Morgan Stanley And TD Cowen Lead Financing Of Up To $285M For Psychedelics Company: Private Placement Backed By 'Select Group' Of Investors

Psychedelics biotech giant COMPASS Pathways CMPS has entered into a securities purchase agreement for an initial $125 million and potential additional of $160 million, with a select group of healthcare specialist investors. 

Led by TCGX and Aisling Capital and the participation of several new and existing institutional investors, the agreement entails the private placement of 16,076,750 American Depositary Shares (ADS) representing 16,076,750 ordinary shares, as well as warrants to purchase up to 16,076,750 ADSs (representing 16,076,750 ordinary shares) at approximately $7.78 each and accompanying warrant to purchase one ADS.

Each warrant will have an exercise price of $9.93 per ADS, representing a 30% premium to the last sale price. The financing is expected to close on August 18, and net proceeds along with the company’s current cash and cash equivalents would the extend cash runway into late 2025.

COMPASS will receive approximately $125 million in gross proceeds before deducting placement agent commissions to Morgan Stanley MS and TD Cowen and offering expenses. This will add to an additional $160 million in gross proceeds if the warrants are fully exercised for cash.

The warrants will be exercisable at the investors’ call for a three-year period. The securities are not registered under the Securities Act or any state or other applicable jurisdiction laws and may not be offered or sold in the U.S. except pursuant to an effective registration statement or an applicable exemption. 

COMPASS has agreed to file a registration statement with the SEC registering the resale of the ADSs issued in the placement and the ADSs issuable upon the exercise of warrants issued therein.

CEO Kabir Nath says the team is grateful for the investors’ support and confidence in the company’s “rigorous approach to building a strong base of evidence” for the potential of COMP360 treatment for people with Treatment-Resistant Depression (TRD), PTSD and anorexia nervosa. 

Nath stated that management expects these net proceeds will allow for the advancement of COMPASS’ pivotal Phase 3 program in TRD as well as achieve important milestones in the COMP360’s development. 

“We view this investment as a validation of the potential of psychedelic medicine and the importance of a rigorous and evidence-based approach,” Nath concluded.

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Photo: Benzinga edit with photo by chrissmith12 and Bru-nO on Pixabay.