognized in the condensed consolidated statements of operations and comprehensive loss as a component of other income, net, and represents the sum of the research and development tax credits recoverable in the UK. The UK research and development tax credit is fully refundable to the Company and is not dependent on current or future taxable income. As a result, the Company has recorded the entire benefit from the UK research and development tax credit as a benefit which is included in net loss before income tax and accordingly, not reflected as part of the income tax provision. If, in the future, any UK research and development tax credits generated are needed to offset a corporate income tax liability in the UK, that portion would be recorded as a benefit within the income tax provision and any refundable portion not dependent on taxable income would continue to be recorded within other income, net. The Company may not be able to continue to claim research and development tax credits under the SME regime in the future because it may no longer qualify as a small or medium-sized company. In addition, the EU State Aid cap limits the total aid claimable in respect of a given project to €7.5 million which may impact the Company’s ability to claim R&D tax credits in future. Further, the U.K. Finance Act of 2021 introduced a cap on credit claims under the SME Program in excess of £20,000 with effect from April 2021 by reference to, broadly, three times the total Pay As You Earn, or PAYE, and National Insurance Contributions, or NICs, liability of the company, subject to an exception which prevents the cap from applying. That exception requires the company to be creating, taking steps to create or managing intellectual property, as well as having qualifying research and development expenditure in respect of connected parties, which does not exceed 15% of the total claimed. If such exception does not apply, this could restrict the amount of payable credit that we claim. Unsurrendered UK losses may be carried forward indefinitely to be offset against future taxable profits, subject to numerous utilization criteria and restrictions. The amount that can be offset each year is limited to £5.0 million plus an incremental 50% of UK taxable profits. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss includes net loss as well as other changes in shareholders’ equity that result from transactions and economic events other than those with shareholders. For the six months ended June 30, 2023 and 2022, the only component of accumulated other comprehensive loss is foreign currency translation adjustment. |
Net Loss per Share | Net Loss per Share The Company has reported losses since inception and has computed basic net loss per share attributable to ordinary shareholders by dividing net loss attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding for the period, without consideration for potentially dilutive securities. The Company computes diluted net loss per ordinary share after giving consideration to all potentially dilutive ordinary shares, including unvested restricted shares and outstanding options. Because the Company has reported net losses since inception, these potential ordinary shares have been anti-dilutive and basic and diluted loss per share were the same for all periods presented. |
Derivatives | DerivativesThe Company enters into foreign currency contracts to reduce the risk that its cash flows and earnings will be adversely affected by foreign currency exchange rate fluctuations. The Company does not enter into foreign currency contracts for speculative purposes. The Company recognizes derivative instruments, which do not qualify for hedge accounting, as either assets or liabilities on the balance sheet at fair value. The Company records changes in the fair value (gains or losses) of the derivatives in the accompanying condensed consolidated statements of operations and comprehensive loss as other income, net. |
