Chemomab Therapeutics Ltd. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Financial statements are unaudited and presented in U.S. dollars unless otherwise noted. Chemomab is a clinical-stage biotechnology company; the March 2021 merger with Anchiano was accounted for as a reverse recapitalization, with Chemomab Ltd. as the accounting acquirer.
Business context and operating results
The company is developing CM-101, a CCL24-targeting antibody, for inflammatory and fibrotic diseases. Its lead programs include Phase 2 studies in primary sclerosing cholangitis (PSC) and non-alcoholic steatohepatitis (NASH); management expected to initiate a systemic sclerosis (SSc) Phase 2 study early the following year.
Chemomab had generated no revenue and reported no gross profit; margins are therefore not applicable. It remains loss-making, with research and development and general and administrative expenses as its principal operating costs.
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $1.307m | $0.847m | $2.464m | $2.399m |
| General and administrative expense | $1.446m | $0.254m | $1.988m | $0.406m |
| Net loss | $2.770m | $1.081m | $4.474m | $2.776m |
| Net loss per ordinary share | $0.013 | $0.008 | $0.024 | $0.021 |
Financial position and cash flows
- At June 30, 2021, cash and cash equivalents were $45.396m and short-term bank deposits were $21.524m, totaling approximately $66.9m. Total assets were $70.518m; total liabilities were $2.479m, including $0.392m of operating lease liabilities. The filing reports no borrowings.
- Accumulated deficit was $28.169m; shareholders’ equity was $68.039m.
- For the six months, operating cash use was $6.900m, investing cash use was $20.605m, and financing cash inflow was $61.227m. Cash, cash equivalents and restricted cash rose $33.722m to $45.449m.
- Contractual commitments totaled $6.705m, including $3.546m for 2022 and $2.598m for 2023.
Material changes and financing
- Q2 R&D expense rose 54% year over year, which management attributed primarily to increased clinical and preclinical activity. First-half R&D rose 3%.
- Q2 G&A expense increased $1.192m to $1.446m; first-half G&A increased $1.582m to $1.988m. Management cited merger-related costs and the costs of becoming a public company.
- Net loss increased 156% year over year in Q2 and 61% for the first half. First-half operating cash use increased $4.114m year over year.
- The March merger and concurrent private placement brought approximately $45.5m in gross proceeds; the placement included warrants exercisable at $17.35 per ADS that could provide approximately $4.5m if fully exercised. A separate ATM facility authorized sales of up to $75m; through June 30, the company sold 699,806 ADSs for $15.9m gross.
Outlook, risks and unusual items
- Management said existing cash resources were expected to fund projected cash requirements approximately through mid-2023. The company nevertheless expects to need substantial additional financing and had no commitments for future external funding. Additional equity financing could dilute shareholders; debt could increase fixed obligations and impose covenants.
- Management expected R&D expenses to increase substantially as programs advance, and G&A expenses to rise to support development and public-company requirements.
- COVID-19 disrupted trial sites, delayed PSC enrollment and affected recruitment rates. The company expanded recruiting to additional territories; further disruption and patient withdrawals remained possible.
- Other notable items included the $1m sale of Anchiano’s pan-RAS and PDE10/β-catenin programs and a July 2021 shareholder-approved increase of 540,000 ADSs in the 2015 plan’s authorized shares.
- No material change to previously disclosed risk factors was reported. Management said disclosure controls were effective as of June 30, 2021; internal-control procedures were being strengthened following the merger, with management’s assessment planned for the 2021 annual report.
Important facts for investors to verify
- Whether cash use, clinical-trial spending and recruitment progress remain consistent with the stated mid-2023 runway, and how the company may finance operations thereafter.
- Current status, timing and enrollment of the PSC and NASH trials and the planned SSc study, including any continuing COVID-19 effects.
- Remaining ATM capacity, subsequent ADS sales, potential dilution from outstanding warrants and options, and the effect of the expanded 2015 plan.
- Whether contractual commitments or other contingencies have changed since June 30, 2021; the filing reports no currently pending legal matter expected to have a material adverse effect.