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What changed in Clene Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Clene Inc.'s 2023 and 2024 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 2024 report.

+615 added−583 removedSource: 10-K (2025-03-24) vs 10-K (2024-03-13)

Top changes in Clene Inc.'s 2024 10-K

615 paragraphs added · 583 removed · 465 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

309 edited+102 added−60 removed194 unchanged
Biggest changeHowever, these treatments are acknowledged to have limited disease-modifying effects and do not substantially halt or reverse the progressive nature of the disease: Riluzole extends participant lifespans by an average of only two to three months; edaravone slows the decline of the ALSFRS-R score, a clinical measure of functional decline, in only a small subset of participants at an early stage of disease; tofersen slows decline of certain clinical outcomes in patients with SOD1-ALS, which represents only a small percentage of ALS cases; and sodium phenylbutyrate and taurursodiol slowed the decline of the ALSFRS-R score and had longer median overall survival in a limited exploratory analysis in a Phase 2 trial, but in a subsequent Phase 3 trial did not demonstrate a statistically significant treatment benefit as measured by the ALSFRS-R score and quality of life patient-reported outcome assessments, including overall survival and respiratory function.
Biggest changeHowever, these treatments are acknowledged to have limited disease-modifying effects and do not substantially halt or reverse the progressive nature of the disease: Riluzole extends participant lifespans by an average of only two to three months; edaravone slows the decline of the ALS Functional Rating Scale Revised (“ALSFRS-R”) score, a clinical measure of functional decline, in only a small subset of participants at an early stage of disease; and tofersen slows decline of certain clinical outcomes in ALS cases caused by mutations of the SOD1 gene, which represents only a small fraction of all ALS cases.
Our exceptional team brings extensive expertise and industry experience to their roles in leading the Company skillfully and effectively. The members of the executive team have established track records in scientific innovation, early and late-stage pharmaceutical development, commercialization, marketing, and the generation and protection of intellectual property.
Our exceptional team brings extensive expertise and industry experience to their roles in leading the Company skillfully and effectively. The members of our executive team have established track records in scientific innovation, early and late-stage pharmaceutical development, commercialization, marketing, and the generation and protection of intellectual property.
The trial was conducted over 36 weeks in 45 enrolled participants. The trial randomized participants 1:1 to treatment with CNM-Au8 at 30 mg daily or matching placebo on top of standard of care (riluzole). The primary endpoint of the trial was the percent change of the sum of Motor Unit Number Index (“MUNIX”) from baseline to week 36.
The trial was conducted over 36 weeks in 45 enrolled participants. The trial randomized participants 1:1 to treatment with CNM-Au8 at 30 mg daily or matching placebo on top of standard of care (riluzole). The primary endpoint was the percent change of the sum of Motor Unit Number Index (“MUNIX”) from baseline to week 36.
This relationship was observed both on an integrated basis across the two trials and independently in both REPAIR-PD and REPAIR-MS. TEAEs were rated as mild and transient. No SAEs were reported and no participants experienced clinically significant laboratory abnormalities.
This relationship was observed both on an integrated basis across the two trials and independently in both REPAIR-PD and REPAIR-MS. No SAEs were reported, TEAEs were rated as mild and transient, and no participants experienced clinically significant laboratory abnormalities.
A partial volume head coil was used in the same patient cohort to measure occipito-parietal levels of individual NAD + and NADH phosphorous metabolites to determine the ratio of NAD + /NADH.
A partial volume head coil was used in the same patient cohort to measure occipito-parietal levels of individual NAD + and NADH phosphorous metabolites to determine the ratio of NAD + /NADH.
(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.
(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, 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.
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.
Pending: BR 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, ES, SI, CH, TR, GB 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.
The independent results for REPAIR-PD demonstrated consistent trends toward improvement in the primary and secondary endpoints, although neither REPAIR-PD nor REPAIR-MS independently reached a level of statistical significance: the mean change in the brain NAD + /NADH ratio was 0.386 units (+6.8%) following 12-weeks of treatment with CNM-Au8 (p=0.1077, paired t-test), and the secondary endpoints of mean change from baseline in the NAD + fraction of the total NAD pool increased (p=0.1336, paired t-test) and NADH fraction of the total NAD pool decreased (p=0.1336, paired t-test).
The independent results for REPAIR-PD demonstrated consistent trends toward improvement in the primary and secondary endpoints, although neither REPAIR-PD nor REPAIR-MS independently reached a level of statistical significance: the mean change in the brain NAD + /NADH ratio was 0.386 units (+6.8%) following 12 weeks of treatment with CNM-Au8 (p=0.1077, paired t-test), and the secondary endpoint of mean change from baseline in the NAD + fraction of the total NAD pool increased (p=0.1336, paired t-test) and NADH fraction of the total NAD pool decreased (p=0.1336, paired t-test).
C,D, Neurotoxin (MPP + ) induced mitochondrial stress and death of dopaminergic neurons in primary E15 rat co-cultures is prevented by CNM-Au8 (green), as determined by TH + cell number (not shown), reduction of ROS as measured as by the fraction of dopaminergic ( “ TH ” ) cells fluorescing with CELLROX Green signal, a marker of cytosolic oxidizing environment (C), and increased mitochondrial membrane potential (Mitotracker Red CMXRos) (D).
Panel C-D, Neurotoxin (MPP + ) induced mitochondrial stress and death of dopaminergic neurons in primary E15 rat co-cultures is prevented by CNM-Au8 (green), as determined by TH + cell number (not shown), reduction of ROS as measured as by the fraction of dopaminergic ( “ TH ” ) cells fluorescing with CELLROX Green signal, a marker of cytosolic oxidizing environment (C), and increased mitochondrial membrane potential (Mitotracker Red CMXRos) (D).
Treatment of the glutamate- or A-beta-challenged motor neurons with CNM-Au8 significantly reduced the accumulation of TDP-43 aggregates in a dose-dependent manner. In addition to animal models, iPSCs have emerged as a new technique for neurodegenerative disease modeling using human-derived cells. iPSCs can be generated from human skin or blood samples, and then differentiated in vitro into astrocytes and motor neurons.
Treatment of the glutamate- or Aβ-challenged motor neurons with CNM-Au8 significantly reduced the accumulation of TDP-43 aggregates in a dose-dependent manner. In addition to animal models, iPSCs have emerged as a new technique for neurodegenerative disease modeling using human-derived cells. iPSCs can be generated from human skin or blood samples, and then differentiated in vitro into astrocytes and motor neurons.
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.
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; 39 Table of Contents ● 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 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.
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 gold nanoparticles produced using our electrochemistry manufacturing platform.
C, the rate of decay of the NADH absorbance peak is greater for CNM-Au8 than it is for citrate-reduced gold, nanoparticles of 10 nm (orange) and 30 nm (red) diameters (purchased from the National Institute of Standards and Technology), indicating that CNM-Au8 has a catalytic rate at least three-fold higher than National Institute of Standards and Technology comparators under the same reaction conditions.
Panel C, the rate of decay of the NADH absorbance peak is greater for CNM-Au8 than it is for citrate-reduced gold, nanoparticles of 10 nm (orange) and 30 nm (red) diameters (purchased from the National Institute of Standards and Technology), indicating that CNM-Au8 has a catalytic rate at least three-fold higher than National Institute of Standards and Technology comparators under the same reaction conditions.
CNM-Au8 30 mg treatment reduced plasma NfL levels compared to baseline using a mixed model with repeat measures (“MMRM”), LS means on a Ln scale 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.
CNM-Au8 30 mg treatment reduced plasma NfL levels compared to baseline using a mixed model with repeat measures (“MMRM”), LS means on a Ln scale for the 76-week change from baseline: 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.
One-way ANOVA, corrected for multiple comparisons was used to compare the mean of each treatment group of MPP with CNM-Au8 treatment to the mean of the MPP (4 μ M) alone treatment group; a statistically significant difference between each CNM-Au8 treatment group and MPP alone is denoted by asterisks: *p “ Control ” group is included to demonstrate the significant effect of MPP treatment to increase levels of ROS in TH neurons in Panel C and reduce mitochondrial membrane potential in Panel D, which was not included in the ANOVA analysis. 14 Table of Contents Previous drug development efforts in the neurodegenerative disease space have targeted misfolded protein aggregates as toxic drivers of disease; for example, alpha-synuclein in PD, amyloid beta in Alzheimer’s Disease, and TAR DNA binding protein 43 (“TDP-43”) in ALS.
One-way ANOVA, corrected for multiple comparisons was used to compare the mean of each treatment group of MPP with CNM-Au8 treatment to the mean of the MPP (4μM) alone treatment group; a statistically significant difference between each CNM-Au8 treatment group and MPP alone is denoted by asterisks: *p “ Control ” group is included to demonstrate the significant effect of MPP treatment to increase levels of ROS in TH neurons in Panel C and reduce mitochondrial membrane potential in Panel D, which was not included in the ANOVA analysis. 12 Table of Contents Previous drug development efforts in the neurodegenerative disease space have targeted misfolded protein aggregates as toxic drivers of disease; for example, TAR DNA binding protein 43 (“TDP-43”) in ALS, alpha-synuclein in PD, and amyloid beta in Alzheimer’s disease.
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.
Failure to strictly 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.
A, The NAD-NADH reduction-oxidation couple plays a key role in both ATP-generating reactions, glycolysis and mitochondrial electron transport chain oxidative phosphorylation. B, Ultraviolet-visible light spectroscopy was used to show the catalytic activity of CNM-Au8 with time.
Panel A, The NAD-NADH reduction-oxidation couple plays a key role in both ATP-generating reactions, glycolysis and mitochondrial electron transport chain oxidative phosphorylation. Panel B, Ultraviolet-visible light spectroscopy was used to show the catalytic activity of CNM-Au8 with time.
D, Catalytic rate of CNM-Au8 is demonstrably superior to several commercially available gold nanoparticles. Sigma Aldrich provides reactant-free, “ citrate reduced ” gold nanoparticles, in which extra procedures are used to clean the surfaces of reactants. “ Citrate ” gold nanoparticles may still have residual reactants present in the suspensions.
Panel D, Catalytic rate of CNM-Au8 is demonstrably superior to several commercially available gold nanoparticles. Sigma Aldrich provides reactant-free, “ citrate reduced ” gold nanoparticles, in which extra procedures are used to clean the surfaces of reactants. “ Citrate ” gold nanoparticles may still have residual reactants present in the suspensions.
Fox Foundation, and the National Institute of Neurological Disorders and Stroke, a division of the National Institute of Health. The grants include the following terms: ● National Multiple Sclerosis Society . ○ We received a grant of $0.4 million in September 2019 for biomarker analyses related to our VISIONARY-MS clinical trial.
