Clene Inc
For the period ended Jun 30, 2024. Filed Aug 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 7, 2024
CLNN$3.95-0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-08.
0001437749-24-015209
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001437749-24-025014
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 103 previous paragraphs and 107 current paragraphs.
70 unchanged; 26 reworded; 10 added; 7 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 44 previous and 61 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
Reverse Stock Split
Current report
Effective July 11, 2024 (the “Effective Date”), we filed a Certificate of Amendment to our Fourth Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, to effect a 1-for-20 reverse stock split (the “Reverse Stock Split”) of our Common Stock. Beginning with the opening of trading on the Effective Date, our Common Stock began trading on Nasdaq on a split-adjusted basis under the same symbol, “CLNN.” As a result of the Reverse Stock Split, every 20 shares of our Common Stock issued and outstanding were automatically combined and converted into 1 validly issued, fully paid and non-assessable share of Common Stock. In lieu of any fractional shares, stockholders received an amount in cash (without interest) equal to: (i) the number of shares of Common Stock held by such stockholder before the Reverse Stock Split that would otherwise have been exchanged for such fractional shares multiplied by (ii) the closing price of our Common Stock on Nasdaq on the trading day immediately preceding the Effective Date.
Current report
The Reverse Stock Split did not reduce the total number of authorized shares of Common Stock or preferred stock, par value $0.0001 per share (“Preferred Stock”), or change the par values of the Company’s Common Stock or Preferred Stock. All outstanding stock options, warrants, rights to restricted stock awards, convertible debt, and contingent earn-out shares entitling their holders to purchase or receive shares of Common Stock were adjusted as a result of the Reverse Stock Split, in accordance with the terms of each such security. In addition, the number of shares reserved for issuance pursuant to our Amended 2020 Stock Plan was also appropriately adjusted. All historical share and per share data for the periods presented in our condensed consolidated financial statements, including for periods ending prior to July 11, 2024, has been adjusted to reflect the 1-for-20 Reverse Stock Split on a retroactive basis as if the Reverse Stock Split occurred as of the earliest period presented.
Current report
In June 2024, we announced new long-term CNM-Au8 treatment results for survival and NfL levels from the HEALEY ALS Platform Trial open label extension (“OLE”). The data highlights up to 42 months of survival follow-up and 76 weeks of long-term NfL biomarker results, including a neurofilament light (“NfL”) responder subset (the “CNM-Au8 NfL Responders”) from the HEALEY ALS Platform Trial who had consistent and sustained NfL reductions, comprising nearly half of all CNM-Au8 patients. All participants treated with CNM-Au8 30 mg, including ex-placebo participants who transitioned to CNM-Au8 in the OLE, with complete baseline co-variates were included in the survival analysis:
Current report
On July 13, 2024, we submitted a briefing book to the U.S. Food and Drug Administration (“FDA”) in advance of a granted Type C interaction expected to occur in the third quarter of 2024. The briefing book contains newpost-hoc analyses from two independently conducted Phase 2 clinical trials of CNM-Au8® for the treatment for ALS. This new information supplements the original data previously discussed with the FDA in late 2023 and is intended to guide the planned FDA Type C interaction expected to occur in the third quarter of 2024 to discuss an accelerated approval regulatory pathway. We plan to publicly announce the topline FDA feedback following the conclusion of the Type C interaction. CNM-Au8 NfL Responders demonstrated a 28% mean reduction in NfL levels compared to baseline, while NfL levels continued to increase in CNM-Au8 NfL non-responders (all doses; GMR difference at week 76 post-baseline: 0.57, 95% CI: 0.50 – 0.64, p < 0.00001). The analyses of the CNM-Au8 NfL Responders demonstrated efficacy in all-cause mortality, function, and combined assessment of function and survival (“CAFS”):
Current report
Independent of NfL responder status, long-term treatment with CNM-Au8 30 mg was associated with improved survival in participants from the RESCUE-ALS and HEALEY ALS Platform Trials using updated long-term follow-up of survival status compared to propensity matched controls from the clinical trial data registry PRO-ACT, the ALS/MND Natural History Consortium (“NHC”), and the Australian MiNDAUS registry. Matching methods and covariates were prespecified and conducted by an independent statistician.
Current report
Further, CNM-Au8 mechanism of action responders demonstrated concordance with CNM-Au8 NfL Responders. Data provided to the FDA also included an association of responses between CNM-Au8 mechanism responders (defined as those who had consistent and sustained NAD+ and GSH/GGSG glutathione improvements) and CNM-Au8 NfL Responders. The connection between CNM-Au8 mechanism responders and CNM-Au8 NfL Responders links the mechanism of action to NfL declines. Biomarkers of oxidative stress, including the GSH/GSSG ratio, demonstrated consistent improvement following CNM-Au8 treatment with increased activity associated with the duration of treatment. These data support a dual mechanism of action of neuronal metabolic support and decreased oxidative stress. We further provided mechanistic evidence from preclinical models that established improved neuronal integrity and survival, where CNM-Au8 simultaneously decreased the release of NfL from damaged motor neurons axons.
