UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
10-Q
(Mark
One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended March
31, 2022
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from to
Commission
File Number: 001-38807
Chemomab
Therapeutics Ltd.
(Exact
Name of Registrant as Specified in its Charter)
|
Israel
|
|
81-3676773
|
| |
|
|
|
(State
or other jurisdiction of
incorporation
or organization) |
|
(I.R.S.
Employer
Identification
No.) |
|
|
|
|
|
Kiryat
Atidim, Building
7 |
|
Tel
Aviv, Israel 6158002
|
|
(Address
of principal executive offices including zip code) |
Registrant’s
telephone number, including area code: +972-77-331-0156
Securities
registered pursuant to Section 12(b) of the Exchange Act:
|
Title
of each class
|
Trading
Symbol(s)
|
Name
of each exchange on which registered
|
|
American
Depositary Shares, each representing twenty (20) ordinary shares, no par value per share
|
CMMB
|
Nasdaq
Capital Market |
|
Ordinary
shares, no par value per share
|
n/a
|
Nasdaq
Capital Market* |
*Not for trading;
only in connection with the registration of American Depository Shares
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company,
or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated
filer |
☐ |
|
Accelerated filer
|
☐ |
|
|
Non-accelerated
filer |
☐ |
|
Smaller reporting
company |
☒
|
|
| |
|
|
Emerging growth company
|
☒
|
|
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
As
of May 11, 2022, the registrant had 11,404,515
American Depositary Shares outstanding.
CHEMOMAB
THERAPEUTICS LTD.
QUARTERLY
REPORT ON FORM 10-Q
FOR
THE QUARTER ENDED MARCH 31, 2022
TABLE
OF CONTENTS
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1 |
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1 |
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11 |
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20 |
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20 |
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21 |
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21 |
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21 |
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21 |
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21 |
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21 |
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21 |
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22 |
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23 |
CAUTIONARY
NOTE ABOUT FORWARD-LOOKING STATEMENTS
This
quarterly report contains forward-looking statements. All statements other than statements of historical fact are “forward-looking
statements” for purposes of this Quarterly Report on Form 10-Q. These statements involve known and unknown risks, uncertainties
and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance
or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by
terms including “anticipates,” “believes,” “could,” “estimates,” “expects,”
“intends,” “may,” “plans,” “potential,” “predicts,” “projects,”
“should,” “will,” “would,” or the negative of these terms or other similar expressions. Forward-looking
statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties.
Actual results or events could differ materially from those set forth or implied by such forward-looking statements and related assumptions
due to certain factors, including, without limitation, the risks set forth under the caption “Risk Factors” below, which are
incorporated herein by reference as well as those business risks and factors described elsewhere in this report and in our other filings
with the Securities and Exchange Commission (the “SEC”), specifically our most recent Annual Report on Form 10-K, and our
Quarterly Reports on Form 10-Q filed Current Reports on Form 8-K filed subsequently to our most recent Annual Report on Form 10-K. All
forward-looking statements speak only as of the date made, and we undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or otherwise, except as required by law.
CERTAIN
TERMS USED IN THIS QUARTERLY REPORT ON FORM 10-Q
As used in this Quarterly Report
on Form 10-Q, unless the context otherwise requires:
| |
• |
references to “Chemomab Therapeutics Ltd.”, “Chemomab,”
the “Company,” “us,” “we” and “our” refer to Chemomab Therapeutics Ltd. an Israeli company
and its consolidated subsidiaries, although with respect to the presentation of financial results for historical periods that preceded
the Merger (as defined below), these terms refer to the financial results of Chemomab Ltd., which was the accounting acquirer in the Merger; |
| |
• |
references to “ordinary shares,” “our shares”
and similar expressions refer to the Company’s ordinary shares, no nominal (par) value; |
| |
• |
references to “ADS” refer to the American Depositary
Shares listed on the Nasdaq Capital Market (“Nasdaq”) under the symbol “CMMB,” each representing twenty (20) ordinary
shares; |
| |
• |
references to “dollars,” “U.S. dollars”
and “$” are to U.S. Dollars; |
| |
• |
references to “NIS” are to New Israeli Shekels; |
| |
• |
references to the “SEC” are to the U.S. Securities
and Exchange Commission; and |
| |
• |
references to the “Merger” refer to the merger
involving Anchiano Therapeutics Ltd. and Chemomab Ltd., whereby a wholly owned subsidiary of Anchiano Therapeutics Ltd. merged with and
into Chemomab Ltd., with Chemomab Ltd. surviving as a wholly owned subsidiary of Anchiano Therapeutics Ltd. Upon consummation of the Merger,
Anchiano Therapeutics Ltd. changed its name to “Chemomab Therapeutics Ltd.” and the business conducted by Chemomab Ltd. became
primarily the business conducted by the Company. |
PART
I. – FINANCIAL INFORMATION
Item
1. FINANCIAL STATEMENTS
|
Chemomab
Therapeutics Ltd. and
its
subsidiaries
Condensed
Consolidated Interim
Financial
Statements
As
of March 31, 2022
(Unaudited) |
Chemomab Therapeutics Ltd.
and its subsidiaries
Unaudited
Condensed Consolidated Interim Financial Statements as of March 31, 2022
Contents
Chemomab Therapeutics
Ltd.