Fox Foundation, and the National Institute of Neurological Disorders and Stroke, a division of the National Institutes of Health. The grants include the following terms: ● National Multiple Sclerosis Society . ○ We received a grant of $0.4 million in September 2019 for biomarker analyses related to our VISIONARY-MS clinical trial.
In the event of a recall or an inquiry regarding a potentially illegitimate product, manufacturers must be able to provide information regarding the transaction history and transaction information of their products. Violations of the DSCSA may result in fines or imprisonment. In addition, many states regulate manufacturers and enforce recordkeeping and licensure requirements.
In the event of a recall or an inquiry regarding a potentially illegitimate product, manufacturers must be able to provide information regarding the transaction history and transaction information of their products. Violations of the DSCSA may result in fines or imprisonment. In addition, many states regulate manufacturers and distributors and enforce recordkeeping and licensure requirements.
(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.
(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 precursor cells demonstrated that multiple transcripts for known myelination genes are upregulated, and that glycolytic activity and ATP production are also increased.
Our biological science discovery team collaborates with our research engineering team to refine our CSN therapeutic candidate selection characteristics to optimize their biological effects. Our biological science discover team is led by an experienced research scientist who is a medical doctor and has a PhD in molecular science. Nonclinical Development.
Our biological science discovery team collaborates with our research engineering team to refine our CSN therapeutic candidate selection characteristics to optimize their biological effects. Our biological science discovery team is led by an experienced research scientist who is a medical doctor and has a PhD in molecular science. Nonclinical Development.
Neuronal energetic failure underlies PD, as evidenced by the observed impaired mitochondrial and lysosomal functioning, neuronal sensitivity to glutamate toxicity, accumulation of oxidative stress, autophagic failure in clearing misfolded proteins, and loss of synapse integrity associated with this disease.
Neuronal energetic failure underlies PD, as evidenced by the observed impaired mitochondrial and lysosomal functioning, neuronal sensitivity to glutamate toxicity, accumulation of oxidative stress, autophagic failure in clearing misfolded proteins, and loss of synapse integrity associated with the disease.
The federal false claims and civil monetary penalty laws, including the False Claims Act, which imposes significant penalties and can be enforced by private citizens through civil qui tam actions, prohibit any person or entity from, among other things, knowingly presenting, or causing to be presented, a false or fraudulent claim for payment to, or approval by, the federal government, including federal healthcare programs, such as Medicare and Medicaid, knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government, or knowingly making a false statement to improperly avoid, decrease or conceal an obligation to pay money to the federal government.
The federal false claims and civil monetary penalty laws, including the False Claims Act that imposes significant penalties and can be enforced by private citizens through civil qui tam actions, prohibit any person or entity from, among other things, knowingly presenting, or causing to be presented, a false or fraudulent claim for payment to, or approval by, the federal government, including federal healthcare programs, such as Medicare and Medicaid; knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government; or knowingly making a false statement to improperly avoid, decrease or conceal an obligation to pay money to the federal government.
Unlike traditional pharmacological approaches, which are limited to single targets or specific signaling pathways, our technology platform has produced metallic nanocrystals that are beneficial through multi-modal activities in multiple cell types across multiple diseases.
Unlike traditional pharmacological approaches, which are limited to single targets or specific signaling pathways, our platform has produced metallic nanocrystals that are beneficial through multi-modal activities in multiple cell types across multiple diseases.
Treatment with CNM-Au8 was also associated with statistically significant and directional trends across all prespecified time to clinical worsening event analyses (not adjusted for multiple comparisons), including (i) 98% decreased risk of death or permanently assisted ventilation (p=0.028), (ii) 95% decreased risk of death (p=0.053), (iii) 74% decreased risk of feeding tube placement (p=0.035), (iv) 63% decreased risk of assisted ventilation (p=0.058), (v) 84% decreased risk of ALS-related hospitalization (p=0.107), and (vi) 69% decreased risk of all-cause hospitalization (p=0.065).
CNM-Au8 treatment was also associated with statistically significant and directional trends across all prespecified time to clinical worsening event analyses (not adjusted for multiple comparisons), including (i) 98% decreased risk of death or PAV (p=0.028), (ii) 95% decreased risk of death (p=0.053), (iii) 74% decreased risk of feeding tube placement (p=0.035), (iv) 63% decreased risk of assisted ventilation (p=0.058), (v) 84% decreased risk of ALS-related hospitalization (p=0.107), and (vi) 69% decreased risk of all-cause hospitalization (p=0.065).
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and its implementing regulations, imposes requirements relating to the privacy, security and transmission of individually identifiable health information.
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and its implementing regulations, imposes requirements relating to the privacy, security and transmission of certain individually identifiable health information.
The flow of conditioned water is controlled, and the electrodes are continuously monitored and controlled by computerized, automated controllers. ● The electrodes are slowly advanced at a nominal rate to ensure that conditioned water is exposed to the same electrochemical processing conditions to ensure batch-to-batch reproducibility, thus maintaining consistent size and shape of nanocrystals in each nanocrystal suspension. ● In-process API containing elemental nanocrystals is continuously produced and collected into large containers. ● The nominal concentration of active drug ingredients is achieved by treating in-process API with a proprietary concentration procedure. ● The concentrated nanocrystal suspension is validated to ensure it adheres to physiochemical release specifications. ● The concentrated nanocrystal suspension is subsequently filtered to remove any microbiological contaminants and volumetrically filled into single unit containers.
The flow of conditioned water is controlled, and the electrodes are continuously monitored and controlled by computerized, automated controllers. ● The electrodes are slowly advanced at a nominal rate to ensure that conditioned water is exposed to the same electrochemical processing conditions to ensure batch-to-batch reproducibility, thus maintaining consistent size and shape of nanocrystals in each nanocrystal suspension. ● In-process API containing elemental nanocrystals is continuously produced and collected into large containers. 36 Table of Contents ● The nominal concentration of active drug ingredients is achieved by treating in-process API with a proprietary concentration procedure. ● The concentrated nanocrystal suspension is validated to ensure it adheres to physiochemical release specifications. ● The concentrated nanocrystal suspension is subsequently filtered to remove any microbiological contaminants and volumetrically filled into single unit containers.
Supportive sensitivity analyses incorporating baseline neurofilament light chain (“NfL”) levels were similarly robust and resulted in increased effect sizes and smaller nominal p-values in the same “within regimen” analyses. In June 2023, we announced a statistically significant reduction of plasma NfL levels across all CNM-Au8 (Regimen C) participants compared to placebo (CNM-Au8 or placebo, n=161).
Supportive sensitivity analyses incorporating baseline neurofilament light chain (“NfL”) levels were similarly robust and resulted in increased effect sizes and smaller nominal p-values in the same “within regimen” analyses. In June 2023, we announced a statistically significant reduction of plasma NfL across all CNM-Au8 participants compared to placebo (CNM-Au8 or placebo, n=161).
For example, our clinical research, sales, marketing and scientific/educational grant programs have to comply with the anti-fraud and abuse provisions of the Social Security Act (such as the Anti-Kickback Statute), the False Claims Act, the anti-fraud provisions of and the privacy and security provisions of regulations implementing the Health Insurance Portability and Accountability Act (“HIPAA”), the Drug Supply Chain Security Act (“DSCSA”), and similar state laws, each as amended, as applicable.
For example, our clinical research, sales, marketing and scientific/educational grant programs have to comply with the anti-fraud and abuse provisions of the Social Security Act (such as the Anti-Kickback Statute), the False Claims Act, federal health care anti-fraud provisions, the privacy and security provisions of regulations implementing the Health Insurance Portability and Accountability Act (“HIPAA”), the Drug Supply Chain Security Act (“DSCSA”), and similar state laws, each as amended, as applicable.
Anti-oxidative activity for CNM-Au8 has been demonstrated in primary mouse OL cultures, in which basal levels of ROS were reduced with treatment (Fig. 5C). In a PD in vitro model, ROS generated by treating primary rodent dopaminergic cells with the neurotoxin 1-methyl-4-phenylpyridinium (“MPP”) was lowered in response to CNM-Au8 treatment in the presence of MPP (Fig. 5D).
Anti-oxidative activity for CNM-Au8 has been demonstrated in primary mouse OL cultures, in which basal levels of ROS were reduced with treatment (Figure 5C). In a PD in vitro model, ROS generated by treating primary rodent dopaminergic cells with the neurotoxin 1-methyl-4-phenylpyridinium (“MPP”) was lowered in response to CNM-Au8 treatment in the presence of MPP (Figure 5D).
Additional sensitivity analyses showed consistent reduction in plasma NfL levels versus placebo in specific populations generally considered at greater risk of ALS disease progression, including: ● Faster progressors (baseline pre-treatment ALSFRS-R slope >0.45 points/month ( post hoc , n=107); difference of LS means on a Ln scale (SE) = -0.144 (0.058); p=0.014. ● Definite or probable ALS diagnosis per El Escorial criteria ( post hoc , n=125); difference of LS means on a Ln scale (SE) = -0.124 (0.054); p=0.023. ● Higher mortality risk (baseline plasma NfL > median, post hoc , n=79); difference of LS means on a Ln scale (SE) = -0.150 (0.068); p=0.031.
Additional sensitivity analyses showed consistent reduction in plasma NfL levels versus placebo in specific populations generally considered at greater risk of ALS disease progression, including: ● Faster progressors (baseline pre-treatment ALSFRS-R slope >0.45 points/month ( post hoc , n=107) with the NfL difference of LS means on a Ln scale (SE) = -0.144 (0.058), p=0.014; ● Definite or probable ALS diagnosis per El Escorial criteria ( post hoc , n=125) with the NfL difference of LS means on a Ln scale (SE) = -0.124 (0.054), p=0.023; and ● Higher mortality risk (baseline plasma NfL > median, post hoc , n=79) with the NfL difference of LS means on a Ln scale (SE) = -0.150 (0.068), p=0.031.
Like the Anti-Kickback Statute, the intent standard for certain healthcare fraud statutes under HIPAA does not require actual knowledge of the statute or specific intent to violate it in order to have committed a violation. We may be subject to data privacy and security regulations by both the federal government and the states in which we conduct our business.
Like the Anti-Kickback Statute, the intent standard for certain federal healthcare fraud statutes does not require actual knowledge of the statute or specific intent to violate it in order to have committed a violation. We may be subject to data privacy and security regulations by both the federal government and the states in which we conduct our business.
Clinical Development of CNM-Au8 as a Disease-Modifying Drug for ALS Orphan Drug Status for ALS The FDA granted orphan drug designation to CNM-Au8 for the treatment of ALS in May 2019.
