Chemomab Therapeutics Ltd. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. Amounts are in U.S. dollars; financial statement figures are in thousands unless otherwise noted. Chemomab is a clinical-stage biotechnology company developing CM-101 for fibrotic and inflammatory diseases.
Financial performance and liquidity
- Revenue: None to date. The company expects no product revenue unless it obtains regulatory approval and commercializes a candidate or enters a revenue-generating collaboration.
- Q2 2022: R&D expense was $2.914 million, up 123% year over year; G&A was $3.340 million, up 131%. Net loss was $6.190 million, compared with $2.770 million in Q2 2021. Financing expense, net, was $480,000.
- First half 2022: R&D expense was $5.659 million, up 130%; G&A was $5.915 million, up 198%. Net loss was $11.294 million, compared with $4.474 million in the first half of 2021. Financing expense, net, was $264,000.
- Margins: Not meaningful because the company had no revenue.
- Cash flow: Net cash used in operations was $9.412 million for the first half, versus $6.900 million a year earlier. Investing activities provided $4.109 million, mainly from a decrease in deposits; financing activities provided $22,000. Cash, cash equivalents and restricted cash decreased $5.281 million to $9.960 million.
- Liquidity and debt: Cash, cash equivalents and short-term deposits totaled $51.724 million at June 30, 2022, down from $61.161 million at December 31, 2021. Total liabilities were $4.542 million, principally operating lease liabilities and payables; the filing reports no borrowings. Accumulated deficit was $47.467 million.
- Commitments: Contractual commitments totaled $10.908 million: $5.021 million for the remainder of 2022 and $5.741 million for 2023, with the balance in 2024.
Material changes and developments
- Operating expenses increased substantially year over year, reflecting higher clinical and preclinical activity, added senior-management personnel, increased share-based compensation, and expenses related to the Israeli Tax Authority audit.
- The company revised CM-101’s clinical program. The PSC Phase 2 study was expanded to 93 patients, adding 5 mg/kg and 20 mg/kg dose cohorts alongside the existing 10 mg/kg cohort; safety and tolerability became the primary outcome. Top-line data were expected in the second half of 2024.
- The planned systemic sclerosis study was redesigned to focus on biological proof of concept; the company expected to launch it by the end of 2022. Enrollment in the NASH liver-fibrosis study of a subcutaneous formulation was concluded, with a data readout targeted near year-end 2022.
- In June, the company received a U.S. patent covering CM-101 and other anti-CCL24 antibodies for hepatic diseases, including PSC. It also appointed a new director and VP of Research & Development.
Outlook, risks and unusual items
- Management expected existing cash resources to fund projected requirements through the end of 2023, but said substantial additional financing would be needed. No future external funding commitments were reported; equity financing could dilute shareholders, and debt could add obligations and covenants.
- Management expects R&D and G&A expenses to increase as development advances and operations expand. No specific financial guidance beyond the cash-runway estimate and clinical timing expectations was provided.
- COVID-19 had delayed PSC trial enrollment and affected recruitment rates; additional territories were added to support recruitment. Further delays or patient discontinuations remained possible.
- The Israeli Tax Authority’s VAT audit covers 2017–2020. The company rejected a proposed settlement, received an assessment in July 2022, plans to appeal, and recorded a provision. The filing does not provide a clear value for the provision; the final liability may differ.
- The company had applied to carry back U.S. net operating losses and expected a tax refund in the second half of 2022. The expected refund amount is not stated here.
- The ATM facility allowed sales of up to $75 million; $15.9 million of gross proceeds had been raised through June 30, 2022. A supplement authorized up to $18.125 million, but no ADSs were sold under the agreement from April 25 through the filing date.
Most important facts for investors to verify
- Whether the stated cash runway through year-end 2023 remains adequate as clinical-trial costs and commitments evolve, and what financing may be required.
- PSC enrollment, the interim safety analysis and progress toward the planned 2024 data readout; confirm timing and design of the systemic sclerosis and NASH studies.
- The amount and potential outcome of the Israeli VAT assessment and appeal, including any change to the recorded provision.
- Whether the expected U.S. tax refund was received and whether the company subsequently used the ATM or other financing.