Long-term Debt | Long-term Debt On June 30, 2023, the Company entered into the Loan Agreement with Hercules. The Company assessed all terms and features of the Loan Agreement in order to identify any potential embedded features that would require bifurcation. As part of this analysis, the Company assessed the economic characteristics and risks of the debt. The Company determined that all features of the Loan Agreement are clearly and closely associated with a debt host and, as such, do not require separate accounting as a derivative liability. Debt issuance costs consist of costs incurred in obtaining long-term financing. These costs are classified on the consolidated balance sheet as a direct deduction from the carrying amount of the related debt liability. These expenses are deferred and amortized as part of interest expense in the consolidated statement of operations using the effective interest rate method over the term of the debt agreement. |
Warrants | Warrants On June 30, 2023, the Company entered into a warrant agreement with Hercules. The Company assessed all terms and features of the Warrant Agreement in order to determine accounting classification of the warrants as equity or liability. As part of this analysis, the Company determined it appropriate to account for the warrants issued under the Loan Agreement as equity. The Company measures the warrants at fair value using the Black-Scholes valuation model. Assumptions used in the warrant pricing model include the following: Expected volatility . The Company lacks sufficient company-specific historical and implied volatility information for its ordinary shares. Therefore, it estimates its expected share volatility based on the historical volatility of publicly traded peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded share price. Expected term. The expected term of the warrants is ten years. Risk-free interest rate . The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of the issuance for time periods that are approximately equal to the expected term of the warrant. Expected dividend. Expected dividend yield of zero is based on the fact that the Company has never paid cash dividends on ordinary shares and does not expect to pay any cash dividends in the foreseeable future. In addition, the Loan Agreement with Hercules currently prohibits, and any future debt financing arrangements may contain terms prohibiting or limiting the amount of, dividends that may be declared or paid on our ordinary shares. Fair value of ordinary shares. The fair value of the warrants is determined by reference to the closing price of ADSs on the Nasdaq Global Select Market on the day of issuance. |
Recently adopted accounting pronouncements | Recently adopted accounting pronouncementsThere have been no recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance during the three or six months ended June 30, 2023 that are of significance or potential significance to the Company. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Property and Equipment | Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the respective assets, which are as follows: Estimated Useful Life Lab equipment 5 years Office equipment 3-5 years Furniture and fixtures 3 years Leasehold improvements Shorter of useful life or remaining lease term |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consisted of the following (in thousands): June 30, December 31, 2023 2022 UK R&D tax credit $ 21,589 $ 13,972 Prepaid insurance premium 1,011 2,818 Prepaid research and development 9,143 28,211 VAT recoverable 1,428 1,652 Vendor receivable 9,795 — Other current assets 2,150 1,042 $ 45,116 $ 47,695 |
Long-term Prepaid Expenses an_2
Long-term Prepaid Expenses and Other Assets (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Assets | Long-term prepaid expenses and other assets consisted of the following (in thousands): June 30, December 31, 2023 2022 Prepaid research and development - long-term 7,271 — Other assets 173 327 $ 7,444 $ 327 |
Accrued Expenses and Other Li_2
Accrued Expenses and Other Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Accrued Expenses and Other Liabilities | Accrued expenses and other liabilities consisted of the following (in thousands): June 30, December 31, 2023 2022 Accrued research and development expense $ 2,521 $ 1,684 Accrued professional expenses 1,807 1,284 Accrued compensation and benefit costs 3,582 5,534 Payroll tax payable 7 167 Income taxes payable 72 — Other liabilities 628 656 $ 8,617 $ 9,325 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | Long-term debt consisted of the following (in thousands): June 30, 2023 Term loan payable $ 30,000 End of term charge 1,426 Future principal payments and end of term charge $ 31,426 Unamortized debt issuance costs (3,302) Carrying value of long-term debt $ 28,124 |