Clinical Development of CNM-Au8 as a Disease-Modifying Therapeutic for ALS Orphan Drug Status for ALS The FDA granted orphan drug designation to CNM-Au8 for the treatment of ALS in May 2019.
Amyotrophic Lateral Sclerosis ALS Market Opportunities ALS is the most prevalent adult-onset, progressive, and fatal neurodegenerative disorder of the neuromuscular system, affecting approximately 30,000 patients in the U.S. and over 200,000 patients worldwide, with an average life expectancy of only three to five years after initial diagnosis.
Amyotrophic Lateral Sclerosis ALS Market Opportunity ALS is the most prevalent adult-onset, progressive, and fatal neurodegenerative disorder of the neuromuscular system, affecting approximately 30,000 patients in the U.S. and over 200,000 patients worldwide, with an average life expectancy of only three to five years after initial diagnosis.
For example, quantitation of the number of myelinated versus unmyelinated axons in 587 transmission electron microscope images, averaging 84 images per treatment group (with 15 mice per treatment group, 7 treatment groups total), demonstrated a statistically significant recovery of remyelinated axons in therapeutically treated animals who were dosed with CNM-Au8 by gavage compared to vehicle treated, cuprizone-fed controls (p in vitro and in vivo experiments reported in Robinson et al (2020). 22 Table of Contents Figure 7.
For example, quantitation of the number of myelinated versus unmyelinated axons in 587 transmission electron microscope images, averaging 84 images per treatment group (with 15 mice per treatment group, 7 treatment groups total), demonstrated a statistically significant recovery of remyelinated axons in therapeutically treated animals who were dosed with CNM-Au8 by gavage compared to vehicle treated, cuprizone-fed controls (p in vitro and in vivo experiments reported in Robinson et al (2020). 26 Table of Contents Figure 9.
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
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. 49 Table of Contents
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 Pipeline Our CSN therapeutic candidates aim to address high unmet medical needs in several 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 .
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%).
All doses used in the trial 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%).
The term remuneration has been interpreted broadly to include anything of value. The Anti-Kickback Statute has been interpreted to apply to arrangements between therapeutic product manufacturers and prescribers, purchasers, and formulary managers. A number of statutory exceptions and regulatory safe harbors exist to protect certain activities from prosecution.
The term remuneration has been interpreted broadly to include anything of value. The Anti-Kickback Statute has been interpreted to apply, without limitation, to arrangements between therapeutic product manufacturers and prescribers, purchasers, and formulary managers. A number of statutory exceptions and regulatory safe harbors exist to protect certain activities from prosecution.
A seven-day human tolerability study of CNM-ZnAg was previously conducted by an antecedent company to determine the safety and tolerability in 40 healthy human volunteers. No self-reported adverse events occurred and there were no safety findings associated with administration of the dietary supplement.
A seven-day human tolerability study of CNM-ZnAg was previously conducted by an antecedent company to determine the safety and tolerability in 40 healthy human volunteers. No self-reported adverse events occurred and there were no safety findings associated with administration of CNM-ZnAg.
In so doing, we are establishing new classes of nanotherapeutics with the potential to address some of the most serious diseases affecting human health. Strategy and Leadership Our management team is key to the successful execution of this strategic plan and fulfillment of our business model.
In so doing, we are establishing new classes of nanotherapeutics with the potential to address some of the most serious diseases affecting human health. Our Team and Strategy Our management team is key to the successful execution of our strategic plan and fulfillment of our business model.
In autopsied brains from MS patients, OL precursor cells near MS lesions displayed impaired mitochondrial complex activity and other energetic deficits. These energetic deficits play key roles in MS disease progression. CNM-Au8 is uniquely designed to directly address these important pathophysiological mechanisms.
In autopsied brains from MS patients, OL precursor cells near MS lesions displayed impaired mitochondrial complex activity and other energetic deficits. These energetic deficits play key roles in MS disease progression. CNM-Au8 is uniquely designed to directly address these core pathophysiological mechanisms.
REPAIR-PD was conducted at the University of Texas Southwestern, a center with specialized capabilities for conducting and analyzing 7T 31 P-MRS imaging studies, and was conducted in conjunction with the REPAIR-MS trial, with a pre-specified integrated analyses of both trials performed.
REPAIR-PD was conducted at the University of Texas Southwestern, a center with specialized capabilities for conducting and analyzing 7T 31 P-MRS imaging studies, and was conducted in conjunction with the REPAIR-MS trial (discussed above), with a pre-specified integrated analyses of both trials performed.
Our innovation of CSN therapeutic candidates places us at the forefront of novel drug development for a host of high impact, high unmet need human diseases. As we lead the development of CSN therapeutics, our business strategy can be encapsulated by the following: ● First mover advantage .
Our innovation of CSN therapeutics places us at the forefront of novel drug development for a host of high impact, high unmet need human diseases. As we lead the development of CSN therapeutics, our business strategy can be encapsulated by the following: ● First mover advantage .
Potential Advantages of CNM-Au8 for ALS We believe that CNM-Au8 has the potential to be a first-in-class disease modifying nanotherapeutic drug for ALS. In a human induced pluripotent stem cell (“iPSC”) model of ALS, CNM-Au8 demonstrated clearly superior human motor neuron protection compared to riluzole.
Potential Advantages of CNM-Au8 for ALS We believe CNM-Au8 has the potential to be a first-in-class disease modifying nanotherapeutic for ALS. In a human induced pluripotent stem cell (“iPSC”) model of ALS, CNM-Au8 demonstrated clearly superior human motor neuron protection compared to riluzole.
Department of Health and Human Services (“HHS”), as well as other divisions of HHS (such as the Office of Inspector General, Office for Civil Rights and the Health Resources and Service Administration), the U.S. Department of Justice (“DOJ”) and individual U.S. Attorney offices within the DOJ, and state and local governments.
Department of Health and Human Services (“HHS”), as well as other divisions of HHS (such as the Office of Inspector General, Office for Civil Rights and the Health Resources and Service Administration), the U.S. Department of Justice (“DOJ”) and individual U.S. Attorney offices within the DOJ, and state and local governments and regulatory agencies.
These dietary supplements can vary greatly and include nanocrystals of varying composition, shapes and sizes as well as ionic solutions with diverse metallic constituents. 7 Table of Contents Dietary supplements are marketed and distributed through our wholly owned subsidiary, dOrbital, Inc.
These dietary supplements can vary greatly and include nanocrystals of varying composition, shapes and sizes, as well as ionic solutions with diverse metallic constituents. 5 Table of Contents Dietary supplements are marketed and distributed through our wholly owned subsidiary, dOrbital, Inc.
OL precursor cells are known to be present near MS lesions and can play a role in remyelination, but studies have shown that these cells are energetically compromised and remyelination is suboptimal in most central nervous system lesions. Energetic deficits have been noted in the brains of living patients with MS using 31 Phosphorus magnetic resonance spectroscopy (“ 31 P-MRS”).
OL precursor cells are known to be present near MS lesions and can play a role in remyelination, but studies have shown that these cells are energetically compromised and remyelination is suboptimal in most central nervous system lesions. 25 Table of Contents Energetic deficits have been noted in the brains of patients living with MS using 31 phosphorus magnetic resonance spectroscopy (“ 31 P-MRS”).
Remyelination Summary Figure 7. A summary of myelinating activities of CNM-Au8 . Top row, Left: illustration of the demyelination (red) of a neuron ’ s axon (yellow) that occurs in MS. Right: Illustration of restored myelination along the axon (blue) provided by the OL (blue cell).
Remyelination Summary Figure 9. A summary of myelinating activities of CNM-Au8 . Top row: Left: illustration of the demyelination (red) of a neuron ’ s axon (yellow) that occurs in MS; Right: Illustration of restored myelination along the axon (blue) provided by the OL (blue cell).
These studies independently demonstrated that CNM-Au8 treatment has robust neuroprotective properties in preclinical models of PD. 27 Table of Contents Clinical Development of CNM-Au8 as a Disease-Modifying Drug for PD REPAIR-PD REPAIR-PD is a Phase 2, single-center, active-only, sequential group study to demonstrate central nervous system target engagement by examining the brain metabolic effects, safety, pharmacokinetics and pharmacodynamics of orally-delivered CNM-Au8 in patients who have been diagnosed with PD in vivo within three years of screening.
These studies independently demonstrated that CNM-Au8 treatment has robust neuroprotective properties in preclinical models of PD. 31 Table of Contents Clinical Development of CNM-Au8 as a Disease-Modifying Therapeutic for PD REPAIR-PD REPAIR-PD is a Phase 2, single-center, active-only, sequential group study to demonstrate central nervous system target engagement by examining the brain metabolic effects, safety, pharmacokinetics and pharmacodynamics of orally-delivered CNM-Au8 in patients who have been diagnosed with PD in vivo within three years of screening.
In a pooled analysis of the HEALEY ALS Platform Trial and RESCUE-ALS, participants originally randomized to CNM-Au8 30 mg (n=82) demonstrated a statistically significant 59% decreased risk of death compared to PRO-ACT matched placebo patients through long-term follow-up (covariate adjusted hazard ratio=0.406, 95% CI: 0.220 to 0.749, p=0.004).
In a pooled analysis of the HEALEY ALS Platform Trial and RESCUE-ALS, participants originally randomized to CNM-Au8 30 mg (n=82) demonstrated a statistically significant 59% decreased risk of death compared to PRO-ACT matched placebo patients through long-term follow-up (covariate adjusted HR: 0.406, 95% CI: 0.220 to 0.749, p=0.004).
Exploratory mf-VEP results included all participants with recorded VEP data (n=64) and demonstrated (i) mf-VEP amplitude percent change in the least affected eye at baseline (week 48 LS mean difference, 9.7%, 95% CI: 3.1% to 16.3%, p=0.0047); (ii) mf-VEP amplitude percent change in the most affected eye at baseline (week 48 LS mean difference, 6.1%, 95% CI: -0.6% to 12.7%, p=0.0730); and (iii) mf-VEP amplitude percent change across both eyes (week 48 LS mean difference, 7.9%, 95% CI: 1.4% to 14.4%, p=0.0184).
Exploratory mf-VEP results included all participants with recorded VEP data (n=64) and demonstrated: ● mf-VEP amplitude percent change in the least affected eye at baseline (week 48 LS mean difference, 9.7%, 95% CI: 3.1% to 16.3%, p=0.0047). ● mf-VEP amplitude percent change in the most affected eye at baseline (week 48 LS mean difference, 6.1%, 95% CI: -0.6% to 12.7%, p=0.0730). ● mf-VEP amplitude percent change across both eyes (week 48 LS mean difference, 7.9%, 95% CI: 1.4% to 14.4%, p=0.0184).