Current report
Research and development expense during the three and six months ended June 30, 2024 and 2023 was as follows:
Current report
General and administrative expense during the three and six months ended June 30, 2024 and 2023 was as follows:
Current report
Total other income (expense), net, during the three and six months ended June 30, 2024 and 2023 was as follows:
Removed paragraphs (7)
Previous report
In April 2024, we announced our entrance into the first subaward (the “Subaward”) under the October 2023 grant (“the NIH Grant”) awarded from the National Institute of Health (“NIH”) to us, in collaboration with Columbia University, the prime awardee, and Synapticure, a neurology specialty health clinic. The NIH Grant will support a four-year Expanded Access Program (the “NIH EAP”) for CNM-Au8 treatment of ALS. Of the $45.1 million total award, subawards to us may total up to $30.9 million in aggregate and may extend to August 31, 2027. The Subaward represents an amount of up to $7.3 million of grant funds that may be paid to us as reimbursement for our expenses incurred for the NIH EAP during the period from September 25, 2023 to August 31, 2024. Future subawards for the remainder of the up to $30.9 million will be governed by future agreements or addendums. In addition to the NIH EAP, we will continue to support our two currently ongoing ALS EAPs that have enrolled more than 250 participants since 2019.
Previous report
Additionally, following our meeting with the FDA in the fourth quarter of 2023, we are planning to provide supplemental data for further engagement with the FDA by mid-2024, including additional long-term clinical evidence and biomarker results of CNM-Au8’s treatment benefit in people living with ALS. We plan to demonstrate how CNM-Au8’s mechanism of action is linked to the reduction in plasma neurofilament light chain (“NfL”), and the association between observed NfL reductions and improved clinical outcomes in ALS patients, including increased survival time. We do not know when or if we will be able to file a New Drug Application (“NDA”) with the FDA which would be based on the outcome of our future meetings with the FDA and our accumulation of clinical evidence.
Previous report
Research and development expense for the three months ended March 31, 2024 and 2023 was as follows:
Previous report
General and administrative expense for the three months ended March 31, 2024 and 2023 was as follows:
Previous report
Total other income (expense), net, for the three months ended March 31, 2024 and 2023 was as follows:
Previous report
Contingent Earn-Out Liabilities
Previous report
In connection with the Reverse Recapitalization, certain stockholders are entitled to the Contingent Earn-out payments based on achievement of certain milestones. In accordance with ASC 815, we classified the Contingent Earn-outs as liabilities and measured them at fair value on the date of the Reverse Recapitalization. We remeasure the liabilities at each reporting date and record the change in fair value as a component of other income (expense), net, in the condensed consolidated statements of operations and comprehensive loss. The change in fair value of the Clene Nanomedicine Contingent Earn-out resulted in a gain of $0.1 million and a loss of $0.1 million for the three months ended March 31, 2024 and 2023, respectively. The change in fair value of the Initial Stockholders Contingent Earn-out resulted in a gain of $7,000 and a loss of $7,000 for the three months ended March 31, 2024 and 2023, respectively. We estimate the fair value using a Monte Carlo valuation model, which requires significant judgment. The unobservable inputs include the expected stock price volatility, the risk-free interest rate, and the expected term. As of March 31, 2024 and December 31, 2023, the unobservable inputs were as follows:
Reworded paragraphs (26)
Previous wording
We are presently planning the design of an international Phase 3 trial of CNM-Au8 30 mg, RESTORE-ALS, with expert ALS clinical advisors and expect to initiate the trial in the second half of 2024, contingent upon funding. We plan to work closely with regulatory health authorities from the U.S. Food and Drug Administration (“FDA”), European Medicines Agency (“EMA”), ALS experts, and patient representatives to determine the proper path to support potential approval.
Current wording
We are also planning the design of an international Phase 3 trial of CNM-Au8 30 mg, RESTORE-ALS, with expert ALS clinical advisors and expect to initiate the trial in the second quarter of 2025, contingent upon funding. We plan to work closely with regulatory health authorities from the FDA, European Medicines Agency (“EMA”), ALS experts, and patient representatives to determine the proper path to support potential approval.
Previous wording
We have initiated a second dosing cohort of REPAIR-MS, an open-label, investigator blinded Phase 2 clinical trial in non-active progressive MS patients. We anticipate enrollment concluding in the first half of 2024 with topline results available by the end of 2024. We plan to work closely with regulatory health authorities from the FDA and EMA, MS experts, and patient representatives to determine the proper path to advance CNM-Au8 into Phase 3 and potential future approval. We expect to meet with the FDA in an end of Phase 2 meeting in the second half of 2024.
Current wording
We have initiated a second dosing cohort of REPAIR-MS, an open-label, investigator blinded Phase 2 clinical trial in non-active progressive MS patients. We anticipate enrollment concluding in by the end of 2024 with topline results available by mid-2025. We plan to work closely with regulatory health authorities from the FDA and EMA, MS experts, and patient representatives to determine the proper path to advance CNM-Au8 into Phase 3 and potential future approval. We expect to meet with the FDA in an end of Phase 2 meeting in the first half of 2025.
Previous wording
Despite the great need for an effective disease-modifying treatment for ALS and significant research efforts by the pharmaceutical industry to meet this need, there have been limited clinical successes and no curative therapies approved to date. In April 2023, the FDA granted accelerated approval to tofersen, branded as Qalsody, a drug from Biogen Inc. for the treatment of SOD1-ALS, a rare genetic form of ALS. In February 2024, the EMA Committee for Medicinal Products for Human Use recommended the granting of a marketing authorization application under exceptional circumstances for Qalsody in the European Union, subject to the final decision by the European Commission expected in the second quarter of 2024. Additionally, sodium phenylbutyrate and taurursodiol, a drug from Amylyx Pharmaceuticals, Inc. (“Amylyx”) for the treatment of ALS, previously received approval from the FDA and conditional approval from Health Canada based on the results of a Phase 2 trial. In January 2024, the European Commission refused the marketing authorization for sodium phenylbutyrate and taurursodiol, and in March 2024 Amylyx announced the results of a Phase 3 trial which did not demonstrate a statistically significant treatment benefit as measured by the ALSFRS-R score and quality of life patient-reported outcome assessments, including overall survival and respiratory function. In April 2024, Amylyx announced they will voluntarily withdraw sodium phenylbutyrate/taurursodiol from the market in the U.S. and Canada.