Condensed
Consolidated Balance Sheets
In USD thousands (except
share amounts)
| |
|
|
|
|
|
March
31, |
|
|
December
31, |
|
| |
|
|
Note
|
|
|
2022
|
|
|
2021
|
|
|
|
|
|
|
|
|
|
Unaudited |
|
|
|
Audited |
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents |
|
|
|
|
|
|
13,827 |
|
|
|
15,186 |
|
|
Short
term bank deposits |
|
|
|
|
|
|
43,579 |
|
|
|
45,975 |
|
|
Other
receivables and prepaid expenses |
|
|
|
|
|
|
1,934 |
|
|
|
1,527 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current assets |
|
|
|
|
|
|
59,340 |
|
|
|
62,688 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long
term prepaid expenses |
|
|
|
|
|
|
864 |
|
|
|
908 |
|
|
Property
and equipment, net |
|
|
|
|
|
|
358 |
|
|
|
357 |
|
|
Restricted
cash |
|
|
|
|
|
|
85 |
|
|
|
55 |
|
|
Operating
lease right-of-use assets |
|
|
|
|
|
|
309 |
|
|
|
345 |
|
|
Total
non-current assets |
|
|
|
|
|
|
1,616 |
|
|
|
1,665 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets |
|
|
|
|
|
|
60,956 |
|
|
|
64,353 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
payables |
|
|
|
|
|
|
1,487 |
|
|
|
1,336 |
|
|
Accrued
expenses |
|
|
|
|
|
|
1,248 |
|
|
|
555 |
|
|
Employee
and related expenses |
|
|
|
|
|
|
666 |
|
|
|
653 |
|
|
Operating
lease liabilities |
|
|
|
|
|
|
116 |
|
|
|
106 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities |
|
|
|
|
|
|
3,517 |
|
|
|
2,650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
lease liabilities - long term |
|
|
|
|
|
|
203 |
|
|
|
237 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
non-current liabilities |
|
|
|
|
|
|
203 |
|
|
|
237 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
and contingent liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities |
|
|
|
|
|
|
3,720 |
|
|
|
2,887 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary
shares no
par value - Authorized: 650,000,000
shares as of March 31, 2022 and as of December 31, 2021;
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
Issued
and outstanding: 228,090,300
ordinary shares as of March 31, 2022 and as of December 31, 2021 |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
Additional
paid in capital |
|
|
|
|
|
|
98,513 |
|
|
|
97,639 |
|
|
Accumulated
deficit |
|
|
|
|
|
|
(41,277 |
) |
|
|
(36,173 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
shareholders’ equity |
|
|
|
|
|
|
57,236 |
|
|
|
61,466 |
|
|
Total
liabilities and shareholders’ equity |
|
|
|
|
|
|
60,956 |
|
|
|
64,353 |
|
The accompanying notes are an integral
part of the condensed consolidated interim financial statements.
Chemomab Therapeutics
Ltd.
and
its subsidiaries
Condensed
Consolidated Interim Statements of Operations (Unaudited)
In USD thousands
|
|
|
|
Three
months |
|
|
|
Three
months |
|
|
|
|
|
Ended
|
|
|
|
Ended
|
|
|
|
|
|
March
31, |
|
|
|
March
31, |
|
| |
|
|
2022
|
|
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development |
|
|
2,745 |
|
|
|
1,157 |
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative |
|
|
2,575 |
|
|
|
542 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating expenses |
|
|
5,320 |
|
|
|
1,699 |
|
|
|
|
|
|
|
|
|
|
|
|
Financing
expenses (income), net |
|
|
(216 |
) |
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the period |
|
|
5,104 |
|
|
|
1,704 |
|
| |
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per Ordinary Share* |
|
|
0.022 |
|
|
|
0.011 |
|
| |
|
|
|
|
|
|
|
|
|
Weighted
average number of Ordinary Shares outstanding, basic, and diluted* |
|
|
228,090,300 |
|
|
|
156,751,771 |
|
*
Number of shares has been retroactively adjusted based on the equivalent number of shares received
by the accounting acquirer’s shareholders in the reverse recapitalization transaction (refer to Note 1B).
The
accompanying notes are an integral part of the condensed consolidated interim financial statements.
Chemomab Therapeutics Ltd.
and
its subsidiaries
Condensed
Consolidated Interim Statements of Changes in Equity (Unaudited)
In USD thousands (except
share amounts)
| |
|
Ordinary
Shares
|
|
|
Additional
paid
in
capital |
|
|
Accumulated
Deficit
|
|
|
Total
Shareholders’
equity
|
|
| |
|
Number
|
|
|
USD
|
|
|
USD
|
|
|
USD
|
|
|
USD
|
|
|
For
the three-month period ended on March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of January 1, 2022 * |
|
|
228,090,300 |
|
|
|
- |
|
|
|
97,639 |
|
|
|
(36,173 |
) |
|
|
61,466 |
|
|
Share-based
compensation |
|
|
- |
|
|
|
- |
|
|
|
874 |
|
|
|
- |
|
|
|
874 |
|
|
Net
loss for the period |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(5,104 |
) |
|
|
(5,104 |
) |
|
Balance
as of March 31, 2022 |
|
|
228,090,300 |
|
|
|
- |
|
|
|
98,513 |
|
|
|
(41,277 |
) |
|
|
57,236 |
|
|
For
the three-month period ended on March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of January 1, 2021 (**) |
|
|
9,274,838 |
|
|
|
- |
|
|
|
34,497 |
|
|
|
(23,695 |
) |
|
|
10,802 |
|
|
Share-based
compensation |
|
|
- |
|
|
|
- |
|
|
|
43 |
|
|
|
- |
|
|
|
43 |
|
|
Effect
of reverse capitalization transaction |
|
|
152,299,702
|
|
|
|
- |
|
|
|
2,476
|
|
|
|
- |
|
|
|
2,476
|
|
|
Issuance
of shares and warrants, net of issuance costs |
|
|
52,385,400
|
|
|
|
- |
|
|
|
43,547
|
|
|
|
- |
|
|
|
43,547
|
|
|
Net
loss for the period |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,704 |
) |
|
|
(1,704 |
) |
|
Balance
as of March 31, 2021 |
|
|
213,959,940 |
|
|
|
- |
|
|
|
80,563 |
|
|
|
(25,399 |
) |
|
|
55,164 |
|
(*)
Number and type of equity instruments reflects the capital of the legal parent (the Company).
(**)
Number of shares has been retroactively adjusted to reflect the share reverse split effected on
March 16, 2021 (refer to Note 1B).
The
accompanying notes are an integral part of the condensed consolidated interim financial statements.
Chemomab Therapeutics Ltd.
