Clene Inc
For the period ended Sep 30, 2024. Filed Nov 13, 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.
Sep 30, 2024 · Filed Nov 13, 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 2024-06-30; filed 2024-08-07.
0001437749-24-025014
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-13.
0001437749-24-034663
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 107 previous paragraphs and 101 current paragraphs.
69 unchanged; 31 reworded; 1 added; 7 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 61 previous and 44 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 (1)
Current report
On November 1, 2024, we met with the FDA in a Type C meeting that we previously announced on September 16, 2024 and are awaiting minutes from that meeting. We are also planning to execute an international confirmatory Phase 3 trial of CNM-Au8 30 mg, RESTORE-ALS, and expect to initiate the trial in the second quarter of 2025, contingent upon the outcome of the Type C meeting and funding. We announced the following planned design of RESTORE-ALS at the 2024 Annual Northeast ALS Consortium (“NEALS”) Meeting on October 23, 2024:
Removed paragraphs (7)
Previous 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:
Previous report
CNM-Au8 was well-tolerated and no significant safety findings were observed in the OLE.
Previous 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”):
Previous 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.
Previous 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.
Previous report
In April 2024, we announced the latest data from the open label long-term extension (“LTE”) of our Phase 2 VISIONARY-MS clinical trial at the 2024 American Academy of Neurology Annual Meeting. These new long-term results across multiple paraclinical exploratory endpoints reinforce the evidence for sustained clinical benefit to trial participants across multiple clinical outcome measures associated with consistent improvements in neuronal function and remyelination. The LTE results demonstrate evidence supporting repair and remyelinating effects of CNM-Au8 treatment in patients originally randomized to CNM-Au8 and further enhance the trial’s results from the double-blind period, which demonstrated significant improvements in the primary and secondary endpoints, low contrast letter acuity (“LCLA”) and the modified MS Functional Rating Scale, respectively. The key LTE results include the following:
Previous report
CNM-Au8 was well-tolerated and no significant safety findings were observed.
Reworded paragraphs (31)
Previous 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.
Current wording
We plan to continue working closely with regulatory health authorities from the FDA, European Medicines Agency, 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 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.
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 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 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.
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. 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 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.
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 if and when we advance our assets into Phase 3. Additionally, if we are able to file an NDA with the FDA under an accelerated approval pathway or subsequent to future Phase 3 clinical development activities, if any, 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 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.
Current wording
We anticipate that our general and administrative expenses in future periods will be contingent upon our discussions with the FDA. If we are able to file an NDA with the FDA under an accelerated pathway, 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 with the FDA under an accelerated pathway, 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
Total other income (expense), net, consists primarily of (i) interest income and interest expense, (ii) commitment share expense from shares of Common Stock issued as a commitment fee, (iii) changes in the fair value of our (a) common stock warrant liabilities and (b) Contingent Earn-outs, (iv) research and development tax credits, unconditional grants, and conditional grants for which applicable conditions have been met, and (v) realized gains and losses on foreign currency transactions and other miscellaneous income and expense items.
Current wording
Total other income (expense), net, consists primarily of (i) interest income and interest expense, (ii) commitment share expense from shares of Common Stock issued as a commitment fee, (iii) issuance costs for common stock warrant liabilities, (iv) a loss on initial issuance of equity from the fair value in excess of proceeds from a public equity offering, (v) changes in the fair value of our common stock warrant liabilities and Contingent Earn-outs, (vi) research and development tax credits, unrestricted grants, and conditional grants for which applicable conditions have been met, and (vii) realized gains and losses on foreign currency transactions and other miscellaneous income and expense items.
Previous wording
Our results of operations for the three and six months ended June 30, 2024 and 2023 were as follows:
Current wording
Our results of operations for the three and nine months ended September 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 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.
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 nine months ended September 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
Cost of revenue related to production and distribution costs for the sales of Gold Factor, Zinc Factor, and rMetx dietary supplements.
Current wording
Cost of revenue relates to production and distribution costs for the sales of Gold Factor, Zinc Factor, and rMetx dietary supplements.
Previous wording
Research and development expense during the three and six months ended June 30, 2024 and 2023 was as follows:
Current wording
Research and development expense during the three and nine months ended September 30, 2024 and 2023 was as follows:
Previous wording
General and administrative expense during the three and six months ended June 30, 2024 and 2023 was as follows:
Current wording
General and administrative expense during the three and nine months ended September 30, 2024 and 2023 was as follows:
Previous wording
Total other income (expense), net, during the three and six months ended June 30, 2024 and 2023 was as follows:
Current wording
Total other income (expense), net, during the three and nine months ended September 30, 2024 and 2023 was as follows:
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 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.