Current wording
Despite the great need for an effective disease-modifying treatment for ALS and significant research efforts by the pharmaceutical industry to meet this need, there have been limited clinical successes and no curative therapies approved to date. In April 2023, the FDA granted accelerated approval to tofersen, branded as Qalsody, a drug from Biogen Inc. for the treatment of SOD1-ALS, a rare genetic form of ALS. In May 2024, the European Commission granted marketing authorization under exceptional circumstances for Qalsody in the European Union. Additionally, sodium phenylbutyrate and taurursodiol, a drug from Amylyx Pharmaceuticals, Inc. (“Amylyx”) which previously received approval from the FDA and conditional approval from Health Canada based on the results of a Phase 2 trial, was voluntarily withdrawn from the market in the U.S. and Canada following the negative outcome of a Phase 3 clinical trial.
Previous wording
Our research and development expenses are affected by the scope and advancement of our existing product pipeline and the commencement of new drug programs. Drug candidates in later stages of clinical development generally have higher development costs than those in earlier stages, primarily due to costs and fees for per patient clinical trial sites for larger clinical trials, opening and monitoring clinical sites, contract research organization (“CRO”) activity, and manufacturing. We anticipate that our research and development expenses will increase throughout 2024 and into future years as we advance our assets into Phase 3. Additionally, if we are able to file an NDA under an accelerated pathway with the FDA, contingent upon our discussions with the FDA regarding our accumulation of clinical evidence which is expected by mid-2024, we anticipate that our research and development expenses related to regulatory activities would increase in advance of receiving regulatory approval.
Current wording
Our research and development expenses are affected by the scope and advancement of our existing product pipeline and the commencement of new drug programs. Drug candidates in later stages of clinical development generally have higher development costs than those in earlier stages, primarily due to costs and fees for per patient clinical trial sites for larger clinical trials, opening and monitoring clinical sites, contract research organization (“CRO”) activity, and manufacturing. We anticipate that our research and development expenses will decrease throughout 2024 as we complete our Phase 2 clinical trials and will increase in future years as we advance our assets into Phase 3. Additionally, if we are able to file a new drug application (“NDA”) under an accelerated pathway with the FDA, contingent upon our Type C interaction with the FDA which will occur in the third quarter of 2024 as discussed above underRecent Developments of Our Clinical Programs, we anticipate that our research and development expenses related to regulatory activities would increase in advance of receiving regulatory approval.
Previous wording
We anticipate that our general and administrative expenses in future periods will be contingent upon our discussions with the FDA, expected by mid-2024. If we are able to file an NDA with the FDA based on our accumulation of clinical evidence, we anticipate our general and administrative expenses would increase in future periods to support increases in our drug development activities and as we build our commercial capabilities in advance of receiving regulatory approval. This potential increase will likely include increased headcount, increased stock compensation expenses, expanded infrastructure including certain sales and marketing activities performed ahead of regulatory approval, and increased insurance expenses. If we are unable to file an NDA based on our FDA interaction, we would need to continue investing in clinical research activities and we anticipate our general and administrative expenses would decrease in future periods as we decrease commercial expansion projects, including at our Elkton, Maryland facility, and as we implement cost-saving initiatives, such as a reduction in compensation, a hiring freeze, and elimination of certain staff positions.
Current wording
We anticipate that our general and administrative expenses in future periods will be contingent upon our discussions with the FDA, expected in the third quarter of 2024. If we are able to file an NDA with the FDA based on our accumulation of clinical evidence, we anticipate our general and administrative expenses would increase in future periods to support increases in our drug development activities and as we build our commercial capabilities in advance of receiving regulatory approval. This potential increase will likely include increased headcount, increased stock compensation expenses, expanded infrastructure including certain sales and marketing activities performed ahead of regulatory approval, and increased insurance expenses. If we are unable to file an NDA based on our FDA interaction, we would need to continue investing in clinical research activities and we anticipate our general and administrative expenses would decrease in future periods as we decrease commercial expansion projects, including at our Elkton, Maryland facility, and as we implement cost-saving initiatives, such as a reduction in compensation, a hiring freeze, and elimination of certain staff positions.
Previous wording
Our results of operations for the three months ended March 31, 2024 and 2023 were as follows:
Current wording
Our results of operations for the three and six months ended June 30, 2024 and 2023 were as follows:
Previous wording
Product revenue relates to our dietary supplement products and consists of (i) sales of an aqueous zinc-silver ion dietary (mineral) supplement sold by our wholly-owned subsidiary, dOrbital, Inc., under the trade name “rMetx™ ZnAg Immune Boost,” or under a supply agreement with 4Life under the trade name “Zinc Factor™,” and (ii) sales of KHC46, an aqueous gold dietary (mineral) supplement of very low concentration, sold under a supply agreement with 4Life under the trade name “Gold Factor™.” Royalty revenue relates to our dietary supplement products and consists of proceeds under an exclusive and royalty-bearing license agreement with 4Life relating to the sale of Gold Factor. During the three months ended March 31, 2024 and 2023, changes in product and royalty revenues were due to the timing of purchases of Zinc Factor and Gold Factor by 4Life under the supply and license agreements.
