Filing summary
Entity mismatch: The requested company is Chemomab Therapeutics Ltd., but the supplied Form 10-Q is for Anchiano Therapeutics Ltd. This summary reflects Anchiano’s filing, not Chemomab’s.
Business context and reporting period
Unaudited Form 10-Q for the quarter ended September 30, 2020, filed November 16, 2020. Anchiano was a preclinical biotechnology company developing small-molecule pan-mutant RAS inhibitors and PDE10/beta-catenin pathway inhibitors. It had discontinued clinical development of inodiftagene vixteplasmid in November 2019 and reported no revenue to date.
Financial position and results
- Revenue: None. The company said it did not expect revenue unless a product were approved and commercialized or it entered a revenue-generating collaboration.
- Net loss: $2.449 million in Q3 2020 versus $7.168 million in Q3 2019; $9.465 million for the first nine months of 2020 versus $21.520 million in the comparable 2019 period.
- Operating expenses: Q3 R&D was $1.252 million, down 78%; G&A was $1.125 million, down 34%; restructuring expense was $79,000. Nine-month R&D was $3.609 million, down 71%; G&A was $5.126 million, up 3%; restructuring expense was $749,000.
- Margins: Not meaningful given the absence of revenue.
- Cash flow: Operating cash use was $11.022 million in the first nine months of 2020, compared with $10.544 million in 2019. Investing activities provided $85,000; there was no financing cash flow in 2020. Cash and cash equivalents fell to $6.768 million from $17.575 million at year-end 2019.
- Liquidity and liabilities: Current assets were $7.388 million and current liabilities $2.275 million at September 30, 2020. Total liabilities were $2.338 million, including operating lease liabilities; the filing reports no borrowings. Accumulated deficit was $114.896 million.
- Share data: 37,099,352 ordinary shares were outstanding at September 30, 2020 and November 16, 2020. Basic and diluted loss per share was $0.07 for Q3 and $0.26 for the nine-month period.
Material changes versus prior comparable periods
- Lower R&D spending reflected reduced development activity, workforce reductions, and the discontinued bladder cancer study. G&A for the nine months was slightly higher, while Q3 G&A was lower.
- 2019 nine-month net loss included $4.286 million of net finance expense, mainly from warrant remeasurement; 2020 reported $19,000 of net finance income.
- Cash declined substantially, and 2020 had no financing proceeds, unlike 2019, when the company received $26.621 million of net IPO proceeds.
- Anchiano closed its Israeli office and laboratories, completed the closure by May 2020, and reduced its workforce. In July it further reduced staff and temporarily curtailed internal and external work on its pan-RAS program.
Outlook, risks, and unusual items
- Going concern: Management said existing cash was expected to fund projected needs only into Q1 2021 and stated that these conditions raised substantial doubt about the company’s ability to continue as a going concern. Additional financing or a strategic transaction was needed, but might not be available on acceptable terms or at all.
- Strategic review: Anchiano engaged Oppenheimer & Co. in July 2020 to review strategic alternatives. There was no assurance that the process would produce or complete a transaction or create shareholder value. Management also said it was seeking financing or co-development partners for the pan-RAS program.
- Potential claim: The company disclosed potential exposure of up to $0.4 million related to former CEO Frank Haluska’s claim that he resigned for “Good Reason.” Anchiano disputed entitlement to severance and said it would contest claims.
- Leadership: Neil Cohen was appointed CEO and Andrew Fine CFO on October 20, 2020, after the reporting quarter.
- Other risks: The company cited strategic-review costs and disruption, financing uncertainty, and the possibility of future Nasdaq listing noncompliance. It had regained bid-price compliance in June 2020, but said continued compliance was not assured. COVID-19 had not significantly affected operations as of October 14, 2020, though future effects remained uncertain.
- Contingencies and commitments: Operating lease commitments totaled $276,000 at September 30, 2020. The filing reported $238,000 remaining in restructuring accruals. No material pending legal proceedings were reported.
Important facts for investors to verify
- Whether the intended filing was Anchiano’s 2020 Q3 10-Q or a Chemomab filing.
- Cash runway assumptions, actual spending, and the availability and terms of any subsequent financing or strategic transaction.
- Current status and funding of the pan-RAS and PDE10/beta-catenin programs, including any changes to the temporary R&D reduction.
- Outcome of the former CEO’s severance dispute and any resulting payment or legal exposure.
- How restructuring and clinical-development termination charges are categorized: the filing gives differing descriptions of related charges in its notes and MD&A.