Chemomab Therapeutics Ltd. — FY2021 Form 10-K
Reporting period: Year ended December 31, 2021; filed March 30, 2022. This is an annual report, not a standalone fourth-quarter report. Chemomab is an Israel-based clinical-stage biotechnology company developing CM-101 for fibrotic and inflammatory diseases. The March 2021 merger with Anchiano was accounted for as a reverse recapitalization; the 2020 comparative results are principally those of Chemomab Ltd.
Financial results and liquidity
| Metric (USD millions, except per-share data) | 2021 | 2020 | Change / context |
|---|---|---|---|
| Revenue | None | None | No product revenue; none expected in the near term. |
| Research and development expense | 6.334 | 4.684 | Up 35%, primarily from increased headcount and clinical and preclinical work. |
| General and administrative expense | 6.033 | 1.288 | Up 368%, reflecting public-company costs, professional fees, insurance, share-based compensation and headcount. |
| Total operating expenses | 12.367 | 5.972 | More than doubled. |
| Net loss | 12.478 | 5.951 | Loss widened; basic and diluted loss per ordinary share was $0.060 versus $0.044. |
| Net cash used in operating activities | 12.374 | 5.242 | Higher cash use, broadly consistent with increased operating expenses. |
| Cash and cash equivalents | 15.186 | 11.674 | Year-end balance. |
| Short-term bank deposits | 45.975 | 0.024 | Total cash, cash equivalents and short-term deposits were about $61.2 million at year-end. |
| Total assets / total liabilities | 64.353 / 2.887 | 12.476 / 1.674 | Liabilities included lease obligations; no borrowings are reported in the supplied statements. |
Margins are not meaningful because the company had no revenue. Net cash provided by financing activities was $61.074 million in 2021, including $58.637 million from share and warrant issuance, net of issuance costs, and $2.427 million of cash acquired in the merger. Investing activities used $45.186 million, primarily for short-term deposits. Accumulated deficit was $36.173 million. No cash dividends have been paid.
Material changes and financing
- The March 2021 merger transformed the listed company’s business into Chemomab’s drug-development operations. Former Chemomab securityholders held approximately 90% of the combined company immediately after closing, on a fully diluted basis.
- A March 2021 private placement generated approximately $45.5 million gross and included warrants to purchase up to 261,929 ADSs at $17.35 per ADS. Full exercise could provide about $4.5 million.
- Under a $75 million at-the-market facility, the company sold 699,806 ADSs through December 31, 2021, for approximately $15.9 million gross. It also filed a shelf registration statement permitting up to $200 million of securities offerings.
- Management estimated existing cash resources would fund operating and capital needs through the end of 2023, while noting that assumptions may prove incorrect and additional financing will be needed to advance development and potential commercialization.
Business, outlook and risks
- Lead program: CM-101 is an investigational antibody targeting CCL24, intended to have anti-inflammatory and anti-fibrotic effects. It is not approved for sale. The company’s business is highly dependent on CM-101.
- Clinical programs: A Phase 2 study in primary sclerosing cholangitis (PSC) was recruiting in Europe and Israel. On March 9, 2022, following a strategic review, Chemomab said it planned to expand the study with lower and higher dose cohorts and an open-label extension. A Phase 2 systemic sclerosis (SSc) study was planned for the second half of 2022. An ongoing liver-fibrosis/NASH study of a subcutaneous formulation was expected to complete enrollment early and provide data near year-end 2022.
- Early evidence: The filing describes Phase 1 studies as generally well tolerated and reports exploratory biomarker changes in a small NAFLD patient study. These findings are preliminary and do not establish clinical efficacy in PSC or SSc.
- Management and operations: Leadership changed during 2021; Dale Pfost became CEO in October and chairman in February 2022, and Donald Marvin became CFO/COO in November. The company relies on third parties for manufacturing and reports a sole supplier for CM-101.
- Key risks: Significant ongoing losses and need for future capital; clinical, regulatory and enrollment uncertainty; COVID-19-related trial disruption; dependence on CM-101 and a single manufacturer; competition; patent and intellectual-property risk; and operational and geopolitical exposure in Israel. Israeli Innovation Authority-funded know-how is subject to restrictions on transfer outside Israel.
- Financial reporting: KPMG issued an unqualified audit opinion on the financial statements. Management reported effective disclosure controls and internal control over financial reporting; the auditor did not provide an ICFR attestation because the company was an emerging growth company.
Important facts for investors to verify
- Whether the cash runway estimate through December 2023 remains supported by updated cash, deposits, spending plans and clinical-program costs.
- Progress, enrollment, dose design, timing and results for the expanded PSC trial, planned SSc study and subcutaneous liver-fibrosis study.
- Remaining capacity and potential dilution under the ATM and shelf registrations, and exercise terms or status of outstanding warrants and options.
- Manufacturing capacity, continuity and costs with the sole CM-101 supplier, including the commitments under the additional manufacturing agreements.
- Whether any subsequent events or trial updates after the reporting date materially changed the company’s strategy, financing needs or outlook.