Current wording
Product revenue relates to our dietary supplement products and consists of (i) sales of an aqueous zinc-silver ion dietary (mineral) supplement sold by our wholly-owned subsidiary, dOrbital, Inc., under the trade name “rMetx™ ZnAg Immune Boost,” or under a supply agreement with 4Life under the trade name “Zinc Factor™,” and (ii) sales of KHC46, an aqueous gold dietary (mineral) supplement of very low concentration, sold under a supply agreement with 4Life under the trade name “Gold Factor™.” Royalty revenue relates to our dietary supplement products and consists of proceeds under an exclusive and royalty-bearing license agreement with 4Life relating to the sale of Gold Factor. During the three and six months ended June 30, 2024 and 2023, changes in product and royalty revenues were due to the timing of purchases of Zinc Factor and Gold Factor by 4Life under the supply and license agreements.
Previous wording
We are incorporated in the state of Delaware and subject to statutory U.S. federal corporate income tax at a rate of 21.00%.We are also subject to state income tax in Maryland at a rate of 8.25%, and in Utah at a rate of 4.65% and 4.85% for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024 and December 31, 2023, we recorded a full valuation allowance against our net deferred tax assets due to the uncertainty as to whether such assets will be realized resulting from our three-year cumulative loss position and the uncertainty surrounding our ability to generate pre-tax income in the foreseeable future.
Current wording
We are incorporated in the state of Delaware and subject to statutory U.S. federal corporate income tax at a rate of 21.00%.We are also subject to state income tax in Maryland at a rate of 8.25%, and in Utah at a rate of 4.65% and 4.85% for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024 and December 31, 2023, we recorded a full valuation allowance against our net deferred tax assets due to the uncertainty as to whether such assets will be realized resulting from our three-year cumulative loss position and the uncertainty surrounding our ability to generate pre-tax income in the foreseeable future.
Previous wording
Our wholly-owned subsidiary, Clene Australia Pty Ltd (“Clene Australia”), was established in Australia in March 2018 and is subject to corporate income tax at a rate of 30.00%. Clene Australia had no taxable income or provision for income taxes for the three months ended March 31, 2024 and 2023. We recorded other income of $14,000 and $0.3 million for the three months ended March 31, 2024 and 2023, respectively, for research and development tax credits pertaining to Clene Australia for the 2024 and 2023 tax years, respectively.
Current wording
Our wholly-owned subsidiary, Clene Australia Pty Ltd (“Clene Australia”), was established in Australia in March 2018 and is subject to corporate income tax at a rate of 30.00%. Clene Australia had no taxable income or provision for income taxes for the six months ended June 30, 2024 and 2023. We recorded other income of $40,000 and $0.7 million for the six months ended June 30, 2024 and 2023, respectively, for research and development tax credits pertaining to Clene Australia for the 2024 and 2023 tax years, respectively.
Previous wording
Our wholly-owned subsidiary, Clene Netherlands B.V. (“Clene Netherlands”), was established in the Netherlands in April 2021 and is subject to corporate income tax at a rate of 19.00% up to €200,000 of taxable income and 25.80% for taxable income in excess of €200,000. Clene Netherlands had no taxable income or provision for income taxes for the three months ended March 31, 2024 and 2023.
Current wording
Our wholly-owned subsidiary, Clene Netherlands B.V. (“Clene Netherlands”), was established in the Netherlands in April 2021 and is subject to corporate income tax at a rate of 19.00% up to €200,000 of taxable income and 25.80% for taxable income in excess of €200,000. Clene Netherlands had no taxable income or provision for income taxes for the six months ended June 30, 2024 and 2023.
Previous wording
We incurred a loss from operations of $9.2 million and $10.7 million for the three months ended March 31, 2024 and 2023, respectively. Our accumulated deficit was $253.8 million and $242.7 million as of March 31, 2024 and December 31, 2023, respectively. Our cash, cash equivalents, and marketable securities totaled $27.9 million and $35.0 million as of March 31, 2024 and December 31, 2023, respectively, and net cash used in operating activities was $7.1 million and $9.2 million for the three months ended March 31, 2024 and 2023, respectively.
Current wording
We incurred a loss from operations of $7.4 million and $10.3 million for the three months ended June 30, 2024 and 2023, respectively; and $16.6 million and $21.1 million for the six months ended June 30, 2024 and 2023, respectively. Our accumulated deficit was $260.6 million and $242.7 million as of June 30, 2024 and December 31, 2023, respectively. Our cash, cash equivalents, and marketable securities totaled $21.7 million and $35.0 million as of June 30, 2024 and December 31, 2023, respectively, and net cash used in operating activities was $13.4 million and $16.2 million for the six months ended June 30, 2024 and 2023, respectively.
Previous wording
For at least the next twelve months, our primary capital requirements are to fund our operations, including research and development, personnel, regulatory, and other clinical trial costs related to development of our lead drug candidate, CNM-Au8; and general and administrative costs to support our drug development and pre-commercial activities in advance of receiving regulatory approval for our drug candidates. Firm commitments for funds include approximately $7,000 and $1.1 million of payments under finance and operating lease obligations, respectively; payment of principal and interest on notes payable totaling $21.9 million; and commitments under various agreements for capital expenditures totaling $0.2 million related to the construction of our manufacturing facilities. We expect to meet our short-term liquidity requirements primarily through cash on hand. Additional sources of funds include equity financing, debt financing, or other capital sources.
Current wording
For at least the next twelve months, our primary capital requirements are to fund our operations, including research and development, personnel, regulatory, and other clinical trial costs related to development of our lead drug candidate, CNM-Au8; and general and administrative costs to support our drug development and pre-commercial activities in advance of receiving regulatory approval for our drug candidates. Firm commitments for funds include approximately $1.1 million of payments under operating lease obligations; payment of principal and interest on notes payable totaling $22.0 million; and commitments under various agreements for capital expenditures totaling $0.2 million related to the construction of our manufacturing facilities. We expect to meet our short-term liquidity requirements primarily through cash on hand. Additional sources of funds include equity financing, debt financing, or other capital sources.
