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What changed in Clene Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Clene Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+610 added−660 removedSource: 10-K (2024-03-13) vs 10-K (2023-03-13)

Top changes in Clene Inc.'s 2023 10-K

610 paragraphs added · 660 removed · 443 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

247 edited+70 added−87 removed246 unchanged
Biggest changeAs such, we are eligible for and may take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies for as long as we continue to be an emerging growth company, including (i) the exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act, (ii) the exemptions from say-on-pay, say-on-frequency and say-on-golden parachute voting requirements, and (iii) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
Biggest changeAs a smaller reporting company, we are eligible for and may take advantage of certain exemptions from various reporting requirements applicable to other public companies for as long as we continue to be a smaller reporting company, including (i) the choice of presenting only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K, (ii) the exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act, and (iii) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. 44 Table of Contents Other Regulations In addition to the foregoing, state and federal laws regarding environmental protection and hazardous substances, including the Occupational Safety and Health Act, the Resource Conservation and Recovery Act and the Toxic Substances Control Act, affect our business.
To support our research efforts, we have partnered with academic experts at The Johns Hopkins University in ALS, Cambridge University for myelination-related experiments, Northwestern University for myelination-related experiments, the George Washington University for myelination-related experiments, and the University of Edinburgh for myelination-related research. In general, we outsource the majority of toxicology, pharmacology, and toxicokinetic studies to expert nonclinical CROs.
To support our research efforts, we have partnered with academic experts at Johns Hopkins University for ALS, the University of Cambridge for myelination-related experiments, Northwestern University for myelination-related experiments, George Washington University for myelination-related experiments, and the University of Edinburgh for myelination-related research. In general, we outsource the majority of toxicology, pharmacology, and toxicokinetic studies to expert nonclinical CROs.
In addition to the scope, depth and quality of the service and product offerings of the CROs, for clinical trial management, we place emphasis on the ability of the CROs to facilitate optimal site selection, to recruit patients in a timely manner, and to conduct complex clinical trials efficiently. Our CROs are widely recognized within their functional areas of research.
In addition to the scope, depth, quality of service, and product offerings of CROs, for clinical trial management, we place emphasis on the ability of CROs to facilitate optimal site selection, to recruit patients in a timely manner, and to conduct complex clinical trials efficiently. Our CROs are widely recognized within their functional areas of research.
To date, we have not licensed our electro-crystal-chemistry platform, any CSN therapeutics or any drug candidates to any other parties. Sources and Availability of Raw Materials Certain critical raw materials are available from a limited number of suppliers in the market.
To date, we have not licensed our electro-crystal-chemistry platform, CSN therapeutics, or drug candidates to any other parties. Sources and Availability of Raw Materials Certain critical raw materials are available from a limited number of suppliers in the market.
(4), AU (3), CA (2), CN, ID, IL, IN, JP (2), KR, MX, PH; BE, DK, ES, FI, FR, DE, HU, IE, IT, NL, NO, PL, PT, SE, SI, SC, CH, TR, GB Granted: Pending: U.S., EP, JP July 11, 2007 December 31, 2013 August 29, 2017 October 9, 2018 May 11, 2021 Expiration dates for these patents will occur in 2028 in the applicable foreign jurisdictions and in 2030 in the U.S.* Continuous methods for treating liquids and manufacturing certain constituents (e.g., nanoparticles) in liquids, apparatuses and nanoparticles and nanoparticle/ liquid solution(s) therefrom Issued: U.S.
(4), AU (3), CA (2), CN, ID, IL, IN, JP (2), KR, MX, PH; BE, DK, ES, FI, FR, DE, HU, IE, IT, NL, NO, PL, PT, SE, SI, SC, CH, TR, GB Pending: U.S., EP July 11, 2007 December 31, 2013 August 29, 2017 October 9, 2018 May 11, 2021 Expiration dates for these patents will occur in 2028 in the applicable foreign jurisdictions and in 2030 in the U.S.* Continuous methods for treating liquids and manufacturing certain constituents (e.g., nanoparticles) in liquids, apparatuses and nanoparticles and nanoparticle/ liquid solution(s) therefrom Issued: U.S.
In addition, CNM-Au8 treated participants consistently showed directional benefits (i.e., less decline) across measures of respiratory function and the motor function, albeit non-significantly. CNM-Au8 was found to be well-tolerated through 36 weeks of oral daily dosing. There were no reported SAEs related to CNM-Au8 treatment. Treatment-emergent adverse events were predominantly mild-to-moderate in severity.
In addition, CNM-Au8 treated participants consistently showed directional benefits (i.e., less decline) across measures of respiratory function and the motor function, albeit non-significantly. CNM-Au8 was found to be well-tolerated through 36 weeks of oral daily dosing. No SAEs related to CNM-Au8 treatment were reported. Treatment-emergent adverse events were predominantly mild-to-moderate in severity.
The trial includes substantial financial support from philanthropic donors and the Healey Center, and provides access to over 50 expert ALS clinical trial sites across the U.S. from the Northeast Amyotrophic Lateral Sclerosis consortium. We contributed a direct fee to the Healey Center toward the clinical conduct of this trial; there were no additional licensing fees or milestone requirements.
The trial includes substantial financial support from philanthropic donors and the Healey Center, and provides access to over 50 expert ALS clinical trial sites across the U.S. from the Northeast Amyotrophic Lateral Sclerosis consortium. We contributed a direct fee to the Healey Center toward the clinical conduct of the trial and there were no additional licensing fees or milestone requirements.
Our in-house research and development team has a full range of capabilities ranging from drug discovery to preclinical development to and the design and implementation of clinical trials. We believe our in-house research and development team is experienced, qualified, and will enable us to achieve our long-term goal of developing and commercializing innovative CSN therapeutics for patients worldwide.
Our internal research and development team has a full range of capabilities ranging from drug discovery to preclinical development to the design and implementation of clinical trials. We believe our in-house research and development team is experienced, qualified, and will enable us to achieve our long-term goal of developing and commercializing innovative CSN therapeutics for patients worldwide.
A Complete Response Letter will describe all of the deficiencies that the FDA has identified in the NDA, except that, where the FDA determines that the data supporting the application are inadequate to support approval, the FDA may issue the Complete Response Letter without first conducting required inspections, testing submitted product lots, and/or reviewing proposed labeling.
A Complete Response Letter will describe all the deficiencies that the FDA has identified in the NDA, except that, where the FDA determines that the data supporting the application are inadequate to support approval, the FDA may issue the Complete Response Letter without first conducting required inspections, testing submitted product lots, and/or reviewing proposed labeling.
Also, the side effects of current MS drugs range from mild to serious, which may lead to reduced patient adherence. Potential Advantages of CNM-Au8 for MS We believe that CNM-Au8 has the potential to be a global first-in-class remyelinating and neuroprotective disease-modifying nanotherapeutic drug for MS.
Also, the side effects of current MS drugs range from mild to serious, which may lead to reduced patient adherence. Potential Advantages of CNM-Au8 for MS We believe that CNM-Au8 has the potential to be a first-in-class remyelinating and neuroprotective disease-modifying nanotherapeutic drug for MS.
As such, improvement of cellular energetic efficiency, as is possible with CNM-Au8, represents an important and previously unaddressed therapeutic target for this disease. Potential Advantages of CNM-Au8 for PD We believe that CNM-Au8 has the potential to be a global first-in-class disease modifying nanotherapeutic drug for PD.
As such, improvement of cellular energetic efficiency, as is possible with CNM-Au8, represents an important and previously unaddressed therapeutic target for this disease. Potential Advantages of CNM-Au8 for PD We believe that CNM-Au8 has the potential to be a first-in-class disease modifying nanotherapeutic drug for PD.
Our nonclinical development team is led by a research scientist with a PhD in Developmental Biology from Stanford University and a Master of Science degree in Genetics from the University of Cambridge where she was a Marshall Scholar. She is also an adjunct faculty member of the University of Utah School of Medicine.
Our nonclinical development team is led by a research scientist with a PhD in Developmental Biology from Stanford University and a Master of Science degree in Genetics from the University of Cambridge where she was a Marshall Scholar. She is also an adjunct faculty member of the University of Utah School of Medicine. Clinical Development.
March 30, 2011 July 12, 2016 Expiration dates for these patents will occur in 2030 in the U.S. and in 2032 in the applicable foreign jurisdictions* Methods and treatment for certain demyelination and dysmyelination-based disorders and/or promoting remyelination (these patents relate to CNM-Au8) Issued: AU, BR, CA, ID, IL, JP, KR, MX, NZ (2), PH, RU, SG (2); BE, DK, FI, FR, DE, HU, IE, IT, NL, NO, PT, SE, SI, CH, TR, GB Granted: Allowed: Pending: IN NA NA Expiration dates for these patents will occur in 2033 in the U.S. and the applicable foreign jurisdictions* * Expiration dates do not include possible patent extensions for certain countries.
March 30, 2011 July 12, 2016 Expiration dates for these patents will occur in 2030 in the U.S. and in 2032 in the applicable foreign jurisdictions* Methods and treatment for certain demyelination and dysmyelination-based disorders and/or promoting remyelination (these patents relate to CNM-Au8) Issued: AU, BR, CA, ID, IL, JP, KR, MX, NZ (2), PH, RU, SG (2); BE, DK, FI, FR, DE, HU, IE, IT, NL, NO, PT, SE, SI, CH, TR, GB Pending: IN, JP NA NA Expiration dates for these patents will occur in 2033 in the U.S. and the applicable foreign jurisdictions* * Expiration dates do not include possible patent extensions for certain countries.
Significant functional improvements due to CNM-Au8 treatment was demonstrated in both the behavioral apomorphine-induced rotation and cylinder paw placement tests. In addition, larger numbers of surviving dopaminergic neurons were detected in the striatum of CNM-Au8-treated lesioned animals compared to vehicle controls.
Significant functional improvements due to CNM-Au8 treatment were demonstrated in both the behavioral apomorphine-induced rotation and cylinder paw placement tests. In addition, larger numbers of surviving dopaminergic neurons were detected in the striatum of CNM-Au8-treated lesioned animals compared to vehicle controls.
In vitro experiments on primary OL precursor cells demonstrated robust induction of myelin production by CNM-Au8. RNASeq analyses of CNM-Au8 treated OL precursors cells demonstrated that multiple transcripts for known myelination genes are upregulated, and that glycolytic activity and ATP production are also increased.
(2020), in vitro experiments on primary OL precursor cells demonstrated robust induction of myelin production by CNM-Au8. RNASeq analyses of CNM-Au8 treated OL precursors cells demonstrated that multiple transcripts for known myelination genes are upregulated, and that glycolytic activity and ATP production are also increased.
Our nonclinical development team is responsible for developing a complete dataset of nonclinical animal pharmacology, toxicology, and safety studies, which is sufficient to support regulatory filings with human research ethics committees (“HRECs”) and government regulatory authorities in order to obtain approval for use in human studies.
Our nonclinical development team is responsible for developing a complete and sufficient dataset of nonclinical animal pharmacology, toxicology, and safety studies to support regulatory filings with human research ethics committees (“HRECs”) and government regulatory authorities, in order to obtain approval for use in human studies.
No subjects discontinued the study due to TEAEs and no SAEs were reported across any treatment group. The most frequently reported TEAEs were almost entirely of Grade 1 (mild) severity and transient. The most frequently reported TEAEs consisted of headaches, somnolence, fatigue, abdominal pain, diarrhea, nausea, and dizziness. Pharmacokinetics.
No subjects discontinued the study due to TEAEs and no SAEs were reported across any treatment group. The most frequently reported TEAEs were almost entirely of Grade 1 (mild) severity and transient. The most frequently reported TEAEs consisted of headaches, somnolence, fatigue, abdominal pain, diarrhea, nausea, and dizziness.
The process required by the FDA before drug candidates may be marketed in the U.S. generally involves the following: ● completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s current Good Laboratory Practices regulations; ● submission to the FDA of an IND application, which must become effective before clinical trials may begin and must be updated annually or when significant changes are made; ● approval by an independent review board whose role is to review the research before the trial is commenced and continuously throughout the trial to assure the protection of the rights and welfare of the human subjects.
The process required by the FDA before drug candidates may be marketed in the U.S. generally involves the following: ● completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s current Good Laboratory Practices regulations; ● submission to the FDA of an IND application, which must become effective before clinical trials may begin and must be updated annually or when significant changes are made; ● approval by an independent review board whose role is to review the research before the trial commences and continuously throughout the trial to assure the protection of the rights and welfare of the human subjects.
Internal Research and Development Our internal, or in-house research and development activities are executed by a group of experienced research scientists, materials scientists, engineers, molecular biologists, medical doctors, clinical trial operational specialists, and a management team with deep expertise in the biopharmaceutical industry.
Internal Research and Development Our internal research and development activities are executed by a group of experienced in-house research scientists, materials scientists, engineers, molecular biologists, medical doctors, clinical trial operational specialists, and a management team with deep expertise in the biopharmaceutical industry.
These boards are often called “institutional review boards” (“IRBs”); ● performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed drug candidate for its intended purpose; ● preparation of and submission to the FDA of an NDA after completion of all pivotal clinical trials that includes substantial evidence of safety and efficacy from results of nonclinical testing and clinical trials; ● a determination by the FDA within 60 days of its receipt of an NDA to file the application for review; ● satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with GMP and to assure that the facilities, methods, and controls are adequate to preserve the drug candidate’s continued safety, purity and potency, and of selected clinical investigation sites to assess compliance with Good Clinical Practices (“GCP”); ● satisfactory completion of an FDA Advisory Committee review, if applicable; and ● FDA review and approval of the NDA to permit commercial marketing of the product for particular indications for use in the U.S.
These boards are often called “institutional review boards” (“IRBs”); ● performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed drug candidate for its intended purpose; 35 Table of Contents ● preparation of and submission to the FDA of an NDA after completion of all pivotal clinical trials that includes substantial evidence of safety and efficacy from results of nonclinical testing and clinical trials; ● a determination by the FDA within 60 days of its receipt of an NDA to file the application for review; ● satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with GMP and to assure that the facilities, methods, and controls are adequate to preserve the drug candidate’s continued safety, purity and potency, and of selected clinical investigation sites to assess compliance with Good Clinical Practices (“GCP”); ● satisfactory completion of an FDA Advisory Committee review, if applicable; and ● FDA review and approval of the NDA to permit commercial marketing of the product for particular indications for use in the U.S.
Reduction in Misfolded Protein Aggregates Figure 6. shows the dose-dependent reduction of three different types of protein aggregates in dopaminergic and spinal motor neurons that are typically found in PD (Figure 6A), sporadic and familial ALS cases (Figure 6B), and familial SOD1 ALS cases (Figure 6C).
Reduction in Misfolded Protein Aggregates Figure 6. shows the dose-dependent reduction of three different types of protein aggregates in dopaminergic and spinal motor neurons that are typically found in PD (Fig. 6A), sporadic and familial ALS cases (Fig. 6B), and familial SOD1 ALS cases (Fig. 6C).
(3), AE, AU (5), BR, CA, CN, ID, IN, IL, JP (4), KR (3), MX, PH, RU, SG (2); CH, DE, DK, ES, FI, FR, GB, IE, IT, NL, NO, SE Allowed: AE Pending: AU, MX, PH, SG, U.S.
(3), AE, AU (5), BR, CA, CN, ID, IN, IL, JP (4), KR (3), MX (2), PH, RU, SG (2); CH, DE, DK, ES, FI, FR, GB, IE, IT, NL, NO, SE Pending: AU, MX, PH, SG, U.S.
Preliminary uncontrolled observational case series with the dietary supplement yielded results suggesting oral administration of ZnAg to individuals with PCR-confirmed, COVID-19 infections may improve subject well-being and limit the duration of the disease.
Preliminary uncontrolled observational case series with the dietary supplement yielded results suggesting oral administration of CNM-ZnAg to individuals with PCR-confirmed, COVID-19 infections may improve subject well-being and limit the duration of the disease.
Clinical Trial Management To support our clinical trials, our internal clinical trials team designs, implements, collects and analyzes data for our clinical trials. When additional services are required to support a clinical trial, we conduct a feasibility and qualification assessment for potential vendors and CROs.
Clinical Trial Management To support our clinical trials, our internal clinical development team designs, implements, collects and analyzes data for our clinical trials. When additional services are required to support a clinical trial, we conduct a feasibility and qualification assessment for potential vendors and CROs.
All of our activities are potentially subject to federal and state consumer protection and unfair competition laws. Ensuring business arrangements with third parties comply with applicable healthcare laws and regulations is a costly endeavor.
All our activities are potentially subject to federal and state consumer protection and unfair competition laws. Ensuring business arrangements with third parties comply with applicable healthcare laws and regulations is a costly endeavor.
The facets and vertices of the nanocrystals serve as the surface areas where electron exchange can take place. Metal nanocrystals have been shown to have a variety of different catalytic activities, including superoxide dismutase, peroxidase, and catalase-like activities for reducing ROS, to reactions involving the oxidation of glucose, ascorbic acid, or the energetic metabolite, nicotinamide adenine dinucleotide (“NAD”).
The facets and vertices of the nanocrystals serve as the surface areas where electron exchange can take place. Metal nanocrystals have been shown to have a variety of different catalytic activities, from superoxide dismutase, peroxidase, and catalase-like activities for reducing ROS, to reactions involving the oxidation of glucose, ascorbic acid, or the energetic metabolite nicotinamide adenine dinucleotide (“NAD”).
Given the potential for a clinical effect together with no identified safety signals from animal toxicology or initial human tolerability studies, we initiated a randomized, placebo-controlled clinical trial to determine the efficacy and safety of CNM-ZnAg for symptomatic improvement of COVID-19. This clinical trial was conducted in Brazil and fully enrolled with 288 subjects.
Given the potential for a clinical effect together with no identified safety signals from animal toxicology or initial human tolerability studies, we initiated a randomized, double-blind, placebo-controlled clinical trial to determine the efficacy and safety of CNM-ZnAg for symptomatic improvement of COVID-19. This clinical trial was conducted in Brazil and fully enrolled with 288 subjects.
Additional CSN Therapeutics in the Pipeline Three other drug candidates are at various IND-enabling stages of research. Utilizing our CSN therapeutic drug development platform, we have developed additional drug candidates based on the transition elements silver and zinc (CNM-ZnAg) for anti-viral/anti-bacterial and wound healing applications (CNM-AgZn17).
Additional CSN Therapeutics in the Pipeline Two other drug candidates are at various IND-enabling stages of research. Utilizing our CSN therapeutic drug development platform, we have developed additional drug candidates based on the transition elements silver and zinc (CNM-ZnAg) for anti-viral/anti-bacterial and wound healing applications (CNM-AgZn17).
