Business context and reporting period
Clene Inc. is a clinical-stage pharmaceutical company developing clean-surfaced nanocrystal therapeutics. Its lead candidate, CNM-Au8, is in clinical development for ALS, multiple sclerosis (MS) and Parkinson’s disease (PD); CNM-ZnAg is being studied for COVID-19. The company has no approved drugs and generated no drug-sale revenue. This 10-K covers the fiscal year ended December 31, 2021; it is not a fourth-quarter-only report. Comparisons below are with fiscal 2020.
Financial and operating performance
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $0.723 million | $0.206 million |
| Cost of revenue / gross profit | $0.289 million / $0.434 million | $0.065 million / $0.141 million |
| Research and development expense | $28.416 million | $15.204 million |
| General and administrative expense | $21.996 million | $5.151 million |
| Operating loss | $49.978 million | $20.214 million |
| Net loss | $9.740 million | $19.277 million |
| Cash used in operating activities | $34.624 million | $18.929 million |
| Cash and restricted cash at year-end | $50.346 million | $59.275 million |
Revenue was from dietary supplements and related-party royalties, not drug sales. Gross profit is calculated from reported revenue less cost of revenue. The company remains loss-making, with no positive operating margin; it reported no drug-product margins.
The 2021 net loss narrowed despite a substantially higher operating loss because other income included $37.542 million of noncash gains from remeasuring contingent earn-out liabilities. These gains were driven primarily by the decline in Clene’s share price and do not represent operating cash generation. Other income also included a $1.519 million Australian research and development credit and a $0.648 million gain from forgiveness of the PPP loan.
At December 31, 2021, current assets were $54.583 million and current liabilities were $6.026 million. Notes payable were $14.484 million and convertible notes payable were $4.598 million, in addition to lease obligations. The Avenue loan provided $20 million of gross Tranche 1 funding; it carries a variable rate, initially interest-only, and matures in December 2024. A further $10 million tranche was available subject to conditions. Cash declined year over year as operating outflows exceeded financing inflows.
Material changes versus the prior comparable period
- Revenue rose $0.517 million, but remained immaterial relative to expenses and came from supplements and royalties.
- R&D expense increased 87% and general and administrative expense increased 327%, reflecting clinical-trial activity, headcount, public-company costs, insurance and facility expansion.
- Operating cash use increased to $34.624 million from $18.929 million. The company ended 2021 with $50.346 million of cash and restricted cash, down from $59.275 million.
- Financing included $20 million of Avenue loan proceeds and approximately $9.3 million of 2021 PIPE proceeds.
Outlook, management commentary, risks and unusual items
- Management said existing resources, without additional capital, were expected to fund operations into the second quarter of 2023. Additional financing or collaboration may be needed; depending on results, cost reductions, including delaying or reducing programs, could be required as early as the third quarter of 2022.
- CNM-Au8’s RESCUE-ALS Phase 2 trial did not meet its primary or secondary endpoints at week 36. The filing reports favorable exploratory measures and subset signals, but these do not replace the missed endpoints. Healey ALS Platform Trial results were anticipated in the second half of 2022.
- REPAIR-MS and REPAIR-PD showed a statistically significant increase in the combined analysis of the brain NAD+/NADH ratio after 12 weeks; the individual trial results were not statistically significant. These were small, open-label studies focused on target engagement, not proof of clinical benefit.
- VISIONARY-MS was expected to conclude early because of COVID-19-related challenges; full unblinded results were anticipated in the second half of 2022. Interim efficacy analyses described in the filing were blinded.
- The COVID-19 CNM-ZnAg trial in Brazil was fully enrolled at 276 subjects as of February 2022, with results anticipated in mid-2022. The filing also describes uncontrolled supplement observations; these are not controlled evidence of efficacy.
- Principal risks include clinical failure or delay, regulatory uncertainty for nanocrystal drugs, continued cash burn and financing needs, manufacturing scale-up and supply constraints, and competition. The company relies on its own manufacturing facilities and is expanding capacity.
- Management identified material weaknesses in financial-reporting controls, including account reconciliations and journal-entry review, segregation of duties, and IT general controls. Remediation was underway; management had not concluded the weaknesses were fully remedied. Disclosure controls were deemed ineffective.
- No material legal proceedings were reported. Clene has never paid cash dividends and does not expect to do so in the foreseeable future.
Most important facts for investors to verify
- Trial status and full, unblinded results for the Healey ALS Platform Trial and VISIONARY-MS, including whether findings support confirmatory development.
- How much cash is available relative to ongoing operating burn, and whether additional financing or the conditional Avenue Tranche 2 is obtained.
- The Avenue loan’s current interest cost, covenants, repayment schedule and collateral, along with total debt and lease commitments.
- Progress in remediating the disclosed material weaknesses and whether subsequent filings report effective controls.
- Whether manufacturing expansion, regulatory requirements and raw-material availability can support planned clinical programs and any future commercialization.