Previous wording
Beyond the next twelve months, our primary capital requirements are to fund our operations, including research and development, personnel, regulatory, and other clinical trial costs related to development of our lead drug candidate, CNM-Au8; and general and administrative costs to support our drug development activities in advance of receiving regulatory approval for our drug candidates. Additional funds may be spent to initiate new clinical trials, at our discretion. Known obligations beyond the next twelve months include $6.1 million of payments under operating lease obligations, and interest and principal repayment of notes payable of $8.9 million. We expect to meet our long-term liquidity requirements primarily through equity financing, debt financing, or other capital sources.
Current wording
Beyond the next twelve months, our primary capital requirements are to fund our operations, including research and development, personnel, regulatory, and other clinical trial costs related to development of our lead drug candidate, CNM-Au8; and general and administrative costs to support our drug development activities in advance of receiving regulatory approval for our drug candidates. Additional funds may be spent to initiate new clinical trials, at our discretion. Known obligations beyond the next twelve months include $5.8 million of payments under operating lease obligations, and interest and principal repayment of notes payable of $7.9 million. We expect to meet our long-term liquidity requirements primarily through equity financing, debt financing, or other capital sources.
Previous wording
Our cash flows for the three months ended March 31, 2024 and 2023 were as follows:
Current wording
Our cash flows for the six months ended June 30, 2024 and 2023 were as follows:
Previous wording
Net cash used in operating activities was $7.1 million for the three months ended March 31, 2024, which resulted from a net loss of $11.1 million, adjusted for non-cash items totaling $4.2 million and a net change in operating assets and liabilities of $0.2 million. Significant non-cash items included (i) depreciation expense of $0.4 million related to laboratory and office equipment and leasehold improvements; (ii) non-cash lease expense of $0.1 million; (iii) stock-based compensation expense of $2.0 million; (iv) accretion of debt discount of $0.4 million; (v) non-cash interest expense of $91,000; (vi) a change in fair value of our common stock warrant liabilities of $1.3 million, primarily driven by the increase in price of our Common Stock on Nasdaq and changes in valuation model inputs; and (vii) the changes in fair value of the Clene Nanomedicine and Initial Stockholders Contingent Earn-outs of $0.1 million and $7,000, respectively, primarily driven by the decrease in price of our Common Stock on Nasdaq and changes in valuation model inputs. The net change in operating assets and liabilities was primarily attributable to the following: (a) a decrease in accounts receivable of $0.1 million and an increase in accounts payable of $0.1 million due to the timing of vendor invoicing and payments; (b) an increase in prepaid expenses and other current assets of $0.4 million due to the timing of vendor invoicing and payments, the timing of receipt of metals to be used in research and development, and an increase in research and development tax credits receivable; (c) an increase in accrued liabilities of $0.2 million primarily due to increased accrued compensation and benefits and CRO and clinical fees, partially offset by a decrease in other accrued liabilities; and (d) a decrease in operating lease obligations of $0.2 million.
Current wording
Net cash used in operating activities was $13.4 million for the six months ended June 30, 2024, which resulted from a net loss of $17.9 million, adjusted for non-cash items totaling $5.4 million and a net change in operating assets and liabilities of $0.9 million. Significant non-cash items included: (i) depreciation expense of $0.8 million for laboratory and office equipment and leasehold improvements; (ii) non-cash lease expense of $0.3 million; (iii) stock-based compensation expense of $4.0 million; (iv) accretion of debt discount of $0.8 million; (v) non-cash interest expense of $28,000; (vi) non-cash interest income on marketable securities of $0.2 million; (vii) a change in fair value of common stock warrant liabilities of $0.3 million due to changes in price of our Common Stock on Nasdaq and changes in valuation model inputs; and (viii) a change in fair value of the Clene Nanomedicine and Initial Stockholders Contingent Earn-outs of $0.1 million and $10,000, respectively, due to changes in price of our Common Stock on Nasdaq and changes in valuation model inputs. The net change in operating assets and liabilities was primarily attributable to: (a) a decrease in accounts receivable of $0.1 million and a decrease in accounts payable of $0.4 million due to the timing of vendor invoicing and payments; (b) an increase in prepaid expenses and other current assets of $2.5 million due to the timing of vendor invoicing and payments, the timing of receipt of metals to be used in research and development, an increase in prepaid ACT-EAP expenses, and an increase in research and development tax credits receivable; (c) an increase in accrued liabilities of $2.2 million primarily due to increased accrued compensation and benefits and increased deferred grants, partially offset by a decrease in accrued CRO and clinical fees; and (d) a decrease in operating lease obligations of $0.3 million.