Representative CSN Therapeutic Nanocrystals Figure 1. Representative transmission electron micrographs of the commonly observed crystalline shapes of gold nanocrystals (CNM-Au8) resulting from our CSN therapeutic platform. Insets are wireframes illustrating each classic shape: A, pentagonal bipyramid; B, tetrahedron; and C, hexagonal bipyramid. These nanocrystals are 10-13 nm in diameter.
Representative transmission electron micrographs of the commonly observed crystalline shapes of gold nanocrystals (CNM-Au8) resulting from our CSN therapeutic platform. Insets are wireframes illustrating each classic shape: A, pentagonal bipyramid; B, tetrahedron; and C, hexagonal bipyramid. These nanocrystals are 10-13 nm in diameter.
The information contained in or accessible from any website referred to in this Form 10-K is not incorporated into this Annual Report, and you should not consider it part of this Annual Report. We have included our website address in this Annual Report solely as an inactive textual reference. 39 Table of Contents
The information contained in or accessible from any website referred to in this Form 10-K is not incorporated into this Annual Report, and you should not consider it part of this Annual Report. We have included our website address in this Annual Report solely as an inactive textual reference. 45 Table of Contents
Our practices may not in all cases meet all of the criteria for protection under a statutory exception or regulatory safe harbor.
Our practices may not in all cases meet all the criteria for protection under a statutory exception or regulatory safe harbor.
Products Our CSN therapeutic candidates aim to address high unmet medical needs in several disease areas including primarily: (1) disease modification of central nervous system disorders , including ALS, MS, and PD; (2) the treatment of infectious diseases ; and (3) accelerated wound healing and scar formation .
Drug Candidates Our CSN therapeutic candidates aim to address high unmet medical needs in several disease areas including primarily: (1) disease modification of central nervous system disorders , including ALS, MS, and PD; (2) the treatment of infectious diseases ; and (3) accelerated wound healing and scar formation .
Our clean-surfaced nanocrystals exhibit catalytic activities many-fold higher than other commercially available nanoparticles, produced using various techniques, that we have comparatively evaluated. We have multiple drug candidates currently in development and/or clinical trials for applications primarily in neurology.
Our clean-surfaced nanocrystals exhibit catalytic activities many-fold higher than other commercially available nanoparticles, produced using various techniques, that we have comparatively evaluated. We have multiple drug assets currently in development and/or clinical trials for applications primarily in neurology.
It is unclear how any such challenges and the healthcare reform measures of the Biden administration will impact the Affordable Care Act and our business. 37 Table of Contents Further legislation or regulation could be passed that could harm our business, financial condition and results of operations.
It is unclear how any such challenges and the healthcare reform measures of the Biden administration will impact the Affordable Care Act and our business. 43 Table of Contents Further legislation or regulation could be passed that could harm our business, financial condition and results of operations.
Furthermore, in a pre-specified analysis in the subset of limb onset ALS, CNM-Au8 demonstrated a significant treatment effect in MUNIX at week 12 (p=0.0385) and a trend for improvement at week 36 (p=0.0741) (Fig. 7B). Limb onset ALS accounts for approximately 70% of the ALS population.
Furthermore, in a pre-specified analysis in the subset of limb onset ALS, CNM-Au8 demonstrated a significant treatment effect in MUNIX at week 12 (p=0.0385) and a trend for improvement at week 36 (p=0.0741). Limb onset ALS accounts for approximately 70% of the ALS population.
Our biological science discovery team is responsible for the initial characterization of CSN therapeutics, conducting biological assays, and assessing the activity and toxicity of drug candidates through in vitro and in vivo assays. Our biological discovery team assesses the CSN therapeutic candidates once initial development has been completed by our research engineering team.
Our biological science discovery team is responsible for the initial characterization of CSN therapeutic candidates, conducting biological assays, assessing the activity and toxicity of drug candidates through in vitro and in vivo assays, and assessing CSN therapeutic candidates once the initial development has been completed by our research engineering team.
The p-value (Fig. 5C, D) represents the probability of obtaining test results at least as extreme as the results observed in the assay, under the general assumption that there is no difference between the groups (the null hypothesis). Previous drug development efforts for neurodegenerative diseases have included numerous antioxidants, all of which failed to show disease-modifying effects.
The p-value (Fig. 5C, D) represents the probability of obtaining test results at least as extreme as the results observed in the assay, under the general assumption that there is no difference between the groups (the null hypothesis). 13 Table of Contents Previous drug development efforts for neurodegenerative diseases have included numerous antioxidants, all of which failed to show disease-modifying effects.
Despite currently available disease-modifying therapies, approximately 26% of people with MS have developed a non-active, progressive form of the disease, for which there are limited approved, effective therapies, leading to significant loss of quality of life. The diagnosis of MS is predominantly a clinical one that is aided by radiological tests (e.g., magnetic resonance imaging (“MRI”)).
Despite currently available DMTs, approximately 26% of people with MS have developed a non-active, progressive form of the disease, for which there are limited approved, effective therapies, leading to significant loss of quality of life. The diagnosis of MS is predominantly a clinical one that is aided by radiological tests (e.g., magnetic resonance imaging, or “MRI”).
In the VISIONARY-MS trial plan, all participants were to have remained in the double-blind, placebo-controlled treatment period through week 48. However, as announced in February 2022, the trial was stopped prematurely due to COVID-19 pandemic operational challenges and there were some participants that did not complete 48 weeks of treatment, but all participants completed at least 24 weeks of treatment.
In the VISIONARY-MS trial plan, all participants were to have remained in the double-blind, placebo-controlled treatment period through week 48. However, as announced in February 2022, the trial was stopped prematurely due to COVID-19 pandemic operational challenges and some participants did not complete 48 weeks of treatment, but nearly all participants completed at least 24 weeks of treatment.
Accumulation of excess ROS damages cell membranes, allows calcium ion imbalances, and eventually leads to cell death. 11 Table of Contents Figure 4. NAD Oxidation and Biological Effects on ATP and NAD + Figure 4. Energetic catalysis by CNM-Au8 .
Accumulation of excess ROS damages cell membranes, allows calcium ion imbalances, and eventually leads to cell death. 12 Table of Contents Figure 4. NAD Oxidation and Biological Effects on ATP and NAD + Figure 4. Energetic catalysis by CNM-Au8 .
In the REPAIR program, a full volume head coil was used to collect whole brain spectral waveforms in ~600 voxels with a spatial resolution of 2 cm 3 for the following metabolites: NAD pool (both NAD + and NADH together), ATP-α, ATP-ß, ATP-γ, phosphocreatine, extracellular and cellular inorganic phosphate, uridine diphosphate glucose, phosphocholine (“PC”), phosphoethanolamine, glycerophosphocholine, and glycerophosphoethanolamine.
A full volume head coil was used to collect whole brain spectral waveforms in ~600 voxels with a spatial resolution of 2 cm 3 for the following metabolites: NAD pool (both NAD + and NADH together), α-ATP, ß-ATP, γ-ATP, phosphocreatine, extracellular and cellular inorganic phosphate, uridine diphosphate glucose, phosphocholine, phosphoethanolamine, glycerophosphocholine, and glycerophosphoethanolamine.
However, despite the stabilization of MS disease activity in active MS patients by these agents for these MS patients, significant improvement in overall function has not been shown. Importantly, for the DMTs that have been approved to date, efficacy and safety are generally inversely correlated. 18 Table of Contents There is an increasing demand for better treatment strategies.
However, despite the stabilization of MS disease activity in active MS patients by these agents for these MS patients, significant improvement in overall function has not been shown. Importantly, for the DMTs that have been approved to date, efficacy and safety are generally inversely correlated. There is an increasing demand for better treatment strategies.
These clinical trials are intended to establish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval by health authorities. In some cases, the FDA may require, or companies may voluntarily pursue, additional clinical trials after a product is approved to gain more information about the product.
These clinical trials are intended to establish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval by health authorities. 36 Table of Contents In some cases, the FDA may require, or companies may voluntarily pursue, additional clinical trials after a product is approved to gain more information about the product.
We believe CNM-Au8 remains in a different class from standard antioxidants because, to our knowledge, no other antioxidant demonstrates catalytic ability to increase energetic metabolites NAD + and ATP, while independently catalytically decreasing ROS. 12 Table of Contents Figure 5. Reduction of Reactive Oxygen Species Figure 5. CNM-Au8 is a catalytically active antioxidant.
We believe CNM-Au8 remains in a different class from standard antioxidants because, to our knowledge, no other antioxidant demonstrates catalytic ability to increase energetic metabolites NAD + and ATP, while independently catalytically decreasing ROS. Figure 5. Reduction of Reactive Oxygen Species Figure 5. CNM-Au8 is a catalytically active antioxidant.
Manufacturing We manufacture CSN therapeutics at our own production facility based in North East, Maryland, USA (the “North East Facility”), based on novel manufacturing processes and devices that were entirely invented by us.
Manufacturing We manufacture CSN therapeutics at our production facility in North East, Maryland (the “North East Facility”), based on novel manufacturing processes and devices that were entirely invented by us.
Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all of its facts and circumstances.
Failure to meet all the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the activity per se illegal under the Anti-Kickback Statute. Instead, the legality of the activity will be evaluated on a case-by-case basis based on a cumulative review of all of its facts and circumstances.
Coverage and reimbursement by a third-party payor may depend upon a number of factors, including the third-party payor’s determination that use of a therapeutic is: ● a covered benefit under its health plan; ● safe, effective and medically necessary; 36 Table of Contents ● appropriate for the specific patient; ● cost-effective; and ● neither experimental nor investigational.
Coverage and reimbursement by a third-party payor may depend upon a number of factors, including the third-party payor’s determination that use of a therapeutic is: ● a covered benefit under its health plan; ● safe, effective and medically necessary; ● appropriate for the specific patient; ● cost-effective; and ● neither experimental nor investigational.
The mITT population excluded data from a single site (n=9) with LCLA testing execution errors and the timed 25-foot walk data from one subject with a change in mobility assist device at a different site. The ITT results, which included the non-valid data, were directionally consistent with the mITT results, although the ITT results were not significant.
The mITT population excluded data from a single site (n=9) with LCLA testing issues and the timed 25-foot walk data from one subject with a change in mobility assist device at a different site. The ITT results, which included the non-valid data, were directionally consistent with the mITT results, although the ITT results were not significant.
Clinical Development of CNM-ZnAg as a Therapeutic Treatment for COVID-19 Because of exigent worldwide need, we determined to rapidly develop CNM-ZnAg as a candidate treatment for COVID-19 based on the hypothesis that CNM-ZnAg may provide immune support benefits. On a limited basis, a dietary supplement version of ZnAg has been provided to support immune health.
Clinical Development of CNM-ZnAg as a Therapeutic Treatment for COVID-19 Because of exigent worldwide need, we rapidly developed CNM-ZnAg as a candidate for treatment of COVID-19 based on the hypothesis that CNM-ZnAg may provide immune support benefits. On a limited basis, a dietary supplement version of CNM-ZnAg has been provided to support immune health.
Reimbursement may impact the demand for, or the price of, any product for which we obtain regulatory approval. Third-party payors are increasingly challenging the price, examining the medical necessity, and reviewing the cost-effectiveness, of medical products, therapies and services, in addition to questioning their safety and efficacy.
Reimbursement may impact the demand for, or the price of, any product for which we obtain regulatory approval. 42 Table of Contents Third-party payors are increasingly challenging the price, examining the medical necessity, and reviewing the cost-effectiveness, of medical products, therapies and services, in addition to questioning their safety and efficacy.
Our internal clinical development team holds meetings with CROs to evaluate the CRO’s performance by following up on clinical progress and resolving potential issues and risks. Financial Grants We have been awarded grants from various organizations, including the National Multiple Sclerosis Society, FightMND, a not-for-profit registered charity in Australia, and the Michael J.
Our internal clinical development team holds meetings with CROs to evaluate the CRO’s performance by following up on clinical progress and resolving potential issues and risks. 31 Table of Contents Financial Grants We have been awarded grants from various organizations, including the National Multiple Sclerosis Society, FightMND, a not-for-profit registered charity in Australia, the Michael J.
Sci Rep 10, 1936 (2020)) as well as due to an indirect cellular response to NAD upregulation, which has been shown to activate autophagic and proteostatic responses.
Sci Rep 10, 1936 (2020)) as well as due to an indirect cellular response to NAD upregulation, which has been shown to activate autophagic and proteostatic responses. Figure 6.
After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to FDA review and approval. There also are continuing user fee requirements, under which FDA assesses an annual program fee for each product identified in an approved NDA.
After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to FDA review and approval. Under continuing user fee requirements, the FDA assesses an annual program fee for each product identified in an approved NDA.
Remyelination of the corpus callosum or spinal cord using either technique requires the migration of surviving OL precursor cells to the sites of demyelination, differentiation of these cells into mature myelinating OLs, and rapid generation of specialized proteins and lipids for formation of new myelin membrane wraps around axons in this energetically demanding process.
Remyelination of the corpus callosum or spinal cord using either technique requires the migration of surviving OL precursor cells to the sites of demyelination, differentiation of these cells into mature myelinating OLs, and rapid generation of specialized proteins and lipids for formation of new myelin membrane wraps around axons in this energetically demanding process (Robinson et al., 2020).
CNM-Au8 was well-tolerated, and there were no drug-related serious adverse events or significant safety findings reported. Expanded Access Programs Based on interest in the potential of CNM-Au8 to delay disease progression in ALS patients, clinical experts at Massachusetts General Hospital requested to use CNM-Au8 in two EAPs.
CNM-Au8 was well-tolerated, and no drug-related serious adverse events or significant safety findings were reported. 19 Table of Contents Expanded Access Programs Based on interest in the potential of CNM-Au8 to delay disease progression in ALS patients, clinical experts at Massachusetts General Hospital requested to use CNM-Au8 in two EAPs.
There are multiple conflicting reports in the literature regarding the toxicity of these nanoparticles, ranging from reportedly non-toxic to highly toxic to living organisms. We believe this lack of consistency may have been due to the varying degrees to which different nanoparticle preparations were contaminated with organic reagents, leading to observed toxic effects.
Multiple conflicting reports exist in scientific literature regarding the toxicity of these nanoparticles, ranging from reportedly non-toxic to highly toxic to living organisms. We believe this lack of consistency may have been due to the varying degrees to which different nanoparticle preparations were contaminated with organic reagents, leading to observed toxic effects.
Exploratory endpoints included OCT, multi-focal VEP (“mf-VEP”) amplitude & latency, full field-VEP amplitude & latency, MRI endpoints, visual function (high contrast) and QOL/Expanded Disability Status Scale (“EDSS”). 20 Table of Contents Contrast is the quantity of lightness or darkness contained by an object in comparison to its background.
Exploratory endpoints included OCT, multi-focal visual evoked potential (“mf-VEP”) amplitude & latency, full field-VEP amplitude & latency, MRI endpoints, visual function (high contrast) and QOL/Expanded Disability Status Scale (“EDSS”). 24 Table of Contents Contrast is the quantity of lightness or darkness contained by an object in comparison to its background.
MS typically begins between the ages from 20 to 40, and it is the leading cause of non-traumatic disability in young adults. Women are affected approximately three-times as often as men, except in individuals with the less common, primary-progressive form of the disease, where there is no gender preponderance.
MS typically begins between the age of 20 to 40 and is the leading cause of non-traumatic disability in young adults. Women are affected approximately three times as often as men, except in individuals with the less common, primary-progressive form of the disease, where there is no gender preponderance.
The exceptions and safe harbors are drawn narrowly and practices that involve remuneration that may be alleged to be intended to induce prescribing, purchasing, or recommending may be subject to scrutiny if they do not qualify for an exception or safe harbor.
Exceptions and safe harbors are drawn narrowly and practices involving remuneration that may be alleged to be intended to induce prescribing, purchasing, or recommending may be subject to scrutiny if they do not qualify for an exception or safe harbor.
The resulting mixture is referred to as “process water.” ● The process water is transferred to the conditioning portion of the trough apparatus at a constant nominal rate, where the process water is exposed to an atmospheric plasma in each trough apparatus, creating “conditioned water.” ● The conditioned water then flows into the electrochemical crystal growth portion of the trough apparatus, at a constant rate, where the conditioned water is exposed to a series of pairs of wire electrodes.
The resulting mixture is referred to as “process water.” ● Process water is transferred to the conditioning portion of the trough apparatus at a constant nominal rate where it is exposed to an atmospheric plasma in each trough apparatus, creating “conditioned water.” ● Conditioned water flows into the electrochemical crystal growth portion of the trough apparatus, at a constant rate, where it is exposed to a series of wire electrode pairs.
One of the key metabolites catalyzed by CNM-Au8 is the oxidized form of nicotinamide adenine dinucleotide (“NAD + ”) (Fig. 4). NAD + and its reduced partner NADH are vital for driving cellular energy ATP-generating reactions in living cells (Fig. 4A). Brain imaging studies have shown the ratio of NAD + to NADH typically decreases with aging.
One of the key metabolites catalyzed by CNM-Au8 is the oxidized form of NAD, NAD + (Fig. 4). NAD + and its reduced partner NADH are vital for driving cellular energy ATP-generating reactions in living cells (Fig. 4A). Brain imaging studies have shown the ratio of NAD + to NADH typically decreases with aging.
These include: ● rMetx ™ (ZnAg Immune Boost) by dOrbital: rMetx™ is an aqueous zinc-silver ion dietary (mineral) supplement made using our electrochemistry manufacturing platform with bioactive immune-supporting properties. rMetx is sold through dOrbital, and a substantially similar product under the tradename, Zinc Factor™, is sold by 4Life, an international supplier of health supplements and a related party, under a supply agreement. ● KHC46 (Gold Factor™) by 4Life: KHC46 is an aqueous gold dietary (mineral) supplement of very low-concentration Au nanoparticles produced using our electrochemistry manufacturing platform.
These include: ● rMetx ™ (ZnAg Immune Boost) by dOrbital, is an aqueous zinc-silver ion dietary (mineral) supplement made using our electrochemistry manufacturing platform with bioactive immune-supporting properties. rMetx is sold through dOrbital, and a substantially similar product under the tradename, Zinc Factor™, is sold by 4Life under a supply agreement. ● KHC46 (Gold Factor™) by 4Life, is an aqueous gold dietary (mineral) supplement of very low-concentration Au nanoparticles produced using our electrochemistry manufacturing platform.
The increasing mean improvements observed across the entire trial population (CNM-Au8 and placebo) may suggest a positive clinical effect for CNM-Au8 when contrasted with the anticipated decline reported in publications from the MSOAC data. Figure 9 below summarizes the primary and secondary efficacy outcomes for the VISIONARY-MS trial. 21 Table of Contents Figure 9.