and
its subsidiaries
Condensed
Interim Statements of Cash flows (Unaudited)
In USD thousands
|
|
|
Three
months
ended
March
31,
2022
|
|
|
Three
months
ended
March
31,
2021
|
|
|
Cash
flows from operating activities |
|
|
|
|
|
|
|
|
|
Net
loss for the period |
|
|
(5,104 |
) |
|
|
(1,704 |
) |
|
|
|
|
|
|
|
|
|
|
|
Adjustments
for operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
13 |
|
|
|
7 |
|
|
Change
in other receivables and prepaid expenses |
|
|
(363 |
) |
|
|
57 |
|
|
Change
in operating lease liability |
|
|
12 |
|
|
|
- |
|
|
Change
in trade payables |
|
|
151 |
|
|
|
281 |
|
|
Change
in accrued expenses |
|
|
693 |
|
|
|
(62 |
) |
|
Change
in employees and related expenses |
|
|
13 |
|
|
|
85 |
|
|
Share-based
compensation |
|
|
874 |
|
|
|
43 |
|
|
|
|
|
1,393 |
|
|
|
411 |
|
|
Net
cash used in operating activities |
|
|
(3,711 |
) |
|
|
(1,293 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities |
|
|
|
|
|
|
|
|
|
Investment
in deposits |
|
|
2,396 |
|
|
|
1 |
|
|
Purchase
of property and equipment |
|
|
(14 |
) |
|
|
(3 |
) |
|
Net
cash provided by (used in) investing activities
|
|
|
2,382 |
|
|
|
(2 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities |
|
|
|
|
|
|
|
|
|
Cash
acquired in reverse recapitalization |
|
|
- |
|
|
|
2,427 |
|
|
Issuance
of shares and warrants, net of issuance costs |
|
|
- |
|
|
|
45,372 |
|
|
Net
cash provided by financing activities |
|
|
- |
|
|
|
47,799 |
|
|
|
|
|
|
|
|
|
|
|
|
Change
in cash, cash equivalents and restricted cash |
|
|
(1,329 |
) |
|
|
46,504 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
cash equivalents and restricted cash at beginning of period |
|
|
15,241 |
|
|
|
11,727 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
cash equivalents and restricted cash at end of period |
|
|
13,912 |
|
|
|
58,231 |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
|
Liabilities
assumed, net of non-cash assets received in reverse merger |
|
|
- |
|
|
|
49 |
|
|
Accrued
share issuance expenses |
|
|
- |
|
|
|
1,825 |
|
The
accompanying notes are an integral part of the condensed consolidated interim financial statements.
CHEMOMAB
THERAPEUTICS LTD AND ITS SUBSIDIARIES
(FORMERLY
ANCHIANO THERAPEUTICS LTD.)
NOTES
TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Note 1 - General.
| |
A.
|
Chemomab
Therapeutics Ltd. (hereinafter - "the Company") is an Israeli based company incorporated under the laws of the State of Israel in September
2011. The Company’s registered office is located in Kiryat Atidim, Tel Aviv, Israel. The Company is a clinical-stage biotech company
discovering and developing innovative therapeutics for conditions with high-unmet medical need that involve inflammation and fibrosis. |
| |
|
|
| |
B. |
On March 16, 2021, the Company,
then known as Anchiano Therapeutics Ltd. (“Anchiano”), completed its merger with Chemomab Ltd., a privately-held Israeli limited
company (“Chemomab Ltd.”). Pursuant to the Agreement and Plan of merger (the “Merger Agreement”) dated as of December 14,
2020, by and among Anchiano, CMB Acquisition Ltd., an Israeli limited company and wholly-owned subsidiary of Anchiano (“Merger Sub”),
and Chemomab Ltd. Upon completion of the merger transaction, pursuant to which Merger Sub merged with and into Chemomab Ltd., with Chemomab
Ltd. being the surviving entity and a wholly owned subsidiary of Anchiano (the “Merger”), the Company changed its name from
“Anchiano Therapeutics Ltd.” to “Chemomab Therapeutics Ltd.” and the business conducted by Chemomab Ltd. became
the primarily business conducted by the Company. |
| |
|
|
| |
|
For
accounting purposes, Chemomab Ltd. is considered to have acquired Anchiano based upon the terms of the Merger as well as other factors
including; (i) Chemomab Ltd.'s former shareholders owned approximately 90% of the combined Company’s outstanding ordinary shares
immediately following the closing of the Merger, and (ii) Chemomab Ltd. management holds key management positions of the combined Company.
The Merger has been accounted for as an asset acquisition (reverse recapitalization transaction) rather than a business combination, as
the assets acquired and the liabilities assumed by Chemomab Ltd. do not meet the definition of a business under U.S. GAAP. The net assets
acquired in connection with the Merger were recorded at their estimated acquisition date fair market value as of March 16, 2021, the date
of completion of the Merger.
Immediately
prior to the effective date of the Merger, all preferred shares of Chemomab Ltd. were converted into ordinary shares of Chemomab Ltd.
on a one-for-one basis. |
In
connection with the Merger, and following the effective time of the Merger, the Company effected a reverse share split of its ordinary
shares at a ratio of 4:1
(the “Reverse Split”) and increased the number of ordinary shares underlying each American Depositary Share ("ADS") from 5
to 20. At the effective time of the Merger, each Chemomab Ltd. ordinary share outstanding immediately prior to the effective time of the
Merger automatically converted into the right to receive approximately 12.86
ADSs, each representing 20
ordinary shares of the Company, plus a warrant to purchase ADSs that may become exercisable only under certain circumstances (the “exchange
ratio”).
The
exchange ratio was calculated by a formula that was determined through arms-length negotiations between the Company and Chemomab Ltd.
The combined Company assumed all of the outstanding options of Chemomab Ltd., vested and unvested, under the Chemomab Share Incentive
Plan (the “2015 Plan”), with such options representing the right to purchase a number of ADSs equal to approximately 12.86
multiplied by the number of Chemomab Ltd. ordinary shares previously represented by such options.
CHEMOMAB
THERAPEUTICS LTD AND ITS SUBSIDIARIES
(FORMERLY
ANCHIANO THERAPEUTICS LTD)
NOTES
TO CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
Note
1 - General. (Cont.)
The
accompanying unaudited condensed consolidated financial statements and notes to the unaudited condensed consolidated financial statements
give retroactive effect to the exchange ratio and the Reverse Split for all periods presented.
The
equity structure reflects the legal acquirer's equity structure. The balance sheet has been adjusted to reflect the par value of the outstanding
shares of the legal acquirer, including the number of shares issued in the Merger. Any difference is recognized as an adjustment to the
additional paid in capital.
Immediately
after completion of the Merger, on March 16, 2021, the Company had 8,078,727
ADS issued and outstanding (9,003,357
on a fully diluted basis). In addition, immediately after the Merger, Chemomab Ltd. former shareholders owned approximately 90%
of the number of issued and outstanding ordinary shares of the Company and the shareholders of the Company immediately prior to the Merger
owned approximately 10% of the number of issued and outstanding ordinary shares of the Company (all on a fully diluted basis).
On
March 16, 2021, immediately prior to the effectiveness of the Merger, Anchiano had 65,675,904
ordinary shares outstanding (prior to the effect of the Reverse Split) and a market capitalization of $58.7 million.
The estimated fair value of the net assets of Anchiano on March 16, 2021, prior to the Merger, was approximately $2.5 million.
The fair value of ordinary shares on the Merger closing date, prior to the Merger, was above the fair value of the Company’s net
assets. As the Company’s net assets were predominantly composed of cash offset against current liabilities, the fair value of the
Company’s net assets as of March 16, 2021, immediately prior to the Merger, was considered to be the best indicator of the fair
value and, therefore, the estimated preliminary purchase consideration.