Previous wording
Net cash used in operating activities was $9.2 million for the three months ended March 31, 2023, which resulted from a net loss of $11.8 million, adjusted for non-cash items totaling $3.5 million and a net change in operating assets and liabilities of $1.0 million. Significant non-cash items included (i) depreciation expense of $0.4 million related to laboratory and office equipment and leasehold improvements; (ii) non-cash lease expense of $0.1 million; (iii) commitment share expense of $0.4 million related to the shares of Common Stock issued to Lincoln Park as an initial fee for Lincoln Park’s commitment to purchase shares of Common Stock under a purchase agreement with the Company; (iv) stock-based compensation expense of $2.2 million; (v) accretion of debt discount of $0.3 million; (vi) non-cash interest expense of $0.1 million; and (vii) the changes in the fair value of the Clene Nanomedicine and Initial Stockholders Contingent Earn-outs of $0.1 million and $7,000, respectively. The changes in fair value of these instruments were primarily driven by the decrease of the closing price of our Common Stock on Nasdaq. The net change in operating assets and liabilities was primarily attributable to the following: (a) a decrease in accounts receivable of $0.1 million and a decrease in accounts payable of $2.4 million due to the timing of vendor invoicing and payments; (b) an increase in inventory of $45,000; (c) an increase in prepaid expenses and other current assets of $0.6 million due to the timing of vendor invoicing and payments, the timing of receipt of metals to be used in research and development, and an increase in research and development tax credits receivable; (d) an increase in accrued liabilities of $2.1 million primarily due to increased accrued compensation and benefits and increased CRO and clinical fees; and (e) a decrease in operating lease obligations of $0.1 million.
Current wording
Net cash used in operating activities was $16.2 million for the six months ended June 30, 2023, which resulted from a net loss of $36.9 million, adjusted for non-cash items totaling $21.1 million and a net change in operating assets and liabilities of $0.5 million. Significant non-cash items included: (i) depreciation expense of $0.8 million for laboratory and office equipment and leasehold improvements; (ii) non-cash lease expense of $0.2 million; (iii) commitment share expense of $0.4 million for shares of Common Stock issued to Lincoln Park as an initial fee for their commitment to purchase shares of our Common Stock under a purchase agreement; (iv) issuance costs of $0.3 million for liability-classified warrants issued in a public equity offering; (v) a loss on initial issuance of equity of $14.8 million from the fair value in excess of proceeds from a public equity offering; (vi) stock-based compensation expense of $4.7 million; (vii) accretion of debt discount of $0.5 million; (viii) non-cash interest expense of $0.2 million; (ix) a change in fair value of the Clene Nanomedicine and Initial Stockholders Contingent Earn-outs of $1.1 million and $0.1 million, respectively, due to the decrease in price of our Common Stock on Nasdaq and changes in valuation model inputs; and (x) a change in fair value of common stock warrant liabilities of $0.4 million due to the increase in price of our Common Stock on Nasdaq between the issuance date and reporting date and changes in valuation model inputs. The net change in operating assets and liabilities was primarily attributable to: (a) a decrease in accounts receivable of $28,000 and a decrease in accounts payable of $2.2 million due to the timing of vendor invoicing and payments; (b) an increase in inventory of $9,000; (c) a decrease in prepaid expenses and other current assets of $1.7 million due to the timing of vendor invoicing and payments, the timing of receipt of metals to be used in research and development, and a decrease in research and development tax credits receivable; (d) an increase in accrued liabilities of $0.2 million primarily due to increased CRO and clinical fees, partially offset by decreased accrued compensation and benefits; and (e) a decrease in operating lease obligations of $0.3 million.
Previous wording
Net cash used in investing activities was $0.1 million for the three months ended March 31, 2024, which consisted of purchases of marketable securities of $6.2 million and purchases of property and equipment of $11,000, partially offset by proceeds from maturities of marketable securities of $6.3 million. Net cash provided by investing activities was $4.7 million for the three months ended March 31, 2023, which consisted of proceeds from maturity of marketable securities of $5.0 million, partially offset by purchases of property and equipment of $0.3 million.
Current wording
Net cash provided by investing activities was $6.3 million for the six months ended June 30, 2024, which consisted of proceeds from maturities of marketable securities of $12.5 million, partially offset by purchases of marketable securities of $6.2 million and purchases of property and equipment of $13,000. Net cash provided by investing activities was $4.8 million for the six months ended June 30, 2023, which consisted of proceeds from maturity of marketable securities of $5.0 million, partially offset by purchases of property and equipment of $0.2 million.
Previous wording
Net cash used in financing activities was $19,000 for the three months ended March 31, 2024, which consisted of payments of finance lease obligations of $19,000. Net cash provided by financing activities was $4.6 million for the three months ended March 31, 2023, which consisted of (i) proceeds from issuance of common stock, net of offering costs, of $4.3 million, and (ii) proceeds from the issuance of notes payable of $0.4 million; partially offset by payments of finance lease obligations of $28,000.
Current wording
Net cash provided by financing activities was $9,000 for the six months ended June 30, 2024, which consisted of proceeds from the exercise of stock options of $36,000, partially offset by payments of finance lease obligations of $27,000. Net cash provided by financing activities was $42.4 million for the six months ended June 30, 2023, which consisted of proceeds from issuance of common stock, net of offering costs, of $42.1 million, and proceeds from the issuance of notes payable of $0.4 million; partially offset by payments of finance lease obligations of $46,000.
Previous wording
In June 2023, we sold 50,000,000 units at a sale price of $0.80 per unit pursuant to an underwriting agreement with Canaccord Genuity LLC (“Canaccord”) as underwriter. Each unit consisted of (i) one share of Common Stock, (ii) one warrant to purchase one share of Common Stock at an exercise price of $1.10 per share (the “Tranche A Warrants”), and (iii) one warrant to purchase one share of Common Stock at an exercise price of $1.50 per share (the “Tranche B Warrants”). The aggregate gross proceeds were $40.0 million, excluding the proceeds, if any, from the exercise of the Tranche A Warrants and Tranche B Warrants. We cannot predict when or if the Tranche A Warrants or Tranche B Warrants will be exercised, and it is possible they may expire and/or never be exercised. We paid underwriting discounts and commissions of $2.4 million and offering expenses of $0.2 million. The offering was made pursuant to our registration statement on Form S-3 (file number 333-264299), which was declared effective by the SEC on April 26, 2022, a related registration statement pursuant to Rule 462(b) (file number 333-272692), filed with the SEC and effective on June 16, 2023, and our prospectus supplement relating to the offering.