HEALEY ALS Platform Trial—Open Label Extension In September 2023, we announced long-term survival data from the OLE phase of the HEALEY ALS Platform Trial for patients treated with CNM-Au8 30 mg for up to 133 weeks (n=59).
HEALEY ALS Platform Trial—Open Label Extension In September 2023, we announced long-term survival data from the HEALEY ALS Platform Trial OLE for patients treated with CNM-Au8 30 mg for up to 133 weeks (n=59).
(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.
(3), AE, AU (6), BR, CA, CN, ID, IN, IL, JP (4), KR (3), MX (2), PH, RU, SG (3); CH, DE, DK, ES, FI, FR, GB, IE, IT, NL, NO, SE Pending: MX, PH, U.S.
These post hoc results showed a statistically significant 49% decreased risk of death for the covariate risk-adjusted analyses compared to matched placebo patients through long-term follow-up from the largest U.S. clinical database of previous ALS trials, PRO-ACT (covariate adjusted hazard ratio=0.510, 95% CI: 0.263 to 0.987, p=0.046).
These post hoc results showed a statistically significant 49% decreased risk of death for the covariate risk-adjusted analyses compared to matched placebo patients through long-term follow-up from the largest U.S. clinical database of previous ALS trials, PRO-ACT (covariate adjusted HR: 0.510, 95% CI: 0.263 to 0.987, p=0.046).
Currently available DMTs for the treatment of MS include: Injectable medications , Avonex (interferon beta-1a), Betaseron (interferon beta-1b), Extavia (interferon beta-1b), Copaxone (glatiramer acetate), Plegridy (peginterferon beta-1a), Rebif (interferon beta-1a), Glatiramer acetate generic equivalent (Glatiramer Acetate Injection), Glatopa (glatiramer acetate); Oral medications , Aubagio (teriflunomide), Gilenya (fingolimod), Tecfidera (dimethyl fumarate), Mavenclad (cladribine), Mayzent (siponimod); Infusion medications , Lemtrada (alemtuzumab), Novantrone (mitoxantrone), Ocrevus (ocrelizumab), and Tysabri (natalizumab).
Currently available DMTs for MS include: Injectable medications , Avonex (interferon beta-1a), Betaseron (interferon beta-1b), Extavia (interferon beta-1b), Copaxone (glatiramer acetate), Plegridy (peginterferon beta-1a), Rebif (interferon beta-1a), Glatiramer acetate generic equivalent (Glatiramer Acetate Injection), and Glatopa (glatiramer acetate); Oral medications , Aubagio (teriflunomide), Gilenya (fingolimod), Tecfidera (dimethyl fumarate), Mavenclad (cladribine), and Mayzent (siponimod); Infusion medications , Lemtrada (alemtuzumab), Novantrone (mitoxantrone), Ocrevus (ocrelizumab), and Tysabri (natalizumab).
Furthermore, animals that were provided with CNM-Au8 only after full demyelination (five complete weeks of cuprizone treatment) had taken place displayed evidence of higher levels of mature myelin marker expression in their brains than vehicle controls, indicating that CNM-Au8 was not blocking the action of cuprizone but rather inducing recovery by stimulating the differentiation of OLs.
Furthermore, animals that were provided with CNM-Au8 only after full demyelination had occurred (five complete weeks of cuprizone treatment) displayed evidence of higher levels of mature myelin marker expression in their brains than vehicle controls, indicating that CNM-Au8 was not blocking the action of cuprizone but rather inducing recovery by stimulating the differentiation of OLs.
Our in-house research and development team operates functionally through four sub-teams: (1) research engineering team, (2) biological science discovery team, (3) nonclinical development team, and (4) clinical development team, which work collaboratively to ensure the success of our research and development efforts. Research Engineering.
Our in-house research and development team operates functionally through four sub-teams: (1) research engineering, (2) biological science discovery, (3) nonclinical development, and (4) clinical development, who work collaboratively to ensure the success of our research and development efforts. Research Engineering.
We will own all intellectual property rights from grant related activities. ● The Michael J. Fox Foundation . We received a grant of $0.5 million in January 2021 for preclinical iPSC and animal model studies to assess CNM-Au8 for the treatment of PD. Funding was based upon the achievement of certain analytical milestones.
We will own all intellectual property rights from grant related activities. 35 Table of Contents ● The Michael J. Fox Foundation . We received a grant of $0.5 million in January 2021 for preclinical iPSC and animal model studies to assess CNM-Au8 for the treatment of PD. Funding was based upon the achievement of certain analytical milestones.
Nanocatalytic activity of clean-surfaced, faceted nanocrystalline gold enhances remyelination in animal models of multiple sclerosis. Scientific Reports , 10 (1):1936) and the studies were fully funded by us and were the result of collaborations among academic researchers from Northwestern University, George Washington University, and various other academic consultants and our employees. In Robinson et al.
“Nanocatalytic activity of clean-surfaced, faceted nanocrystalline gold enhances remyelination in animal models of multiple sclerosis.” Scientific Reports , 10 (1):1936). The studies were fully funded by us and were the result of collaborations among academic researchers from Northwestern University, George Washington University, and various other academic consultants and our employees. In Robinson et al .
The goal of this study will be to demonstrate safety sufficient to advance to Phase 2 clinical programs with CNM-AgZn17. Given the multiple preclinical benefits demonstrated to date with CNM-AgZn17, we envision a clinical program focused on healing burn and/or surgical wounds. 29 Table of Contents Research and Development Overview We are deeply invested in our research and development program.
The goal of this study will be to demonstrate safety sufficient to advance to Phase 2 clinical programs with CNM-AgZn17. Given the multiple preclinical benefits demonstrated to date with CNM-AgZn17, we envision a clinical program focused on healing burn and/or surgical wounds. Research and Development Overview We are deeply invested in our research and development program.
A full volume head coil was used to collect whole brain spectral waveforms in ~600 voxels with a spatial resolution of 2 cm3 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.
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.
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.
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.
An important component of the mechanism of action of CNM-Au8 is its ability to dose-dependently reduce aggregated alpha-synuclein and TDP-43 in cellular models of PD and ALS, respectively (Fig. 6).
An important component of the mechanism of action of CNM-Au8 is its ability to dose-dependently reduce aggregated TDP-43 and alpha-synuclein in cellular models of ALS and PD, respectively (Figure 6).
We expect to meet with the FDA in an end of Phase 2 meeting in the second half of 2024. 23 Table of Contents REPAIR-MS REPAIR-MS is a Phase 2, single-center, active-only, sequential group study to demonstrate central nervous system target engagement by examining the brain metabolic effects, safety, pharmacokinetics and pharmacodynamics of orally-delivered CNM-Au8 in patients who have been diagnosed with MS in vivo within 15 years of screening.
We expect to meet with the FDA in an end of Phase 2 meeting in the second half of 2025. 27 Table of Contents REPAIR-MS REPAIR-MS is a Phase 2, single-center, active-only, sequential group study to demonstrate central nervous system target engagement by examining the brain metabolic effects, safety, pharmacokinetics and pharmacodynamics of orally-delivered CNM-Au8 in patients who have been diagnosed with MS in vivo within 15 years of screening.
The primary endpoint was rate of change in ALSFRS-R score from baseline to week 24 adjusted for mortality, with secondary endpoints of combined assessment of function and survival (“CAFS”), a combined joint-rank score based on survival and change in ALSFRS-R score from baseline to week 24, changes in slow vital capacity (“SVC”), and survival (time to death or death equivalent).
The primary endpoint was rate of change in ALSFRS-R from baseline to week 24 adjusted for mortality, with secondary endpoints of: (i) combined assessment of function and survival (“CAFS”), a combined joint-rank score based on survival and change in ALSFRS-R from baseline to week 24, (ii) changes in slow vital capacity (“SVC”), and (iii) survival (time to death or death equivalent).
Smaller Reporting Company Status We are a “smaller reporting company” because the market value of our stock held by non-affiliates was less than $250 million as of June 30, 2023.
Smaller Reporting Company Status We are a “smaller reporting company” because the market value of our stock held by non-affiliates was less than $250 million as of June 30, 2024.
The study had two phases: a single-ascending dose (“SAD”) phase, where 40 subjects were randomized to CNM-Au8 (n=30) or placebo (n=10) at a 3:1 ratio in single dose escalating cohorts who received CNM-Au8 at 15 mg, 30 mg, 60 mg, or 90 mg, with follow-up study duration for each subject of 17 days; and a multiple-ascending dose (“MAD”) phase, where 46 subjects were randomized to CNM-Au8 (n=35) or placebo (n=11) in multiple dose cohorts who received CNM-Au8 at 15 mg, 30 mg, 60 mg, and 90 mg, with the duration of treatment at 21 days and follow-up of each subject at up to 50 days.
The trial had two phases: a single-ascending dose (“SAD”) phase, where 40 subjects were randomized to CNM-Au8 (n=30) or placebo (n=10) at a 3:1 ratio in single dose escalating cohorts who received CNM-Au8 at 15 mg, 30 mg, 60 mg, or 90 mg, with follow-up duration for each subject of 17 days; followed by a multiple-ascending dose (“MAD”) phase, where 46 subjects were randomized to CNM-Au8 (n=35) or placebo (n=11) in multiple dose cohorts who received CNM-Au8 at 15 mg, 30 mg, 60 mg, and 90 mg, with the duration of treatment at 21 days and follow-up for each subject at up to 50 days.
Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain compliance with GMP and other aspects of regulatory compliance. The FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.
Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain compliance with GMP, state licensure obligations, and other aspects of regulatory compliance. The FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.
The prespecified exploratory analyses of the secondary survival endpoint demonstrated a >90% reduction in risk of death alone or in risk of death/permanently assisted ventilation at 24 weeks, when adjusted for baseline imbalances in risk (p=0.028 to p=0.075, unadjusted for multiple comparisons) with the CNM-Au8 30 mg dose.
The prespecified exploratory analyses of the secondary survival endpoint demonstrated a >90% reduction in risk of death alone or in risk of death/permanently assisted ventilation (“PAV”) at 24 weeks, when adjusted for baseline imbalances in risk (p=0.028 to p=0.075, unadjusted for multiple comparisons) with the 30 mg dose.
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.
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 10 below summarizes the primary and secondary efficacy outcomes for the VISIONARY-MS trial. Figure 10.
E, Cellular NAD + levels increase in response to CNM-Au8 treatment in primary rodent neuron-glial co-cultures. F, Cellular ATP levels increase in primary rodent OL cultures in response to CNM-Au8 treatment. Panels E-F, quantities shown are group means +/ − SEM.