Schedule of Maturities of Long-Term Debt | Future principal payments, including End of Term Charge, are as follows (in thousands): December 31, 2023 — December 31, 2024 — December 31, 2025 6,587 December 31, 2026 14,173 December 31, 2027 10,666 Total $ 31,426 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Nonvested Restricted Share Units Activity | A summary of the changes in the Company’s unvested restricted share units during the six months ended June 30, 2023 are as follows: Number of Shares Weighted Average Grant Date Fair Value Unvested and Outstanding as of December 31, 2022 271,135 $ 12.23 Granted 175,750 $ 10.85 Vested (42,518) $ 11.84 Forfeited (11,506) $ 11.79 Unvested and Outstanding as of June 30, 2023 392,861 $ 11.67 |
Schedule of Share-based Payment Arrangement, Option, Activity | The following table summarizes the Company’s share options activity for the six months ended June 30, 2023: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Outstanding as of December 31, 2022 5,092,732 $ 13.55 8.38 $ 13,013 Granted 2,365,866 $ 9.83 Exercised (128,869) $ 0.01 Forfeited (345,895) $ 17.90 Outstanding as of June 30, 2023 6,983,834 $ 13.24 8.45 $ 13,553 Exercisable as of June 30, 2023 2,803,031 $ 11.60 7.45 $ 11,744 Unvested as of June 30, 2023 4,180,803 $ 14.35 9.11 $ 1,809 |
Schedule of Valuation Assumptions | The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the share options granted to employees and directors during the six months ended June 30, 2023, and 2022 were as follows: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Expected option life (years) 3.99 years 5.50 years 5.80 years 5.85 years Expected volatility 91.82 % 81.17 % 87.70 % 80.29 % Risk-free interest rate 4.16 % 3.35 % 3.55 % 1.80 % Expected dividend yield — % — % — % — % Fair value of underlying ordinary shares $ 7.93 $ 10.08 $ 10.49 $ 15.01 |
Summary of Share-based Compensation Expense | Share-based compensation expense recorded as research and development and general and administrative expenses is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Research and development 2,198 1,830 4,442 3,622 General and administrative 2,363 1,348 4,190 2,684 Total share based compensation expense $ 4,561 $ 3,178 $ 8,632 $ 6,306 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | Basic and diluted net loss per share attributable to ordinary shareholders was calculated as follows (in thousands, except share and per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Numerator Net loss $ (28,335) $ (21,037) $ (52,543) $ (42,208) Net loss attributable to ordinary shareholders - basic and diluted $ (28,335) $ (21,037) $ (52,543) $ (42,208) Denominator Weighted-average number of ordinary shares used in net loss per share - basic and diluted 45,565,991 42,474,987 44,153,772 42,110,161 Net loss per share - basic and diluted $ (0.62) $ (0.50) $ (1.19) $ (1.00) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The Company excluded the following potential ordinary shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to ordinary shareholders for the six months ended June 30, 2023 and 2022 because including them would have had an anti-dilutive effect: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Unvested restricted share units 392,861 186,411 392,861 186,411 Share options 6,983,834 4,340,885 6,983,834 4,340,885 Warrants 94,222 — 94,222 — 7,470,917 4,527,296 7,470,917 4,527,296 |
Right of use of assets (Tables)
Right of use of assets (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Schedule of Costs Included in Operating Expenses Related To Right of Use Assets | The following table summarizes the Company’s costs included in its condensed consolidated statements of operations and comprehensive loss related to right of use lease assets we have entered into through June 30, 2023 (in thousands): Six months ended June 30, 2023 2022 Lease cost Operating lease cost $ 1,136 $ 1,151 Short-term lease cost 163 86 $ 1,299 $ 1,237 Other information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used in operating leases $ 1,123 $ 1,122 Right of use assets obtained in exchange for new operating lease liabilities 3,645 822 Weighted average remaining lease term (in years) 2.4 1.8 Weighted average discount rate 8.49 % 5.52 % |
Schedule of Future Minimum Lease Payments Due Under Operating Leases | The following table summarizes the future minimum lease payments due under operating leases as of June 30, 2023, (in thousands): December 31, 2023 1,132 December 31, 2024 2,247 December 31, 2025 1,541 December 31, 2026 227 December 31, 2027 57 Total future minimum lease payments $ 5,204 Less: imputed interest $ (489) Total $ 4,715 |