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 4.55% and 4.65% for the nine months ended September 30, 2024 and 2023, respectively. As of September 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 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.
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 nine months ended September 30, 2024 and 2023. We recorded other income of $0.1 million and $0.9 million for the nine months ended September 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 six months ended June 30, 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 nine months ended September 30, 2024 and 2023.
Previous 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.
Current wording
We incurred a loss from operations of $7.8 million and $9.5 million for the three months ended September 30, 2024 and 2023, respectively; and $24.4 million and $30.6 million for the nine months ended September 30, 2024 and 2023, respectively. Our accumulated deficit was $268.6 million and $242.7 million as of September 30, 2024 and December 31, 2023, respectively. Our cash, cash equivalents, and marketable securities totaled $14.6 million and $35.0 million as of September 30, 2024 and December 31, 2023, respectively, and net cash used in operating activities was $16.5 million and $23.0 million for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
To mitigate our funding needs, we plan to raise additional funding, including exploring equity financing and offerings, debt financing, licensing or collaboration arrangements with third parties, as well as utilizing our existing at-the-market facility and equity purchase agreement and potential proceeds from the exercise of outstanding warrants and stock options. These plans are subject to market conditions and reliance on third parties, and there is no assurance that effective implementation of our plans will result in the necessary funding to continue current operations. We have implemented cost-saving initiatives, including delaying and reducing certain research and development programs and commercialization efforts and elimination of certain staff positions. We have concluded that our plans do not alleviate the substantial doubt about our ability to continue as a going concern beyond one year from the date the condensed consolidated financial statements are issued.
Current wording
To mitigate our funding needs, we plan to raise additional funding, including exploring equity financing and offerings, debt financing, licensing or collaboration arrangements with third parties, as well as utilizing our existing at-the-market facility and equity purchase agreement and potential proceeds from the exercise of outstanding warrants and stock options. These plans are subject to market conditions and reliance on third parties, and there is no assurance that effective implementation of our plans will result in the necessary funding to continue current operations. During the three months ended September 30, 2024, we generated $2.1 million of gross proceeds from our equity distribution agreement (the “ATM Agreement”) and subsequent to September 30, 2024, we raised $3.5 million from a registered direct offering of equity securities and an additional $3.8 million that we received as of September 30, 2024 from separate, concurrent private placements of equity securities that closed on October 1, 2024. We have implemented cost-saving initiatives, including delaying and reducing certain research and development programs and commercialization efforts and elimination of certain staff positions. We have concluded that our plans do not alleviate the substantial doubt about our ability to continue as a going concern beyond one year from the date the condensed consolidated financial statements are issued.
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 $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.
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 $11.0 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 $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.
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 $5.5 million of payments under operating lease obligations, and interest and principal repayment of notes payable of $7.7 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 six months ended June 30, 2024 and 2023 were as follows:
Current wording
Our cash flows for the nine months ended September 30, 2024 and 2023 were as follows:
Previous 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.
Current wording
Net cash used in operating activities was $16.5 million for the nine months ended September 30, 2024, which resulted from a net loss of $25.9 million, adjusted for non-cash items totaling $7.8 million and a net change in operating assets and liabilities of $1.6 million. Significant non-cash items included: (i) depreciation expense of $1.2 million for laboratory and office equipment and leasehold improvements; (ii) non-cash lease expense of $0.4 million; (iii) stock-based compensation expense of $6.2 million; (iv) accretion of debt discount of $1.2 million; (v) non-cash interest expense of $40,000; (vi) non-cash interest income on marketable securities of $0.2 million; (vii) a change in fair value of common stock warrant liabilities of $1.0 million due to changes in the 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 the 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 an increase in accounts payable of $0.2 million due to the timing of vendor invoicing and payments; (b) an increase in prepaid expenses and other current assets of $1.2 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 prepaid ACT-EAP expenses, partially offset by a decrease in research and development tax credits receivable; (c) an increase in accrued liabilities of $2.9 million primarily due to increased accrued compensation and benefits, increased deferred grants, and an increase in accrued CRO and clinical fees; and (d) a decrease in operating lease obligations of $0.4 million.
Previous 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.