Panel E, Cellular NAD + levels increase in response to CNM-Au8 treatment in primary rodent neuron-glial co-cultures. Panel F, Cellular ATP levels increase in primary rodent OL cultures in response to CNM-Au8 treatment. Panel E-F, quantities shown are group means +/ − SEM.
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.
Due to the trial’s 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 that censored invalid data.
Laboratory assessments indicated no significant changes from baseline in body weight, blood pressure, heart rate, liver enzymes (AST/ALT), blood glucose, and blood lipids (total cholesterol, LDL/HDL, triglycerides).
Laboratory assessments indicated no significant changes from baseline in body weight, blood pressure, heart rate, liver enzymes (AST/ALT), blood glucose, or blood lipids (total cholesterol, LDL/HDL, triglycerides).
To demonstrate neuroprotection of motor neurons by CNM-Au8, in vitro neuroprotection assays were first used. Rat motor neurons were challenged with glutamate to induce excitotoxicity, or with amyloid beta 1-42 peptide (“A-beta”), which is toxic to motor neurons. In Alzheimer’s Disease, A-beta aggregates participate in the formation of amyloid plaques.
To demonstrate neuroprotection of motor neurons by CNM-Au8, in vitro neuroprotection assays were used. Rat motor neurons were challenged with glutamate to induce excitotoxicity, or with amyloid beta 1-42 peptide (“Aβ”), which is toxic to motor neurons. In Alzheimer’s disease, Aβ aggregates participate in the formation of amyloid plaques.
It is formulated as an ionic solution of zinc (Zn +2 ) and silver (Ag + ) with a limited presence ( 0 nanoparticles, all generated using the CSN platform in a manner that does not involve traditional inorganic synthesis methods utilized to generate zinc and silver compounds.
It is formulated as an ionic solution of zinc (Zn +2 ) and silver (Ag + ) with a limited presence ( 0 nanoparticles, all generated using our CSN platform in a manner that does not involve traditional inorganic synthesis methods to generate zinc and silver compounds.
In the study using slower-progressing SOD 1G93A animals, CNM-Au8 treated animals showed significant treatment effects in a number of behavioral and functional tests, including overall clinical score, weights hold, static rod orientation time, and average wheel-running velocity. Median survival of CNM-Au8 treated animals significantly exceeded vehicle-treated controls by 23 days (approximately 20% of the animal’s expected life-span).
In the study using slower-progressing SOD1 G93A animals, CNM-Au8 treated animals showed significant treatment effects in a number of behavioral and functional tests, including overall clinical score, weights hold, static rod orientation time, and average wheel-running velocity. Median survival of CNM-Au8 treated animals significantly exceeded vehicle-treated controls by 23 days (approximately 20% of the animal’s expected life-span).
Middle row: isolated primary mouse OL precursors treated with vehicle control (left), 3 μ g/mL CNM-Au8 , or positive control and myelin-inducing agent tri-iodothyronine.
Middle row: isolated primary mouse OL precursors treated with vehicle control (left), 3 μg/mL CNM-Au8 (center) , or positive control and myelin-inducing agent tri-iodothyronine (right).
Our nonclinical studies demonstrate that CNM-Au8 is robustly neuroprotective of dopaminergic neurons across a variety of disease-relevant insults created using a variety of toxins and stressors. In addition, CNM-Au8 may have a tolerability profile superior to existing approved products and commonly used drugs for PD, such as levodopa/carbidopa which results in risk of dyskinesias after long-term use.
Our nonclinical studies demonstrate that CNM-Au8 is robustly neuroprotective of dopaminergic neurons across a variety of disease-relevant insults created using a variety of toxins and stressors. In addition, CNM-Au8 may have a tolerability profile superior to existing approved products and commonly used drugs for PD, such as levodopa and carbidopa, which result in risk of dyskinesia after long-term use.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeCost overruns associated with constructing or maintaining our facilities could require us to raise additional funds from other sources, which may not be available on favorable terms or at all.
Biggest changeCost overruns associated with constructing or maintaining our facilities could require us to raise additional funds from other sources, which may not be available on favorable terms or at all. 54 Table of Contents Much of the equipment used in our manufacturing process was developed and built by us, and it would be difficult or even impossible to purchase or create suitable replacements in a short period of time.
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.
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; 79 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.
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.
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; 67 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 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.
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 certain individually identifiable health information; and 69 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.
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.
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; 59 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.
As 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. 76 Table of Contents We cannot predict if investors will find our Common Stock less attractive because we rely on these exemptions.
As 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. 80 Table of Contents We cannot predict if investors will find our Common Stock less attractive because we rely on these exemptions.
A number of those requirements has required us to carry out activities we have not done previously. Our management and other personnel also have devoted and will continue to devote a substantial amount of time to these compliance initiatives. In addition, additional expenses associated with SEC reporting requirements have been incurred.
A number of those requirements have required us to carry out activities we have not done previously. Our management and other personnel also have devoted and will continue to devote a substantial amount of time to these compliance initiatives. In addition, additional expenses associated with SEC reporting requirements have been incurred.
We are highly dependent on Mark Mortenson, our co-founder and Chief Science Officer, Rob Etherington, our Chief Executive Officer and President, and the other principal members of our management and scientific teams. We do not maintain “key person” insurance for any of our executives or other employees.
We are highly dependent on Mark Mortenson, our co-founder and Chief Science Officer, Rob Etherington, our Chief Executive Officer (“CEO”) and President, and the other principal members of our management and scientific teams. We do not maintain “key person” insurance for any of our executives or other employees.
We may, however, detect instances in which an unreleased product was produced without adherence to our manufacturing procedures or the raw material used in our production process was not collected to store in accordance with the GMP or other regulations, resulting in a determination that the implicated products should be destroyed. 67 Table of Contents In addition, if we fail to comply with relevant quality control requirements under laws, regulations, and GMP, we could experience a disruption in the supply of our products, which could delay or prevent further sales of such products, which could have a material adverse effect on our business and financial results.
We may, however, detect instances in which an unreleased product was produced without adherence to our manufacturing procedures or the raw material used in our production process was not collected to store in accordance with the GMP or other regulations, resulting in a determination that the implicated products should be destroyed. 71 Table of Contents In addition, if we fail to comply with relevant quality control requirements under laws, regulations, and GMP, we could experience a disruption in the supply of our products, which could delay or prevent further sales of such products, which could have a material adverse effect on our business and financial results.
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.
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. 74 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.
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.
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. 65 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.
Any of these changes could make the results of planned clinical trials or other future clinical trials we may initiate less predictable and could cause our drug candidates to perform differently, which could delay completion of clinical trials, delay approval of our drug candidates, and/or jeopardize our ability to commence commercialization of our drug candidates. 57 Table of Contents Clinical trials of our drug candidates may fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities, or may not otherwise produce positive results, which may cause us to incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our drug candidates.
Any of these changes could make the results of planned clinical trials or other future clinical trials we may initiate less predictable and could cause our drug candidates to perform differently, which could delay completion of clinical trials, delay approval of our drug candidates, and/or jeopardize our ability to commence commercialization of our drug candidates. 61 Table of Contents Clinical trials of our drug candidates may fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities, or may not otherwise produce positive results, which may cause us to incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our drug candidates.
Such provisions include the following: ● a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our Board; ● the ability of our Board to approve the issuance shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror and/or existing stockholders; ● the requirement for the affirmative vote of holders of at least 66⅔% of the voting power of all of the then-outstanding shares of the Common Stock, voting together as a single class, to amend certain provisions of our amended and restated certificate of incorporation or our amended and restated bylaws, which may inhibit the ability of an acquiror to effect such amendments to facilitate an unsolicited takeover attempt; ● the exclusive right of our Board to elect a director to fill a vacancy created by the expansion of our Board or the resignation, retirement death, disqualification or removal of a director, which prevents stockholders from being able to fill vacancies on our Board for a period of time; and ● the requirement that a special meeting of stockholders may be called only by our Board, the chairman of our Board or our Chief Executive Officer, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors.
Such provisions include the following: ● a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our Board; ● the ability of our Board to approve the issuance shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror and/or existing stockholders; ● the requirement for the affirmative vote of holders of at least 66⅔% of the voting power of all of the then-outstanding shares of the Common Stock, voting together as a single class, to amend certain provisions of our amended and restated certificate of incorporation or our amended and restated bylaws, which may inhibit the ability of an acquiror to effect such amendments to facilitate an unsolicited takeover attempt; ● the exclusive right of our Board to elect a director to fill a vacancy created by the expansion of our Board or the resignation, retirement death, disqualification or removal of a director, which prevents stockholders from being able to fill vacancies on our Board for a period of time; and ● the requirement that a special meeting of stockholders may be called only by our Board, the chairman of our Board or our CEO, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors.
We may not be able to accomplish these tasks, and our failure to accomplish any of them could prevent us from successful growth and could harm our business, financial condition, results of operations, and prospects. 48 Table of Contents Changes in government regulation or in practices relating to the pharmaceutical and biotechnology industries, including potential healthcare reform, could decrease the need for our drug candidates, or make it more difficult to obtain regulatory approvals for our drug candidates and commercialize them.
We may not be able to accomplish these tasks, and our failure to accomplish any of them could prevent us from successful growth and could harm our business, financial condition, results of operations, and prospects. 52 Table of Contents Changes in government regulation or in practices relating to the pharmaceutical and biotechnology industries, including potential healthcare reform, could decrease the need for our drug candidates, or make it more difficult to obtain regulatory approvals for our drug candidates and commercialize them.
If an ownership change occurs and our ability to use our NOL carryforwards is materially limited, it would harm our financial condition and results of operations by effectively increasing our future tax obligations. 52 Table of Contents Changes in tax laws may adversely affect us, and the Internal Revenue Service or a court may disagree with tax positions taken by us, which may result in adverse effects in our financial condition or the value of our Common Stock.
If an ownership change occurs and our ability to use our NOL carryforwards is materially limited, it would harm our financial condition and results of operations by effectively increasing our future tax obligations. 56 Table of Contents Changes in tax laws may adversely affect us, and the Internal Revenue Service or a court may disagree with tax positions taken by us, which may result in adverse effects in our financial condition or the value of our Common Stock.
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.
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. 66 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.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. 73 Table of Contents If we are sued for infringing the intellectual property rights of third parties, such litigation could be costly and time consuming and could prevent or delay us from developing or commercializing our drug candidates.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. 77 Table of Contents If we are sued for infringing the intellectual property rights of third parties, such litigation could be costly and time consuming and could prevent or delay us from developing or commercializing our drug candidates.
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.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. 51 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 and equity purchase agreement and potential proceeds from the exercise of outstanding warrants and stock options.
