Chemomab Therapeutics Ltd. — Q1 2022 Form 10-Q
Business context and period. The Israeli clinical-stage biotechnology company reported unaudited results for the three months ended March 31, 2022, with comparisons to Q1 2021. It is developing CM-101, an antibody targeting CCL24, for fibrotic and inflammatory diseases. The company has not generated revenue. Amounts below are in U.S. dollars; financial statement figures are in thousands unless stated otherwise.
Financial performance and position
| Metric | Q1 2022 / March 31, 2022 | Q1 2021 / December 31, 2021 |
|---|---|---|
| Revenue | None | None to date |
| Research and development expense | $2.745 million | $1.157 million |
| General and administrative expense | $2.575 million | $542,000 |
| Total operating expenses | $5.320 million | $1.699 million |
| Financing income (expense), net | $216,000 income | $5,000 expense |
| Net loss | $5.104 million; $0.022 per ordinary share | $1.704 million; $0.011 per ordinary share |
| Operating cash used | $3.711 million | $1.293 million |
| Cash, cash equivalents and short-term bank deposits | $57.406 million | $61.161 million |
| Total assets / total liabilities | $60.956 million / $3.720 million | $64.353 million / $2.887 million |
| Accumulated deficit | $41.277 million | $36.173 million |
Cash, cash equivalents and restricted cash at quarter-end were $13.912 million; the company also held $43.579 million in short-term deposits. The filing reports no borrowing debt; liabilities principally include payables, accruals, employee costs and operating leases. Current assets were $59.340 million against current liabilities of $3.517 million. Contractual commitments totaled $11.986 million, mostly due in the remainder of 2022 and 2023. Gross margin is not applicable because the company had no revenue.
Material changes versus comparable period
- Net loss increased $3.4 million, or 200%. R&D expense rose 137%, primarily due to increased clinical and preclinical activity. G&A expense rose 375%, primarily reflecting higher noncash share-based compensation and public-company costs.
- Operating cash use increased $2.418 million to $3.711 million. Q1 2021 cash flow included $47.799 million of financing proceeds from the private placement and reverse recapitalization; Q1 2022 had no financing cash inflow.
- Share-based compensation was $874,000 in Q1 2022 versus $43,000 in Q1 2021. Financing income in Q1 2022 reflected interest on bank deposits and foreign-exchange gains.
- Comparisons involve the 2021 merger, accounted for as a reverse recapitalization with Chemomab Ltd. as accounting acquirer. Share data were retroactively adjusted for the exchange ratio and reverse split.
Outlook, commentary and risks
- Management said existing cash resources were expected to fund projected requirements through the end of 2023, while noting that substantial additional financing will be needed. Future funding may dilute shareholders or impose debt obligations; financing may not be available on acceptable terms.
- Following a strategic review, the company planned to expand the Phase 2 PSC study with dose-finding cohorts and an open-label extension; redesign its planned SSc study to pursue earlier proof-of-concept data; and complete enrollment earlier in its subcutaneous CM-101 liver-fibrosis safety, PK and biomarker study, with a readout targeted near year-end 2022.
- COVID-19 had delayed and affected PSC trial enrollment; the company expanded recruiting territories. Further effects on enrollment and operations remained uncertain.
- R&D and G&A expenses were expected to increase as development advances and operations expand. The filing gives no revenue or earnings guidance. Clinical, regulatory, financing, manufacturing and intellectual-property execution are key risks; management reported no material change to the risk factors in its 2021 Form 10-K.
- After quarter-end, on April 25, 2022, the company filed a prospectus supplement to reactivate its ATM facility for up to $18.125 million of ADS sales. The company had previously sold 699,806 ADSs under the facility for gross proceeds of about $15.9 million through March 31, 2022.
Important facts for investors to verify
- Whether the expanded PSC trial and revised SSc plan proceed on schedule, and whether the targeted late-2022 subcutaneous-study readout is achieved.
- Cash and deposit balances, actual cash burn, and the assumptions supporting management’s stated runway through year-end 2023.
- Any ATM sales after March 31, 2022, their proceeds and dilution, and the remaining registered capacity.
- Clinical-trial enrollment, COVID-related disruption, safety and efficacy data, and the financing needed to advance programs.
- The timing and composition of the $11.986 million contractual commitments and any material changes in liabilities or cash requirements.