Current wording
In June 2023, we sold 2,500,000 units at a sale price of $16.00 per unit pursuant to an underwriting agreement with Canaccord Genuity LLC (“Canaccord”). Each unit consisted of (i) one share of Common Stock, (ii) one warrant to purchase one share of Common Stock at an exercise price of $22.00 per share (the “Tranche A Warrants”), and (iii) one warrant to purchase one share of Common Stock at an exercise price of $30.00 per share (the “Tranche B Warrants”). The aggregate gross proceeds were $40.0 million, excluding the proceeds, if any, from the exercise of the Tranche A and Tranche B Warrants. We cannot predict when or if the Tranche A or Tranche B Warrants will be exercised, and it is possible they may expire and/or never be exercised. We paid underwriting discounts and commissions of $2.4 million and offering expenses of $0.2 million. The offering was made pursuant to our registration statement on Form S-3 (file number 333-264299), which was declared effective by the SEC on April 26, 2022, a related registration statement pursuant to Rule 462(b) (file number 333-272692), filed with the SEC and effective on June 16, 2023, and our prospectus supplement relating to the offering.
Previous wording
During the three months ended March 31, 2023 we sold 2,895,090 shares of Common Stock under our Equity Distribution Agreement (the “ATM Agreement”) with Canaccord, generated gross proceeds of $4.5 million, and paid commissions of $0.1 million. We did not make any sales during the three months ended March 31, 2024. The issuance and sale of Common Stock by us under the ATM Agreement was made pursuant to our registration statement on Form S-3 (file number 333-264299), which was declared effective by the Securities and Exchange Commission on April 26, 2022, and our prospectus supplement relating to the offering. We subsequently terminated and filed a new prospectus supplement relating to the offering, which was most recently amended on May 8, 2024 for the future offer and sale of Common Stock having an aggregate offering price of up to $12.3 million.
Current wording
During the three and six months ended June 30, 2023, we sold 0 and 144,755 shares of Common Stock, respectively, under our Equity Distribution Agreement (the “ATM Agreement”) with Canaccord; generated gross proceeds of $0 and $4.5 million, respectively; and paid commissions of $0 and $0.1 million, respectively. We did not sell any shares during the three and six months ended June 30, 2024. The sale of Common Stock under the ATM Agreement was made pursuant to our registration statement on Form S-3 (file number 333-264299), which was declared effective by the Securities and Exchange Commission on April 26, 2022. We subsequently terminated and filed a new prospectus supplement relating to the offering, which was most recently amended on May 8, 2024, for the future offer and sale of Common Stock having an aggregate offering price of up to $12.3 million.
Previous wording
During the three months ended March 31, 2023, we entered into a purchase agreement (the “Purchase Agreement”) with Lincoln Park, pursuant to which we issued 332,668 shares of Common Stock (the “Initial Commitment Shares”) to Lincoln Park as an initial fee for its commitment under the Purchase Agreement. We did not sell any Common Stock under the Purchase Agreement during the three months ended March 31, 2024 and 2023. The issuance and sale of Common Stock under the Purchase Agreement is made pursuant to our registration statement on Form S-3 (file number 333-264299), which was declared effective by the SEC on April 26, 2022. On June 16, 2023, we suspended and terminated the prospectus supplement (the “Purchase Agreement Prospectus Supplement”) related to the offering with respect to the unsold shares of Common Stock issuable pursuant to the Purchase Agreement. We will not make any further sales of our securities pursuant to the Purchase Agreement, unless and until a new prospectus supplement is filed. Other than the termination of the Purchase Agreement Prospectus Supplement and offering with respect to future sales by us, the Purchase Agreement remains in full force and effect.
Current wording
During the three and six months ended June 30, 2023, we sold 20,000 shares of Common Stock under our purchase agreement (the “Purchase Agreement”) with Lincoln Park, issued 145 Additional Commitment Shares, and generated gross proceeds of $0.4 million. We did not sell any shares during the three and six months ended June 30, 2024. The sale of Common Stock under the Purchase Agreement was made pursuant to our registration statement on Form S-3 (file number 333-264299), which was declared effective by the SEC on April 26, 2022. On June 16, 2023, we suspended and terminated the prospectus supplement (the “Purchase Agreement Prospectus Supplement”) related to the offering with respect to the unsold shares of Common Stock issuable pursuant to the Purchase Agreement. We will not make any further sales of our securities pursuant to the Purchase Agreement, unless and until a new prospectus supplement is filed. Other than the termination of the Purchase Agreement Prospectus Supplement and offering with respect to future sales by us, the Purchase Agreement remains in full force and effect.
Previous wording
Pursuant to the 2021 Avenue Loan, $5.0 million of the outstanding principal is subject to a conversion feature. In accordance with ASU 2020-06,Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, we classified this portion as convertible notes payable in the condensed consolidated balance sheets and did not separate the conversion option from the host contract as it did not meet the requirements for accounting as a derivative instrument. We account for the convertible note as a single liability measured at its amortized cost. As of March 31, 2024 and December 31, 2023, the convertible note was carried at $5.0 million and $4.9 million, respectively.
Current wording
In accordance with ASU 2020-06,Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, we classified a portion of the 2021 Avenue Loan as convertible notes payable in the condensed consolidated balance sheets as of December 31, 2023 and did not separate the conversion option from the host contract as it did not meet the requirements for accounting as a derivative instrument. As of June 30, 2024, the conversion option has expired. We accounted for the convertible note as a single liability measured at its amortized cost as December 31, 2023 with a carrying value of $4.9 million.