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.
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. 68 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.
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.
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. 72 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.
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.
In addition, we may not have adequate insurance coverage to compensate for any losses associated with such events. 53 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.
Our failure to become and remain profitable would decrease our value significantly and could impair our ability to raise capital, expand our business or continue our operations, which in turn may adversely affect our business, financial condition, and results of operations. 46 Table of Contents We currently do not generate any revenue from the commercial sales of drug candidates and we may not become profitable when expected, or at all.
Our failure to become and remain profitable would decrease our value significantly and could impair our ability to raise capital, expand our business or continue our operations, which in turn may adversely affect our business, financial condition, and results of operations. 50 Table of Contents We currently do not generate any revenue from the commercial sales of drug candidates and we may not become profitable when expected, or at all.
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 may focus our efforts and resources on potential drug candidates or other potential programs that ultimately prove to be unsuccessful. 60 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.
Any negative impact could have a material adverse effect on our business, financial condition, results of operations, and prospects. 69 Table of Contents We have entered into research collaborations and may form or seek collaborations, joint ventures or strategic alliances or enter into licensing arrangements in the future, and we may not realize the benefits of such collaborations, alliances, or licensing arrangements.
Any negative impact could have a material adverse effect on our business, financial condition, results of operations, and prospects. 73 Table of Contents We have entered into research collaborations and may form or seek collaborations, joint ventures or strategic alliances or enter into licensing arrangements in the future, and we may not realize the benefits of such collaborations, alliances, or licensing arrangements.
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.
For all of these reasons, we may not obtain non-U.S. regulatory approvals on a timely basis, if at all. 63 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.
This preference for U.S. industry may limit our ability to contract with non-U.S. product manufacturers for products covered by such intellectual property. 72 Table of Contents We may not be able to protect our intellectual property rights throughout the world or prevent unfair competition by third parties.
This preference for U.S. industry may limit our ability to contract with non-U.S. product manufacturers for products covered by such intellectual property. 76 Table of Contents We may not be able to protect our intellectual property rights throughout the world or prevent unfair competition by third parties.
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.
Moreover, the applicable time period or the scope of patent protection afforded could be less than we request. 78 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.
As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. 71 Table of Contents The issuance of a patent is not conclusive as to our inventorship, scope, validity, or enforceability, and our patents may be challenged in the courts or patent offices in any country.
As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. 75 Table of Contents The issuance of a patent is not conclusive as to our inventorship, scope, validity, or enforceability, and our patents may be challenged in the courts or patent offices in any country.
This could impair our ability to commercialize our drug candidates and may harm our business and results of operations. 58 Table of Contents If we encounter difficulties enrolling patients in clinical trials, clinical trials of our drug candidates may be delayed or otherwise adversely affected.
This could impair our ability to commercialize our drug candidates and may harm our business and results of operations. 62 Table of Contents If we encounter difficulties enrolling patients in clinical trials, clinical trials of our drug candidates may be delayed or otherwise adversely affected.
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.
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. 64 Table of Contents Designation as a Breakthrough Therapy is within the discretion of the FDA.
In addition, the government may assert that a claim including items or services resulting from a violation of the U.S. federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act; ● the federal false claims and civil monetary penalties laws, including the civil False Claims Act and the Civil Monetary Penalties Law, which can be enforced by private citizens through civil whistleblower or qui tam actions, prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; ● HIPAA prohibits, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters.
In addition, the government may assert that a claim including items or services resulting from a violation of the U.S. federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act; ● the federal false claims and civil monetary penalties laws, including the civil False Claims Act and the Civil Monetary Penalties Law, which can be enforced by private citizens through civil whistleblower or qui tam actions, prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; ● Other federal criminal anti-fraud statutes prohibit, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters.
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.
This could adversely affect investor confidence in us and, as a result, the value of our Common Stock. 58 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. 53 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. 57 Table of Contents We have identified material weaknesses in our internal control over financial reporting.
Although we have begun to implement measures to address the material weaknesses, the implementation of these measures may not fully address the material weaknesses and deficiencies in our internal control over financial reporting, and we cannot conclude that these matters have been fully remedied.
Although we have begun to implement measures to address the material weaknesses, the implementation of these measures may not fully address the material weaknesses and deficiencies in our internal control over financial reporting, and we cannot conclude that these matters have been fully remediated.
In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting.
We will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting.
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.
These market and industry factors may materially reduce the market price of our Common Stock regardless of our operating performance. 82 Table of Contents 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.
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.
In connection with the audit of our financial statements as of and for the years ended December 31, 2024 and 2023, our management identified material weaknesses in our internal control over financial reporting.
We are a “smaller reporting company” because the market value of our stock held by non-affiliates was less than $250 million as of June 30, 2023.
We are a “smaller reporting company” because the market value of our stock held by non-affiliates was less than $250 million as of June 30, 2024.
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).
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; ● 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.
As a result of changes in the macro environment, including those resulting from geo-political actions, such as the U.S. and foreign government responses to the ongoing conflicts between Ukraine and Russia and Israel and Palestine, the global credit and financial markets have experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, and uncertainty about economic stability.
As a result of changes in the macro environment, including those resulting from geo-political actions, such as the U.S. and foreign government responses to ongoing global conflicts, the global credit and financial markets have experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, and uncertainty about economic stability.
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 $12.9 million will begin to expire after 2032. As of December 31, 2024, we had research and development tax credit carryforwards of $6.4 million, which may be available to reduce future tax liabilities and expire at various dates beginning after 2032.
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.
As of December 31, 2024, we had U.S. federal net operating loss (“NOL”) carryforwards of $170.1 million, of which $136.7 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.
Further, we expect to incur significant costs in the future, in particular for research and development and the commercialization of our drug candidates. Research and development expenses totaled $26.7 million and $31.9 million for the years ended December 31, 2023 and 2022, respectively.
Further, we expect to incur significant costs in the future, in particular for research and development and the commercialization of our drug candidates. Research and development expenses totaled $20.1 million and $26.7 million for the years ended December 31, 2024 and 2023, respectively.
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.
Beginning in 2022, applicable manufacturers were required to start reporting 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.
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.
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. Item 1B. Unresolved Staff Comments Not applicable.
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.
The remaining balance of $33.4 million will begin to expire after 2034. As of December 31, 2024, we had state NOL carryforwards of $116.1 million, of which $103.2 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.
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.
Our cash, cash equivalents, and marketable securities totaled $12.2 million and $35.0 million as of December 31, 2024 and 2023, respectively, and net cash used in operating activities was $21.3 million and $30.2 million for the years ended December 31, 2024 and 2023, respectively.
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.
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. 70 Table of Contents Further legislation or regulation could be passed that could harm our business, financial condition and results of operations.
There can be no assurance that we will be able to comply with the continued listing requirements of Nasdaq.
There can be no assurance that we will be able to maintain compliance with any of the Nasdaq continued listing requirements.
We are also unable to predict how changing global economic or political conditions, such as the ongoing conflicts between Ukraine and Russia and Israel and Palestine and related global economic sanctions, or potential global health concerns, such as future health epidemics or pandemics, may impact our CROs, clinical investigators, third-party vendors, and other collaborators.
We are also unable to predict how changing global economic or political conditions or potential global health concerns, such as future health epidemics or pandemics, may impact our CROs, clinical investigators, third-party vendors, and other collaborators.
Additionally, based on a recent executive order, the Biden administration expressed its intent to pursue certain policy initiatives to reduce drug prices.
Additionally, in an executive order, the Biden administration expressed its intent to pursue certain policy initiatives to reduce drug prices.
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.
We incurred a loss from operations of $33.1 million and $40.5 million for the years ended December 31, 2024 and 2023, respectively, and a net loss of $39.4 million and $49.5 million for the years ended December 31, 2024 and 2023, respectively. Our accumulated deficit was $282.1 million and $242.7 million as of December 31, 2024 and 2023, respectively.
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.
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. 81 Table of Contents General Risk Factors There can be no assurance that we will be able to comply with the continued listing requirements of Nasdaq.
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.
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.
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.
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.
Additionally, we are constantly seeking to further fine-tune and develop our advanced manufacturing techniques and process controls to fully utilize our facilities.
Additionally, we are constantly seeking to further fine-tune and develop our advanced manufacturing techniques and process controls to fully utilize our facilities. Advances in manufacturing techniques may render our facilities and equipment inadequate, in which case we may lose any competitive advantage.
Risks Relating to Our Business and Industry We depend substantially on the successful commercialization of our drug candidates in the future, which may fail to materialize or may experience significant delays.
Risks Relating to Our Business and Industry We depend substantially on the successful commercialization of our drug candidates in the future, which may fail to materialize or may experience significant delays. We currently do not have any drugs available for commercial sales nor do we have any drugs that have been approved for sale by the regulatory authorities.
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).
Additionally, pursuant to our senior secured convertible promissory notes (the “2024 SSCP Notes”), we are required to maintain unrestricted cash and cash equivalents of at least $2.0 million to avoid acceleration of the full balance of the 2024 SSCP Notes (see Note 8 to the consolidated financial statements).
No legislation or administrative actions have been finalized to implement these principles. In addition, Congress is considering drug pricing as part of the budget reconciliation process.
In addition, Congress is considering drug pricing as part of the budget reconciliation process.
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. We do not currently have Fast Track Designation or Breakthrough Therapy Designation, but may seek one or more of such designations in the future.
We do not currently have Fast Track Designation or Breakthrough Therapy Designation, but may seek one or more of such designations in the future.
Any sustained inflation or significant increases in inflation and interest rates could have a material adverse effect on our business, financial condition and results of operations.
Significant inflation is often accompanied by higher interest rates. Any sustained inflation or significant increases in inflation and interest rates could have a material adverse effect on our business, financial condition and results of operations. Our future success depends on our ability to retain key executives and to attract, train, retain, develop, and motivate qualified and highly skilled personnel.
However, our insurance coverage may not reimburse us, or may not be sufficient to reimburse us, for any expenses or losses we may suffer. We may be unable to meet the requirements for our drug candidates if there were a catastrophic event or failure of our manufacturing facilities or processes.
However, our insurance coverage may not reimburse us, or may not be sufficient to reimburse us, for any expenses or losses we may suffer.
Further legislation or regulation could be passed that could harm our business, financial condition and results of operations. Other legislative changes have been proposed and adopted since the Affordable Care Act was enacted.
Other legislative changes have been proposed and adopted since the Affordable Care Act was enacted.
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.
We may be unable to meet the requirements for our drug candidates if there were a catastrophic event or failure of our manufacturing facilities or processes. 55 Table of Contents 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.