Nature of Business (Details)
Nature of Business (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 21 Months Ended | 34 Months Ended | ||||||
Oct. 08, 2021 USD ($) | Jun. 30, 2023 USD ($) | Mar. 31, 2023 USD ($) | Jun. 30, 2022 USD ($) | Mar. 31, 2022 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) shares | Jun. 30, 2023 USD ($) shares | Dec. 31, 2022 USD ($) | |
Conversion of Stock [Line Items] | ||||||||||
Ordinary share conversion ratio | 1 | |||||||||
Net loss | $ 28,335 | $ 24,208 | $ 21,037 | $ 21,171 | $ 52,543 | $ 42,208 | ||||
Accumulated deficit | 313,689 | 313,689 | $ 313,689 | $ 313,689 | $ 261,146 | |||||
Cash and cash equivalents | 148,234 | $ 207,177 | 148,234 | $ 207,177 | 148,234 | 148,234 | $ 143,206 | |||
Loan Agreement | ||||||||||
Conversion of Stock [Line Items] | ||||||||||
Term loan payable | 50,000 | 50,000 | 50,000 | 50,000 | ||||||
Market capitalization | 750,000 | 750,000 | 750,000 | 750,000 | ||||||
Loan Agreement, Term Loan One | ||||||||||
Conversion of Stock [Line Items] | ||||||||||
Term loan payable | 30,000 | 30,000 | 30,000 | 30,000 | ||||||
Loan Agreement, Term Loan Two | ||||||||||
Conversion of Stock [Line Items] | ||||||||||
Term loan payable | 10,000 | 10,000 | 10,000 | 10,000 | ||||||
Loan Agreement, Term Loan Three | ||||||||||
Conversion of Stock [Line Items] | ||||||||||
Term loan payable | 10,000 | 10,000 | 10,000 | 10,000 | ||||||
Debt instrument covenant, cash on hand | $ 22,500 | $ 22,500 | $ 22,500 | $ 22,500 | ||||||
Initial Public Offering | American Depositary Shares | ||||||||||
Conversion of Stock [Line Items] | ||||||||||
Maximum amount of stock that may be sold | $ 150,000 | |||||||||
At-The-Market Offering | ||||||||||
Conversion of Stock [Line Items] | ||||||||||
Sale of stock, shares issued in transaction (in shares) | shares | 2,982,038 | 2,982,038 | ||||||||
Consideration received on transaction | $ 28,600 | $ 28,600 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Property, Plant and Equipment (Details) | Jun. 30, 2023 |
Lab equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 5 years |
Office equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 3 years |
Office equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 5 years |
Furniture and fixtures | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life | 3 years |
Leasehold Improvements | |
Property, Plant and Equipment [Line Items] | |
Property, Plant, and Equipment, Useful Life, Term, Description [Extensible Enumeration] | Useful Life, Shorter of Lease Term or Asset Utility [Member] |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Narrative (Details) £ in Thousands, $ in Thousands, € in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 USD ($) | Jun. 30, 2022 | Jun. 30, 2023 EUR (€) region | Jun. 30, 2023 GBP (£) region | Jun. 30, 2022 | Dec. 31, 2022 USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Number of geographic regions | region | 2 | 2 | ||||
Expected dividend yield (in percent) | 0% | 0% | 0% | 0% | 0% | |
Operating lease right-of-use assets | $ | $ 4,784 | $ 2,006 | ||||
Operating lease liabilities - current | $ | $ 2,176 | $ 1,510 | ||||
Maximum qualifying research and development expenditures with connected parties (in percent) | 15% | 15% | ||||
Warrant term | 10 years | |||||
Measurement Input, Expected Dividend Rate | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Warrants dividend yield (as a percent) | 0 | |||||
United Kingdom Research and Development Tax Credit Regime, Small or Medium-Sized Enterprises (SME) | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Total aid claimable (in euros) | € | € 7.5 | |||||
Cap on payable claims (in GBP) | £ | £ 20 | |||||
United Kingdom Research and Development Tax Credit Regime | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Annual offset amount (in euros) | £ | £ 5,000 | |||||
Percentage of taxable profits (in percent) | 50% | 50% |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
UK R&D tax credit | $ 21,589 | $ 13,972 |
Prepaid insurance premium | 1,011 | 2,818 |
Prepaid research and development | 9,143 | 28,211 |
VAT recoverable | 1,428 | 1,652 |
Vendor receivable | 9,795 | 0 |
Other current assets | 2,150 | 1,042 |
Prepaid expenses and other current assets | $ 45,116 | $ 47,695 |
Long-term Prepaid Expenses an_3