The increasing mean improvements observed across the entire trial population (CNM-Au8 and placebo) may suggest a positive clinical effect for CNM-Au8 when contrasted with the anticipated decline reported in publications from the MSOAC data. Figure 9 below summarizes the primary and secondary efficacy outcomes for the VISIONARY-MS trial. Figure 8.
In this way, each nanocrystal acts as a potent catalyst which can drive, support, and maintain beneficial metabolic and energetic cellular reactions within diseased, stressed, and damaged cells. We believe these catalytic, nanocrystal-based therapeutic drugs represent an entirely new approach to drug development, substantially differing from the standard paradigm of small-molecule drugs and large-molecule biologics.
In this way, each nanocrystal acts as a potent catalyst which can drive, support, and maintain beneficial metabolic and energetic cellular reactions within diseased, stressed, and damaged cells. We believe these catalytic, nanocrystal-based therapeutic drugs represent a novel approach to drug development, substantially different from the standard paradigm of small-molecule drugs and large-molecule biologics.
The scientific community and regulatory authorities, such as the FDA, conventionally regard p-values of 0.05 or less to be significant when replicated in independent clinical trials. Consistently statistically significant preclinical results, such as those described here, are used to support investigative New Drug Applications (“NDAs”) to investigate the clinical effects of an investigational product.
The scientific community and regulatory authorities, such as the U.S. Food and Drug Administration (“FDA”), conventionally regard p-values of 0.05 or less to be significant when replicated in independent clinical trials. Consistently statistically significant preclinical results, such as those described here, are used to support investigative New Drug Applications (“NDAs”) to investigate the clinical effects of an investigational product.
Due to the limited enrollment, the threshold for significance was pre-specified at p=0.10 prior to database lock and submitted to the FDA as part of the statistical analysis plan. The primary analysis was conducted in a mITT population, which censored invalid data.
Due to the limited enrollment, the threshold for significance was pre-specified at p=0.10 prior to database lock and submitted to the FDA as part of the statistical analysis plan. The primary analysis was conducted in a modified intent to treat (“mITT”) population, which censored invalid data.
Other potential consequences include, among other things: ● restrictions on the marketing or manufacturing of a product, mandated modification of promotional materials or issuance of corrective information, issuance by FDA or other regulatory authorities of safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety information about the product, or complete withdrawal of the product from the market or product recalls; ● fines, warning or untitled letters or holds on post-approval clinical trials; ● refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of existing product approvals; ● product seizure or detention, or refusal of the FDA to permit the import or export of products; or ● injunctions, consent decrees or the imposition of civil or criminal penalties.
Other potential consequences include, among other things: ● restrictions on the marketing or manufacturing of a product, mandated modification of promotional materials or issuance of corrective information, issuance by FDA or other regulatory authorities of safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety information about the product, or complete withdrawal of the product from the market or product recalls; ● fines, warning or untitled letters or holds on post-approval clinical trials; ● refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of existing product approvals; ● product seizure or detention, or refusal of the FDA to permit the import or export of products; or ● injunctions, consent decrees or the imposition of civil or criminal penalties. 39 Table of Contents The FDA closely regulates the marketing, labeling, advertising and promotion of drugs and biologics.
We believe that any attempts to reverse engineer or otherwise replicate our discoveries would be extraordinarily challenging for potential competitors without violating our intellectual property protections. We are also focused on building out a robust and relevant trade secret portfolio. Our trade secret portfolio largely relates to the liquid handling and processing of our water-based products from start to finish.
We believe that any attempts to reverse engineer or otherwise replicate our discoveries would be extraordinarily challenging for potential competitors without violating our intellectual property protections. We are also focused on building a robust and relevant trade secret portfolio, primarily related to the liquid handling and processing of our products from start to finish.
We began in 2013 by innovating an electro-crystal-chemistry drug development platform that draws from advances in nanotechnology, plasma and quantum physics, material science, and biochemistry. Our platform process results in nanocrystals with faceted surfaces that are free of the chemical surface modifications that accompany other production methods.
We innovated an electro-crystal-chemistry drug development platform that draws from advances in nanotechnology, plasma and quantum physics, material science, and biochemistry. Our platform process results in nanocrystals with faceted structures and surfaces that are free of the chemical surface modifications that accompany other production methods.
We have collaborated with experts at key academic universities which have myelination and neuroprotection expertise. These university collaborators have conducted animal experiments to demonstrate the effects of CNM-Au8 treatment on remyelination and neuroprotection in animals and in cell-based in vitro assays.
We have collaborated with experts at key academic universities with myelination and neuroprotection expertise who have conducted animal experiments to demonstrate the effects of CNM-Au8 treatment on remyelination and neuroprotection in animals and in cell-based in vitro assays.
The table below sets forth our employees by role: Department Count of Employees Percent of Total Manufacturing 20 23 % Clinical 5 6 % Quality Control & Bioanalytics 12 14 % Microbiology Lab 9 11 % Research and Development 6 7 % Senior Management 7 8 % Quality Assurance 8 9 % Finance 5 6 % Human Resources 4 5 % Information Technology 1 1 % Regulatory 1 1 % Medical Affairs 1 1 % Marketing 1 1 % Engineering and Technology 6 7 % Total 86 100 % None of our employees are represented by a labor union or are covered by a collective bargaining agreement, and we believe that we have good relations with our employees.
The table below sets forth our employees by role: Department Count of Employees Percent of Total Manufacturing 21 25 % Clinical 7 8 % Quality Control & Bioanalytics 10 12 % Microbiology Lab 9 11 % Research and Development 11 13 % Senior Management 6 7 % Quality Assurance 8 9 % Finance 5 6 % Human Resources 4 5 % Information Technology 1 1 % Regulatory 1 1 % Medical Affairs 1 1 % Marketing 1 1 % Total 85 100 % None of our employees are represented by a labor union or are covered by a collective bargaining agreement, and we believe that we have good relations with our employees.
Multiple independent in vivo remyelination assays, using either cuprizone or lysolecithin as demyelination agents, were performed to demonstrate the remyelinating ability of CNM-Au8.
In Robinson et al. (2020), multiple independent in vivo remyelination assays, using either cuprizone or lysolecithin as demyelination agents, were performed to demonstrate the remyelinating ability of CNM-Au8.
Our nonclinical development team works collaboratively with our biological science discovery team and clinical development team to translate our findings into animals and prepare for eventual studies in patients. This team also leads our external collaboration research activities with universities and academic experts.
Our nonclinical development team collaborates with our biological science discovery and clinical development teams to translate our findings into animals and prepare for eventual studies in patients. Our nonclinical development team also leads our external collaboration research activities with universities and academic experts.
In addition to filings for United States (“U.S.”) and foreign patents, we will continue to protect and maintain our proprietary position by the use of trademarks, trade secrets, copyright protection, and continued technological innovation.
In addition to filings for U.S. and foreign patents, we will continue to protect and maintain our proprietary position by the use of trademarks, trade secrets, copyright protection, and continued technological innovation.
Figure 2 is an illustration of catalysis, showing a single gold nanocrystal converting molecules of nicotinamide adenine dinucleotide hydride (“NADH”) in the background into NAD in the foreground.
Figure 2 shows an illustration of catalysis, with a single gold nanocrystal converting molecules of nicotinamide adenine dinucleotide hydride (“NADH”) in the background into NAD in the foreground.
Safety. Safety assessments revealed no significant findings. All doses used in this study were determined to be well-tolerated based on the frequency of reported treatment emergent adverse events (“TEAEs”). TEAEs occurred more frequently on placebo (86%) than in the CNM-Au8 dosing groups in both the SAD and MAD phases combined (75%).
All doses used in the study were determined to be well-tolerated based on the frequency of reported treatment emergent adverse events (“TEAEs”). TEAEs occurred more frequently on placebo (86%) than in the CNM-Au8 dosing groups in both the SAD and MAD phases combined (75%).
Members of our research engineering team have PhDs and/or master’s degrees in chemistry, material science and engineering, electrical engineering, and solid-state physics. Our research engineering team leader has a degree in electrical engineering and has been instrumental in the design of our electro-crystal-chemistry platform including the various continuous flow trough apparatuses we use to produce our CSN therapeutics.
Members of our research engineering team have PhDs and/or master’s degrees in chemistry, material science and engineering, electrical engineering, and solid-state physics. Our research engineering team leader has a degree in electrical engineering and has been instrumental in the design of our electro-crystal-chemistry platform including the various continuous flow apparatuses (“troughs”) used to produce our CSN therapeutics. Biological Science Discovery.
Our internal clinical development team supervises CROs on key clinical activities, such as patient eligibility review, medical data review, and SAE review, to ensure that the performance of these CROs complies with our protocols and applicable laws, which in turn protects the integrity and authenticity of the data from our clinical trials.
Our internal clinical development team supervises CROs on key clinical activities, such as patient eligibility review, medical data review, and SAE review, to ensure that the performance of CROs complies with our protocols and applicable laws and to protect the integrity and authenticity of the data from our clinical trials.
The results for the primary endpoint, the mean change in the brain NAD + /NADH ratio (the ratio of the oxidized to reduced form of NAD), demonstrated a statistically significant increase by an average of 0.589 units (10.4%) following 12-weeks of treatment with CNM-Au8 (p=0.037, paired t-test), in the pre-specified integrated analysis of the REPAIR-PD and REPAIR-MS trials.
The pre-specified integrated analyses of REPAIR-MS and REPAIR-PD demonstrated a statistically significant increase in the primary endpoint, the mean change in the brain NAD+/NADH ratio (the ratio of the oxidized to reduced form of NAD), of 0.589 units (+10.4%) following 12 weeks of treatment with CNM-Au8 (p=0.037, paired t-test).
(3), AU, CA, CN, IN, IS, JP, KR; CH, DE, DK, FI, FR, IE, NL, NO, SE, GB Allowed: Pending: January 15, 2009 June 30, 2015 July 31, 2018 May 18, 2021 Expiration dates for these patents will occur in 2030 in the U.S. and the applicable foreign jurisdictions* Novel gold-based nanocrystals for medical treatments and electrochemical manufacturing processes therefor (these patents relate to CNM-Au8) Issued: U.S.
(3), AU, CA, CN, IN, IS, JP, KR; CH, DE, DK, FI, FR, IE, NL, NO, SE, GB January 15, 2009 June 30, 2015 July 31, 2018 May 18, 2021 Expiration dates for these patents will occur in 2030 in the U.S. and the applicable foreign jurisdictions* 34 Table of Contents Description Jurisdiction Application Date (U.S.) Grant Date (U.S.) Novel gold-based nanocrystals for medical treatments and electrochemical manufacturing processes therefor (these patents relate to CNM-Au8) Issued: U.S.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe may experience numerous unexpected events during, or as a result of, clinical trials that could delay or prevent us from receiving regulatory approval or commercializing our drug candidates, including: ● regulators, IRBs, or HRECs may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; ● our inability to reach agreements on acceptable terms with prospective CROs, clinical trial vendors, and trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; ● manufacturing issues, including problems with manufacturing, supply quality, compliance with GMP, or obtaining from third parties sufficient quantities of a drug candidate for use in a clinical trial; ● clinical trials of our drug candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon drug development programs; ● the number of patients required for clinical trials of our drug candidates may be larger than we anticipate; ● our third-party contractors, including clinical investigators, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ● we may not investigate, may not be able to license, or may be unable to properly conduct companion diagnostic tests to identify patients who are likely to benefit from treatment with our drug candidates; ● we might have to suspend or terminate clinical trials of our drug candidates for various reasons, including a finding of a lack of clinical response or other unexpected characteristics or a finding that participants are being exposed to unacceptable health risks; ● regulators, IRBs or HRECs may require that we or our investigators suspend or terminate clinical research or not rely on the results of clinical research for various reasons, including non-compliance with regulatory requirements; ● the cost of clinical trials of our drug candidates may be greater than we anticipate; ● the supply or quality of our drug candidates or other materials necessary to conduct clinical trials of our drug candidates may be insufficient or inadequate; and ● our drug candidates may have undesirable side effects or unexpected characteristics, causing us or our investigators, regulators, IRBs or ethics committees to suspend or terminate the clinical trials, or reports may arise from preclinical studies or clinical trials of other therapies that raise safety or efficacy concerns about our drug candidates. 50 Table of Contents If we are required to conduct additional clinical trials or other testing of our drug candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our drug candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive or if they raise safety concerns, we may (i) be delayed in obtaining regulatory approval for our drug candidates; (ii) not obtain regulatory approval at all; (iii) obtain approval for indications that are not as broad as intended; (iv) have the drug removed from the market after obtaining regulatory approval; (v) be subject to additional post-market testing requirements; (vi) be subject to restrictions on how the drug is distributed or used; or (vii) be unable to obtain reimbursement for use of the drug.
Biggest changeWe may experience numerous unexpected events during, or as a result of, clinical trials that could delay or prevent us from receiving regulatory approval or commercializing our drug candidates, including: ● regulators, IRBs, or HRECs may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; ● our inability to reach agreements on acceptable terms with prospective CROs, clinical trial vendors, and trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; ● manufacturing issues, including problems with manufacturing, supply quality, compliance with GMP, or obtaining from third parties sufficient quantities of a drug candidate for use in a clinical trial; ● clinical trials of our drug candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon drug development programs; ● the number of patients required for clinical trials of our drug candidates may be larger than we anticipate; ● our third-party contractors, including clinical investigators, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ● we may not investigate, may not be able to license, or may be unable to properly conduct companion diagnostic tests to identify patients who are likely to benefit from treatment with our drug candidates; ● we might have to suspend or terminate clinical trials of our drug candidates for various reasons, including a finding of a lack of clinical response or other unexpected characteristics or a finding that participants are being exposed to unacceptable health risks; ● regulators, IRBs or HRECs may require that we or our investigators suspend or terminate clinical research or not rely on the results of clinical research for various reasons, including non-compliance with regulatory requirements; ● the cost of clinical trials of our drug candidates may be greater than we anticipate; ● the supply or quality of our drug candidates or other materials necessary to conduct clinical trials of our drug candidates may be insufficient or inadequate; and ● our drug candidates may have undesirable side effects or unexpected characteristics, causing us or our investigators, regulators, IRBs or ethics committees to suspend or terminate the clinical trials, or reports may arise from preclinical studies or clinical trials of other therapies that raise safety or efficacy concerns about our drug candidates.
These market and industry factors may materially reduce the market price of our Common Stock regardless of our operating performance. SEC regulations may limit the amount of funds we can raise during any 12-month period pursuant to our shelf registration statement on Form S-3.
These market and industry factors may materially reduce the market price of our Common Stock regardless of our operating performance. SEC regulations limit the amount of funds we can raise during any 12-month period pursuant to our shelf registration statement on Form S-3.
The loss of the services of any of our executive officers, other key employees, and other scientific advisors, and our inability to find suitable replacements could result in delays in product development and harm our business. Recruiting and retaining qualified scientific, technical, clinical, manufacturing, sales, and marketing personnel in the future will also be critical to our success.
The loss of the services of any of our executive officers, other key employees, and other scientific advisors, and our inability to find suitable replacements could result in delays in product development and harm our business. Recruiting, retaining, and developing qualified scientific, technical, clinical, manufacturing, sales, and marketing personnel in the future will also be critical to our success.
If our drug candidates receive regulatory approval and we or others discover undesirable side effects caused by such drugs (or any other similar drugs) or that such drug candidates are less effective than previously believed, a number of potentially significant negative consequences could result, including: ● the FDA, NMPA, TGA, Health Canada, EMA or other comparable regulatory authorities may withdraw or limit their approval of such drug candidates; ● the FDA, NMPA, TGA, Health Canada, EMA or other comparable regulatory authorities may require the addition of labeling statements, such as a “boxed” warning or a contra-indication; ● we may be required to create a medication guide outlining the risks of such side effects for distribution to patients; ● we may be required to change the way such drug candidates are distributed or administered, conduct additional clinical trials or change the labeling of our drug candidates; ● the FDA, NMPA, TGA, Health Canada, EMA or other comparable regulatory authorities may require the development of risk evaluation and mitigation strategies and plans to mitigate risks, which could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools; ● we may be subject to regulatory investigations and government enforcement actions; ● we may decide to, or be required to, remove such drug candidates from the marketplace; ● we could be sued and held liable for injury caused to individuals exposed to or taking our drugs; and ● our reputation may suffer.
If our drug candidates receive regulatory approval and we or others discover undesirable side effects caused by such drugs (or any other similar drugs) or that such drug candidates are less effective than previously believed, a number of potentially significant negative consequences could result, including: ● the FDA, NMPA, TGA, Health Canada, EMA or other comparable regulatory authorities may withdraw or limit their approval of such drug candidates; ● the FDA, NMPA, TGA, Health Canada, EMA or other comparable regulatory authorities may require the addition of labeling statements, such as a “boxed” warning or a contra-indication; 63 Table of Contents ● we may be required to create a medication guide outlining the risks of such side effects for distribution to patients; ● we may be required to change the way such drug candidates are distributed or administered, conduct additional clinical trials or change the labeling of our drug candidates; ● the FDA, NMPA, TGA, Health Canada, EMA or other comparable regulatory authorities may require the development of risk evaluation and mitigation strategies and plans to mitigate risks, which could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools; ● we may be subject to regulatory investigations and government enforcement actions; ● we may decide to, or be required to, remove such drug candidates from the marketplace; ● we could be sued and held liable for injury caused to individuals exposed to or taking our drugs; and ● our reputation may suffer.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; ● HIPAA, as amended by HITECH, and their implementing regulations, also imposes obligations, including mandatory contractual terms, certain covered healthcare providers, health plans, and healthcare clearinghouses and their respective business associates and covered subcontractors that perform services for them that involve the use, or disclosure of, individually identifiable health information with respect to safeguarding the privacy, security and transmission of individually identifiable health information; and ● the federal Physician Payments Sunshine Act requires applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to annually report to the CMS information regarding payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as information regarding ownership and investment interests held by physicians and their immediate family members.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; ● HIPAA, as amended by HITECH, and their implementing regulations, also imposes obligations, including mandatory contractual terms, certain covered healthcare providers, health plans, and healthcare clearinghouses and their respective business associates and covered subcontractors that perform services for them that involve the use, or disclosure of, individually identifiable health information with respect to safeguarding the privacy, security and transmission of individually identifiable health information; and 65 Table of Contents ● the federal Physician Payments Sunshine Act requires applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to annually report to the CMS information regarding payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as information regarding ownership and investment interests held by physicians and their immediate family members.
In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our drug candidates. We may not be able to successfully identify, discover, develop or in-license new drug candidates.
In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our drug candidates. We may not be able to successfully identify, discover, or develop new drug candidates.