Much of the equipment used in our manufacturing process was developed and built by us, and it would be difficult or even impossible to purchase or create suitable replacements in a short period of time. Further, for much of this equipment we have an insufficient amount of or no spare parts available.
Further, for much of this equipment we have an insufficient amount of or no spare parts available.
Removed
As a new biopharmaceutical business, we currently do not have any drugs available for commercial sales nor do we have any drugs that have been approved for sale by the regulatory authorities.
Added
During the year ended December 31, 2024, we generated $2.7 million of gross proceeds from our equity distribution agreement (the “ATM Agreement”), raised $3.5 million from a registered direct offering of equity securities and an additional $3.8 million from separate, concurrent private placements of equity securities, and raised $10.0 million from the issuance of the 2024 SSCP Notes of which $7.9 million was used to repay the remaining balance of our obligations under a term loan with Avenue Venture Opportunities Fund, L.P.
Removed
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.
Added
Additionally, subsequent to December 31, 2024, we generated $2.5 million of gross proceeds from our ATM Agreement. We have implemented cost-saving initiatives, including delaying and reducing certain research and development programs and commercialization efforts and elimination of certain staff positions.
Removed
To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging.
Added
Additionally, political conditions, including new and changing laws or tariffs, regulations, government funding, executive orders and enforcement priorities, may create uncertainty about how such laws and regulations will be interpreted and applied, which may adversely impact our business.
Removed
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.
Added
For example, changes in the regulatory environment affecting life sciences and pharmaceutical companies, and reduced budget allocations to government agencies that fund research and development activities, such as the NIH, or targeted cancellations by the U.S. federal government of certain grants or contracts, could adversely affect our business or results of operations.
Removed
Supreme Court ruling, on January 28, 2021, President Biden issued an executive order that initiated a special enrollment period for purposes of obtaining health insurance coverage through the Affordable Care Act marketplace, which began on February 15, 2021 and remained open through August 15, 2021.
Added
Further, with the change in presidential administrations in 2025, there is substantial uncertainty as to how, if at all, the new administration will seek to modify or revise the requirements and policies of the FDA and other regulatory agencies with jurisdiction over our product candidates.
Removed
The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the Affordable Care Act.
Added
There is also uncertainty as to how other measures being implemented by the new administration across the government will impact our activities and those of the FDA and its operations. For example, the potential loss of FDA personnel could lead to further disruptions and delays in FDA review of our product candidates.
Removed
It is possible that the Affordable Care Act will be subject to judicial or Congressional challenges in the future. 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.
Added
Similarly, efforts by the new administration to substantially reduce research funding by the NIH of medical research could have substantial direct or indirect impacts on our research activities. 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.
Removed
As previously disclosed, on August 1, 2023, we received a written notice from Nasdaq that for the last 30 consecutive business days, the bid price for our Common Stock had closed below the minimum $1.00 per share requirement for continued listing on Nasdaq pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeData backups are stored in geographically separate facilities. Vulnerability Assessments. We conduct assessments over potential vulnerabilities for all new and existing network-connected assets on an annual basis. Any potential vulnerabilities that we identify are remediated.
Biggest changeWe perform data backups periodically based on business requirements to maximize data availability and prevent information loss, including before any system upgrade or maintenance. Encrypted data remains encrypted throughout our backup processes. Data backups are stored in geographically separate facilities. Vulnerability Assessments. We conduct assessments over potential vulnerabilities for all new and existing network-connected assets on an annual basis.
We also reserve the right to scan information systems, monitor or screen content and traffic patterns, block e-mail, quarantine and/or confiscate any Information Systems that may post a threat to us, and if such activities reveal possible evidence of criminal activity, to take any appropriate action which may include providing evidence to law enforcement officials. Physical Security.
We also reserve the right to scan information systems, monitor or screen content and traffic patterns, block e-mail, quarantine and/or confiscate any Information Systems that may post a threat to us, and if such activities reveal possible evidence of criminal activity, to take any appropriate action which may include providing evidence to law enforcement officials. 83 Table of Contents Physical Security.
Access to our network services is restricted to authorized individuals and granted only following individual identification and authentication. Local wireless access is limited to authorized entry points, with various forms of authentication required before access is granted to authorized individuals. 80 Table of Contents Security and Application Lifecycle Security.
Access to our network services is restricted to authorized individuals and granted only following individual identification and authentication. Local wireless access is limited to authorized entry points, with various forms of authentication required before access is granted to authorized individuals. Security and Application Lifecycle Security.
For more information about the cybersecurity risks we face, see Item 1A—Risk Factors “Our internal computer systems, or those used by any CROs or other third-party contractors or consultants we may engage, may fail or suffer security breaches.” 82 Table of Contents
For more information about the cybersecurity risks we face, see Item 1A—Risk Factors “Our internal computer systems, or those used by any CROs or other third -party contractors or consultants we may engage, may fail or suffer security breaches.”
Change and Configuration Management Our change and configuration management policy and procedures enable the effective management of changes to Information Systems (“Changes”) to ensure the confidentiality and integrity of Information Assets and the continued availability of both the Information Systems and information technology (“IT”) services.
Change and Configuration Management Our change and configuration management policy and procedures enable the effective management of changes to Information Systems (“Changes”) to ensure the confidentiality and integrity of Information Assets and the continued availability of both the Information Systems and IT services.
Our cybersecurity policies and procedures have been developed to ensure an adequate and consistent approach to the management, control, and protection of our information (“Information Assets”).
Item 1C. Cybersecurity Overview Our cybersecurity policies and procedures have been developed to ensure an adequate and consistent approach to the management, control, and protection of our information (“Information Assets”).
These officers have more than 21 years of combined experience in managing IT, operations, and information risk and security. Our Vice President of Quality and Technical Operations has experience developing comprehensive information security programs for organizations, and brings extensive experience in the private sector and is a specialist in IT governance strategies, risk management protocols, and compliance frameworks.
These officers have more than 24 years of combined experience in managing IT, operations, and information risk and security. Our VP of Quality has experience developing comprehensive information security programs for organizations, and brings extensive experience in the private sector and is a specialist in IT governance strategies, risk management protocols, and compliance frameworks.
Our Chief Executive Officer, General Counsel, and Vice President of Quality and Technical Operations directly oversee the development, implementation, operation, and revision of our cybersecurity policies and procedures, and are primarily responsible for the oversight of risks from cybersecurity threats and any security incidents that may occur.
Our CEO, General Counsel, and Vice President of Quality and Technical Operations (“VP of Quality”) directly oversee the development, implementation, operation, and revision of our cybersecurity policies and procedures, and are primarily responsible for the oversight of risks from cybersecurity threats and any security incidents that may occur.
Additionally, for Changes that may impact our manufacturing process, we perform impact assessments prior to performing a Change to understand the (i) level of financial, technical, and compliance risk, (ii) impact on business operations, (iii) impact of configuration and user access security, (iv) impact on connected Information Systems and interfaces, and (v) need for user training.
Errors are identified, logged, and resolved. 84 Table of Contents Additionally, for Changes that may impact our manufacturing process, we perform impact assessments prior to performing a Change to understand the (i) level of financial, technical, and compliance risk, (ii) impact on business operations, (iii) impact of configuration and user access security, (iv) impact on connected Information Systems and interfaces, and (v) need for user training.
All security incidents are managed by our Vice President of Quality and Technical Operations and reported to management, including our Chief Executive Officer, General Counsel, and other personnel based upon the specifics of the incident and its impact.
All security incidents are managed by our VP of Quality and reported to management, including our CEO, General Counsel, and other personnel based upon the specifics of the incident and its impact.
Firewalls. Our network and Computer Equipment is protected by one or more authorized firewalls, with any changes to firewall hardware, operating system, or rules requiring approval from authorized personnel including the review and approval of an IT change control document. Administration of firewalls is restricted to a minimum number of authorized personnel as necessary.
Our network and Computer Equipment is protected by one or more authorized firewalls, with any changes requiring approval from authorized personnel including the review and approval of an information technology (“IT”) change control document. Administration of firewalls is restricted to a minimum number of authorized personnel as necessary. We also employ intrusion detection at critical points of our network.
Additionally, we currently use confidentiality agreements before granting access as determined by relationship of the user and the associated risks of the Information Asset, and we periodically review access rights to ensure compliance and prevent unauthorized access. Governance Assessing, identifying, and managing cybersecurity related risks are integrated into our overall risk management program.
Before granting access to Information Assets, we assess the relationship of the user and associated risks of the Information Assets to determine if access is appropriate, and we periodically review access rights to ensure compliance and prevent unauthorized access. 85 Table of Contents Governance Assessing, identifying, and managing cybersecurity related risks are integrated into our overall risk management program.
To mitigate risk, we utilize (i) firewalls to protect our network perimeter and additional perimeters within the network as required, (ii) anti-malware software to protect all Computer Equipment, including but not limited to desktops, laptops, workstations, and servers, (iii) device scanning, alerts, and reporting, (iv) physical security, (v) security and application lifecycle security, (vi) security updates and backups, and (vii) vulnerability and risk assessments.
To mitigate risk, we utilize (i) firewalls to protect our network and Computing Equipment, (ii) anti-malware software to protect our Computer Equipment, (iii) device monitoring, (iv) physical security, (v) security and application lifecycle security, (vi) security updates and backups, and (vii) vulnerability and risk assessments. Firewalls.
Our corporate office in Utah is equipped with physical security including locks/access controls to the facility and to secure all IT-related equipment and personnel files. Installation, maintenance, and repair of equipment is restricted to authorized personnel. We protect our Computer Equipment from power failure, surges, and other electrical anomalies, and cabling is protected from unauthorized access or damage.
We control physical access to our facilities, areas within our facilities, data centers, server rooms, and equipment. Installation, maintenance, and repair of equipment is restricted to authorized personnel. We protect our Computer Equipment from power failure, surges, and other electrical anomalies, and cabling is protected from unauthorized access or damage.
The extent and documentation of impact assessments are commensurate with the level of risk associated with the Change, and the level of testing performed shall be determined by the results of the impact assessment. 81 Table of Contents Identity and Access Management Our identity and access management policies and procedures define the access control measures to our Information Systems to protect the privacy, security, and confidentiality of Computer Equipment, Information Systems, and Information Assets.
The extent and documentation of impact assessments are commensurate with the level of risk associated with the Change, and the level of testing performed shall be determined by the results of the impact assessment.
Removed
Item 1C. Cybersecurity Overview Information, unlike other assets such as cash, facilities, equipment, and products, is highly volatile in terms of its value and many people can use it simultaneously. It leaves no obvious indicators when it is stolen, and it is in constant motion across our internet, intranet, extranet, and computer systems.