Long-term Prepaid Expenses and Other Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid research and development - long-term | $ 7,271 | $ 0 |
Other assets | 173 | 327 |
Total long-term prepaid expenses and other assets | $ 7,444 | $ 327 |
Accrued Expenses and Other Li_3
Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Other Liabilities Disclosure [Abstract] | ||
Accrued research and development expense | $ 2,521 | $ 1,684 |
Accrued professional expenses | 1,807 | 1,284 |
Accrued compensation and benefit costs | 3,582 | 5,534 |
Payroll tax payable | 7 | 167 |
Income taxes payable | 72 | 0 |
Other liabilities | 628 | 656 |
Total accrued expenses and other liabilities | $ 8,617 | $ 9,325 |
Debt - Narrative (Details)
Debt - Narrative (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 USD ($) shares | Jun. 30, 2023 USD ($) shares | |
Debt Instrument [Line Items] | ||
Debt issuance costs | $ 3,302 | $ 3,302 |
Number of shares available for purchase, percent of principal amount of term loan (as a percent) | 0.025 | 0.025 |
Number of options exercisable (in shares) | shares | 94,222 | 94,222 |
Fair value of exercisable options | $ 700 | $ 700 |
Debt interest expense (less than) | 100 | |
Facility Fees | ||
Debt Instrument [Line Items] | ||
Debt issuance costs | 400 | 400 |
Company Fees | ||
Debt Instrument [Line Items] | ||
Debt issuance costs | 800 | 800 |
Warrants | ||
Debt Instrument [Line Items] | ||
Debt issuance costs | 700 | 700 |
End of Term Charge | ||
Debt Instrument [Line Items] | ||
Debt issuance costs | 1,400 | 1,400 |
Loan Agreement | ||
Debt Instrument [Line Items] | ||
Term loan payable | $ 50,000 | $ 50,000 |
Stated interest rate | 9.75% | 9.75% |
Paid-in-kind interest rate | 0.0140 | |
Effective interest rate | 15.10% | 15.10% |
Market capitalization | $ 750,000 | $ 750,000 |
Loan Agreement | Prime Rate | ||
Debt Instrument [Line Items] | ||
Interest rate, prime margin (as a percent) | 1.50% | |
Loan Agreement, Term Loan One | ||
Debt Instrument [Line Items] | ||
Term loan payable | $ 30,000 | 30,000 |
Loan Agreement, Term Loan Two | ||
Debt Instrument [Line Items] | ||
Term loan payable | 10,000 | 10,000 |
Loan Agreement, Term Loan Three | ||
Debt Instrument [Line Items] | ||
Term loan payable | 10,000 | 10,000 |
Debt instrument covenant, cash on hand | $ 22,500 | $ 22,500 |
Debt - Components of Debt (Deta
Debt - Components of Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Debt Disclosure [Abstract] | ||
Term loan payable | $ 30,000 | |
End of term charge | 1,426 | |
Future principal payments and end of term charge | 31,426 | |
Unamortized debt issuance costs | (3,302) | |
Carrying value of long-term debt | $ 28,124 | $ 0 |
Debt - Schedule of Principal Pa
Debt - Schedule of Principal Payments (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Debt Disclosure [Abstract] | |
December 31, 2023 | $ 0 |
December 31, 2024 | 0 |
December 31, 2025 | 6,587 |
December 31, 2026 | 14,173 |
December 31, 2027 | 10,666 |
Future principal payments and end of term charge | $ 31,426 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) $ in Millions | 6 Months Ended | 21 Months Ended | 34 Months Ended | |||||||||
Oct. 08, 2021 USD ($) | Jun. 30, 2023 £ / shares shares | Jun. 30, 2022 £ / shares shares | Jun. 30, 2023 USD ($) shares | Jun. 30, 2023 USD ($) shares | Jun. 30, 2023 USD ($) shares | Mar. 31, 2023 £ / shares | Dec. 31, 2022 £ / shares | Mar. 31, 2022 £ / shares | Dec. 31, 2021 £ / shares | Sep. 30, 2020 £ / shares | Aug. 31, 2020 £ / shares | |
Class of Stock [Line Items] | ||||||||||||
Ordinary share conversion ratio | 1 | |||||||||||
Exercise of share options (in shares) | 128,869 | |||||||||||
Number of shares available for purchase, percent of principal amount of term loan (as a percent) | 0.025 | |||||||||||
Warrant term | 10 years | |||||||||||
Number of options exercisable (in shares) | 94,222 | |||||||||||
Fair value of exercisable options | $ | $ 0.7 | |||||||||||
At-The-Market Offering | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Sale of stock, shares issued in transaction (in shares) | 2,982,038 | 2,982,038 | ||||||||||
Consideration received on transaction | $ | $ 28.6 | $ 28.6 | ||||||||||
American Depositary Shares | Initial Public Offering | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Amount authorized | $ | $ 150 | |||||||||||
Ordinary shares | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Exercise of share options (in shares) | 128,869 | 431,855 | ||||||||||