We would have little or no control over the marketing and sales efforts of such third parties, and our revenue from product sales, if approved, may be lower than if we had commercialized any approved drugs by ourselves or we may fail to generate any product sales revenue in the future at all. 55 Table of Contents We face substantial competition from other pharmaceutical and biotechnology companies, and our operating results may suffer if we fail to compete effectively.
We would have little or no control over the marketing and sales efforts of such third parties, and our revenue from product sales, if approved, may be lower than if we had commercialized any approved drugs by ourselves or we may fail to generate any product sales revenue in the future at all. 64 Table of Contents We face substantial competition from other pharmaceutical and biotechnology companies, and our operating results may suffer if we fail to compete effectively.
For all of these reasons, we may not obtain non-U.S. regulatory approvals on a timely basis, if at all. 51 Table of Contents The process to develop, obtain regulatory approval for and commercialize drug candidates is long, complex and costly both inside and outside the U.S., and approval is never guaranteed.
For all of these reasons, we may not obtain non-U.S. regulatory approvals on a timely basis, if at all. 59 Table of Contents The process to develop, obtain regulatory approval for and commercialize drug candidates is long, complex and costly both inside and outside the U.S., and approval is never guaranteed.
Additionally, pursuant to our term loan with Avenue Venture Opportunities Fund, L.P. (“Avenue”), we are required to maintain unrestricted cash and cash equivalents of at least $5.0 million to avoid acceleration of the full balance of the loan (see Note 9 to the consolidated financial statements).
Additionally, pursuant to our term loan with Avenue Venture Opportunities Fund, L.P. (“Avenue”), we are required to maintain unrestricted cash and cash equivalents of at least $5.0 million to avoid acceleration of the full balance of the loan (see Note 8 to the consolidated financial statements).
In the future, as we move more drug candidates into the clinical trial stage, conduct more clinical trials for commercialized products to broaden their use, and carry out commercial production of our drug candidates, the costs associated with such operations may increase significantly.
In the future, as we move more drug candidates into the clinical trial stage, conduct more clinical trials for commercialized products, if any, to broaden their use, and carry out commercial production of our drug candidates, the costs associated with such operations may increase significantly.
In particular, we and our third-party CROs have faced disruptions that affected our ability to initiate and complete preclinical studies, caused manufacturing disruptions, and created delays at clinical trial site initiation and clinical trial enrollment, which ultimately led to the early conclusion of a clinical trial.
We and our third-party CROs have faced disruptions that affected our ability to initiate and complete preclinical studies, caused manufacturing disruptions, and created delays at clinical trial site initiation and clinical trial enrollment, which ultimately led to the early conclusion of a clinical trial.
In addition, our pivotal clinical trials must be conducted with products produced under GMP. Our failure, or the failure of any third party, to comply with these regulations may results in our having to repeat clinical trials, which would delay the regulatory approval process.
In addition, our pivotal clinical trials must be conducted with products produced under GMP. Our failure, or the failure of any third party, to comply with these regulations may result in our having to repeat clinical trials, which would delay the regulatory approval process.
Under General Instruction I.B.6 to Form S-3, or the Baby Shelf Rule, the amount of funds a company can raise through primary public offerings of securities in any 12-month period using a registration statement on Form S-3 pursuant to the Baby Shelf Rule is limited to one-third of the aggregate market value of its shares of common stock held by non-affiliates of the company.
Under General Instruction I.B.6 to Form S-3 (the “Baby Shelf Rule”), the amount of funds a company can raise through primary public offerings of securities in any 12-month period using a registration statement on Form S-3 pursuant to the Baby Shelf Rule is limited to one-third of the aggregate market value of its shares of common stock held by non-affiliates of the company.
In addition, theft of inventory at warehouses, plants or while in-transit, which are not properly stored and which are sold through unauthorized channels, could adversely impact patient safety, as well as our reputation and business. 59 Table of Contents We rely on third parties to conduct our preclinical studies and clinical trials and we must work effectively with collaborators to develop our drug candidates.
In addition, theft of inventory at warehouses, plants or while in-transit, which are not properly stored and which are sold through unauthorized channels, could adversely impact patient safety, as well as our reputation and business. We rely on third parties to conduct our preclinical studies and clinical trials and we must work effectively with collaborators to develop our drug candidates.
This could adversely affect investor confidence in us and, as a result, the value of our Common Stock. 47 Table of Contents There is significant uncertainty associated with our drug candidates and their viability as a commercial product.
This could adversely affect investor confidence in us and, as a result, the value of our Common Stock. 54 Table of Contents There is significant uncertainty associated with our drug candidates and their viability as a commercial product.
These effects could have a material impact on our business and operations, or the businesses and operations of third parties on which we rely. 46 Table of Contents We have identified material weaknesses in our internal control over financial reporting.
These effects could have a material impact on our business and operations, or the businesses and operations of third parties on which we rely. 53 Table of Contents We have identified material weaknesses in our internal control over financial reporting.
We may focus our efforts and resources on potential drug candidates or other potential programs that ultimately prove to be unsuccessful. Preclinical and clinical development of drug candidates involves a lengthy and expensive process with an uncertain outcome, and we are unable to predict if or when we will successfully develop or commercialize any of our drug candidates.
We may focus our efforts and resources on potential drug candidates or other potential programs that ultimately prove to be unsuccessful. 56 Table of Contents Preclinical and clinical development of drug candidates involves a lengthy and expensive process with an uncertain outcome, and we are unable to predict if or when we will successfully develop or commercialize any of our drug candidates.
We generate an immaterial amount of revenue related to supply agreements for dietary (mineral) supplements; however, such revenue is not expected to be a material contributor to our revenue in the future.
We generate an immaterial amount of revenue related to license and supply agreements for dietary (mineral) supplements; however, such revenue is not expected to be a material contributor to our revenue in the future.
Metallic nanocrystal therapeutic candidates, such as our lead product, CNM-Au8, are considered emerging and novel investigational products for the potential treatment of neurological diseases and other disorders. We are developing CNM-Au8 for the treatment of neurological disorders such as ALS, MS, and PD through remyelination and/or neuroprotection mechanisms related to catalysis of certain biological reactions.
Metallic nanocrystal therapeutic candidates, such as our lead drug candidate, CNM-Au8, are considered emerging and novel investigational products for the potential treatment of neurological diseases and other disorders. We are developing CNM-Au8 for the treatment of neurological disorders such as ALS, MS, and PD through remyelination and/or neuroprotection mechanisms related to catalysis of certain biological reactions.
If Nasdaq delists our shares of Common Stock or warrants from trading on its exchange for failure to meet Nasdaq’s listing standards, we and our stockholders could face significant material adverse consequences including: ● a limited availability of market quotations for our securities; ● reduced liquidity for our securities; 67 Table of Contents ● a determination that our Common Stock is a “penny stock” which will require brokers trading in our Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; ● a limited amount of news and analyst coverage; and ● a decreased ability to issue additional securities or obtain additional financing in the future.
If Nasdaq delists our shares of Common Stock or warrants from trading on its exchange for failure to meet Nasdaq’s listing requirements, we and our stockholders could face significant material adverse consequences including: ● a limited availability of market quotations for our securities; ● reduced liquidity for our securities; ● a determination that our Common Stock is a “penny stock” which will require brokers trading in our Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; ● a limited amount of news and analyst coverage; and ● a decreased ability to issue additional securities or obtain additional financing in the future.
The drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the clinical trial or result in potential product liability claims. Any of these occurrences may harm our business, financial condition and prospects significantly. 54 Table of Contents Clinical trials assess a sample of the potential patient population.
The drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the clinical trial or result in potential product liability claims. Any of these occurrences may harm our business, financial condition, and prospects significantly. Clinical trials assess a sample of the potential patient population.
Any negative impact from health epidemics or pandemics, including the COVID-19 pandemic, on the ability of clinical trial sites to recruit or retain patients or collect patient data could cause costly delays to clinical trial activities, which could adversely affect our ability to obtain regulatory approval for and, if approved, to commercialize our drug candidates, increase our operating expenses, and have a material adverse effect on our financial results.
Any negative impact from health epidemics or pandemics on the ability of clinical trial sites to recruit or retain patients or collect patient data could cause costly delays to clinical trial activities, which could adversely affect our ability to obtain regulatory approval for and, if approved, to commercialize our drug candidates, increase our operating expenses, and have a material adverse effect on our financial results.
In connection with the audit of our financial statements as of and for the years ended December 31, 2022 and 2021, our management identified material weaknesses in our internal control over financial reporting.
In connection with the audit of our financial statements as of and for the years ended December 31, 2023 and 2022, our management identified material weaknesses in our internal control over financial reporting.
Any future legislation or regulations that increase consumer access to lower-priced medicines from outside the countries where we operate could have a material adverse effect on our business. Certain products distributed or sold in the pharmaceutical market may be manufactured without proper licenses or approvals, or may be fraudulently mislabeled with respect to their content or manufacturers.
Any future legislation or regulations that increase consumer access to lower-priced medicines from outside the countries where we operate could have a material adverse effect on our business. 68 Table of Contents Certain products distributed or sold in the pharmaceutical market may be manufactured without proper licenses or approvals, or may be fraudulently mislabeled with respect to their content or manufacturers.
Moreover, the applicable time period or the scope of patent protection afforded could be less than we request. In addition, no patent term extension system has been established in China beyond the new pilot program, and implementation of the pilot program may not occur quickly.
Moreover, the applicable time period or the scope of patent protection afforded could be less than we request. 74 Table of Contents In addition, no patent term extension system has been established in China beyond the new pilot program, and implementation of the pilot program may not occur quickly.
There could be similar changes in the laws of foreign jurisdictions that may impact the value of our patent rights or other intellectual property rights. 64 Table of Contents If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
There could be similar changes in the laws of foreign jurisdictions that may impact the value of our patent rights or other intellectual property rights. If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
Despite our efforts, there is a risk that neither we nor our independent registered public accounting firm will be able to conclude within the prescribed timeframe that our internal control over financial reporting is effective as required by Section 404.
Despite our efforts, there is a risk that neither we nor our independent registered public accounting firm, if and when required, will be able to conclude within the prescribed timeframe that our internal control over financial reporting is effective as required by Section 404.
We may experience difficulties in patient enrollment in our clinical trials for a variety of reasons, including: ● the COVID-19 pandemic; ● the size and nature of the patient population; ● the design of the trial, including the patient eligibility criteria defined in the protocol; ● the size of the study population required for analysis of the trial’s primary endpoints; ● the proximity of patients to trial sites; ● our ability to recruit clinical trial investigators with the appropriate competencies and experience; ● competing clinical trials for similar therapies or other new therapeutics; ● clinicians’ and patients’ perceptions as to the potential advantages and side effects of the drug candidate being studied in relation to other available therapies, including any new drugs or treatments that may be approved for the indications we are investigating; ● our ability to obtain and maintain patient consents; ● the risk that patients enrolled in clinical trials will not complete a clinical trial; and ● the availability of approved therapies that are similar in mechanism to our drug candidates.
We may experience difficulties in patient enrollment in our clinical trials for a variety of reasons, including: ● any future health epidemics or pandemics; ● the size and nature of the patient population; ● the design of the trial, including the patient eligibility criteria defined in the protocol; ● the size of the study population required for analysis of the trial’s primary endpoints; ● the proximity of patients to trial sites; ● our ability to recruit clinical trial investigators with the appropriate competencies and experience; ● competing clinical trials for similar therapies or other new therapeutics; ● clinicians’ and patients’ perceptions as to the potential advantages and side effects of the drug candidate being studied in relation to other available therapies, including any new drugs or treatments that may be approved for the indications we are investigating; ● our ability to obtain and maintain patient consents; ● the risk that patients enrolled in clinical trials will not complete a clinical trial; and ● the availability of approved therapies that are similar in mechanism to our drug candidates.
Increases in interest rates may also adversely affect the repayment terms of certain of our debt agreements. 44 Table of Contents Our future success depends on our ability to retain key executives and to attract, train, retain and motivate qualified and highly skilled personnel.
Increases in interest rates may also adversely affect the repayment terms of certain of our debt agreements. 51 Table of Contents Our future success depends on our ability to retain key executives and to attract, train, retain, develop, and motivate qualified and highly skilled personnel.
For details, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” We expect that within the next twelve months, we may not have sufficient cash and other resources on hand to sustain our current operations or meet our obligations as they become due, and we may need to obtain additional financing.
For details, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” We expect that within the next twelve months, we will not have sufficient cash and other resources on hand to sustain our current operations or meet our obligations as they become due unless we obtain additional financing.
For drugs that have been designated as Breakthrough Therapies, interaction and communication between the FDA and the sponsor can help to identify the most efficient path for development. Designation as a Breakthrough Therapy is within the discretion of the FDA.
For drugs that have been designated as Breakthrough Therapies, interaction and communication between the FDA and the sponsor can help to identify the most efficient path for development. 60 Table of Contents Designation as a Breakthrough Therapy is within the discretion of the FDA.
We qualify as an emerging growth company and smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, it could make our Common Stock less attractive to investors and may make it more difficult to compare our performance to the performance of other public companies.
We qualify as a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to smaller reporting companies, it could make our Common Stock less attractive to investors and may make it more difficult to compare our performance to the performance of other public companies.
The response health epidemics and pandemics, including the COVID-19 pandemic, may redirect our resources with respect to regulatory and intellectual property matters in a way that would adversely affect our ability to obtain regulatory approvals and protect our intellectual property. In addition, we may face impediments to regulatory meetings and approvals due to measures intended to limit in-person interactions.
The response to health epidemics and pandemics may redirect our resources with respect to regulatory and intellectual property matters in a way that would adversely affect our ability to obtain regulatory approvals and protect our intellectual property. In addition, we may face impediments to regulatory meetings and approvals due to measures intended to limit in-person interactions.
Health epidemics and pandemics, including the COVID-19 pandemic, may materially and adversely affect us economically. While the potential global economic impact brought by, and the duration of, health epidemics and pandemics, including the COVID-19 pandemic, may be difficult to assess or predict, they have caused and could cause future disruption in the global financial markets.
Health epidemics and pandemics may materially and adversely affect us economically. While the potential global economic impact brought by, and the duration of, health epidemics and pandemics may be difficult to assess or predict, they have caused and could cause future disruption in the global financial markets.
The following examples are illustrative: ● others may be able to make compounds that are similar to our drug candidates but that are not covered by the claims of the patents that we own or may in the future exclusively license; ● we might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own or may in the future exclusively license, which could result in the patent applications not issuing or being invalidated after issuing; ● we might not have been the first to file patent applications covering certain of our inventions, which could prevent the issuance of the patent applications or cause them to be invalidated after issuance; ● others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; ● it is possible that our pending patent applications will not lead to issued patents; ● issued patents that we own or have exclusively licensed may not provide us with any competitive advantages, or may be held invalid or unenforceable, as a result of legal challenges by our competitors; ● we may obtain patents for certain drug candidates many years before we receive NDA approval for these drugs, and because patents have a limited life, which may begin to run prior to the commercial sale of the related drugs, limiting the commercial value of our patents; ● our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive drugs for commercialization in our major markets; ● we may fail to develop additional proprietary technologies that are patentable; ● we may fail to apply for or obtain adequate intellectual property protection in all the jurisdictions in which we operate; ● the patents of others may have an adverse effect on our business, for example by preventing us from commercializing one or more of our drug candidates for one or more indications; and ● any of the aforementioned threats to our competitive advantage could have a material adverse effect on our business. 65 Table of Contents Risks Related to the Reverse Recapitalization and Integration of Businesses We have incurred significant increased expenses and administrative burdens as a public company, which could have an adverse effect on our business, financial condition and results of operations.
The following examples are illustrative: ● others may be able to make compounds that are similar to our drug candidates but that are not covered by the claims of the patents that we own or may in the future exclusively license; ● we might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own or may in the future exclusively license, which could result in the patent applications not issuing or being invalidated after issuing; ● we might not have been the first to file patent applications covering certain of our inventions, which could prevent the issuance of the patent applications or cause them to be invalidated after issuance; ● others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; ● it is possible that our pending patent applications will not lead to issued patents; 75 Table of Contents ● issued patents that we own or have exclusively licensed may not provide us with any competitive advantages, or may be held invalid or unenforceable, as a result of legal challenges by our competitors; ● we may obtain patents for certain drug candidates many years before we receive NDA approval for these drugs, and because patents have a limited life, which may begin to run prior to the commercial sale of the related drugs, limiting the commercial value of our patents; ● our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive drugs for commercialization in our major markets; ● we may fail to develop additional proprietary technologies that are patentable; ● we may fail to apply for or obtain adequate intellectual property protection in all the jurisdictions in which we operate; ● the patents of others may have an adverse effect on our business, for example by preventing us from commercializing one or more of our drug candidates for one or more indications; and ● any of the aforementioned threats to our competitive advantage could have a material adverse effect on our business.
For any drug candidates that we may seek to in-license from third parties, we may face significant competition from other pharmaceutical or biotechnology companies with greater resources or capabilities than we have, and any agreement that we do enter into may not result in the anticipated benefits. 60 Table of Contents Further, collaborations involving our drug candidates are subject to numerous risks, which may include the following: ● collaborators have significant discretion in determining the efforts and resources that they will apply to a collaboration; ● collaborators may not pursue development and commercialization of our drug candidates, if approved, or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in their strategic focus due to the acquisition of competitive drugs, availability of funding, or other external factors outside of our control, such as a business combination that diverts resources or creates competing priorities; ● collaborators may delay clinical trials, provide insufficient funding for a clinical trial, stop a clinical trial, abandon a drug candidate, repeat or conduct new clinical trials, or require a new formulation of a drug candidate for clinical testing; ● collaborators could independently develop, or develop with third parties, drugs that compete directly or indirectly with our drugs; ● collaborators with marketing and distribution rights to one or more drugs may not commit sufficient resources to their marketing and distribution; ● collaborators may not properly develop, maintain, or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability; ● disputes may arise between us and a collaborator that cause the delay or termination of the research, development, or commercialization of our drug candidates, if approved, or that result in costly litigation or arbitration that diverts management attention and resources; ● collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of our drug candidates, if approved; and ● collaborators may own or co-own intellectual property covering our drugs that results from our collaborating with them, and in such cases, we would not have the exclusive right to commercialize such intellectual property.