Current wording
Net cash used in operating activities was $23.0 million for the nine months ended September 30, 2023, which resulted from a net loss of $39.3 million, adjusted for non-cash items totaling $17.0 million and a net change in operating assets and liabilities of $0.7 million. Significant non-cash items included: (i) depreciation expense of $1.3 million for laboratory and office equipment and leasehold improvements; (ii) non-cash lease expense of $0.3 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 $7.1 million; (vii) accretion of debt discount of $0.8 million; (viii) non-cash interest expense of $0.3 million; (ix) a change in fair value of the Clene Nanomedicine and Initial Stockholders Contingent Earn-outs of $2.1 million and $0.3 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 $6.0 million due to the increase 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 $1.1 million due to the timing of vendor invoicing and payments; (b) an increase in inventory of $0.1 million; (c) a decrease in prepaid expenses and other current assets of $1.5 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) a decrease in accrued liabilities of $0.7 million primarily due to decreased accrued compensation and benefits and CRO and clinical fees; and (e) a decrease in operating lease obligations of $0.4 million.
Previous 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.
Current wording
Net cash provided by investing activities was $6.3 million for the nine months ended September 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 $14,000. Net cash provided by investing activities was $4.7 million for the nine months ended September 30, 2023, which consisted of proceeds from maturity of marketable securities of $5.0 million, partially offset by purchases of property and equipment of $0.3 million.
Previous 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.
Current wording
Net cash used in financing activities was $4.1 million for the nine months ended September 30, 2024, which consisted of proceeds from the exercise of stock options of $0.1 million, proceeds from the issuance of common stock of $2.0 million, and proceeds from share subscriptions receivable of $3.8 million due to receipt of investor subscriptions from a registered direct offering in advance of the closing date of October 1, 2024; partially offset by payments of finance lease obligations of $27,000 and payments of notes payable principal of $10.0 million related to our loan with Avenue. Net cash provided by financing activities was $42.2 million for the nine months ended September 30, 2023, which consisted of proceeds from issuance of common stock and warrants, 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 notes payable modification fees of $0.2 million and payments of finance lease obligations of $0.1 million.
Previous 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.
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, and 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), declared effective by the Securities and Exchange Commission (“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 a related prospectus supplement.
Previous 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.
Current wording
During the three and nine months ended September 30, 2024, we sold 394,453 and 394,453 shares of Common Stock, respectively, under the ATM Agreement with Canaccord, generated gross proceeds of $2.1 million and $2.1 million, respectively, and paid commissions of $0.1 million and $0.1 million, respectively. During the three and nine months ended September 30, 2023, we sold 0 and 144,755 shares of Common Stock, respectively; generated gross proceeds of $0 and $4.5 million, respectively; and paid commissions of $0 and $0.1 million, respectively. The sale of Common Stock under the ATM Agreement was made pursuant to our registration statement on Form S-3 (file number 333-264299), declared effective by the SEC on April 26, 2022, and a related prospectus supplement. On September 30, 2024, we notified Canaccord that we were suspending the prospectus supplement related to the ATM Agreement. We will not make any sales of our common stock pursuant to the ATM Agreement, unless and until a new prospectus supplement is filed. Other than the termination of the prospectus supplement related to the ATM Agreement, the ATM Agreement remains in full force and effect.
Previous 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.
Current wording
During the nine months ended September 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 proceeds of $0.4 million. We did not effect any sales during any of the other periods presented herein. The sale of Common Stock under the Purchase Agreement was made pursuant to our registration statement on Form S-3 (file number 333-264299), declared effective by the SEC on April 26, 2022, and a related prospectus supplement. On June 16, 2023, we suspended and terminated the prospectus supplement related to the Purchase Agreement 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 prospectus supplement related to the Purchase Agreement with respect to future sales by us, the Purchase Agreement remains in full force and effect.
Previous 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:
Current wording
Pursuant to amendments to the 2021 Avenue Loan in June 2023 and September 2024, we issued a warrant to purchase 150,000 shares of Common Stock at $4.6014 per share (the “2023 Avenue Warrant”). In accordance with ASC 815, we recognized the 2023 Avenue Warrant as a derivative liability measured at fair value and remeasure the 2023 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 2023 Avenue Warrant resulted in a gain of $0.1 million and a gain of $0.4 million during the three months ended September 30, 2024 and 2023, respectively; and a gain of $39,000 and a gain of $0.3 million during the nine months ended September 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 September 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 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:
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 $0.6 million and a gain of $5.9 million during the three months ended September 30, 2024 and 2023, respectively; and a gain of $0.9 million and a gain of $5.6 million during the nine months ended September 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 September 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 six months ended June 30, 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 nine months ended September 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 six months ended June 30, 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 nine months ended September 30, 2024 and 2023.