The
following table summarizes the net assets acquired based on their estimated fair values as of March 16, 2021, immediately prior to completion
of the Merger (in thousands):
|
Cash
and cash equivalents |
|
$ |
2,427 |
|
|
Asset
held for sale |
|
|
1,000 |
|
|
Prepaid
and other assets |
|
|
236 |
|
|
Accrued
liabilities |
|
|
(1,187 |
) |
|
Net
acquired assets |
|
$ |
2,476 |
|
| |
|
|
| |
C.
|
In connection with the Merger, on
March 15, 2021, Anchiano entered into Securities Purchase Agreements with certain purchasers for the issuance and sale by Anchiano in
a private placement (“Private Placement”) of approximately $45.5
million of its ADSs and accompanying warrants to purchase ADSs. The warrants have an exercise price of approximately $17.35
per ADS, expire five
years from the date of issuance, and if exercised in full will provide additional proceeds to the Company of $4.5
million. The closing of the Private Placement was completed on March 22, 2021. |
CHEMOMAB
THERAPEUTICS LTD AND ITS SUBSIDIARIES
(FORMERLY
ANCHIANO THERAPEUTICS LTD)
NOTES
TO CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
Note
1 - General. (Cont.)
| |
D.
|
Pursuant to an Asset Purchase and
Assignment Agreement dated as of March 16, 2021, as amended on March 31, 2021, between the Company’s wholly owned subsidiary, Anchiano
Therapeutics, Inc., a Delaware corporation (“Anchiano Delaware”) and Kestrel Therapeutics, Inc., a company organized under
the laws of Delaware (“Kestrel”), Anchiano Delaware agreed to sell to Kestrel all of the its rights and obligations in its
business to the extent related to the research, development and commercialization of the Compounds and Products (as such terms are defined
in the Collaboration and License Agreement entered into as of September 13, 2019, by and between ADT Pharmaceuticals, LLC and the Anchiano
Delaware), also known as the pan-RAS and PDE10/β-catenin programs. In consideration of the sale and transfer of the Compounds and
Products Kestrel paid the Company a total of $1.0
million. |
| |
|
|
| |
E.
|
On April 30, 2021, the Company entered
into an At the Market Offering Agreement (the "ATM agreement") with Cantor Fitzgerald & Co., ("Cantor"). Pursuant to the ATM agreement,
the Company may offer and sell, from time to time, its ADSs having an aggregate offering price of up to $75
million through Cantor or the ATM agreement. From April 30, 2021 through March 31, 2022, the Company issued 699,806
ADSs at an average price of $22.75
per ADS through the ATM Prospectus Supplement, resulting in gross proceeds of $15.9
million. The offer and sale of ADSs under the ATM agreement has been registered under the Company’s effective registration statement
on Form S-3 (File No. 333-255658), together with a prospectus forming a part thereof, filed with the SEC under the Securities Act of 1933,
as amended (the “Securities Act”). Sales, if any, of ADS pursuant to the ATM agreement may be made in any transactions that
are deemed to be “at the market” offerings as defined in Rule 415(a)(4) under the Securities Act. The Company is not obligated
to sell any ADSs under the ATM agreement. |
| |
|
|
| |
|
On
April 25, 2022, the Company filed a prospectus supplement with the SEC for the issuance and sale of up to $18,125,000
of the Company's ADSs (instead of the amount of $75 million above) in connection with the reactivation of the ATM Facility.
|
| |
|
|
| |
F.
|
Since
January 2020, the COVID-19 outbreak has dramatically expanded into a worldwide pandemic creating macro-economic uncertainty and disruption
in the business and financial markets. Many countries around the world, including Israel, have been taking measures designated to limit
the continued spread of the Coronavirus, including the closure of workplaces, restricting travel, prohibiting assembling, closing international
borders and quarantining populated areas. The Company's clinical trial sites have been affected by the COVID-19 pandemic, and as a result,
commencement of the enrollment of Company’s clinical trials of CM-101 in PSC was delayed and the enrollment rate has been affected
as well. As a result, the Company extended patient recruiting to additional territories with significant recruitment potential. In
addition, after enrollment in these trials, patients may drop out of the Company's trials because of the COVID-19 possible implications.
|
| |
|
|
| |
|
Based
on management’s assessment, the extent to which the coronavirus will further impact the Company’s operations will depend on
future developments, which are highly uncertain and cannot be predicted with confidence, including the duration and severity of the outbreak,
and the actions that may be required to contain the coronavirus or treat its impact. The Company is carefully monitoring the restrictions
due to the COVID-19 outbreak and will adjust activities accordingly. |
CHEMOMAB
THERAPEUTICS LTD AND ITS SUBSIDIARIES
(FORMERLY
ANCHIANO THERAPEUTICS LTD)
NOTES
TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Note
2 - Basis of Presentation and Significant Accounting Policies
A.
Basis of Preparation
The
condensed interim consolidated financial statements included in this quarterly report are unaudited. These financial statements have been
prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and applicable rules
and regulations of the SEC regarding interim financial reporting and reflect, in the opinion of management, all adjustments of a normal
and recurring nature that are necessary for a fair statement of the Company’s financial position as of
March 31, 2022, and its results of operations for the three months ended March 31, 2022, and 2021, changes in shareholders’ equity
for the three months ended March 31, 2022 and 2021, and cash flows for the three months ended March 31, 2022 and 2021. The results of
operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending
December 31, 2022 or for any other future annual or interim period. These financial statements should be read in conjunction with the
audited financial statements included in the Company’s Form 10-K for the year ended December 31, 2021 as filed with the SEC. The
Company’s significant accounting policies are disclosed in the audited financial statements for the year ended December 31, 2021
included in the Company’s Form 10-K. Since the date of such financial statements, there have been no changes to the Company’s
significant accounting policies.
B.
Use of estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ materially from those estimates.
Item
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
You
should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated
financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated
financial statements and related notes for the year ended December 31, 2021, as filed in our Annual Report on Form 10-K for the year ended
December 31, 2021 (the “2021 Annual Report”). Some of the information contained in this discussion and analysis, particularly
with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks
and uncertainties. You should read “Risk Factors” in Item 1A of our 2021 Annual Report for a discussion of important
factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements
contained in the following discussion and analysis.
Overview
The
Company is a clinical-stage biotechnology company focused on the discovery and development of innovative therapeutics for fibrotic and
inflammatory diseases with high unmet need. Based on the unique and pivotal role of the soluble protein CCL24 in promoting fibrosis and
inflammation, the Company developed CM-101, a monoclonal antibody designed to bind and block CCL24 activity. CM-101 has demonstrated the
potential to treat multiple severe and life-threatening fibrotic and inflammatory diseases.
The
Company has pioneered the therapeutic targeting of CCL24, a chemokine that promotes various types of cellular processes that regulate
inflammatory and fibrotic activities through the CCR3 receptor. The chemokine is expressed in various types of cells, including immune
cells, endothelial cells and epithelial cells. We have developed a novel CCL24 inhibiting product candidate with dual anti-fibrotic and
anti-inflammatory activity that modulates the complex interplays of both of these inflammatory and fibrotic mechanisms that drive abnormal
states of fibrosis and clinical fibrotic diseases. This innovative approach is being developed for difficult to treat rare diseases, also
known as orphan indications or diseases, such as primary sclerosing cholangitis, or PSC, and systemic sclerosis, or SSc, for which patients
have no established disease modifying standard of care treatment options.
CM-101,
the Company’s lead clinical product candidate, is a first-in-class humanized monoclonal antibody that hinders the basic function
of the soluble chemokine CCL24, also known as eotaxin-2, as a regulator of major inflammatory and fibrotic pathways. We have demonstrated
that CM-101 interferes with the underlying biology of inflammation and fibrosis through a novel and differentiated mechanism of action.
Based on these findings, the Company is actively developing CM-101 in Phase 2 clinical studies directed toward two distinct clinical indications
including patients with liver, skin, and/or lung fibrosis. We are currently conducting a Phase 2 clinical study in PSC, a rare obstructive
and cholestatic liver disease. In addition, we are planning a biological and clinical proof of concept study in SSc focused on establishing
biological and clinical proof of concept in this patient population. Although our primary focus relates to these two rare indications,
an additional Phase 2 clinical study is currently ongoing in non-alcoholic steatohepatitis, or NASH. This trial will provide important
safety and PK data to support the development of CM-101 subcutaneous formulation.
Fibrosis
is the abnormal and excessive accumulation of collagen and extracellular matrix, the non-cellular component in all tissues and organs,
that provides structural and biochemical support to surrounding cells. When present in excessive amounts, collagen and extracellular matrix
lead to scarring and thickening of connective tissues, affecting tissue properties and potentially leading to organ failure. Fibrosis
can occur in many different tissues, including lung, liver, kidney, muscle, skin, and the gastrointestinal tract, resulting in a wide
array of progressive fibrotic conditions. Fibrosis and inflammation are intrinsically linked. While a healthy inflammatory response is
necessary for efficient tissue repair; after injury, an excessive, uncontrolled inflammatory response can lead to tissue fibrosis.
Recent
Developments
New
Executive Appointments
On
February 10, 2022, our shareholders approved the appointment of Dr. Dale Pfost, our Chief Executive Officer, to the additional role of
Chairman of our Board of Directors. This appointment followed the resignation of our previous Chairman of the Board, Dr. Stephen Squinto,
who concurrent with his resignation effective December 19, 2021, became an ad-hoc strategic advisor and consultant to us in connection
with our corporate and business strategy and corporate development.
On
January 4, 2022, we announced the addition of Jack Lawler, who brings extensive experience managing global clinical trials, as Vice President
of Global Clinical Development Operations.
Revisions
to Chemomab’s Clinical Programs
On
March 9, 2022, we announced that, following a comprehensive strategic review, we are making revisions to our current clinical programs.
The changes are designed to optimize the clinical development of lead product candidate CM-101 by maximizing the clinical information
obtained, generating additional important data to support future advancement to registration trials, and decreasing the overall risk in
the CM-101 clinical development program in the lead indications of PSC and SSc, as well as potentially in additional indications where
the scientific rationale is strong. The key top-line changes to the clinical development programs include the following:
Expanding
our commitment to primary sclerosing cholangitis with an enlarged clinical trial that adds an important dose finding component. We
plan to significantly expand the Phase 2 clinical trial in PSC by implementing a dose finding component to the CM-101 development program.
We will be increasing the size of the study by adding additional dose cohorts, including plans to evaluate both a lower and a higher dose
level of CM-101 to support future potential registrational trials. In addition, we plan to add an open-label extension to the trial to
evaluate the safety, tolerability and durability of effect over longer treatment durations.
Focusing
our clinical efforts in systemic sclerosis on establishing earlier biological and clinical proof of concept. We plan to focus
our SSc trial towards establishing biological and clinical proof of concept in this patient population. We are revising the design of
our planned SSc trial in a way that we believe should enable an expedited path to proof of concept data, as well as further elucidation
of the different mechanisms of action of CM-101 in treating the skin, lung and vascular damage seen in SSc patients.
Early
completion of enrollment in our safety, pharmacokinetic and biomarker liver fibrosis study, yielding a data readout targeted near the
end of 2022. We will be completing enrollment in our ongoing safety, tolerability and biomarker trial that is evaluating the
subcutaneous formulation of CM-101 in liver fibrosis patients. We believe the early completion of this study should be sufficient to achieve
our key objectives—exploring safety and providing the pharmacokinetic data needed to assess next steps in the development of the
subcutaneous formulation—while allowing us to focus our resources on our lead indications of PSC and SSc.
We
expect that the proposed changes to the CM-101 development program will provide important data on the clinical dose response relationship
to inform the broader development program and to identify the optimal dose to advance in later PSC trials. The modifications are also
expected to generate proof of concept data on clinically relevant aspects of SSc, a complex rheumatological disorder, to best inform the
development path for a novel, first-in-class therapeutic like CM-101, along with relevant safety and tolerability data to support the
evaluation of higher doses and inform decisions on next steps in the development of the subcutaneous formulation.
Shelf
Registration Statement and ATM Offering
On
April 30, 2021, we filed a shelf registration statement on Form S-3 with the SEC (File No. 333-255658) for the issuance and sale by us
of up to $200,000,000 of our ordinary shares, ADSs, debt securities, warrants and units comprising any combination of the foregoing securities
(the “Shelf Registration Statement”). On the same date, we entered into the sales agreement (the “Sales Agreement”)
with Cantor Fitzgerald, pursuant to which we may offer and sell, from time to time, at our option, through or to Cantor Fitzgerald, up
to an aggregate of $75,000,000 of our ADSs (the “ATM Facility”). During the period from April 30, 2021 through the date of
this quarterly report on Form 10-Q, we had sold an aggregate of 699,806 ADSs pursuant to the Sales Agreement for a total gross consideration
of approximately $15.9 million.
On
April 25, 2022, we filed a prospectus supplement with the SEC for the issuance and sale of up to $18,125,000 of our ADSs in connection
with the reactivation of the ATM Facility and pursuant to General Instruction I.B.6 of Form S-3, which, subject to certain exceptions,
limits the amount of securities we are able to offer and sell under such registration statement to one-third of our unaffiliated public
float. Any ADSs offered, or to be offered, and sold under the Sales Agreement were issued and sold, or will be issued and sold, pursuant
to the Shelf Registration Statement and the applicable prospectus or prospectus supplement by methods deemed to be an “at the market
offering” as defined in Rule 415(a)(4) promulgated under the Securities Act, or if specified by us, by any other method permitted
by law.
Impact
of COVID-19
Since March 2020, the COVID-19 pandemic has dramatically expanded into a worldwide pandemic, creating macro-economic uncertainty
and disruption in the business and financial markets. The continuing implications of the COVID-19 pandemic on us remain uncertain and
will depend on future developments, including any adverse impact due to additional variants of the virus; its impact on our employees;
the range of government mandated restrictions and other measures; and the success of the COVID-19 vaccines and their effectiveness against
the virus and related variants. Furthermore, our clinical trial sites have been affected by the COVID-19 pandemic, and as a result, commencement
of the enrollment in our clinical trials of CM-101 in PSC was delayed, and the enrollment rate has been affected as well. As a result,
we expanded our patient recruiting efforts to additional territories. In addition, after enrollment in these trials, patients might still
discontinue participation in these trials because of possible COVID-19 implications.
Based on management’s assessment, the extent to which the COVID-19 pandemic will further impact our operations will depend on future
developments, which are highly uncertain and cannot be predicted with confidence, including the duration and severity of the outbreak,
and the actions that may be required to contain the COVID-19 or treat its impact. We are carefully monitoring the restrictions due to
the COVID-19 pandemic and will adjust activities accordingly.
Corporate
Information
We
were incorporated on September 22, 2011 under the laws of the State of Israel. In March 2021, in connection with the Merger, we changed
our name from Anchiano Therapeutics Ltd. to Chemomab Therapeutics Ltd. Our principal executive offices are located at Kiryat Atidim, Building
7, Tel Aviv, Israel 6158002, and our phone number is +972-77-331-0156. Our website is: www.chemomab.com. The
information contained on, or that can be accessed through, our website is not incorporated by reference into this prospectus supplement.
We have included our website address as an inactive textual reference only.
Components
of Operating Results
References
to “we,” “us,” “our” and “Chemomab” in this “Components of Operating Results”
and in the “Results of Operations” below refer to the Company after the Merger, and, with respect to historical periods preceding
the Merger, refer to Chemomab Ltd., whose business became the business of the Company upon consummation of the Merger.
Revenues
To
date, we have not generated any revenue. We do not expect to generate revenue unless and until we obtain regulatory approval and commercialize
a product candidate, or until we receive revenue from a collaboration such as a co-development or out-licensing agreement. There can be
no assurance that we will receive such regulatory approvals, and if any product candidate is approved, that we will be successful in commercializing
it.
Research
and Development Expenses
Research
and development expenses consist primarily of costs incurred in connection with the development of our product candidates. These expenses
include:
| |
• |
expenses incurred under agreements with
contract research organizations or contract manufacturing organizations, as well as investigative sites and consultants that conduct our
clinical trials, preclinical studies and other scientific development services; |
| |
• |
manufacturing scale-up expenses and the
cost of acquiring and manufacturing preclinical and clinical trial materials; |
| |
• |
employee-related expenses, including salaries,
related benefits, travel and share-based compensation expenses for employees engaged in research and development functions, as well as
external costs, such as fees paid to outside consultants engaged in such activities; |
| |
• |
license maintenance fees and milestone fees
incurred in connection with various license agreements; |
| |
• |
costs related to compliance with regulatory
requirements; and |
| |
• |
depreciation and other expenses. |
We
recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided
to us by our service providers.
We
do not allocate employee costs or facility expenses, including depreciation or other indirect costs, to specific programs because these
costs are deployed across multiple programs and, as such, are not separately classified. We use our internal resources primarily to oversee
research, as well as for managing our preclinical development, process development, manufacturing and clinical development activities.
Our employees work across multiple programs and, therefore, we do not track costs by program.
Research
and development activities are fundamental to our business. Product candidates in later stages of clinical development generally have
higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage
clinical trials. As a result, we expect that our research and development expenses will increase substantially over the next several quarters
and years as we continue to advance the development of our product candidates. We also expect to incur additional expenses related to
milestone and royalty payments payable to third parties with whom we have entered into license agreements to acquire the rights to its
product candidates.
General
and Administrative Expenses
General
and administrative expenses consist primarily of salaries, related benefits and share-based compensation expenses for personnel in executive
and administrative functions. General and administrative expenses also include professional fees for legal, consulting, accounting and
audit services.
We
anticipate that our general and administrative expenses will increase in the future as we increase headcount and general activities to
support our continued research activities and development of our product candidates as well as expanding our presence in the United States.
We also anticipate that we will incur increased headcount, accounting, audit, legal, regulatory, compliance, director and officer insurance
costs, as well as investor and public relations expenses associated with being a public company. We expect that the additional costs for
these services will substantially increase our general and administrative expenses. Additionally, if and when we believe that regulatory
approval of a product candidate appears likely, we expect to incur an increase in payroll and related expenses as a result of our preparation
for commercial operations, especially as it relates to the sales and marketing of any product candidate.
Results
of Operations
Three
Months Ended March 31, 2022 Compared to the Three Months Ended March 31, 2021
Below
is a summary of our results of operations for the periods indicated:3
|
|
|
Three
months ended |
|
|
|
|
|
|
|
|
|
|
March
31, |
|
|
Increase/(decrease) |
|
|
|
|
2022 |
|
|
2021 |
|
|
$ |
|
|
|
% |
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development |
|
|
2,745 |
|
|
|
1,157 |
|
|
|
1,588 |
|
|
|
137 |
% |
|
General
and administrative |
|
|
2,575 |
|
|
|
542 |
|
|
|
2,033 |
|
|
|
375 |
% |
|
Operating loss |
|
|
5,320 |
|
|
|
1,699 |
|
|
|
3,621 |
|
|
|
213 |
% |
|
Financing
expense (income) , net |
|
|
(216 |
) |
|
|
5 |
|
|
|
(221 |
) |
|
|
(4,420 |
)% |
|
Net loss |
|
$ |
5,104 |
|
|
$ |
1,704 |
|
|
$ |
3,400 |
|
|
|
200 |
% |
Our
results of operations have varied in the past and can be expected to vary in the future due to numerous factors. We believe that period-to-period
comparisons of our operating results are not necessarily meaningful and should not be relied upon as indications of future performance.
Research
and development expenses
Research
and development expenses increased by approximately $1.6 million, or 137%, for the three months ended March 31, 2022, as compared to the
same period of 2021. The increase was primarily due to increased clinical and pre-clinical activities.
General
and administrative expenses
General
and administrative expenses increased by approximately $2.0 million, or 375%, for the three months ended March 31, 2022, as compared to
the same period of 2021. The increase was primarily due to increase in non-cash share-based expenses as well as expenses incurred as a
result of becoming a public company.
Financing
expenses (income), net
Financing
income, net for the three months ended March 31, 2022 was $216 thousand. Financing expense, net for the three months ended March 31,
2021 was $5 thousand. This reflects an increase in fiance income of $221 thousand, or 4420%, for the three months ended March 31,
2022 from the comparable period of 2021. The increase was primarily related to interest earned on bank deposits and to foreign
currency exchange rate gain.
Financing
income, net for the three months ended March 31, 2022 was primarily related to interest earned on bank deposits and to foreign currency
exchange rate gain.
Financing
expense, net for the three months ended March 31, 2021 was primarily related to foreign currency exchange rate loss.
Liquidity
and Capital Resources
Since
inception, we have not generated any revenue and have incurred significant operating losses and negative cash flows from our operations,
resulting in an accumulated deficit at March 31, 2022 of $41.3 million. We have funded our operations to date primarily with proceeds
from the sale of our ADSs, and, prior to the Merger, other equity securities. Cash in excess of immediate requirements is invested primarily
in bank deposits with a view to liquidity and capital preservation.
During
the period from April 30, 2021 through March 31, 2022, we sold an aggregate of 699,806 ADSs pursuant to the Sales Agreement for total
gross consideration of approximately $15.9 million. As of March 31, 2022, we had an aggregate of approximately $57.5 million of cash,
cash equivalents and short-term deposits.
Developing
product candidates, conducting clinical trials and commercializing products are expensive, and we will need to raise substantial additional
funds to achieve our strategic objectives. We believe that our existing cash resources, including from the ADSs sold pursuant to the Sales
Agreement, will be sufficient to fund our projected cash requirements through the end of 2023. Nevertheless, we will require significant
additional financing in the future to fund our operations, including if and when we progress into additional clinical trials, obtain regulatory
approval for any of our product candidates and commercialize the same. We believe that we will need to raise significant additional funds
before we have any cash flow from operations, if at all. Our future capital requirements will depend on many factors, including:
• the
progress and costs of our preclinical studies, clinical trials and other research and development activities;
• the
scope, prioritization and number of our clinical trials and other research and development programs;
• the
amount of revenues and contributions we receive under future licensing, development and commercialization arrangements with respect to
our product candidates;
• the
costs of the development and expansion of our operational infrastructure;
• the
costs and timing of obtaining regulatory approval for our product candidates;
• the
costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights;
• the
costs and timing of securing manufacturing arrangements for clinical or commercial production;
• the
costs of contracting with third parties to provide sales and marketing capabilities for us;
• the
costs of acquiring or undertaking development and commercialization efforts for any future products, product candidates or platforms;
• the
magnitude of our general and administrative expenses; and
• any
cost that we may incur under future in- and out-licensing arrangements relating to our product candidates.
We
currently do not have any commitments for future external funding. In the future, we will need to raise additional funds, and we may decide
to raise additional funds even before we need such funds if the conditions for raising capital are favorable. Until we can generate significant
recurring revenues, we expect to satisfy our future cash needs through debt or equity financings, credit facilities or by out-licensing
applications of our product candidates. The sale of equity or convertible debt securities may result in dilution to our existing shareholders.
The incurrence of indebtedness would result in increased fixed obligations and could also subject us to covenants that restrict our operations.
We cannot be certain that additional funding, whether through grants from the Israel Innovation Authority, financings, credit facilities
or out-licensing arrangements, will be available to us on acceptable terms, if at all. If sufficient funds are not available, we may be
required to delay, reduce the scope of or eliminate research or development plans for, or commercialization efforts with respect to, one
or more applications of our product candidates, or obtain funds through arrangements with collaborators or others that may require us
to relinquish rights to certain potential products that we might otherwise seek to develop or commercialize independently.
Cash
Flows
The
table below shows a summary of our cash flow activities for the periods indicated:
|
|
|
Three
months ended |
|
|
|
|
|
|
|
|
|
|
March
31, |
|
|
Change |
|
|
|
|
2022 |
|
|
2021 |
|
|
$ |
|
|
|
% |
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
|
|
Net cash used in
operating activities |
|
$ |
(3,711 |
) |
|
$ |
(1,293 |
) |
|
$ |
(2,418 |
) |
|
|
187 |
% |
|
Net cash provided
by (used in) investing activities |
|
$ |
2,382 |
|
|
$ |
(2 |
) |
|
$ |
2,384 |
|
|
|
(119,200 |
)% |
|
Net cash used in
financing activities |
|
|
- |
|
|
$ |
47,799 |
|
|
$ |
(47,799 |
) |
|
|
(100 |
)% |
Net increase (decrease)
in cash, cash equivalents and restricted cash |
|
$ |
(1,329 |
) |
|
$ |
46,504 |
|
|
$ |
(47,833 |
) |
|
|
(103 |
)% |
Operating
activities
Net
cash used in operating activities increased by $2.4 million, or 187%, for the three months ended March 31, 2022, compared to the same
period of 2021. The increase is primarily related to the increase in net loss of $3.4 million, as well as an increase in non-cash activities
adjustment to net loss of $0.9 million, offset by an increase of accrued expenses of $0.7 million.
Investing
activities
Net
cash provided in investing activities for the three months ended March 31, 2022 increased by approximately $2.4 million, as compared to
the same period of 2021. The increase is primarily related to withdrawal of bank deposits.
Financing
activities
Net
cash provided by financing activities for the three months ended March 31, 2022 decreased by approximately $48 million, as compared to
the same period of 2021.
Contractual
Commitments
The
Company’s contractual commitments are as follows at March 31, 2022 (in thousands):
|
Remainder of 2022
|
$ |
5,918 |
|
|
|
|
|
|
2023 |
|
|
|
|
|
5,928 |
|
|
2024 |
|
|
|
|
|
140 |
|
|
2025-2027 |
|
|
|
|
|
|
|
|
Total |
$ |
11,986 |
|
|
|
|
|
Critical
Accounting Estimates
The
Company’s financial statements are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”).
The preparation of the Company’s financial statements and related disclosures in accordance with GAAP requires it to make estimates
and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and the disclosure of contingent assets
and liabilities in the Company’s financial statements. The Company bases its estimates on historical experience, known trends and
events and various other factors that it believes are reasonable under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The Company evaluates
its estimates and assumptions on an ongoing basis. The Company’s actual results may differ from these estimates under different
assumptions or conditions.
While
the Company’s significant accounting policies are described in more detail in Note 2 to the Company’s consolidated financial
statements included elsewhere in this Annual Report on Form 10-K, the Company believes that the following accounting estimates are those
that include a higher degree of judgment or complexity and are reasonably likely to have a material impact on our financial condition
or results of operations and are therefore considered critical accounting estimates.
Share-Based
Compensation
We
apply Accounting Standard Codification (ASC) 718-10, “Share-Based Payment,” which requires the measurement and recognition
of compensation expenses for all share-based payment awards made to employees and directors, including employee options under the Company’s
option plans based on estimated fair values.
ASC
718-10 requires that we estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The
fair value of the award is recognized as an expense over the requisite service periods in the Company’s statements of comprehensive
loss. The Company recognizes share-based award forfeitures as they occur, rather than estimate by applying a forfeiture rate.
In
June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07,
“Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting”, which simplifies
the accounting for nonemployee share-based payment transactions by aligning the measurement and classification guidance, with certain
exceptions, to that for share-based payment awards to employees. The amendments expand the scope of the accounting standard for share-based
payment awards to include share-based payment awards granted to non-employees in exchange for goods or services used or consumed in an
entity’s own operations and supersedes the guidance related to equity-based payments to non-employees. We adopted these amendments
on January 1, 2019.
We
recognize compensation expenses for the fair value of non-employee awards over the requisite service period of each award.
We
estimate the fair value of options granted as equity awards using a Black-Scholes options pricing model. The option-pricing model requires
a number of assumptions, of which the most significant are share price, expected volatility and the expected option term (the time from
the grant date until the options are exercised or expire). The Company determines the fair value per share of the underlying stock by
taking into consideration its most recent sales of stock, as well as additional factors that the Company deems relevant. The Company’s
board determined the fair value of ordinary shares based on valuations performed using the Option Pricing Method subject to relevant facts
and circumstances. The Company has historically been a private company and lacks company-specific historical and implied volatility information
of its stock. Expected volatility is estimated based on volatility of similar companies in the biotechnology sector. The Company has historically
not paid dividends and has no foreseeable plans to issue dividends. The risk-free interest rate is based on the yield from governmental
zero-coupon bonds with an equivalent term. The expected option term is calculated for options granted to employees and directors using
the “simplified” method. Grants to non-employees are based on the contractual term. Changes in the determination of each of
the inputs can affect the fair value of the options granted and the results of operations of the Company.
Recently-Issued
Accounting Pronouncements
Certain
recently-issued accounting pronouncements are discussed in Note 2, Summary of Significant Accounting Policies, to the audited consolidated
financial statements in our 2021 Annual Report.
Item
3. Quantitative and Qualitative Disclosures About Market Risk.
We
are an emerging growth company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and are not required to provide the information under this item.
Item
4. Controls and Procedures.
Evaluation
of Disclosure Controls and Procedures
Disclosure
controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded,
processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is
accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing
similar functions, as appropriate to allow timely decisions regarding required disclosure.
Under
the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting
officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act, as of March 31, 2022. Based on such evaluation, our principal executive officer and principal financial
officer have concluded that that our disclosure controls and procedures were effective as of March 31, 2022.
Changes
in Internal Control over Financial Reporting
We
consummated the Merger on March 16, 2021, which has been accounted for as a reverse capitalization for accounting purposes, and, upon
consummation of the Merger, we reconstituted our Board of Directors and our senior management team. Following consummation of the Merger
the Company’s management was in the process of strengthening the Company’s internal control over financial reporting during
the fiscal year ended December 31, 2021, including adopting new policies and procedures appropriate to the Company’s current business
and management team and onboarding new members to our finance team – including a new Chief Financial Officer, VP Finance and director
of finance. The foregoing actions were taken solely in connection with the changes effected in connection with the Merger and not as the
result of any material weakness or deficiency in the Company’s internal control over financial reporting.
There
have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART
II. – OTHER INFORMATION
Item
1. Legal Proceedings
From
time to time, we may become involved in legal proceedings relating to claims arising from the ordinary course of business. Our management
believes that there are currently no claims or actions pending against us, the ultimate disposition of which could have a material adverse
effect on our results of operations, financial condition or cash flows.
Item
1A. Risk Factors
There
have been no material changes from the information set forth in “Item 1A. Risk Factors” in our 2021 Annual Report.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item
3. Defaults Upon Senior Securities.
Not
applicable.
Item
4. Mine Safety Disclosures.
Not
applicable.
Item
5. Other Information.
None.
(a) The following
documents are filed as exhibits to this Quarterly Report or incorporated by reference herein.
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101. INS
|
|
Inline XBRL Instance
Document
|
|
101. SCH
|
|
Inline XBRL Taxonomy
Extension Schema Document
|
|
101. CAL
|
|
Inline XBRL Taxonomy
Extension Calculation Linkbase Document
|
|
101. DEF
|
|
Inline XBRL Taxonomy
Extension Definition Linkbase Document
|
|
101. LAB
|
|
Inline XBRL Taxonomy
Extension Label Linkbase Document
|
|
101. PRE
|
|
Inline XBRL Taxonomy
Extension Presentation Linkbase Document
|
|
104
|
|
Cover Page Interactive
Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
|
*
|
|
Filed herewith.
|
|
**
|
|
Furnished herewith.
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
|
|
CHEMOMAB THERAPEUTICS
LTD.
|
|
|
Date: May 12, 2022 |
By: |
/s/
Dale Pfost |
|
|
|
Name: |
Dale Pfost |
|
|
|
Title: |
Chief Executive
Officer |
|
|
|
|
|
|
|
Date: May 12, 2022 |
By: |
/s/
Donald Marvin |
|
|
|
Name: |
Donald Marvin |
|
|
|
Title: |
Chief Financial
Officer |
|
23