Further, collaborations involving our drug candidates are subject to numerous risks, which may include the following: ● collaborators have significant discretion in determining the efforts and resources that they will apply to a collaboration; ● collaborators may not pursue development and commercialization of our drug candidates, if approved, or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in their strategic focus due to the acquisition of competitive drugs, availability of funding, or other external factors outside of our control, such as a business combination that diverts resources or creates competing priorities; ● collaborators may delay clinical trials, provide insufficient funding for a clinical trial, stop a clinical trial, abandon a drug candidate, repeat or conduct new clinical trials, or require a new formulation of a drug candidate for clinical testing; ● collaborators could independently develop, or develop with third parties, drugs that compete directly or indirectly with our drugs; ● collaborators with marketing and distribution rights to one or more drugs may not commit sufficient resources to their marketing and distribution; ● collaborators may not properly develop, maintain, or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability; ● disputes may arise between us and a collaborator that cause the delay or termination of the research, development, or commercialization of our drug candidates, if approved, or that result in costly litigation or arbitration that diverts management attention and resources; ● collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of our drug candidates, if approved; and ● collaborators may own or co-own intellectual property covering our drugs that results from our collaborating with them, and in such cases, we would not have the exclusive right to commercialize such intellectual property.
The price of our Common Stock may fluctuate due to a variety of factors, including: ● changes in the industries in which we operate; ● variations in our operating performance and the performance of our competitors in general; ● material and adverse impact of the COVID-19 pandemic on the markets and the broader global economy; ● actual or anticipated fluctuations in our quarterly or annual operating results; ● publication of research reports by securities analysts about us or our competitors or our industry; ● the public’s reaction to our press releases, our other public announcements and our filings with the SEC; ● our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market; ● additions and departures of key personnel; ● changes in laws and regulations affecting our business; ● commencement of, or involvement in, litigation involving us; ● changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; ● the volume of shares of our Common Stock available for public sale; and ● general economic and political conditions such as recessions, interest rates, fuel prices, foreign currency fluctuations, international tariffs, social, political and economic risks, pandemics and acts of war or terrorism.
The price of our Common Stock may fluctuate due to a variety of factors, including: ● changes in the industries in which we operate; ● variations in our operating performance and the performance of our competitors in general; ● material and adverse impact of health epidemics or pandemics on the markets and the broader global economy; ● actual or anticipated fluctuations in our quarterly or annual operating results; 78 Table of Contents ● publication of research reports by securities analysts about us or our competitors or our industry; ● the public’s reaction to our press releases, our other public announcements and our filings with the SEC; ● our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market; ● additions and departures of key personnel; ● changes in laws and regulations affecting our business; ● commencement of, or involvement in, litigation involving us; ● changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; ● the volume of shares of our Common Stock available for public sale; and ● general economic, political, industry, and market conditions such as recessions, interest rates, fuel prices, foreign currency fluctuations, international tariffs, social, political and economic risks, epidemics and pandemics, and acts of terrorism or war (such as the ongoing conflicts between Ukraine and Russia and Israel and Palestine).
Supreme Court dismissed a challenge on procedural grounds that argued the Affordable Care Act is unconstitutional in its entirety because the “individual mandate” was repealed by Congress. Thus, the Affordable Care Act will remain in effect in its current form. Further, prior to the U.S.
For example, on June 17, 2021 the U.S. Supreme Court dismissed a challenge on procedural grounds that argued the Affordable Care Act is unconstitutional in its entirety because the “individual mandate” was repealed by Congress. Thus, the Affordable Care Act will remain in effect in its current form. Further, prior to the U.S.
Among the Affordable Care Act provisions of importance to the pharmaceutical and biotechnology industries are the following: among other things, subjected biological products to potential competition by lower-cost biosimilars, created a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations, established annual fees and taxes on manufacturers of certain branded prescription drugs, and created a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D.
Among the Affordable Care Act provisions of importance to the pharmaceutical and biotechnology industries are the following: among other things, subjected biological products to potential competition by lower-cost biosimilars, created a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations, established annual fees and taxes on manufacturers of certain branded prescription drugs, and created a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D. 66 Table of Contents Some of the provisions of the Affordable Care Act have yet to be implemented, and there have been legal and political challenges to certain aspects of the Affordable Care Act.
However, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.
However, while we remain a smaller reporting company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.
Even if clinical trial sites are actively recruiting, we may face difficulties recruiting or retaining patients in our ongoing and planned clinical trials if patients are affected by the COVID-19 virus or are fearful of visiting or traveling to clinical trial sites because of the COVID-19 pandemic, or any potential future epidemics and pandemics.
Even if clinical trial sites are actively recruiting, we may face difficulties recruiting or retaining patients in our ongoing and planned clinical trials if patients are affected by or are fearful of visiting or traveling to clinical trial sites because of any potential future epidemics and pandemics.
Congress, the President, executive branch agencies, and state legislatures have considered various types of healthcare reform to control growing healthcare costs. Similar reform movements have occurred in parts of Europe and Asia.
In recent years, the U.S. Congress, the President, executive branch agencies, and state legislatures have considered various types of healthcare reform to control growing healthcare costs. Similar reform movements have occurred in parts of Europe and Asia.
Any disruption in the supply chain from the COVID-19 pandemic, or any potential future epidemics and pandemics, could have a material adverse effect on our clinical trial plans and business operations.
Any disruption in the supply chain from any potential future epidemics and pandemics could have a material adverse effect on our clinical trial plans and business operations.
As a newly public company, and particularly after we are no longer an emerging growth company or smaller reporting company, we have faced and will continue to face increased legal, accounting, administrative and other costs and expenses as a public company that we did not incur as a private company.
As a public company, and particularly after we are no longer a smaller reporting company, we have faced and will continue to face increased legal, accounting, administrative and other costs and expenses as a public company that we did not incur as a private company.
The remaining balance of $12.9 million will begin to expire after 2032. As of December 31, 2022, we had research and development tax credit carryforwards of $3.8 million, which may be available to reduce future tax liabilities and expire at various dates beginning after 2032.
The remaining balance of $12.9 million will begin to expire after 2032. As of December 31, 2023, we had research and development tax credit carryforwards of $5.6 million, which may be available to reduce future tax liabilities and expire at various dates beginning after 2032.
The remaining balance of $33.5 million will begin to expire after 2034. As of December 31, 2022, we had state NOL carryforwards of $78.4 million, of which $65.5 million may be carried forward indefinitely to reduce future taxable income but utilization is limited to 80% of our taxable income in any given tax year based on current tax laws.
The remaining balance of $33.4 million will begin to expire after 2034. As of December 31, 2023, we had state NOL carryforwards of $96.7 million, of which $83.7 million may be carried forward indefinitely to reduce future taxable income but utilization is limited to 80% of our taxable income in any given tax year based on current tax laws.
As of December 31, 2022, we had U.S. federal net operating loss (“NOL”) carryforwards of $127.2 million, of which $93.7 million may be carried forward indefinitely to reduce future taxable income but utilization is limited to 80% of our annual taxable income in any given year based on current federal tax laws.
As of December 31, 2023, we had U.S. federal net operating loss (“NOL”) carryforwards of $147.1 million, of which $113.7 million may be carried forward indefinitely to reduce future taxable income but utilization is limited to 80% of our annual taxable income in any given year based on current federal tax laws.
Our business and operations have been affected by and could be materially and adversely affected in the future by the effects of health epidemics and pandemics, including the evolving and ongoing effects of the COVID-19 pandemic, which could also cause material adverse effects on the business and operations of third parties on which we rely.
Our business and operations have been affected by and could be materially and adversely affected in the future by the effects of health epidemics and pandemics, which could also cause material adverse effects on the business and operations of third parties on which we rely. Our business and operations could be adversely affected by health epidemics and pandemics.
As all of our drug candidates are still in the research and development stage, we currently do not generate revenue from the sale of drug candidates, and we have recorded continued significant net losses.
Our main business is research and development, and if successful, sales of drug candidates. As all of our drug candidates are still in the research and development stage, we currently do not generate revenue from the sale of drug candidates, and we have recorded continued significant net losses.
We, our CROs, clinical investigators, third-party vendors and clinical sites, and other suppliers may experience disruptions in supply of drug candidates and/or procuring items that are essential for our research and development activities, including raw materials used in the manufacturing of our drug candidates, medical and laboratory supplies used in our clinical trials or preclinical studies or animals that are used for preclinical testing, in each case, for which there may be shortages because of ongoing efforts to address the COVID-19 pandemic.
We, our CROs, clinical investigators, third-party vendors and clinical sites, and other suppliers may experience disruptions in supply of drug candidates and/or procuring items that are essential for our research and development activities, including raw materials used in the manufacturing of our drug candidates, medical and laboratory supplies used in our clinical trials or preclinical studies or animals that are used for preclinical testing, in each case, for which there may be shortages due to future epidemics and pandemics.
Significant clinical trial delays may also increase our development costs and could shorten any periods during which we have the exclusive right to commercialize our drug candidates or allow our competitors to bring drugs to market before we do. This could impair our ability to commercialize our drug candidates and may harm our business and results of operations.
Significant clinical trial delays may also increase our development costs and could shorten any periods during which we have the exclusive right to commercialize our drug candidates or allow our competitors to bring drugs to market before we do.
Our drug candidates could fail to receive regulatory approval for many reasons, including: ● failure to begin or complete clinical trials due to disagreements with regulatory authorities; ● failure to begin or complete clinical trials due to inability to recruit sufficient numbers of study participants; ● failure to demonstrate that a drug candidate is safe and effective or is safe, pure and potent for our proposed indication; ● failure of clinical trial results to meet the level of statistical significance required for approval; ● data integrity issues related to our clinical trials; ● disagreement with our interpretation of data from preclinical studies or clinical trials; ● changes in approval policies or regulations that render our preclinical and clinical data insufficient for approval or require us to amend our clinical trial protocols; ● regulatory requests for additional analysis, reports, data, nonclinical studies and clinical trials, or questions regarding interpretations of data and results and the emergence of new information regarding our drug candidates; ● insufficient data from the clinical trials of our drug candidates to obtain regulatory approval; ● failure by us or our investigators to conduct a clinical trial in accordance with regulatory requirements or our clinical trial protocols; and ● clinical sites, investigators or other participants in our clinical trials deviating from a trial protocol, failing to conduct the trial in accordance with regulatory requirements, or dropping out of a trial. 48 Table of Contents The FDA, NMPA, TGA, Health Canada, EMA or a comparable regulatory authority may require more information, including additional preclinical or clinical data, to support approval, which may delay or prevent approval and our commercialization plans, or we may decide to abandon the development program.
Our drug candidates could fail to receive regulatory approval for many reasons, including: ● failure to begin or complete clinical trials due to disagreements with regulatory authorities; ● failure to begin or complete clinical trials due to inability to recruit sufficient numbers of study participants; ● failure to demonstrate that a drug candidate is safe and effective or is safe, pure and potent for our proposed indication; ● failure of clinical trial results to meet the level of statistical significance required for approval; ● data integrity issues related to our clinical trials; ● disagreement with our interpretation of data from preclinical studies or clinical trials; 55 Table of Contents ● changes in approval policies or regulations that render our preclinical and clinical data insufficient for approval or require us to amend our clinical trial protocols; ● regulatory requests for additional analysis, reports, data, nonclinical studies and clinical trials, or questions regarding interpretations of data and results and the emergence of new information regarding our drug candidates; ● insufficient data from the clinical trials of our drug candidates to obtain regulatory approval; ● failure by us or our investigators to conduct a clinical trial in accordance with regulatory requirements or our clinical trial protocols; and ● clinical sites, investigators or other participants in our clinical trials deviating from a trial protocol, failing to conduct the trial in accordance with regulatory requirements, or dropping out of a trial.
In addition, if the FDA, NMPA, TGA, Health Canada, EMA or a comparable regulatory authority approves our drug candidates, we will have to comply with requirements, including, for example, submissions of safety and other post-market information and reports, registration, as well as continued compliance with GMP and GCP, for any clinical trials that we conduct post-approval.
In addition, if the FDA, NMPA, TGA, Health Canada, EMA or a comparable regulatory authority approves our drug candidates, we will have to comply with requirements, including, for example, submissions of safety and other post-market information and reports, registration, as well as continued compliance with GMP and GCP, for any clinical trials that we conduct post-approval. 61 Table of Contents The FDA and other regulatory authorities strictly regulate the marketing, labeling, advertising and promotion of products that are placed on the market.
Currently, we are not Baby Shelf constrained but could become constrained in the future. Even if sufficient funding is available, there can be no assurance that it will be available on terms acceptable to us or our stockholders.
Currently, we are constrained by the Baby Shelf Rule. Even if sufficient funding is available, there can be no assurance that it will be available on terms acceptable to us or our stockholders.
If we fail to commercialize our drug candidates as planned due to failures to complete clinical trials, obtain regulatory approval, conduct commercial scale manufacturing or for any other reason, we may experience significant delays or failure in generating revenue and realizing profit from the commercial sale of our drug candidates. 40 Table of Contents Further, we expect to incur significant costs in the future, in particular for research and development and the commercialization of our drug candidates.
If we fail to commercialize our drug candidates as planned due to failures to complete clinical trials, obtain regulatory approval, conduct commercial scale manufacturing or for any other reason, we may experience significant delays or failure in generating revenue and realizing profit from the commercial sale of our drug candidates.
Our cash, cash equivalents, and marketable securities totaled $23.3 million and $50.3 million as of December 31, 2022 and 2021, respectively; and net cash used in operating activities was $39.0 million and $34.6 million for the years ended December 31, 2022 and 2021, respectively.
Our cash, cash equivalents, and marketable securities totaled $35.0 million and $23.3 million as of December 31, 2023 and 2022, respectively, and net cash used in operating activities was $30.2 million and $39.0 million for the years ended December 31, 2023 and 2022, respectively.
Commencement of clinical trials is subject to finalizing the trial design based on ongoing discussions with the FDA, NMPA, TGA, Health Canada, EMA and/or other regulatory authorities.
Future clinical trials of our drug candidates may not be successful. Commencement of clinical trials is subject to finalizing the trial design based on ongoing discussions with the FDA, NMPA, TGA, Health Canada, EMA and/or other regulatory authorities.
Furthermore, if we are required or choose to file a new registration statement on a form other than Form S-3, we may incur additional costs and be subject to delays due to review by the SEC staff. 68 Table of Contents Item 1B. Unresolved Staff Comments Not applicable.
Furthermore, if we are required or choose to file a new registration statement on a form other than Form S-3, we may incur additional costs and be subject to delays due to review by the SEC staff.
Beginning in 2022, applicable manufacturers also will be required to report such information regarding payments and transfers of value provided during the previous year to physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified nurse anesthetists and certified nurse-midwives.
Beginning in 2022, applicable manufacturers also will be required to report such information regarding payments and transfers of value provided during the previous year to physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified nurse anesthetists and certified nurse-midwives. The information reported is publicly available on a searchable website, with disclosure required annually.
We incurred a loss from operations of $48.4 million and $50.0 million for the years ended December 31, 2022 and 2021, respectively, and a net loss of $29.9 million and $9.7 million for the years ended December 31, 2022 and 2021, respectively. Our accumulated deficit was $193.2 million and $163.3 million as of December 31, 2022 and 2021, respectively.
We incurred a loss from operations of $40.5 million and $48.4 million for the years ended December 31, 2023 and 2022, respectively, and a net loss of $49.5 million and $29.9 million for the years ended December 31, 2023 and 2022, respectively. Our accumulated deficit was $242.7 million and $193.2 million as of December 31, 2023 and 2022, respectively.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. 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.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. 47 Table of Contents 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, equity purchase agreement, and potential proceeds from the exercise of outstanding warrants and stock options.
Significant inflation could adversely affect our business, financial condition and results of operations. Inflation can adversely affect us by increasing our costs, including salary costs. Significant inflation is often accompanied by higher interest rates. Any significant increases in inflation and interest rates could have material adverse effect on our business, financial condition and results of operations.
Significant or sustained inflation could adversely affect our business, financial condition and results of operations. Inflation can adversely affect us by increasing our costs, including salary costs. Significant inflation is often accompanied by higher interest rates.
The information reported is publicly available on a searchable website, with disclosure required annually. 56 Table of Contents Additionally, we are subject to state and non-U.S. equivalents of each of the healthcare laws described above, among others, some of which may be broader in scope and may apply to healthcare services reimbursed by any source, not just governmental payors, including private insurers.
Additionally, we are subject to state and non-U.S. equivalents of each of the healthcare laws described above, among others, some of which may be broader in scope and may apply to healthcare services reimbursed by any source, not just governmental payors, including private insurers.
To counter infringement or unauthorized use, litigation may be necessary in the future to enforce or defend our intellectual property rights, protect our trade secrets or determine the validity and scope of our own intellectual property rights or the proprietary rights of others. Enforcement or defense of intellectual property rights can be expensive and time consuming.
Competitors may infringe our patent rights or misappropriate or otherwise violate our intellectual property rights. To counter infringement or unauthorized use, litigation may be necessary in the future to enforce or defend our intellectual property rights, protect our trade secrets or determine the validity and scope of our own intellectual property rights or the proprietary rights of others.
Further, the FDA, NMPA, TGA, Health Canada, EMA or other regulatory authorities may disagree with our clinical trial design or our interpretation of data from clinical trials, or may change the requirements for approval even after any regulatory authority has reviewed and commented on the design for our clinical trials. 49 Table of Contents Preclinical studies and clinical trials are expensive, difficult to design and implement, and can take many years to complete.
Further, the FDA, NMPA, TGA, Health Canada, EMA or other regulatory authorities may disagree with our clinical trial design or our interpretation of data from clinical trials, or may change the requirements for approval even after any regulatory authority has reviewed and commented on the design for our clinical trials.
Moreover, preclinical and clinical data are often susceptible to varying interpretations and analysis, and many companies that have believed their drug candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain regulatory approval of their drug candidates. Future clinical trials of our drug candidates may not be successful.
Preclinical studies and clinical trials are expensive, difficult to design and implement, and can take many years to complete. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analysis, and many companies that have believed their drug candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain regulatory approval of their drug candidates.
In addition, the patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions, and has been the subject of much litigation in recent years. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain.
In addition, the patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions, and has been the subject of much litigation in recent years.
Patent and Trademark Office (“USPTO”), or become involved in opposition, derivation, revocation, re-examination, post-grant and inter partes review, or interference proceedings or similar proceedings in foreign jurisdictions challenging our patent rights or the patent rights of others.
We may be subject to a third-party preissuance submission of prior art to the U.S. Patent and Trademark Office (“USPTO”), or become involved in opposition, derivation, revocation, re-examination, post-grant and inter partes review, or interference proceedings or similar proceedings in foreign jurisdictions challenging our patent rights or the patent rights of others.
If we encounter difficulties enrolling patients in clinical trials, clinical trials of our drug candidates may be delayed or otherwise adversely affected. The timely completion of clinical trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain in the trial until our conclusion.
The timely completion of clinical trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain in the trial until our conclusion.
Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property. An adverse result in any litigation proceeding could put our patents, as well as any patents that may issue in the future from our pending patent applications, at risk of being invalidated, held unenforceable or interpreted narrowly.
An adverse result in any litigation proceeding could put our patents, as well as any patents that may issue in the future from our pending patent applications, at risk of being invalidated, held unenforceable or interpreted narrowly.
If we fail to enter into collaborations and do not have sufficient funds or expertise to undertake the necessary development and commercialization activities, we may not be able to further develop our drug candidates or, if approved, bring them to market and generate product sales revenue, which would harm our business, financial condition, results of operations and prospects.
If we fail to enter into collaborations and do not have sufficient funds or expertise to undertake the necessary development and commercialization activities, we may not be able to further develop our drug candidates or, if approved, bring them to market and generate product sales revenue, which would harm our business, financial condition, results of operations, and prospects. 70 Table of Contents Our business depends on the use of raw materials, and a decrease in the supply or an increase in the cost of these raw materials or any quality issues in such raw materials could materially and adversely affect our business, financial condition, results of operations, and prospects.
We could be subject to risks caused by misappropriation, misuse, leakage, falsification or intentional or accidental release or loss of information maintained in our information systems and networks and those of our vendors, including personal information of our employees and patients, and company and vendor confidential data.
In addition, we may not have adequate insurance coverage to compensate for any losses associated with such events. 49 Table of Contents We could be subject to risks caused by misappropriation, misuse, leakage, falsification or intentional or accidental release or loss of information maintained in our information systems and networks and those of our vendors, including personal information of our employees and patients, and company and vendor confidential data.
To produce our drug candidates in the quantities that we believe will be required to meet anticipated market demand, if approved, we will need to increase or “scale up” the production process by a significant factor over current levels of production.
Advances in manufacturing techniques may render our facilities and equipment inadequate, in which case we may lose any competitive advantage. 50 Table of Contents To produce our drug candidates in the quantities that we believe will be required to meet anticipated market demand, if approved, we will need to increase or “scale up” the production process by a significant factor over current levels of production.
Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the amount, timing and nature of our future offerings. General Risk Factors There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq.
Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the amount, timing and nature of our future offerings. 77 Table of Contents General Risk Factors We do not satisfy all continued listing requirements of Nasdaq.
Non-U.S. markets are an important component of our growth strategy. We initially intend to focus on opportunities in the U.S., the European Union, Canada, Australia, Japan, Korea and China, in particular.
We may explore the licensing of commercialization rights or other forms of collaboration worldwide, which will expose us to additional risks. Non-U.S. markets are an important component of our growth strategy. We initially intend to focus on opportunities in the U.S., the European Union, Canada, Australia, Japan, Korea and China, in particular.
Furthermore, we may not be able to obtain sufficient funding or generate sufficient revenue and cash flows to continue the development of any other drug candidate in the future. Favorable designations may not be granted, or if granted, may be withdrawn later, for any of our drug candidates, and may not lead to faster development or regulatory review or approval.
Furthermore, we may not be able to obtain sufficient funding or generate sufficient revenue and cash flows to continue the development of any other drug candidate in the future.
Our drug candidates, if approved in the future, may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success and the market opportunity for the drug candidate may be smaller than we estimate.
Market acceptance and sales of any of our future approved drug candidates will depend significantly on the availability of adequate coverage and reimbursement from third-party payors for drugs and may be affected by existing and future healthcare reform measures. 62 Table of Contents Our drug candidates, if approved in the future, may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success and the market opportunity for the drug candidate may be smaller than we estimate.
Our patent rights relating to our drugs could be found invalid or unenforceable if challenged in court or before the U.S. Patent and Trademark Office or comparable non-U.S. authority. Competitors may infringe our patent rights or misappropriate or otherwise violate our intellectual property rights.
We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming and unsuccessful. Our patent rights relating to our drugs could be found invalid or unenforceable if challenged in court or before the U.S. Patent and Trademark Office or comparable non-U.S. authority.
If reimbursement is not available or is available only to limited levels, we may not be able to successfully commercialize any drug candidate that we successfully develop. 53 Table of Contents There may be significant delays in obtaining reimbursement for approved drug candidates, and coverage may be more limited than the purposes for which the drug candidates are approved by the FDA, NMPA, TGA, Health Canada, EMA or other comparable regulatory authorities.
There may be significant delays in obtaining reimbursement for approved drug candidates, and coverage may be more limited than the purposes for which the drug candidates are approved by the FDA, NMPA, TGA, Health Canada, EMA or other comparable regulatory authorities.
We manage and maintain our applications and data utilizing on-site systems and outsourced vendors. These applications and data encompass a wide variety of business-critical information including research and development information, commercial information, and business and financial information.
These applications and data encompass a wide variety of business-critical information including research and development information, commercial information, and business and financial information.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur newly-leased Elkton, Maryland facility will be utilized to increase our manufacturing capability. We believe that our facilities are suitable and adequate for present purposes and that our productive capacity is substantially being utilized.
Biggest changeOur leased Elkton, Maryland facility will be utilized to increase our manufacturing capability. We believe that our facilities are suitable and adequate for present purposes and that our productive capacity is substantially being utilized.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAs of the date of this Annual Report, we are not aware of any pending or threatened litigation or administrative proceedings against us, our officers or our directors which may have a material and adverse impact on our business, financial condition or results of operations. Item 4. Mine Safety Disclosures Not Applicable. 69 Table of Contents PART II
Biggest changeAs of the date of this Annual Report, we are not aware of any pending or threatened litigation or administrative proceedings against us, our officers or our directors which may have a material and adverse impact on our business, financial condition or results of operations. Item 4. Mine Safety Disclosures Not Applicable. 83 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Common Stock and publicly-traded warrants are traded on Nasdaq under the symbols “CLNN” and “CLNNW,” respectively. Holders As of March 9, 2023, there were 76,929,203 issued and outstanding shares of our Common Stock held by 70 stockholders of record.
Biggest changeItem 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Common Stock and publicly-traded warrants are traded on Nasdaq under the symbols “CLNN” and “CLNNW,” respectively. Holders As of March 8, 2024, there were 128,430,098 issued and outstanding shares of our Common Stock held by 65 stockholders of record.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResearch and Development Expense Research and development expense for the years ended December 31, 2022 and 2021 was as follows: Year Ended December 31, Change (in thousands) 2022 2021 Dollars % CNM-Au8 $ 10,439 $ 11,659 $ (1,220 ) (10 )% CNM-ZnAg 2,662 970 1,692 174 % Unallocated 5,698 3,542 2,156 61 % Personnel 9,856 7,414 2,442 33 % Stock-based compensation 3,265 4,831 (1,566 ) (32 )% Total research and development $ 31,920 $ 28,416 $ 3,504 12 % The change in research and development expenses was primarily due to the following: (i) a decrease in expenses related to our lead drug candidate, CNM-Au8, primarily due to a decrease in expenses in the REPAIR-PD, RESCUE-ALS, and VISIONARY-MS clinical trials due to completion of the blinded period of each trial; an overall decrease in expenses in the REPAIR-MS clinical trial due to completion of the blinded portion of the first dosing cohort, partially offset by an increase in expenses due to the initiation of the second dosing cohort; and a decrease in pre-clinical and non-clinical expenses; partially offset by an increase in expenses in the HEALEY ALS Platform trial due to the timing of calendar payments for our participation in the trial; and an increase in expenses related to our two Expanded Access Programs (“EAPs”) with the Sean M.
Biggest changeCost of Revenue Cost of revenue related to production and distribution costs for the sales of Gold Factor, Zinc Factor, and rMetx dietary supplements. 89 Table of Contents Research and Development Expense Research and development expense for the years ended December 31, 2023 and 2022 was as follows: Year Ended December 31, (in thousands) 2023 2022 Change CNM-Au8 $ 6,795 $ 10,439 (35 )% CNM-ZnAg 682 2,662 (74 )% Unallocated 5,572 5,698 (2 )% Personnel 9,545 9,856 (3 )% Stock-based compensation 4,061 3,265 24 % Total research and development $ 26,655 $ 31,920 (16 )% The change in research and development expenses was primarily due to the following: (i) a decrease in expenses related to our lead drug candidate, CNM-Au8, primarily due to a decrease in expenses in the HEALEY ALS Platform Trial and our RESCUE-ALS, REPAIR-MS, REPAIR-PD, and VISIONARY-MS clinical trials due to completion of the blinded period of each trial and decreased CRO and clinical operations expenses; and a decrease in expenses related to non-clinical and pre-clinical activities; partially offset by an increase in expenses related to our two ongoing EAPs due to increased enrollment and expansion of one EAP; increased expenses related to the LTE for VISIONARY-MS; and an increase in expenses related to regulatory activities; (ii) a decrease in expenses related to CNM-ZnAg, primarily due to completion of the clinical trial for treatment of COVID-19 in 2022, and the renegotiation of our CRO fees during the year ended December 31, 2023; (iii) a decrease in unallocated expenses, primarily due to decreased research, manufacturing, equipment, and materials expenses; partially offset by increased rent, utility, and depreciation expenses due to our leased facility in Elkton, Maryland and our expanded facility in North East, Maryland; (iv) a decrease in personnel expenses, primarily due to a reduction in headcount during the fourth quarter of 2022, partially offset by increased employee compensation during the second half of 2023; and (v) an increase in stock-based compensation expense, primarily due to the timing of award grants, vesting, and forfeitures for research and development personnel, partially offset by our decreased headcount and corresponding stock-based compensation expense during 2023.
Since our inception, we have dedicated substantially all of our resources to the development of our drug candidates.
Since our inception, we have dedicated substantially all our resources to the development of our drug candidates.
Contingent Earn-Out Liabilities In connection with the Reverse Recapitalization, certain stockholders are entitled to the Contingent Earn-outs payments based on achievement of certain milestones. In accordance with ASC 815, we classified the Contingent Earn-outs as liabilities and measured them at fair value on the date of the Reverse Recapitalization.
Contingent Earn-Out Liabilities In connection with the Reverse Recapitalization, certain stockholders are entitled to the Contingent Earn-out payments based on achievement of certain milestones. In accordance with ASC 815, we classified the Contingent Earn-outs as liabilities and measured them at fair value on the date of the Reverse Recapitalization.
Many traditional methods of nanoparticle synthesis involve the unavoidable deposition of potentially toxic organic residues and stabilizing surfactants on the particle surfaces. Synthesizing stable nanocrystals that are both nontoxic and highly catalytic has overcome this significant hurdle in harnessing transition metal catalytic activity for human therapeutic use.
Many traditional methods of nanoparticle synthesis involve the unavoidable deposition of potentially toxic organic residues and stabilizing surfactants on the particle surfaces. Synthesizing stable nanocrystals that are both nontoxic and highly catalytic has overcome this significant hurdle in harnessing transition metal catalytic activity for therapeutic use.
Our clean-surfaced nanocrystals exhibit catalytic activities many-fold higher than multiple other commercially available nanoparticles, produced using various techniques, that we have comparatively evaluated. We now have multiple drug assets currently in development and/or clinical trials for applications primarily in neurology.
Our clean-surfaced nanocrystals exhibit catalytic activities many-fold higher than multiple other commercially available nanoparticles, produced using various techniques, that we have comparatively evaluated. We have multiple drug assets currently in development and/or clinical trials for applications primarily in neurology.
As of December 31, 2022 and 2021, 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.
As of December 31, 2023 and 2022, 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.
(“Avenue”), we are required to maintain unrestricted cash and cash equivalents of at least $5.0 million to avoid acceleration of the full balance of the loan (see Note 9 to the consolidated financial statements). These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
(“Avenue”), we are required to maintain unrestricted cash and cash equivalents of at least $5.0 million to avoid acceleration of the full balance of the loan (see Note 8 to the consolidated financial statements). These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
Clene Netherlands had no taxable income or provision for income taxes for the years ended December 31, 2022 and 2021. Liquidity and Capital Resources Sources of Capital We have incurred significant losses and negative cash flows from operations since our inception.
Clene Netherlands had no taxable income or provision for income taxes for the years ended December 31, 2023 and 2022. Liquidity and Capital Resources Sources of Capital We have incurred significant losses and negative cash flows from operations since our inception.
The chart below reflects the growing body of evidence for CSN therapeutics from our completed and ongoing clinical programs. Recent Competition Update 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.
The chart below reflects the growing body of evidence for CSN therapeutics from our completed and ongoing clinical programs. 87 Table of Contents Recent Competition Update 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.
Taxation United States We are incorporated in the state of Delaware and subject to statutory U.S. federal corporate income tax at a rate of 21.00% for the years ended December 31, 2022 and 2021.
Taxation United States We are incorporated in the state of Delaware and subject to statutory U.S. federal corporate income tax at a rate of 21.00% for the years ended December 31, 2023 and 2022.
If we are able to file an NDA with the FDA based on our accumulation of clinical evidence, we would expect our general and administrative expenses to increase in future periods to support increases in our drug development activities and as we build out our commercial capabilities in advance of receiving regulatory approval.
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.
The unobservable inputs include the expected stock price volatility, risk-free interest rate, and expected term. No restricted stock awards were granted during the years ended December 31, 2022 and 2021. Item 7A. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, we are not required to provide information required by this Item. 84 Table of Contents
The unobservable inputs include the expected stock price volatility, risk-free interest rate, and expected term. No restricted stock awards were granted during the years ended December 31, 2023 and 2022. Item 7A. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, we are not required to provide information required by this Item. 98 Table of Contents
We expect that within the next twelve months, we may not have sufficient cash and other resources on hand to sustain our current operations or meet our obligations as they become due, and we may need to obtain additional financing. Additionally, pursuant to our term loan with Avenue Venture Opportunities Fund, L.P.
We expect that within the next twelve months, we will not have sufficient cash and other resources on hand to sustain our current operations or meet our obligations as they become due unless we obtain additional financing. Additionally, pursuant to our term loan with Avenue Venture Opportunities Fund, L.P.
Investing Activities Net cash used in investing activities was $10.2 million for the year ended December 31, 2022, which consisted of (i) purchases of marketable securities of $24.6 million and (ii) purchases of property and equipment of $5.2 million, offset primarily by (iii) proceeds from maturities and calls of marketable securities of $12.0 million and (iv) proceeds from sale of marketable securities of $7.6 million.
Net cash used in investing activities was $10.2 million for year ended December 31, 2022, which consisted of (i) purchases of marketable securities of $24.6 million and (ii) purchases of property and equipment of $5.2 million, partially offset by (iii) proceeds from maturities of marketable securities of $12.0 million and (iv) proceeds from sale of marketable securities of $7.6 million.
We have never been profitable and have incurred operating losses in each year since inception. We generate revenue from sales of dietary supplements through our wholly owned subsidiary, dOrbital, Inc., or through an exclusive license with 4Life Research LLC (“4Life”), a stockholder and related party.
We have never been profitable and have incurred operating losses in each year since inception. We generate revenue from sales of dietary supplements through our wholly owned subsidiary, dOrbital, Inc., or through an exclusive license with 4Life Research LLC (“4Life”), an international supplier of health supplements, stockholder, and related party.
(“Clene Netherlands”), was established in the Netherlands in April 2021 and is subject to corporate income tax at a rate of 15.00% up to €395,000 of taxable income and 25.80% for taxable income in excess of €395,000 for the year ended December 31, 2022; and 15.00% up to €245,000 of taxable income and 25.00% for taxable income in excess of €245,000 for the year ended December 31, 2021.
(“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 for the year ended December 31, 2023; and 15.00% up to €395,000 of taxable income and 25.80% for taxable income in excess of €395,000 for the year ended December 31, 2022.
We began in 2013 by innovating an electro-crystal-chemistry drug development platform that draws from advances in nanotechnology, plasma and quantum physics, material science, and biochemistry. Our platform process results in nanocrystals with faceted structures and surfaces that are free of the chemical surface modifications that accompany other production methods.
We innovated an electro-crystal-chemistry drug development platform that draws from advances in nanotechnology, plasma and quantum physics, material science, and biochemistry. Our platform process results in nanocrystals with faceted structures and surfaces that are free of the chemical surface modifications that accompany other production methods.
In accordance with Accounting Standards Update (“ASU”) 2020-06, Debt— Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity ’ s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity ’ s Own Equity , we classified this portion as convertible notes payable in the consolidated balance sheets and did not separate the Avenue Conversion Feature from the host contract as it did not meet the requirements for accounting as a derivative instrument.
In accordance with ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity ’ s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity ’ s Own Equity , we classified this portion as convertible notes payable in the consolidated balance sheets and did not separate the conversion option from the host contract as it did not meet the requirements for accounting as a derivative instrument.
We are also subject to state income tax in Utah at a rate of 4.85% and 4.95% for the years ended December 31, 2022 and 2021, respectively; and in Maryland at a rate of 8.25% for the years ended December 31, 2022 and 2021.
We are also subject to state income tax in Utah at a rate of 4.65% and 4.85% for the years ended December 31, 2023 and 2022, respectively; and in Maryland at a rate of 8.25% for the years ended December 31, 2023 and 2022.
The issuance and sale of Common Stock, if any, by us under the ATM Facility will be made pursuant to our registration statement on Form S-3 (file number 333-264299), which was declared effective by the Securities and Exchange Commission on April 26, 2022, and our prospectus supplement relating to the offering.
The issuance and sale of Common Stock by us under the ATM Agreement was made pursuant to our registration statement on Form S-3 (file number 333-264299), which was declared effective by the Securities and Exchange Commission on April 26, 2022, and our prospectus supplement relating to the offering.
These commitments are not deemed significant. 79 Table of Contents Long-Term Material Cash Requirements 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.
Long-Term Material Cash Requirements 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.
We have financed our operations principally through the following sources: ● gross proceeds of $134.0 million from equity financing, including sales of common stock, preferred stock, warrants to purchase common stock, and our ATM offering program; 78 Table of Contents ● gross proceeds of $32.3 million from borrowings under convertible promissory notes; ● gross proceeds of $26.9 million from borrowings under notes payable and convertible notes payable; ● gross proceeds of $9.4 million from the Reverse Recapitalization; ● gross proceeds of $6.1 million from refundable research and development tax credits; ● gross proceeds of $2.2 million from grants from various organizations; and ● gross proceeds of $1.0 million from stock option and warrant exercises.
We have financed our operations principally through the following sources: ● gross proceeds of $175.1 million from equity financing, including sales of common stock, preferred stock, and warrants to purchase common stock; ● gross proceeds of $32.3 million from borrowings under convertible promissory notes; 92 Table of Contents ● gross proceeds of $27.3 million from borrowings under notes payable and convertible notes payable; ● gross proceeds of $9.4 million from the Reverse Recapitalization; ● gross proceeds of $8.9 million from refundable research and development tax credits; ● gross proceeds of $2.9 million from grants from various organizations; and ● gross proceeds of $1.0 million from stock option and warrant exercises.