Previous wording
Pursuant to a June 2023 amendment to the 2021 Avenue Loan, we issued a warrant to purchase 3,000,000 shares of Common Stock at $0.80 per share (the “New Avenue Warrant”). In accordance with ASC 815, we recognized the New Avenue Warrant as a derivative liability measured at fair value and remeasure the New Avenue Warrant at each reporting date and record the change in fair value as a component of other income (expense), net, in the condensed consolidated statements of operations and comprehensive loss. The change in fair value of the New Avenue Warrant resulted in a loss of $0.1 million for the three months ended March 31, 2024. We estimate the fair value using a Black-Scholes option-pricing model with probability weights for the occurrence of the following events: (i) settlement of the instrument upon a change of control transaction, (ii) dissolution of the Company, or (iii) another outcome outside of (i)-(ii). These estimates require significant judgment. As of March 31, 2024 and December 31, 2023, the unobservable inputs were as follows:
Current wording
Pursuant to a June 2023 amendment to the 2021 Avenue Loan, we issued a warrant to purchase 150,000 shares of Common Stock at $16.00 per share (the “New Avenue Warrant”). In accordance with ASC 815, we recognized the New Avenue Warrant as a derivative liability measured at fair value and remeasure the New Avenue Warrant at each reporting date and record the change in fair value as a component of other income (expense), net, in the condensed consolidated statements of operations and comprehensive loss. The change in fair value of the New Avenue Warrant resulted in a gain of $0.1 million and a loss of $0.1 million during the three months ended June 30, 2024 and 2023, respectively; and a loss of $0.1 million and a loss of $0.1 million during the six months ended June 30, 2024 and 2023, respectively. We estimate the fair value using a Black-Scholes option-pricing model with probability weights for the occurrence of the following events: (i) settlement of the instrument upon a change of control transaction, (ii) dissolution of the Company, or (iii) another outcome outside of (i)-(ii). These estimates require significant judgment. As of June 30, 2024 and December 31, 2023, the unobservable inputs were as follows:
Previous wording
Pursuant to an underwritten public offering in June 2023, we issued the Tranche A Warrants to purchase 50,000,000 shares of Common Stock at $1.10 per share and the Tranche B Warrants to purchase 50,000,000 shares of Common Stock at $1.50 per share. In accordance with ASC 815, we recognized the Tranche A Warrants as derivative liabilities measured at fair value and will remeasure the Tranche A Warrants at each reporting date and record the change in fair value as a component of other income (expense), net, in the condensed consolidated statements of operations and comprehensive loss (the Tranche B Warrants qualified for equity classification at issuance). The change in fair value of the Tranche A Warrants out resulted in a loss of $1.2 million for the three months ended March 31, 2024. We estimate the fair value using a Black-Scholes option-pricing model with probability weights for the occurrence of the following events: (i) FDA acceptance of an NDA for CNM-Au8, (ii) settlement upon a fundamental transaction, (iii) dissolution of the Company, and (iv) another outcome outside of (i)-(iii). These estimates require significant judgment. As of March 31, 2024 and December 31, 2023, the unobservable inputs were as follows:
Current wording
Pursuant to an underwritten public offering in June 2023, we issued the Tranche A Warrants to purchase 2,500,000 shares of Common Stock at $22.00 per share. In accordance with ASC 815, we recognized the Tranche A Warrants as derivative liabilities measured at fair value and will remeasure them at each reporting date and record the change in fair value as a component of other income (expense), net, in the condensed consolidated statements of operations and comprehensive loss. The change in fair value of the Tranche A Warrants resulted in a gain of $1.5 million and a loss of $0.3 million during the three months ended June 30, 2024 and 2023, respectively; and a gain of $0.3 million and a loss of $0.3 million during the six months ended June 30, 2024 and 2023, respectively. We estimate the fair value using a Black-Scholes option-pricing model with probability weights for the occurrence of the following events: (i) FDA acceptance of an NDA for CNM-Au8, (ii) settlement upon a fundamental transaction, (iii) dissolution of the Company, and (iv) another outcome outside of (i)-(iii). These estimates require significant judgment. As of June 30, 2024 and December 31, 2023, the unobservable inputs were as follows:
Previous wording
We estimate the fair value of stock options using a Black-Scholes option-pricing model, which requires significant judgment. The unobservable inputs include the expected price volatility, risk-free interest rate, expected dividend yield, and expected term. For the three months ended March 31, 2024 and 2023, the unobservable inputs were as follows:
Current wording
We estimate the fair value of stock options using a Black-Scholes option-pricing model, which requires significant judgment. The unobservable inputs include the expected price volatility, risk-free interest rate, expected dividend yield, and expected term. For the six months ended June 30, 2024 and 2023, the unobservable inputs were as follows:
Previous wording
We estimate the fair value of restricted stock awards using a Monte Carlo valuation model to simulate the achievement of certain stock price milestones. The unobservable inputs include the expected stock price volatility, risk-free interest rate, and expected term. No restricted stock awards were granted during the three months ended March 31, 2024 and 2023.
Current wording
We estimate the fair value of restricted stock awards using a Monte Carlo valuation model to simulate the achievement of certain stock price milestones. The unobservable inputs include the expected stock price volatility, risk-free interest rate, and expected term. No restricted stock awards were granted during the six months ended June 30, 2024 and 2023.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
CNM-Au8 was well-tolerated and no significant safety findings were observed in the OLE.