Clene Inc. — FY2023 Form 10-K
Reporting period: Year ended December 31, 2023. Clene is a clinical-stage pharmaceutical company developing clean-surfaced nanocrystal therapeutics, primarily CNM-Au8 for ALS, multiple sclerosis (MS), and Parkinson’s disease (PD). It has no approved drug products and generates no revenue from drug sales; reported revenue is from dietary supplements and related royalties.
Financial results and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Total revenue | $0.654 million | $0.473 million |
| Operating expenses | $41.194 million | $48.882 million |
| Loss from operations | $40.540 million | $48.409 million |
| Net loss | $49.504 million | $29.918 million |
| Net cash used in operating activities | $30.171 million | $39.011 million |
- Revenue comprised $0.498 million of product sales and $0.156 million of royalties. These amounts are immaterial relative to operating costs. No meaningful positive operating margin is reported.
- At December 31, 2023, cash and cash equivalents were $28.821 million and marketable securities were $6.179 million, totaling $35.0 million, versus $23.3 million a year earlier. Current assets were $38.852 million and current liabilities $25.330 million.
- Debt and convertible debt had a combined carrying value of approximately $26.7 million. The Avenue loan bears a 15.1% rate at year-end; its $20 million principal is scheduled for 2024, subject to loan terms and potential extensions. The company must maintain at least $5 million in unrestricted cash under the Avenue agreement.
- Financing activities provided $42.163 million in 2023, chiefly from a June public offering. Shares outstanding increased from 74.8 million at year-end 2022 to 128.4 million at year-end 2023. The offering also issued warrants covering 100 million shares, in addition to other outstanding warrants and options.
Changes versus prior year
- Revenue rose 38%, but from a very small base. Research and development expense decreased 16% to $26.655 million, and general and administrative expense decreased 15% to $14.418 million, primarily reflecting completed trial periods, lower CRO activity, and cost reductions.
- Net loss widened 65%, despite a smaller operating loss. FY2023 included a $14.840 million noncash loss on initial issuance of equity in the June offering, partly offset by gains from changes in fair value of warrants and earn-out liabilities. FY2022 included substantially larger earn-out fair-value gains, making year-over-year net loss comparisons sensitive to noncash items.
- Operating cash use improved by $8.840 million year over year, while cash and marketable securities increased following substantial equity financing.
Outlook, clinical programs, and key risks
- Going concern: Management and the auditor report substantial doubt about Clene’s ability to continue as a going concern. The company says it will not have sufficient resources to sustain current operations or meet obligations over the next 12 months without additional financing; its cost-cutting and fundraising plans do not alleviate the doubt. Planned funding sources include equity, debt, collaborations or licensing, and possible warrant or option proceeds, none assured.
- ALS: Phase 2 trials did not meet key primary endpoints: RESCUE-ALS missed its MUNIX and forced vital capacity endpoints, and the HEALEY ALS Platform Trial missed its primary ALSFRS-R endpoint and key secondary endpoints. Management cites exploratory biomarker and longer-term survival analyses as supportive, but these do not establish efficacy or regulatory approval. The FDA said available NfL biomarker findings were insufficient to support accelerated approval at that time. RESTORE-ALS Phase 3 was planned for the second half of 2024, contingent on funding; timing and any NDA filing remain uncertain.
- MS and PD: REPAIR studies reported brain-metabolite target engagement in integrated analyses, but individual trials did not independently reach statistical significance on the primary measure. VISIONARY-MS ended early during the pandemic with 73 participants versus 150 planned; reported efficacy analyses include modified populations and exploratory findings. Management reported favorable long-term extension measures, which require confirmation.
- Other assets: Clene ceased clinical development of CNM-ZnAg for COVID-19 after its trial showed no clinical benefit. CNM-AgZn17 remains in preclinical development, with further work dependent on funding and regulatory progress.
- Additional risks: Clinical and regulatory uncertainty, dependence on additional capital, high-interest debt and near-term maturities, potential dilution, manufacturing scale-up and supplier constraints, reimbursement and commercialization challenges, and volatile stock-based liability valuations. Nasdaq granted an extension through July 29, 2024 to regain the $1 minimum bid-price requirement; failure could lead to delisting.
- Controls and audit: Management concluded disclosure controls and internal control over financial reporting were ineffective at year-end due to material weaknesses involving the control environment, account reconciliations and journal-entry review, and IT general controls. The auditor issued an unqualified opinion on the financial statements but did not provide an opinion on internal controls.
Important facts for investors to verify
- Current cash runway, financing raised after the filing, and the ability to meet debt payments and the $5 million Avenue cash covenant.
- Terms, timing, and likely dilution from the 2023 warrants, outstanding equity facilities, options, and any subsequent financing.
- Whether RESTORE-ALS receives funding and proceeds, and what FDA feedback and evidence would be required before any NDA submission.
- Whether promising ALS survival and biomarker analyses withstand prospective, controlled confirmation; distinguish exploratory, post hoc, and external-control analyses from primary trial endpoints.
- Progress in remediating the disclosed material weaknesses and regaining Nasdaq bid-price compliance.