Filing identity and reporting period
The supplied filing is Anchiano Therapeutics Ltd.’s Form 10-K for the fiscal year ended December 31, 2019, filed March 17, 2020. It is not a Chemomab Therapeutics Ltd. filing; the company identity in the request and source do not match. The financial statements are audited and prepared under U.S. GAAP; the company had previously reported under IFRS.
Business context
Anchiano was a preclinical biotechnology company developing small-molecule cancer programs. In September 2019 it obtained an exclusive option from ADT Pharmaceuticals to license pan-RAS and PDE10/β-catenin programs. In November 2019 it discontinued its Phase 2 Codex study of inodiftagene for bladder cancer after preliminary efficacy appeared unlikely to meet the study’s futility threshold or support approval. The company reported no active clinical programs at year-end.
Financial performance and liquidity
Amounts below are U.S. dollars; financial statement figures are in millions unless otherwise indicated.
| Metric | 2019 | 2018 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $13.303 | $7.514 |
| General and administrative expense | $6.245 | $5.521 |
| Restructuring expense | $3.350 | — |
| Operating loss | $22.898 | $13.035 |
| Net loss | $27.124 | $13.798 |
| Basic and diluted loss per share | $0.79 | $1.09 |
| Cash used in operating activities | $16.458 | $14.223 |
| Cash provided by financing activities | $26.621 | $20.619 |
Year-end cash and cash equivalents were $17.575 million, up from $7.517 million; cash flow statements report $17.705 million including restricted cash. Current assets were $18.211 million and current liabilities $4.121 million. Total liabilities were $4.846 million, including $1.116 million in lease liabilities; the filing reports no conventional borrowings at year-end. Accumulated deficit was $105.431 million. No gross margin or operating margin is meaningful because the company had no revenue.
The February 2019 IPO raised $30.5 million gross. Management estimated existing cash would fund projected needs only through the end of 2020. The auditor highlighted substantial doubt about the company’s ability to continue as a going concern, and the statements contain no adjustments for a possible failure to continue operations.
Material changes and unusual items
- R&D expense rose 77% year over year, primarily due to clinical-trial and manufacturing costs, staffing, and startup and ongoing costs related to the ADT programs.
- Net financing expense increased to $4.226 million from $0.457 million, principally reflecting a $4.570 million fair-value charge on warrants during their temporary liability classification following the change in functional currency; the warrants were reclassified to equity after the IPO-related modification.
- The $3.350 million restructuring charge related mainly to terminating Codex trial and manufacturing contracts and reducing the workforce by seven employees. In January 2020, the board approved closure of the Israeli office and laboratories; the company expected about $0.8 million of additional restructuring expense in the first half of 2020.
- Inodiftagene’s interim data showed complete responses in 3 of 16 evaluable patients (19%); the planned futility threshold required 10 complete responses in 35 patients. The program was discontinued, though the company retained rights and said it might consider partnering or out-licensing.
Outlook, risks, and contingencies
Management prioritized pan-RAS development, with PDE10/β-catenin secondary and initially expected to receive ADT SBIR-grant support. The filing described plans to identify a pan-RAS clinical lead over the following 12–18 months, conduct about 12 months of IND-enabling work, and potentially begin first-in-human studies in 2022. These were forward-looking plans, contingent on financing and subject to change.
On February 26, 2020, the board initiated a strategic process while deciding to advance pan-RAS development. Potential outcomes included financing, collaboration or licensing, monetization of program rights, or a merger or other transaction. The company cautioned that plans could change, including following changes to the board. It also identified COVID-19 as a potential source of funding difficulty, higher costs, and development delays.
Key risks include the going-concern uncertainty and need for substantial additional capital; the early preclinical stage and high development and regulatory risk; dependence on ADT, CROs and other third parties; the possibility of losing ADT rights if contractual obligations are breached; competition, intellectual-property and commercialization risks; Nasdaq listing compliance; and potential dilution from future fundraising. The ADT arrangement included a $3 million upfront payment, further fees, and potential development and regulatory milestones and sales royalties. The filing reported no material litigation pending at the time.
Most important facts for investors to verify
- Confirm the issuer: this source concerns Anchiano Therapeutics Ltd., not Chemomab Therapeutics Ltd.
- Verify current cash, financing and runway against the filing’s end-of-2020 estimate and going-concern warning.
- Check subsequent developments in the strategic review, board composition, and the company’s ability to fund pan-RAS work.
- Review the ADT option and collaboration terms, including the actual licensing status, additional payments, royalties, and any impact of a strategic transaction.
- Assess the evidentiary basis and limitations of the preclinical results and whether the stated development timetable was achieved.
- Confirm subsequent restructuring costs, lease obligations, and any material changes in share count or financing that could dilute shareholders.