Our cash, cash equivalents, and marketable securities totaled $23.3 million and $50.3 million as of December 31, 2022 and 2021, respectively, and net cash used in operating activities was $39.0 million and $34.6 million for the years ended December 31, 2022 and 2021, respectively. We have incurred significant losses and negative cash flows from operations since our inception.
Our cash, cash equivalents, and marketable securities totaled $35.0 million and $23.3 million as of December 31, 2023 and 2022, respectively, and net cash used in operating activities was $30.2 million and $39.0 million for the years ended December 31, 2023 and 2022, respectively. We have incurred significant losses and negative cash flows from operations since our inception.
Firm commitments for funds include approximately $0.1 million and $1.1 million of payments under finance and operating lease obligations, respectively; payment of principal and interest on notes payable totaling $9.3 million; and commitments under various agreements for capital expenditures totaling $1.6 million related to the construction of our manufacturing facilities.
Firm commitments for funds include approximately $27,000 and $1.1 million of payments under finance and operating lease obligations, respectively; payment of principal and interest on notes payable totaling $22.5 million; and commitments under various agreements for capital expenditures totaling $0.4 million related to the construction of our manufacturing facilities.
If we are not able to file an NDA based on our accumulation of clinical evidence, we would need to continue investing in clinical research activities and we would expect our general and administrative expenses to decrease in future periods as we decrease commercial expansion projects, including at our Elkton, Maryland facility, and as we implement cost-saving initiatives, including a reduction in executive compensation, a hiring freeze, and elimination of certain staff positions.
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.
We enter into agreements in the normal course of business with CROs for clinical trials and with vendors for preclinical studies and other services and products for operating purposes, which are cancelable at any time by us, subject to payment of our remaining obligations under binding purchase orders and, in certain cases, nominal early termination fees.
Additional sources of funds include equity financing, debt financing, or other capital sources. 93 Table of Contents We enter into agreements in the normal course of business with CROs for clinical trials and with vendors for preclinical studies and other services and products for operating purposes, which are cancelable at any time by us, subject to payment of our remaining obligations under binding purchase orders and, in certain cases, nominal early termination fees.
Drug candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to per patient clinical trial site fees for larger clinical trials, the costs of opening and monitoring clinical sites, CRO activity, and manufacturing expenses.
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.
Use of Funds Our cash flows for the years ended December 31, 2022 and 2021 were as follows: Year Ended December 31, (in thousands) 2022 2021 Net cash used in operating activities $ (39,011 ) $ (34,624 ) Net cash used in investing activities (10,164 ) (1,332 ) Net cash provided by financing activities 17,249 27,112 Effect of foreign exchange rate changes on cash (30 ) (85 ) Net decrease in cash, cash equivalents and restricted cash $ (31,956 ) $ (8,929 ) Our primary use of cash in all periods presented was to fund our research and development, regulatory and other clinical trial costs, and general corporate expenditures.
Use of Funds Our cash flows for the years ended December 31, 2023 and 2022 were as follows: Year Ended December 31, (in thousands) 2023 2022 Net cash used in operating activities $ (30,171 ) $ (39,011 ) Net cash used in investing activities (1,499 ) (10,164 ) Net cash provided by financing activities 42,163 17,249 Effect of foreign exchange rate changes on cash (4 ) (30 ) Net increase (decrease) in cash, cash equivalents and restricted cash $ 10,489 $ (31,956 ) Our primary use of cash in all periods presented was to fund our research and development, regulatory and other clinical trial costs, and general corporate expenditures.
Australia 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% and 25.00% for the years ended December 31, 2022 and 2021, respectively.
Australia 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% for the years ended December 31, 2023 and 2022. Clene Australia had no taxable income or provision for income taxes for the years ended December 31, 2023 and 2022.
For the years ended December 31, 2022 and 2021, the unobservable inputs were as follows: 2022 2021 Expected stock price volatility 89.57% – 99.77% 87.40% – 91.51% Risk-free interest rate 1.65% – 4.31% 0.72% – 1.34% Expected dividend yield 0.00 % 0.00 % Expected term of options (in years) 5.00 – 6.98 6.00 We estimate the fair value of restricted stock awards using a Monte Carlo valuation model to simulate the achievement of certain stock price milestones.
For the years ended December 31, 2023 and 2022, the unobservable inputs were as follows: Year Ended December 31, 2023 2022 Expected stock price volatility 96.22% –103.31 % 89.57% –99.77 % Risk-free interest rate 3.26% –4.66 % 1.65% –4.31 % Expected dividend yield 0.00 % 0.00 % Expected term of options (in years) 5.00 –6.43 5.00 –6.98 We estimate the fair value of restricted stock awards using a Monte Carlo valuation model to simulate the achievement of certain stock price milestones.
We anticipate that our research and development expenses will decrease in 2023 due to the completion of many of our ongoing clinical trials but will increase in future years as we advance our assets into Phase 3. Research and development costs are charged to operations as incurred.
We anticipate that our research and development expenses will decrease in early 2024 due to the completion of many of our ongoing clinical trials but will increase throughout 2024 and into future years as we advance our assets into Phase 3.
Net cash used in investing activities was $1.3 million for year ended December 31, 2021, which consisted of purchases of property and equipment. 80 Table of Contents Financing Activities Net cash provided by financing activities was $17.3 million for the year ended December 31, 2022, which primarily consisted of (i) proceeds from exercise of stock options of $0.3 million, (ii) proceeds from issuance of common stock, net of offering costs, of $11.5 million, and (iii) proceeds from the issuance of notes payable of $5.7 million; offset primarily by (iv) payment of finance lease obligations of $0.1 million, and (v) payment of notes payable issuance costs of $0.1 million.
Net cash provided by financing activities was $17.3 million for the year ended December 31, 2022, which consisted of (i) proceeds from exercise of stock options of $0.3 million, (ii) proceeds from issuance of common stock, net of offering costs, of $11.5 million, and (iii) proceeds from the issuance of notes payable of $5.7 million; partially offset by (iv) payments of finance lease obligations of $0.1 million and (v) payments of notes payable issuance costs of $0.1 million.
Research and development costs include payroll and personnel expenses, including salaries and related benefits and stock-based compensation expense for employees engaged in research and development functions; clinical trial supplies and materials to support our clinical trials; payments to CROs, principal investigators, and clinical trial sites; costs associated with preclinical activities; consulting costs; and allocated overhead, including rent, equipment, utilities, depreciation, insurance, and facilities maintenance costs.
Research and development costs consist primarily of payroll and personnel expenses for salaries, benefits, and stock-based compensation; supplies and materials expenses to support our clinical trials; payments to CROs, principal investigators, and clinical trial sites; costs of preclinical activities; consulting costs; and allocated overhead costs, including rent, equipment, utilities, depreciation, insurance, and facilities maintenance.
We consider the following estimates to be critical as they involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations. See Note 2 to our consolidated financial statements for a description of other significant accounting policies.
We consider the following estimates to be critical as they involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations.
We account for the convertible note as a single liability measured at its amortized cost. As of December 31, 2022 and 2021, the convertible note was carried at $4.8 million and $4.6 million, respectively.
We account for the convertible note as a single liability measured at its amortized cost. As of December 31, 2023 and 2022, the convertible note was carried at $5.3 million and $5.0 million, respectively.
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.
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.
Going Concern We incurred a loss from operations of $48.4 million and $50.0 million for the years ended December 31, 2022 and 2021, respectively. Our accumulated deficit was $193.2 million and $163.3 million as of December 31, 2022 and 2021.
Going Concern We incurred a loss from operations of $40.5 million and $48.4 million for the years ended December 31, 2023 and 2022, respectively. Our accumulated deficit was $242.7 million and $193.2 million as of December 31, 2023 and 2022.
We remeasure the liabilities at each reporting date and record the change in fair value as a component of other income (expense), net, in the consolidated statements of operations and comprehensive loss. We estimate the fair value using a Monte Carlo valuation model, which requires significant judgment.
We remeasure the liabilities at each reporting date and record the change in fair value as a component of other income (expense), net, in the consolidated statements of operations and comprehensive loss.
During the year ended December 31, 2022, we sold 358,769 shares of Common Stock under the ATM Facility, generated gross proceeds of $0.8 million, and paid commissions of $23,000.
During the year ended December 31, 2022, we sold 358,769 shares of Common Stock and generated gross proceeds of $0.8 million, and commissions paid to Canaccord were insignificant.
Operating Activities Net cash used in operating activities was $39.0 million for the year ended December 31, 2022, which resulted from a net loss of $29.9 million, adjusted for non-cash items totaling $(7.6) million and a net change in operating assets and liabilities of $(1.5) million.
Operating Activities Net cash used in operating activities was $30.2 million for the year ended December 31, 2023, which resulted from a net loss of $49.5 million, adjusted for non-cash items totaling $19.5 million and a net change in operating assets and liabilities of $0.2 million.
We reflect the appropriate trial expenses in the consolidated financial statements by matching the appropriate expenses with the period in which services and efforts are expended. In the event advance payments are made to a CRO, the payments will be recorded as a prepaid asset, which will be expensed over the period of time the contracted services are performed.
We reflect the appropriate clinical trial expenses in the consolidated financial statements by matching the appropriate expenses with the period in which services are performed. In the event advance payments are made to CROs, the payments are recorded as prepaid assets and expensed over the period in which services are performed.
As a result of this commitment, our pipeline of drug candidates has been advancing and expanding. Historically, substantially all of our research and development expenses relate to CNM-Au8, our lead asset, with the remainder spent on our CNM-ZnAg asset.
As a result of this commitment, our pipeline of drug candidates has been advancing, with substantially all our research and development expenses relating to CNM-Au8, our lead asset, with the remainder spent on our CNM-ZnAg asset. Our research and development expenses are affected by the scope and advancement of our existing product pipeline and the commencement of new drug programs.
The change in fair value of the Contingent Earn-outs has been recorded in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2022 and 2021. 74 Table of Contents Financial Overview Our results of operations, financial condition, and the period-to-period comparability of our financial results are principally affected by the following factors: Research and Development Expense The discovery and development of novel drug candidates require a significant investment of resources over a prolonged period of time, and a core part of our strategy is to continue making sustained investments in this area.
Financial Overview Our financial condition, results of operations, and the period-to-period comparability of our financial results are principally affected by the following factors: Research and Development Expense The discovery and development of novel drug candidates require a significant investment of resources over a prolonged period of time, and a core part of our strategy is to continue making sustained investments in this area.
Reverse Recapitalization with Tottenham and Clene Nanomedicine On December 30, 2020 (the “Closing Date”), Chelsea Worldwide Inc., our predecessor, consummated a business combination (the “Reverse Recapitalization”) by and among Clene Nanomedicine, Inc. (“Clene Nanomedicine”), Tottenham Acquisition I Limited (“Tottenham”), Chelsea Worldwide Inc. (“PubCo”), a Delaware corporation and wholly-owned subsidiary of Tottenham, Creative Worldwide Inc.
(“Clene Nanomedicine”) became a public company on December 30, 2020 (the “Closing Date”) when it completed a reverse recapitalization (the “Reverse Recapitalization”) with Tottenham Acquisition I Limited (“Tottenham”), and with Tottenham’s wholly-owned subsidiary and our predecessor, Chelsea Worldwide Inc., and Creative Worldwide Inc., a wholly-owned subsidiary of Chelsea Worldwide Inc.
Net cash provided by financing activities was $27.1 million for the year ended December 31, 2021, which primarily consisted of (i) proceeds from exercise of stock options of $0.4 million, (ii) proceeds from the issuance of notes payable of $20.0 million offset by payment of issuance costs of $0.5 million, and (iii) proceeds from the a private placement of common stock of $9.3 million, offset primarily by (iv) payment of finance lease obligations of $0.2 million and (v) payment of deferred offering costs of $1.9 million.
Financing Activities Net cash provided by financing activities was $42.2 million for the year ended December 31, 2023, which consisted of (i) proceeds from issuance of common stock and warrants, net of offering costs, of $42.1 million, and (ii) proceeds from the issuance of notes payable of $0.4 million; partially offset by (iii) payments of finance lease obligations of $0.1 million and (iv) payments of notes payable modification fees of $0.2 million.
Food and Drug Administration (“FDA”) and European Medicines Agency, ALS experts, and patient representatives to determine the proper path to support potential approval.
We plan to work closely with regulatory health authorities from the U.S. Food and Drug Administration (“FDA”), European Medicines Agency (“EMA”), ALS experts, and patient representatives to determine the proper path to support potential approval.
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.
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.
Based on our evaluation of these factors, we have not recorded income tax benefits for the net operating losses or for research and development tax credits or other deferred tax assets due to uncertainty of realizing benefits from these items. 83 Table of Contents Stock-Based Compensation We account for stock-based compensation arrangements using a fair value-based method for costs related to all share-based payments including stock options and stock awards.
Based on our evaluation of these factors, we have not recorded income tax benefits for the net operating losses or for research and development tax credits or other deferred tax assets due to uncertainty of realizing benefits from these items.
We classified the 2022 DHCD Loan as convertible notes payable in the consolidated balance sheets and did not separate the conversion option from the host contract as it did not meet the requirements for accounting as a derivative instrument. We account for the convertible note as a single liability measured at its amortized cost.
As of December 31, 2023 and 2022, the convertible note was carried at $4.9 million and $4.8 million, respectively. 96 Table of Contents We classified the 2022 DHCD Loan as convertible notes payable in the consolidated balance sheets and did not separate the conversion option from the host contract as it did not meet the requirements for accounting as a derivative instrument.
Clene Australia income tax benefit totaled $0 and $0.4 million for the years ended December 31, 2022 and 2021, respectively. We recorded other income of $2.6 million and $1.5 million for the years ended December 31, 2022 and 2021, respectively, for research and development tax credits pertaining to Clene Australia for the 2022 and 2021 tax years, respectively.
We recorded other income of $1.0 million and $3.1 million for the years ended December 31, 2023 and 2022, respectively, for research and development tax credits pertaining to Clene Australia for the 2023 and 2022 tax years, respectively. Netherlands Our wholly-owned subsidiary, Clene Netherlands B.V.
We anticipate these revenues to be small compared to our operating expenses and to the revenue we expect to generate from potential future sales of our drug candidates, for which we are currently conducting clinical trials. We incurred a loss from operations of $48.4 million and $50.0 million for the years ended December 31, 2022 and 2021, respectively.
We anticipate these revenues to be small compared to our operating expenses and to the revenue we expect to generate from potential future sales of our drug candidates, for which we are currently conducting clinical trials. Reverse Recapitalization Clene Nanomedicine, Inc.
The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided to us under such contracts.
Our clinical trial accrual process seeks to account for expenses resulting from obligations under contracts with CROs, consultants, and clinical sites in connection with conducting clinical trials. The financial terms of these contracts vary and may result in payment flows that do not match the periods over which materials or services are provided to us under such contracts.
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 our assets into Phase 3 and potential future approval. We expect to meet with the FDA in an end of Phase 2 meeting in the third quarter of 2023.
We anticipate enrollment concluding in the first half of 2024 with topline results available by the end of 2024. We plan to work closely with regulatory health authorities from the FDA and EMA, MS experts, and patient representatives to determine the proper path to advance CNM-Au8 into Phase 3 and potential future approval.
On the Closing Date, PubCo changed its name from Chelsea Worldwide Inc. to Clene Inc. and listed its shares of common stock, par value $0.0001 per share (“Common Stock”) on the Nasdaq Capital Market (“Nasdaq”) under the symbol “CLNN.” Earn-out Shares In connection with the Reverse Recapitalization, certain of Clene Nanomedicine’s common stockholders are entitled to receive earn-out payments (the “Clene Nanomedicine Contingent Earn-out”), and Tottenham’s former officers and directors and Norwich Investment Limited (collectively, the “Initial Stockholders”) are entitled to receive earn-out payments (the “Initial Stockholders Contingent Earn-out,” and both collectively the “Contingent Earn-outs”) based on achieving certain milestones.
On the Closing Date, Chelsea Worldwide Inc. changed its name to Clene Inc. and listed its shares of common stock, par value $0.0001 per share (“Common Stock”) on the Nasdaq Capital Market (“Nasdaq”) under the symbol “CLNN.” In connection with the Reverse Recapitalization, certain of Clene Nanomedicine’s common stockholders are entitled to receive earn-out payments (the “Clene Nanomedicine Contingent Earn-out”), and Tottenham’s former officers and directors and Norwich Investment Limited (collectively, the “Initial Stockholders”) are entitled to receive earn-out payments (the “Initial Stockholders Contingent Earn-out,” and both collectively the “Contingent Earn-outs”) based on achieving certain milestones. 85 Table of Contents Recent Developments of Our Clinical Programs Amyotrophic Lateral Sclerosis In December 2023, we announced a statistically significant reduction of plasma neurofilament light chain (“NfL”) levels in the Phase 2 HEALEY ALS Platform Trial from baseline to 76 weeks in patients randomized to CNM-Au8 30 mg compared to patients treated with placebo for 24 weeks prior to crossing over to CNM-Au8 treatment.
The changes in fair value were due to changes in the price of our Common Stock on Nasdaq and updates in the valuation model assumptions (see “Critical Accounting Estimates”); (v) a gain from a decrease in fair value of the common stock warrant liability related to the Avenue Warrant.
The changes in fair value were due to the change in price of our Common Stock on Nasdaq and updates in the valuation model assumptions (see “Critical Accounting Estimates” ). As of March 31, 2022, we reclassified Tranche 1 of the Original Avenue Warrant to additional paid-in capital.
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.
We expect to meet our short-term liquidity requirements primarily through cash on hand.
The net change in operating assets and liabilities was primarily attributable to the following: (a) increases in accounts payable and accrued liabilities of $1.3 million and $0.9 million, respectively, which in both cases was due to the timing of vendor invoicing and payments; and (b) an increase in prepaid expenses and other current assets of $0.7 million due to the timing of vendor invoicing and payments and timing of receipt of metals to be used in research and development, partially offset by a decrease in research and development tax credits receivable.
The net change in operating assets and liabilities was primarily attributable to the following: (a) a decrease in accounts receivable of $46,000 and a decrease in accounts payable of $1.5 million due to the timing of vendor invoicing and payments; (b) a decrease in prepaid expenses and other current assets of $2.0 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; (c) a decrease in accrued liabilities of $0.1 million primarily due to a decrease in accrued CRO and clinical fees, partially offset by an increase in accrued compensation and benefits and other accrued liabilities; and (d) a decrease in operating lease obligations of $0.6 million. 94 Table of Contents Net cash used in operating activities was $39.0 million for the year ended December 31, 2022, which resulted from a net loss of $29.9 million, adjusted for non-cash items totaling $7.6 million and a net change in operating assets and liabilities of $1.5 million.
