Securities Purchase Agreement

On November 2, 2022, Compass Therapeutics, Inc. (the “Company”) and certain accredited investors (each an “Investor” and collectively, the “Investors”) entered into a securities purchase agreement (the “Securities Purchase Agreement”) pursuant to which the Company agreed to sell and issue to the Investors in a private placement (the “Private Placement”) an aggregate of 25,000,000 shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) at a purchase price of $3.21 per share. The purchase price represents a price that is no lower than the average closing price of the Company’s common stock on the Nasdaq Capital Market for the five trading days immediately preceding the signing of the Securities Purchase Agreement.

The Private Placement is anticipated to close no later than November 8, 2022, subject to the satisfaction of customary closing conditions. The Company anticipates receiving gross proceeds from the Private Placement of approximately $80 million, before deducting fees to the placement agents and other offering expenses payable by the Company. Jefferies LLC, SVB Securities LLC and Stifel, Nicolaus & Company, Incorporated acted as placement agents in the Private Placement. The Company intends to use the net proceeds from the Private Placement, together with existing cash and cash equivalents, to fund clinical development of CTX-009, CTX-471, CTX-8371, the preclinical development of other programs, research activities as well as working capital and other general corporate purposes. The proceeds from the private placement are expected to extend the Company’s cash runway into 2026. The Securities Purchase Agreement contains customary representations and warranties and covenants, as well as rights in favor of one Investor to appoint one individual to the Company’s Board of Directors, as described in greater detail under Item 5.02 below.

The foregoing description of the Securities Purchase Agreement does not purport to be complete and is qualified in its entirety by references to the full text of such agreement, which will be filed as an exhibit to the Company’s next Quarterly Report on Form 10-Q.

Registration Rights Agreement

In connection with the Private Placement, the Company and the Investors also entered into a Registration Rights Agreement, dated November 2, 2022 (the “Registration Rights Agreement”), providing for the registration for resale of the Shares. The Company is required to prepare and file a registration statement with the Securities and Exchange Commission (the “SEC”) promptly, and in any event within 30 days of the closing, and to use commercially reasonable efforts to cause the registration statement to be declared effective by February 1, 2023. The Company and the Investors have granted customary indemnification rights to each other in connection with the Registration Rights Agreement.

The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by references to the full text of such agreement, which will be filed as an exhibit to the Company’s next Quarterly Report on Form 10-Q.

On November 2, 2022, the Company issued a press release announcing the Private Placement, a copy of which is attached hereto as Exhibit 99.1 and is incorporated by reference herein.

The information contained above under Item 1.01, to the extent applicable, is hereby incorporated by reference herein. Based in part upon the representations of the Investors in the Securities Purchase Agreement, the offering and sale of the Shares was made in reliance on the exemption afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and/or Rule 506 of Regulation D under the Securities Act and corresponding provisions of state securities or “blue sky” laws. The Shares have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from the registration requirements. The sale of the Shares did not involve a public offering and was made without general solicitation or general advertising. The Investors represented that they are accredited investors, as such term is defined in Rule 501(a) of Regulation D under the Securities Act, and that they are acquiring the securities for investment purposes only and not with a view to any resale, distribution or other disposition of the securities in violation of the U.S. federal securities laws.

Neither this Current Report on Form 8-K nor any exhibit attached hereto is an offer to sell or the solicitation of an offer to buy shares of Common Stock or other securities of the Company.

Pursuant to the Securities Purchase Agreement, the Company has agreed to appoint James P. Boylan, the Chief Executive Officer of Enavate Sciences, as a Class II director to join the Board of Directors (the “Board”) of the Company, with a term expiring at the Company’s annual meeting of stockholders in 2025. On November 1, 2022, the Board appointed Mr. Boylan to join as a director of the Board, effective upon the closing of the Private Placement. The Board determined that Mr. Boylan is independent within the meaning of Nasdaq’s listing rules.

Mr. Boylan, aged 55, is the Chief Executive Officer of Enavate Sciences, a portfolio company of Patient Square Capital. Mr. Boylan is an experienced executive, entrepreneur and innovator with nearly three decades of health care experience. Prior to joining Enavate Sciences in May 2022, Mr. Boylan was the President and Head of Investment Banking of SVB Leerink, which he joined in May 2009 and where he architected and led the transformation of Leerink Swann into an industry-leading health care investment bank that was acquired by SVB Financial in 2019. Across his 12 years at SVB Leerink and prior 12 years as a Managing Director at Merrill Lynch, Mr. Boylan has worked with numerous healthcare and biotechnology companies to develop strategy and complete transactions in capital markets and mergers & acquisitions. Mr. Boylan has a broad network of CEO, CFO, board member, venture capital and investor relationships in the health care field. Mr. Boylan earned an MBA in finance from the Columbia Business School and a BS in finance from Lehigh University.

There are no family relationships between Mr. Boylan, on the one hand, and any director, executive officer or any other person nominated or chosen by the Company to become a director or executive officer, on the other. Mr. Boylan is not a party to any related person transactions with the Company that would require disclosure under Item 404(a) of Regulation S-K of the Securities Act, and there are no arrangements or understandings between Mr. Boylan and any other persons pursuant to which he was selected as a director. The Company has not yet determined the compensation that Mr. Boylan will receive, if any, for his service as a director on the Board. In addition, Mr. Boylan will enter into a customary indemnification agreement with the Company.

(d) Exhibits: