Chemomab Therapeutics Ltd. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. Chemomab is an Israeli clinical-stage biotechnology company developing CM-101, an antibody targeting CCL24 for fibrotic and inflammatory diseases. It has no products approved for sale and reported no revenue.
Financial performance and position
- Operating expenses: $9.049 million, up 70% year over year. Research and development was $6.887 million, up 151%, primarily reflecting increased clinical and preclinical activity. General and administrative expense was $2.162 million, down 16%.
- Net loss: $8.753 million, versus $5.104 million in Q1 2022; loss per ordinary share was $0.040 versus $0.022. Net financing income was $317,000, compared with $216,000.
- Cash flow: Operating cash use was $7.186 million, versus $3.711 million. Investing activities provided $14.432 million, mainly from withdrawals of bank deposits; there was no financing cash flow. Cash, cash equivalents and restricted cash ended at $20.842 million.
- Liquidity: Cash and cash equivalents plus short-term bank deposits totaled $32.706 million at March 31, compared with $39.893 million at December 31, 2022. The company said existing resources should fund operations through June 30, 2024, with potential cost reductions to extend the runway. It expects to need significant additional funding.
- Balance sheet and debt: Total assets were $35.013 million and total liabilities $7.059 million. The filing reports no borrowings; liabilities principally include payables, accruals, employee expenses and operating leases. Shareholders’ equity was $27.954 million. Accumulated deficit was $72.572 million.
- Margins are not meaningful because the company has not generated revenue. Contractual commitments totaled $9.097 million, including $6.361 million for the remainder of 2023.
Business developments, outlook and risks
- The FDA cleared the IND for the Phase 2 ABATE trial of CM-101 in systemic sclerosis. The planned study is expected to enroll 45 patients, with enrollment targeted around mid-2023 and a data readout targeted for the second half of 2024.
- The company reported January 2023 topline results from a 23-patient Phase 2a NASH trial: the study met its safety and tolerability endpoint, and the company reported favorable changes in selected fibrosis biomarkers and liver stiffness measures. These are early findings; the filing notes that treated patients had higher baseline fibrosis than placebo patients and that the impact is unknown.
- The Phase 2 PSC study was recruiting in the U.S., Europe and Israel. Management expects research and development expenses to increase as programs advance, and anticipates higher general and administrative costs to support development and public-company activities.
- Funding risk is significant: the company has operating losses, negative operating cash flow and no committed future external financing. Equity issuance could dilute shareholders; debt or partnering may not be available on acceptable terms and could constrain operations or require relinquishing rights.
- An Israeli tax authority VAT audit concerns 2017–2020, including VAT recoverability on merger-related expenses. The company rejected a proposed settlement, received an assessment and plans to appeal; a provision was recorded in 2022, but its amount is not clearly stated in this filing excerpt and the outcome is uncertain.
- The filing reports no material changes to the risk factors in the 2022 Form 10-K. Management concluded disclosure controls were effective as of March 31, 2023.
Most important facts for investors to verify
- Whether cash use and clinical-trial spending remain consistent with the stated runway through June 2024, and what financing may be needed sooner.
- Enrollment progress and timing for the PSC and systemic sclerosis Phase 2 trials, including whether the targeted SSc readout remains achievable.
- Whether NASH biomarker findings are reproducible in larger studies and how the baseline imbalance affects interpretation.
- The status, potential financial exposure and appeal outcome of the Israeli VAT assessment.
- Any subsequent use of the ATM facility or the March 2023 registration statement for up to $10 million of ADSs, and the resulting dilution.