General and Administrative Expense General and administrative expenses consist primarily of payroll and personnel expenses, including salaries and related benefits and stock-based compensation expense; professional fees for legal, accounting, tax, and information technology services; fees for directors' and officers’ insurance; expenses for business development activities and investor and public relations; utilities and facility expenses; travel expenses; rental fees; consulting fees; and other administrative expenses.
General and Administrative Expense General and administrative expenses consist primarily of payroll and personnel expenses for salaries, benefits, and stock-based compensation; fees for legal, accounting, tax, and information technology services; fees for directors’ and officers’ insurance; expenses for business development activities and investor and public relations; rent, utilities, and facility costs; travel costs; and consulting fees. 88 Table of Contents We anticipate that our general and administrative expenses in future periods will be contingent upon our discussions with the FDA, expected in the first half of 2024.
General and Administrative Expenses General and administrative expense for the years ended December 31, 2022 and 2021 was as follows: Year Ended December 31, Change (in thousands) 2022 2021 Dollars % Directors’ and officersʼ insurance $ 3,395 $ 3,719 $ (324 ) (9 )% Legal 557 1,518 (961 ) (63 )% Finance and accounting 773 3,183 (2,410 ) (76 )% Public and investor relations 927 887 40 5 % Personnel 4,649 3,530 1,119 32 % Stock-based compensation 5,248 7,553 (2,305 ) (31 )% Other 1,387 1,606 (219 ) (14 )% Total general and administrative $ 16,936 $ 21,996 $ (5,060 ) (23 )% The change in general and administrative expense was primarily due to the following: (i) a decrease in directors’ and officers’ insurance fees; (ii) a decrease in legal fees after completing the Reverse Recapitalization and subsequent registration statement filings with the SEC, decreased patent and trademark expenses, decreased fees related to financing and fundraising, and a decrease in other general corporate legal fees; (iii) a decrease in finance and accounting fees after completing the Reverse Recapitalization and subsequent filings with the SEC, including decreased fees from consultants and other financial vendors; decreased fees for various financial institutions, investment bankers, advisors, and auditors; partially offset by an increase in tax professional fees; (iv) an increase in fees related to our public and investor relations efforts; (v) an increase in personnel expenses, primarily due to our increased headcount, partially offset by a reduction in headcount during the fourth quarter of 2022; (vi) a decrease in stock-based compensation expense, primarily due to a decrease in stock-based compensation expense from restricted stock awards, partially offset by an increase in stock-based compensation expense from stock options; and (vii) a decrease in other expenses, primarily due a decrease in expenses related to business development, information technology, and office and professional expenses; partially offset by an increase in expenses related to corporate and liability insurance, travel, supplies and equipment, depreciation, and increased rent and utility expenses due to our newly-leased facility in Elkton, Maryland and our expanded facility in North East, Maryland.
General and Administrative Expenses General and administrative expense for the years ended December 31, 2023 and 2022 was as follows: Year Ended December 31, (in thousands) 2023 2022 Change Directors’ and officersʼ insurance $ 1,593 $ 3,395 (53 )% Legal 404 557 (27 )% Finance and accounting 1,317 773 70 % Public and investor relations 614 927 (34 )% Personnel 4,239 4,649 (9 )% Stock-based compensation 5,056 5,248 (4 )% Other 1,195 1,387 (14 )% Total general and administrative $ 14,418 $ 16,936 (15 )% The change in general and administrative expense was primarily due to the following: (i) a decrease in directors’ and officers’ insurance fees; (ii) a decrease in legal fees, primarily due to a decrease in general corporate legal fees, intellectual property fees, and legal fees related to financing and fundraising; 90 Table of Contents (iii) an increase in finance and accounting fees, primarily due to increased fees from auditors, consultants, advisors, and other financial vendors, partially offset by decreased tax fees; (iv) a decrease in fees related to our public and investor relations efforts; (v) a decrease in personnel expenses, primarily due to a reduction in headcount during the fourth quarter of 2022, partially offset by increased employee compensation during the second half of 2023; (vi) a decrease in stock-based compensation expense, primarily due to the timing of award grants, vesting, and forfeitures for general and administrative personnel, and our decreased headcount during 2023; and (vii) a decrease in other expenses, primarily due to a decrease in expenses related to supplies and equipment, facilities, corporate and liability insurance, information technology, travel, business development, and office and professional expenses; partially offset by increased depreciation expense.
Additional funds may be spent to initiate new clinical trials, at our discretion. Known obligations beyond the next twelve months include $27,000 and $7.5 million of payments under finance and operating lease obligations, respectively; and interest and principal repayment of notes payable of $23.2 million.
Additional funds may be spent to initiate new clinical trials, at our discretion. Known obligations beyond the next twelve months include $6.4 million of payments under operating lease obligations, and interest and principal repayment of notes payable of $9.1 million. We expect to meet our long-term liquidity requirements primarily through equity financing, debt financing, or other capital sources.
Results of Operations Our results of operations for the years ended December 31, 2022 and 2021 were as follows: Year Ended December 31, Change (in thousands) 2022 2021 Dollars % Product revenue $ 329 $ 570 $ (241 ) (42 )% Royalty revenue 144 153 (9 ) (6 )% Total revenue 473 723 (250 ) (35 )% Operating expenses: Cost of revenue 26 289 (263 ) (91 )% Research and development 31,920 28,416 3,504 12 % General and administrative 16,936 21,996 (5,060 ) (23 )% Total operating expenses 48,882 50,701 (1,819 ) (4 )% Loss from operations (48,409 ) (49,978 ) 1,569 (3 )% Total other income (expense), net 18,491 39,810 (21,319 ) (54 )% Net loss before income taxes (29,918 ) (10,168 ) (19,750 ) 194 % Income tax benefit — 428 (428 ) (100 )% Net loss $ (29,918 ) $ (9,740 ) $ (20,178 ) 207 % Revenue Product revenue totaled $0.3 million and $0.6 million for the years ended December 31, 2022 and 2021, respectively, in our Supplements segment related to (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.” During the years ended December 31, 2022 and 2021, changes in product revenue were due to the timing of purchases of Zinc Factor and Gold Factor by 4Life under the supply agreement.
Results of Operations Our results of operations for the years ended December 31, 2023 and 2022 were as follows: Year Ended December 31, (in thousands) 2023 2022 Change Revenue: Product revenue $ 498 $ 329 51 % Royalty revenue 156 144 8 % Total revenue 654 473 38 % Operating expenses: Cost of revenue 121 26 365 % Research and development 26,655 31,920 (16 )% General and administrative 14,418 16,936 (15 )% Total operating expenses 41,194 48,882 (16 )% Loss from operations (40,540 ) (48,409 ) (16 )% Total other income (expense), net (8,964 ) 18,491 * Net loss $ (49,504 ) $ (29,918 ) 65 % Revenue 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.
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, and our prospectus supplement relating to the Offering. 82 Table of Contents Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S.
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. Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S.
As of December 31, 2022 and 2021, the unobservable inputs were as follows: 2022 2021 Expected stock price volatility 115.00 % 105.00 % Risk-free interest rate 4.20 % 1.10 % Expected dividend yield 0.00 % 0.00 % Expected term (in years) 3.00 4.00 The change in fair value of the Clene Nanomedicine Contingent Earn-out resulted in gains of $15.8 million and $34.0 million for the years ended December 31, 2022 and 2021, respectively.
As of December 31, 2023 and 2022, the unobservable inputs were as follows: December 31, December 31, 2023 2022 Expected stock price volatility 115.00 % 115.00 % Risk-free interest rate 4.20 % 4.20 % Expected dividend yield 0.00 % 0.00 % Expected term (in years) 2.00 3.00 Convertible Notes Pursuant to the 2021 Avenue Loan, $5.0 million of the outstanding principal is subject to a conversion option.
Total Other Income (Expense), Net Total other income (expense), net, consists primarily of (i) changes in the fair value of our (a) common stock warrant liability and (b) Contingent Earn-outs, (ii) interest income and interest expense, (iii) interest income and expense resulting from changes in fair value of our notes payable, (iv) gains and losses on extinguishment of notes payable, (v) gains and losses on termination of leases, and (vi) the research and development tax credits and unrestricted grants. 75 Table of Contents We also received grants issued by non-government entities which require us to comply with conditions attached to the grants.
Total Other Income (Expense), Net Total other income (expense), net, consists primarily of (i) interest income and interest expense, (ii) gains and losses on termination of leases, (iii) commitment share expense from shares of Common Stock issued as a commitment fee, (iv) issuance costs allocated to liability-classified warrants, (v) a loss on initial issuance of equity from the fair value in excess of proceeds from a public equity offering, (vi) changes in the fair value of our (a) common stock warrant liabilities and (b) Contingent Earn-outs, (vii) research and development tax credits, unconditional grants, and conditional grants for which applicable conditions have been met, and (viii) realized gains and losses on foreign currency transactions and other miscellaneous income and expense items.
The change in fair value was due to the change in price of our Common Stock on Nasdaq, updates in the valuation model assumptions, and the extinguishment of the liability as of December 31, 2021; (vi) income due to research and development tax credits, which are recognized in amounts equal to the qualifying expenses incurred in each period multiplied by the applicable reimbursement percentage; and (vii) an increase in other income (expense), net, primarily due to interest income on cash, cash equivalents, and marketable securities and realized gains and losses on foreign currency transactions.
The changes were due to the price of our Common Stock on Nasdaq and updates in the valuation model assumptions at the end of each respective period (see “Critical Accounting Estimates” ); (viii) a decrease in research and development tax credits and unrestricted grants due to changes in the amount of qualifying research and development expenses incurred and changes in the reimbursement percentage; and (vii) other income during the years ended December 31, 2023 and 2022, primarily due to realized gains and losses on foreign currency transactions and other miscellaneous income and expense items.
The change in fair value of the Initial Stockholders Contingent Earn-out resulted in gains of $2.0 million and $3.6 million for the years ended December 31, 2022 and 2021, respectively. Convertible Notes Pursuant to the 2021 Avenue Loan, $5.0 million of the outstanding principal is subject to the Avenue Conversion Feature.
The change in fair value of the Initial Stockholders Contingent Earn-out resulted in a gain of $0.3 million and $2.0 million for the years ended December 31, 2023 and 2022, respectively. We estimate the fair value using a Monte Carlo valuation model, which requires significant judgment.
We do not know when or if we will be able to file a New Drug Application (“NDA”) with the FDA based on our accumulation of clinical evidence until we meet with the FDA in an end of Phase 2 meeting which is expected in the third quarter of 2023 after we receive the biomarker data and efficacy parameters that is forthcoming from the HEALEY ALS Platform Trial.
We do not know when or if we will be able to file a New Drug Application (“NDA”) with the FDA which would be based on the outcome of our future meetings with the FDA and our accumulation of clinical evidence. 86 Table of Contents Multiple Sclerosis In January 2024, we announced results from the open-label long-term extension (“LTE”) for the mITT population of our Phase 2 VISIONARY-MS clinical trial.
Significant non-cash items included the change in fair value of our (i) common stock warrant liability of $1.0 million, and (ii) Clene Nanomedicine and Initial Stockholders Contingent Earn-outs of $34.0 million and $3.6 million, respectively. The changes in fair value of these instruments were primarily driven by the decrease of the closing price of our Common Stock on Nasdaq.
Significant non-cash items included (i) depreciation expense of $1.7 million relating to laboratory and office equipment and leasehold improvements; (ii) non-cash lease expense of $0.4 million; (iii) commitment share expense of $0.4 million related to the shares of Common Stock issued to Lincoln Park as an initial fee for Lincoln Park’s commitment to purchase Common Stock under a purchase agreement with the Company; (iv) issuance costs of $0.3 million from a public equity offering allocated to liability-classified warrants; (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 $9.1 million; (vii) accretion of debt discount of $1.2 million; (viii) non-cash interest expense of $0.4 million; and (ix) changes in fair value of the Clene Nanomedicine and Initial Stockholders Contingent Earn-outs of $2.2 million and $0.3 million, respectively, primarily driven by the decrease in price of our Common Stock on Nasdaq; and (x) a change in fair value of our common stock warrant liabilities of $6.3 million, primarily driven by the decrease in price of our Common Stock on Nasdaq and changes in valuation model inputs.
Net cash used in operating activities was $34.6 million for the year ended December 31, 2021, which resulted from a net loss of $9.7 million, adjusted for non-cash items totaling $(25.9) million and a net change in operating assets and liabilities of $1.0 million.
Investing Activities Net cash used in investing activities was $1.5 million for the year ended December 31, 2023, which consisted of (i) purchases of marketable securities of $6.2 million and (ii) purchases of property and equipment of $0.3 million, offset primarily by (iii) proceeds from maturities of marketable securities of $5.0 million.
Total Other Income (Expense), Net Total other income (expense), net, for the years ended December 31, 2022 and 2021 was as follows: Year Ended December 31, Change (in thousands) 2022 2021 Dollars % Interest expense $ (3,296 ) $ (870 ) $ (2,426 ) (279 )% Gain on extinguishment of notes payable — 648 (648 ) (100 )% Gain on termination of lease 420 — 420 100 % Change in fair value of common stock warrant liability 169 983 (814 ) (83 )% Change in fair value of Clene Nanomedicine contingent earn-out liability 15,836 33,953 (18,117 ) (53 )% Change in fair value of Initial Stockholders contingent earn-out liability 2,026 3,589 (1,563 ) (44 )% Research and development tax credits and unrestricted grants 3,079 1,519 1,560 103 % Other income (expense), net 257 (12 ) 269 2,242 % Total other income (expense), net $ 18,491 $ 39,810 $ (21,319 ) (54 )% 77 Table of Contents The change in total other income (expense), net, was primarily due to the following: (i) an increase in interest expense primarily due to increasing interest rates and increased amortization of debt discount and debt issuance costs on notes payable; (ii) a gain on extinguishment of notes payable due to forgiveness of a Paycheck Protection Program loan (the “PPP Loan”) by the United States (“U.S.”) Small Business Administration during the year ended December 31, 2021; (iii) a gain on termination of lease due to the termination of an operating lease for office space for the year ended December 31, 2022; (iv) a gain from a decrease in fair value of the Clene Nanomedicine Contingent Earn-out liability and Initial Stockholders Contingent Earn-out liability.
Total Other Income (Expense), Net Total other income (expense), net, for the years ended December 31, 2023 and 2022 was as follows: Year Ended December 31, (in thousands) 2023 2022 Change Interest income $ 1,389 $ 225 517 % Interest expense (4,558 ) (3,296 ) 38 % Gain on termination of lease — 420 * Commitment share expense (402 ) — * Issuance costs for common stock warrant liabilities (333 ) — * Loss on initial issuance of equity (14,840 ) — * Change in fair value of common stock warrant liabilities 6,337 169 3,650 % Change in fair value of Clene Nanomedicine contingent earn-out liability 2,189 15,836 (86 )% Change in fair value of Initial Stockholders contingent earn-out liability 281 2,026 (86 )% Research and development tax credits and unrestricted grants 963 3,079 (69 )% Other income, net 10 32 (69 )% Total other income (expense), net $ (8,964 ) $ 18,491 * * Not meaningful.
As of December 31, 2022, the convertible note was carried at $5.0 million. As of December 31, 2021, the 2022 DHCD Loan was not outstanding. Income Taxes We account for uncertainty in income taxes by applying a two-step process to determine the amount of tax benefit to be recognized in the consolidated financial statements.
As of December 31, 2023, the unobservable inputs were as follows: December 31, 2023 Expected stock price volatility 100.00% –110.00 % Risk-free interest rate 4.13% –4.74 % Expected dividend yield 0.00 % Expected term (in years) 1.08 –2.46 Probability of NDA acceptance 20.00 % Probability of fundamental transaction 25.00 % Probability of dissolution 50.00 % Probability of other outcome 5.00 % 97 Table of Contents Income Taxes We account for uncertainty in income taxes by applying a two-step process to determine the amount of tax benefit to be recognized in the consolidated financial statements.
Removed
As of December 31, 2022 and 2021, we had an accumulated deficit of $193.2 million and $163.3 million, respectively. We expect to continue investing in product development and we expect to incur additional losses in the future to fund our operations and conduct product research and development.
Added
CNM-Au8 30 mg treatment reduced plasma NfL levels compared to baseline using a mixed model with repeat measures (“MMRM”), least squares (“LS”) mean change of the natural logarithm (“Ln”) of the plasma NfL values with the standard error (“SE”) for the 76-week change from baseline of plasma NfL: CNM-Au8 = -0.075 (SE: 0.053); placebo = +0.098 (SE: 0.056); CNM-Au8 30 mg versus original placebo difference = -0.173 (SE: 0.076), p=0.023.
Removed
We also recognize the need to raise additional capital to fully implement our business plan. The long-term continuation of our business plan is dependent upon the generation of sufficient revenues from our products to offset expenses and capital expenditures.
Added
Combined analyses of both CNM-Au8 doses (30 mg and 60 mg) also demonstrated nominally significant reductions in plasma NfL, CNM-Au8 versus placebo difference = -0.144 (SE: 0.066), p=0.029.
Removed
In the event that we do not generate sufficient revenues and are unable to obtain funding, we will be forced to delay, reduce, or eliminate some or all of our research and development programs, product portfolio expansion, or capital expenditures, which could adversely affect our business prospects, ability to meet long-term liquidity needs, or we may be unable to continue operations.
Added
We also announced the results of long-term survival analyses under the prespecified rank-preserving structural failure time model (“RPSFTM”) to account for the effects of CNM-Au8 in participants randomized to placebo who crossed-over to treatment with CNM-Au8.
Removed
Recent Developments of Our Clinical Programs CNM-Au8 for the Treatment of ALS We recently reported data from the open label extension (“OLE”) of our Phase 2 RESCUE-ALS clinical trial, which evaluated the efficacy, safety, pharmacokinetics, and pharmacodynamics of CNM-Au8 in patients with early symptomatic ALS.
Added
Under an assumption of a constant common treatment effect from CNM-Au8, treatment with CNM-Au8 demonstrated a 60% decreased risk of long-term all-cause mortality in participants originally randomized to treatment with CNM-Au8 compared to those originally randomized to placebo, after adjusting for the estimated benefit received after switching to CNM-Au8 (Cox hazard ratio=0.40, 95% CI: 0.19 to 0.85; p=0.017).
Removed
The data showed preserved ALS Functional Rating Scale Revised (“ALSFRS-R”) score in patients and delayed time to clinical worsening from the most recent 12-month data cut of the OLE, which represents a 12-month minimum follow-up for OLE participants from the last-patient last-visit from the 36-week double-blind treatment period through July 14, 2022.

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