Vested (in shares) | 42,518 | |||||||||||
Shares issued related to vesting of restricted share units (in shares) | 29,220 | 12,763 | ||||||||||
Settled (in shares) | 13,298 | |||||||||||
Restricted share units issued in settlement (in shares) | 70,638 | |||||||||||
Vested not issued (in shares) | 8,902 | 57,875 | ||||||||||
Common stock, par value (in GBP per share) | £ / shares | £ 0.008 | £ 0.008 | £ 0.008 | £ 0.008 | £ 0.008 | £ 0.008 | £ 0.008 | £ 0.001 | ||||
Ordinary shares | 2022 And 2023 | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Restricted share units issued in settlement (in shares) | 38,122 | |||||||||||
Deferred shares | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Common stock, par value (in GBP per share) | £ / shares | £ 21,921.504 | £ 21,921.504 | £ 21,921.504 | £ 21,921.504 | £ 21,921.504 | £ 21,921.504 | £ 21,921.504 |
Share-Based Compensation - 2017
Share-Based Compensation - 2017 Equity Incentive Plan (Details) - 2017 Equity Incentive Plan | 6 Months Ended |
Jun. 30, 2023 day shares | |
Share-Based Payment Arrangement, Option [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares authorized (in shares) | shares | 1,475,250 |
Expiration period | 10 years |
Share-Based Payment Arrangement, Option [Member] | Options Granted Before June 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period | 1 year |
Award vesting percentage (in percent) | 25% |
Share-Based Payment Arrangement, Option [Member] | Share-based Payment Arrangement, Tranche one | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting percentage (in percent) | 33.30% |
Share-Based Payment Arrangement, Option [Member] | Share-based Payment Arrangement, Tranche two | Grant Date June 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period | 3 years |
Award vesting percentage (in percent) | 75% |
Share-Based Payment Arrangement, Option [Member] | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period | 3 years |
Share-Based Payment Arrangement, Option [Member] | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period | 4 years |
Restricted Stock Units (RSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period | 4 years |
Award vesting percentage (in percent) | 25% |
Restricted Stock Units (RSUs) | Share-based Payment Arrangement, Tranche one | Grant Date June 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting percentage (in percent) | 25% |
Expiration period | 1 year |
Percentage amount closing price is higher than listing price | 20% |
Threshold consecutive trading days | day | 5 |
Share-Based Compensation - 2020
Share-Based Compensation - 2020 Employee Share Purchase Plan (Details) - Employee stock - shares | 6 Months Ended | |
Oct. 01, 2021 | Jun. 30, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized (in shares) | 340,053 | |
Allowable increase in shares authorized for issuance, percentage of outstanding stock (in percent) | 1% | |
Maximum increase in shares available for issuance (in shares) | 510,080 | |
Stock plan, offering period | 6 months | |
Saving period (in percent) | 15% |
Share-Based Compensation - 20_2
Share-Based Compensation - 2020 Share Option Plan (Details) - shares | 1 Months Ended | 6 Months Ended | |
Sep. 30, 2020 | Jun. 30, 2023 | Jun. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted (in shares) | 2,365,866 | ||
2020 Share Option Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expiration period | 10 years | 10 years | |
Award vesting period | 4 years | ||
Award vesting percentage (in percent) | 25% | ||
Shares issued (in shares) | 5,460,391 | ||
2020 Share Option Plan | Vesting condition one | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 4 years | ||
Award vesting percentage (in percent) | 25% | ||
2020 Share Option Plan | Vesting condition two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 4 years | ||
Award vesting percentage (in percent) | 25% | ||
2020 Share Option Plan | Vesting condition three | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 4 years | ||
Ordinary shares | 2020 Share Option Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares reserved for future issuance (in shares) | 2,074,325 | ||
Maximum percentage of shares outstanding number of shares reserved for issuance may increase (in percent) | 4% | ||
Employee stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted (in shares) | 2,365,866 | 1,217,818 | |
Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares available for grant (in shares) | 181,038 | ||
Granted (in shares) | 175,750 |
Share-Based Compensation - 2022
Share-Based Compensation - 2022 Inducement Grant Option Award (Details) - 2022 Inducement Grant Option Award | Aug. 01, 2022 shares |
Ordinary shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares available for grant (in shares) | 600,000 |
Expiration period | 10 years |
Award vesting period | 36 months |
Share-based Payment Arrangement, Tranche one | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting percentage (in percent) | 25% |
Share-based Payment Arrangement, Tranche two | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting percentage (in percent) | 75% |
Share-Based Compensation - Rest
Share-Based Compensation - Restricted Share Units (Details) - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Number of Shares | |||
Granted (in shares) | 2,365,866 | ||
Unvested and Outstanding, ending balance (in shares) | 4,180,803 | ||
Weighted Average Grant Date Fair Value | |||
Granted (in dollars per share) | $ 7.92 | $ 10.67 | |
Weighted Average Grant Date Fair Value, ending balance (in dollars per share) | $ 14.35 | ||
Restricted Stock Units (RSUs) | |||
Number of Shares | |||
Unvested and Outstanding, beginning balance (in shares) | 271,135 | ||
Granted (in shares) | 175,750 | ||
Vested (in shares) | (42,518) | ||
Forfeited (in shares) | (11,506) | ||
Unvested and Outstanding, ending balance (in shares) | 392,861 | 271,135 | |
Weighted Average Grant Date Fair Value | |||
Weighted Average Grant Date Fair Value, beginning balance (in dollars per share) | $ 12.23 | ||
Granted (in dollars per share) | 10.85 | ||
Vested (in dollars per share) | 11.84 | ||
Forfeited (in dollars per share) | 11.79 | ||
Weighted Average Grant Date Fair Value, ending balance (in dollars per share) | $ 11.67 | $ 12.23 | |
Unrecognized compensation cost | $ 3.9 | $ 2.6 | |
Period for recognition (in years) | 3 years | 3 years | |
Exercise price (in pound sterling per share) (less than) | $ 0.01 | $ 0.01 |
Share-based Compensation - Shar
Share-based Compensation - Share Options (Details) $ / shares in Units, $ in Thousands | 6 Months Ended | |||
Jun. 30, 2023 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Jun. 30, 2023 USD ($) $ / shares shares | Jun. 30, 2022 USD ($) $ / shares shares | |
Number of Shares | ||||
Granted (in shares) | 2,365,866 | |||
Exercised (in shares) | (128,869) | |||
Forfeited (in shares) | (345,895) | |||
Outstanding, ending balance (in shares) | 6,983,834 | 6,983,834 | ||
Exercisable (in shares) | 2,803,031 | 2,803,031 | ||
Unvested (in shares) | 4,180,803 | 4,180,803 | ||
Weighted Average Exercise Price | ||||
Outstanding, beginning balance (in dollars per share) | $ / shares | $ 13.55 | |||
Granted (in dollars per share) | $ / shares | 9.83 | |||
Exercised (in dollars per share) | $ / shares | 0.01 | |||
Forfeited (in dollars per share) | $ / shares | 17.90 | |||
Outstanding, ending balance (in dollars per share) | $ / shares | $ 13.24 | $ 13.55 | 13.24 | |
Exercisable (in dollars per share) | $ / shares | 11.60 | 11.60 | ||
Unvested (in dollars per share) | $ / shares | $ 14.35 | $ 14.35 | ||
Weighted Average Remaining Contractual Term (Years) and Aggregate Intrinsic Value | ||||
Outstanding balance (in years) | 8 years 5 months 12 days | 8 years 4 months 17 days | ||
Exercisable (in years) | 7 years 5 months 12 days | |||
Unvested (in years) | 9 years 1 month 9 days | |||
Outstanding, aggregate intrinsic value | $ | $ 13,553 | $ 13,013 | $ 13,553 | |
Exercisable, aggregate intrinsic value | $ | 11,744 | 11,744 | ||
Unvested, aggregate intrinsic value | $ | 1,809 | 1,809 | ||
Aggregate intrinsic value of options exercised during the period (less than in 2023) | $ | $ 1,100 | $ 5,300 | ||
Granted (in dollars per share) | $ / shares | $ 7.92 | $ 10.67 | ||
Unrecognized compensation cost of options | $ | $ 38,500 | $ 38,500 | $ 29,700 | |
Ordinary shares | ||||
Number of Shares | ||||
Exercised (in shares) | (128,869) | (431,855) | ||
Share-Based Payment Arrangement, Option [Member] | ||||
Weighted Average Remaining Contractual Term (Years) and Aggregate Intrinsic Value | ||||
Period for recognition (in years) | 2 years 9 months 18 days | 2 years 10 months 24 days | ||
Share-Based Payment Arrangement, Option [Member] | Ordinary shares | ||||
Number of Shares | ||||
Outstanding, beginning balance (in shares) | 5,092,732 | |||
