NeuroSense Therapeutics Ltd. — FY2023 Form 20-F
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone 2023 Q4 earnings report; separate fourth-quarter financial results are not clearly provided. Financial statements are prepared under IFRS as issued by the IASB and are presented in U.S. dollars.
Business context
NeuroSense is a clinical-stage biotechnology company developing treatments for neurodegenerative diseases. Its lead candidate, PrimeC, is an extended-release fixed-dose combination of ciprofloxacin and celecoxib being studied for ALS. The company has no approved products and has generated no revenue. It is also developing programs for Alzheimer’s disease and Parkinson’s disease.
Financial results and position
| Metric (US$ millions, except per-share data) | FY2023 | FY2022 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | 7.588 | 6.416 |
| General and administrative expense | 5.714 | 7.136 |
| Operating loss | 13.302 | 13.552 |
| Net loss | 11.280 | 12.340 |
| Net loss per share | $0.83 | $1.07 |
| Net cash used in operating activities | 8.452 | 7.586 |
| Cash and cash equivalents at year-end | 2.640 | 3.543 |
- FY2023 R&D expense rose 18%, mainly from higher clinical-program subcontractor and consulting costs and salaries; share-based compensation decreased.
- G&A expense declined 20%, primarily because of lower share-based compensation and insurance costs, partly offset by higher professional-services and salary costs.
- Net loss narrowed despite higher operating cash use. Financing income was $4.231 million, including a $4.036 million gain from warrant and pre-funded-warrant revaluation; financing expenses included a $1.659 million issuance-related day-one loss and $0.530 million of issuance costs. These items mean net loss does not by itself show the operating cash-burn trend.
- Investing activities provided $3.646 million, mainly reflecting redemption of short-term deposits; financing activities provided $3.895 million, principally from the 2023 securities offering. Cash decreased by $0.903 million during the year.
- At year-end, total assets were $3.176 million, total liabilities $5.050 million, and shareholders’ equity was a deficit of $1.874 million. Working capital was negative by approximately $0.5 million. Liabilities included a $1.518 million warrant liability; the filing reports no material borrowing arrangements. Lease liabilities were also reported.
Material changes and financing
- In June 2023, the company raised approximately $4.5 million gross in a registered direct offering and concurrent private placement, issuing ordinary shares, pre-funded warrants and warrants. The pre-funded warrants were exercised in full during 2023.
- The company ended 2023 with 15,379,042 ordinary shares outstanding, compared with 11,781,963 at the end of 2022, reflecting offerings, exercises and vested awards.
- The company states that year-end cash and cash equivalents would not fund operations for at least 12 months from approval of the financial statements, assuming the development plan proceeds without delay. The auditor’s report highlights substantial doubt about the company’s ability to continue as a going concern. Management expects to seek additional financing; no committed external funding source is identified.
- After year-end, Nasdaq granted an extension to address the Minimum Equity Rule, requiring a $20 million fundraising by April 30, 2024, subject to further Nasdaq action. The filing says the company regained compliance with Nasdaq’s minimum bid-price rule in February 2024. These are post-period developments, not FY2023 results.
Clinical progress, outlook and risks
- In December 2023, the company reported topline results from the six-month, placebo-controlled Phase 2b PARADIGM ALS trial. It reported meeting primary safety and tolerability endpoints and achieving secondary clinical efficacy endpoints. In the per-protocol population, it reported a 37.4% difference in ALSFRS-R versus placebo (p=0.03); in the intent-to-treat population, the reported difference was 29% (p=0.12). Slow vital capacity results were not statistically significant. The results are preliminary topline disclosures; the filing does not provide a complete clinical data set.
- Reported treatment-emergent adverse events were 68.9% with PrimeC and 65.2% with placebo; study-drug-related events were 20.0% and 4.3%, respectively. Serious treatment-emergent events were 8.9% and 8.6%. Investors should review the full safety tables and trial analysis.
- The company expected further PARADIGM biomarker results in Q2 or Q3 2024 and described an FDA/EMA end-of-Phase-2 meeting in Q2 or Q3 2024. Its timing statements for a pivotal ALS trial are not consistent: portions of the filing refer to starting by the end of 2024 or in Q4 2024, while another passage says initiation could be as early as 2025, subject to regulatory agreement and additional data.
- The FDA accepted the PrimeC IND and, following a November 2023 Type D meeting, endorsed the company’s proposed CMC development plan. The company plans a long-term toxicology study, with results expected in Q3 2024. PrimeC has orphan-drug designation from the FDA and EMA; designation is not marketing approval.
- The company began a 20-patient Phase 2 Alzheimer’s study in Israel in Q4 2023. Its Parkinson’s candidate remains in preclinical development; an initial model was described as not relevant to the candidate, prompting plans to explore other models.
- In March 2024, NeuroSense and Biogen agreed not to continue their collaborative evaluation agreement. Biogen had been funding a neurofilament biomarker study and had a right of first refusal relating to a potential licensing agreement; the filing does not report a resulting licensing deal.
- Key risks include going-concern financing needs, continued losses and cash burn, clinical and regulatory uncertainty, dependence on PrimeC, reliance on third-party manufacturers and CROs, competition, Nasdaq listing compliance, and Israel-related security and operational risks. The company said its operations and clinical studies had not been disrupted by the war as of the report, but noted possible future impacts, including staff absences and trial or supply disruption.
Important facts for investors to verify
- Current cash, liquidity runway and the status and terms of any financing after December 31, 2023; specifically, whether the Nasdaq-required fundraising was completed and listing compliance maintained.
- Full PARADIGM results, including the analysis populations, statistical methods, biomarker findings, adverse events and whether the topline efficacy signals are confirmed in further studies.
- The actual agreed pivotal-trial design and start date, given the filing’s differing 2024 and 2025 timing statements and the need for additional toxicology and regulatory discussions.
- The effects of the ended Biogen agreement on biomarker work, development resources and potential commercialization or licensing plans.
- Potential dilution and accounting volatility from outstanding warrants, options and future capital raises; the filing reports a $1.518 million warrant liability and 4,755,000 warrants outstanding at year-end.
- The auditor’s going-concern warning, negative working capital and shareholders’ deficit, and whether the company can fund its plans without reducing or delaying development.