Outstanding, ending balance (in shares) | 5,092,732 |
Share-Based Compensation - Sche
Share-Based Compensation - Schedule of Valuation Assumptions (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | ||||
Expected option life (years) | 3 years 11 months 26 days | 5 years 6 months | 5 years 9 months 18 days | 5 years 10 months 6 days |
Expected volatility (in percent) | 91.82% | 81.17% | 87.70% | 80.29% |
Risk-free interest rate (in percent) | 4.16% | 3.35% | 3.55% | 1.80% |
Expected dividend yield (in percent) | 0% | 0% | 0% | 0% |
Granted (in dollars per share) | $ 7.93 | $ 10.08 | $ 10.49 | $ 15.01 |
Share-based Payment Arrangement, Expense | $ 4,561 | $ 3,178 | $ 8,632 | $ 6,306 |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Share-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 4,561 | $ 3,178 | $ 8,632 | $ 6,306 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | 2,198 | 1,830 | 4,442 | 3,622 |
General and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 2,363 | $ 1,348 | $ 4,190 | $ 2,684 |
Net Loss Per Share - Schedule o
Net Loss Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Earnings Per Share [Abstract] | ||||||
Net loss | $ (28,335) | $ (24,208) | $ (21,037) | $ (21,171) | $ (52,543) | $ (42,208) |
Net loss attributable to ordinary shareholders - basic | (28,335) | (21,037) | (52,543) | (42,208) | ||
Net loss attributable to ordinary shareholders - diluted | $ (28,335) | $ (21,037) | $ (52,543) | $ (42,208) | ||
Weighted average ordinary shares outstanding - basic (in shares) | 45,565,991 | 42,474,987 | 44,153,772 | 42,110,161 | ||
Weighted average ordinary shares outstanding - diluted (in shares) | 45,565,991 | 42,474,987 | 44,153,772 | 42,110,161 | ||
Net loss per share - basic (in dollars per share) | $ (0.62) | $ (0.50) | $ (1.19) | $ (1) | ||
Net loss per share - diluted (in dollars per share) | $ (0.62) | $ (0.50) | $ (1.19) | $ (1) |
Net Loss Per Share - Schedule_2
Net Loss Per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 7,470,917 | 4,527,296 | 7,470,917 | 4,527,296 |
Unvested restricted share units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 392,861 | 186,411 | 392,861 | 186,411 |
Share options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 6,983,834 | 4,340,885 | 6,983,834 | 4,340,885 |
Warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 94,222 | 0 | 94,222 | 0 |
Right of use of assets - Narrat
Right of use of assets - Narrative (Details) - GBP (£) | 1 Months Ended | 6 Months Ended | |||
Apr. 30, 2023 | Aug. 31, 2022 | Jul. 31, 2021 | Jun. 30, 2023 | Jun. 21, 2022 | |
WeWork | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease cancellation notification period (in days) | 90 days | ||||
Soho, London, UK | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease term | 2 years | ||||
Operating leases, noncancelable term | 24 months | ||||
Operating lease, monthly payment | £ 136,200 | ||||
Refundable lease deposit | £ 136,200 | ||||
Denmark Hill, London, UK | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease term | 5 years | ||||
Operating lease, annual payment | £ 180,000 | ||||
Second Soho London, UK Lease | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease term | 2 years | ||||
Operating leases, noncancelable term | 24 months | ||||
Operating lease, monthly payment | £ 130,000 | ||||
Refundable lease deposit | £ 156,000 |
Right of use of assets - Summar
Right of use of assets - Summary of costs included in operating expenses related to right of use assets (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Lease cost | ||
Operating lease cost | $ 1,136 | $ 1,151 |
Short-term lease cost | 163 | 86 |
Total lease cost | 1,299 | 1,237 |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows used in operating leases | 1,123 | 1,122 |
Right of use assets obtained in exchange for new operating lease liabilities | $ 3,645 | $ 822 |
Weighted average remaining lease term (in years) | 2 years 4 months 24 days | 1 year 9 months 18 days |
Weighted average discount rate (in percent) | 8.49% | 5.52% |
Right of use of assets - Summ_2
Right of use of assets - Summary of future minimum lease payments due to operating leases (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Leases [Abstract] | |
December 31, 2023 | $ 1,132 |
December 31, 2024 | 2,247 |
December 31, 2025 | 1,541 |
December 31, 2026 | 227 |
December 31, 2027 | 57 |
Total future minimum lease payments | 5,204 |
Less: imputed interest | (489) |
Total | $ 4,715 |