Added
Any potential vulnerabilities that we identify are remediated.
Removed
It is often stored in many locations in different formats at the same time. These characteristics make it much more difficult to manage, control, and protect than other types of assets and therefore a risk management process is required.
Added
Identity and Access Management Our identity and access management policies and procedures define the access control measures to our Information Systems to protect the privacy, security, and confidentiality of Computer Equipment, Information Systems, and Information Assets.
Removed
Information Assets may be classified as Low, Medium, or High Risk based on the potential impact of its unauthorized disclosure.
Removed
We also employ intrusion detection at critical points of our network.
Removed
We control physical access to our facilities, areas within our facilities, data centers, server rooms, and equipment. Manufacturing and research and development is conducted out of our Maryland facility that employs badging, visitor registries, escorts for visitors, exit/removal procedures, and physical locks/access controls as appropriate and necessary.
Removed
We perform data backups periodically based on business requirements to maximize data availability and prevent information loss, including before any system upgrade or maintenance. Encrypted data remains encrypted throughout our backup processes. We review backup schedules at least annually, and changes may only be made by authorized personnel after formal documentation and approval.
Removed
Prior to the close of 2024, we intend to implement automated system restrictions over Information Assets that will permit general use of Low Risk Information Assets both internally and by our external business partners, and will restrict access to Medium and High Risk Information Assets to limited audiences with legitimate business purposes or specific job responsibilities.

Item 2. Properties

Properties — owned and leased real estate

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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.
Biggest changeOur leased Elkton, Maryland facility will be utilized to increase our manufacturing capability. We believe 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. 83 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. 86 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 8, 2024, there were 128,430,098 issued and outstanding shares of our Common Stock held by 65 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 19, 2025, there were 8,586,460 issued and outstanding shares of our Common Stock held by 68 stockholders of record.

Item 7. Management's Discussion & Analysis

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

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Biggest changeGeneral 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.
Biggest change(vi) an increase in grant revenue, which is recorded as a reduction to research and development expense, due to reimbursements received for expenses incurred for the ACT-EAP and conditional grant revenue recognized related to the second dosing cohort of our REPAIR-MS clinical trial. 94 Table of Contents General and Administrative Expenses General and administrative expense during the years ended December 31, 2024 and 2023 was as follows: Year Ended December 31, (in thousands) 2024 2023 Change Insurance $ 822 $ 1,593 (48 )% Legal 822 404 103 % Finance and accounting 761 1,317 (42 )% Public and investor relations 662 614 8 % Facilities 119 142 (16 )% Depreciation 266 267 (0 )% Information technology 300 326 (8 )% Personnel 4,177 4,239 (1 )% Stock-based compensation 4,407 5,056 (13 )% Other 971 460 111 % Total general and administrative $ 13,307 $ 14,418 (8 )% The change in general and administrative expense was primarily due to the following: (i) a decrease in insurance fees, primarily due to our directors’ and officers’ insurance; (ii) an increase in legal fees, primarily due to an increase in legal fees related to regulatory activities, the ACT-EAP, intellectual property, and other general corporate legal fees; (iii) a decrease in finance and accounting fees, primarily due to a decrease in fees from consultants, advisors, and other financial vendors; partially offset by increased tax fees; (iv) a decrease in stock-based compensation expense, primarily due to the timing of award grants, vesting, and forfeitures for general and administrative personnel; and (v) an increase in other expenses, primarily due to an increase in expenses related to lobbying activities; partially offset by a decrease in expenses related to travel, meals, and other miscellaneous expenses. 95 Table of Contents Total Other Income (Expense), Net Total other income (expense), net, during the years ended December 31, 2024 and 2023 was as follows: Year Ended December 31, (in thousands) 2024 2023 Change Interest income $ 865 $ 1,389 (38 )% Interest expense (4,064 ) (4,558 ) (11 )% Loss on extinguishment of notes payable (214 ) — * Commitment share expense — (402 ) * Issuance costs for common stock warrant liabilities (157 ) (333 ) (53 )% Loss on initial issuance of equity (2,097 ) (14,840 ) (86 )% Change in fair value of common stock warrant liabilities (702 ) 6,337 * Change in fair value of derivative liabilities (379 ) — * Change in fair value of Clene Nanomedicine contingent earn-out liability 75 2,189 (97 )% Change in fair value of Initial Stockholders contingent earn-out liability 10 281 (96 )% Research and development tax credits and unrestricted grants 357 963 (63 )% Other income (expense), net (1 ) 10 * Total other income (expense), net $ (6,307 ) $ (8,964 ) (30 )% * Not meaningful.
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.
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.
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.
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) a change in fair value of the Clene Nanomedicine and Initial Stockholders Contingent Earn-outs of $2.2 million and $0.3 million, respectively, due to 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 due to the decrease in price of our Common Stock on Nasdaq and changes in valuation model inputs.
This potential increase will likely include increased headcount, increased stock compensation expenses, expanded infrastructure including certain sales and marketing activities performed ahead of regulatory approval, and increased insurance expenses.
This potential increase will likely include increased headcount, increased stock-based compensation expenses, expanded infrastructure including certain sales and marketing activities performed ahead of regulatory approval, and increased insurance expenses.
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.
Other than the termination of the prospectus supplement related to the Purchase Agreement with respect to future sales by us, the Purchase Agreement remains in full force and effect. 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, 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.
As of December 31, 2024 and 2023, we recorded a full valuation allowance against our net deferred tax assets due to the uncertainty as to whether such assets will be realized resulting from our three-year cumulative loss position and the uncertainty surrounding our ability to generate pre-tax income in the foreseeable future.
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.
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%. Clene Australia had no taxable income or provision for income taxes for the years ended December 31, 2024 and 2023.
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.
Clene Netherlands had no taxable income or provision for income taxes for the years ended December 31, 2024 and 2023. Liquidity and Capital Resources Sources of Capital We have incurred significant losses and negative cash flows from operations since our inception.
During the years ended December 31, 2023 and 2022, changes in product and royalty revenues were due to the timing of purchases of Zinc Factor and Gold Factor by 4Life under the supply and license agreements.
During the years ended December 31, 2024 and 2023, changes in product and royalty revenues were due to the timing of purchases of Zinc Factor and Gold Factor by 4Life under the supply and license agreements.
On June 16, 2023, we suspended and terminated the prospectus supplement (the “Purchase Agreement Prospectus Supplement”) related to the offering with respect to the unsold shares of Common Stock issuable pursuant to the Purchase Agreement. We will not make any further sales of our securities pursuant to the Purchase Agreement, unless and until a new prospectus supplement is filed.
On June 16, 2023, we suspended and terminated the prospectus supplement related to the Purchase Agreement with respect to the unsold shares of Common Stock issuable pursuant to the Purchase Agreement. We will not make any further sales of our securities pursuant to the Purchase Agreement, unless and until a new prospectus supplement is filed.
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
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, 2024 and 2023. 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. 103 Table of Contents
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 recorded other income of $0.1 million and $1.0 million for the years ended December 31, 2024 and 2023, respectively, for research and development tax credits pertaining to Clene Australia for the 2024 and 2023 tax years, respectively. Netherlands Our wholly-owned subsidiary, Clene Netherlands B.V.
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.
Net cash provided by financing activities was $42.2 million for the year ended December 31, 2023, which consisted of proceeds from the issuance of common stock and warrants, net of offering costs, of $42.1 million, and proceeds from the issuance of notes payable of $0.4 million, partially offset by payments of finance lease obligations of $0.1 million and payments of notes payable modification fees of $0.2 million.
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.
Research and development costs consist primarily of payroll and personnel expenses for salaries, benefits, and stock-based compensation; supplies, materials, and manufacturing expenses to support our clinical trials; payments to CROs, principal investigators, and clinical trial sites; costs of preclinical and nonclinical activities; consulting costs; and allocated overhead costs, including rent, equipment, utilities, depreciation, insurance, maintenance, and information technology.
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.
We are also subject to state income tax in Maryland at a rate of 8.25%, and in Utah at a rate of 4.55% and 4.65% for the years ended December 31, 2024 and 2023, respectively.
The offering was made pursuant to our registration statement on Form S-3 (file number 333-264299), which was declared effective by the SEC on April 26, 2022, a related registration statement pursuant to Rule 462(b) (file number 333-272692), filed with the SEC and effective on June 16, 2023, and our prospectus supplement relating to the offering.
The offering was made pursuant to our registration statement on Form S-3 (file number 333-264299), declared effective by the Securities and Exchange Commission (“SEC”) on April 26, 2022, a related registration statement pursuant to Rule 462(b) (file number 333-272692), filed with the SEC and effective on June 16, 2023, and a related prospectus supplement.
(“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.
(“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 years ended December 31, 2024 and 2023.
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.
Net cash used in investing activities was $1.5 million for year ended December 31, 2023, which consisted of purchases of marketable securities of $6.2 million and purchases of property and equipment of $0.3 million, partially offset by proceeds from maturities of marketable securities of $5.0 million.
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.
If we are able to file an NDA with the FDA under an accelerated pathway, we anticipate our general and administrative expenses would increase in future periods to support increases in our drug development activities and as we build our commercial capabilities in advance of receiving regulatory approval.
As of December 31, 2023, the unobservable inputs were as follows: December 31, 2023 Expected stock price volatility 105.00% –110.00 % Risk-free interest rate 3.88% –5.03 % Expected dividend yield 0.00 % Expected term (in years) 0.75 –4.5 Probability of change of control 25.00 % Probability of dissolution 50.00 % Probability of other outcome 25.00 % Pursuant to an underwritten public offering in June 2023, we issued the Tranche A Warrants to purchase 50,000,000 shares of Common Stock at $1.10 per share and the Tranche B Warrants to purchase 50,000,000 shares of Common Stock at $1.50 per share.
The unobservable valuation inputs were as follows: December 31, December 31, 2024 2023 Expected stock price volatility 100.20% –101.40 % 105.00% –110.00 % Risk-free interest rate 4.20% –4.30 % 3.88% –5.03 % Expected dividend yield 0.00 % 0.00 % Expected term (in years) 0.75 –3.50 0.75 –4.50 Probability of change of control 10.00 % 25.00 % Probability of dissolution 45.00 % 50.00 % Probability of other outcome 45.00 % 25.00 % Pursuant to an underwritten public offering in June 2023, we issued the Tranche A Warrants to purchase 2,500,000 shares of Common Stock at $22.00 per share.
Each unit consisted of (i) one share of Common Stock, (ii) one warrant to purchase one share of Common Stock at an exercise price of $1.10 per share (the “Tranche A Warrants”), and (iii) one warrant to purchase one share of Common Stock at an exercise price of $1.50 per share (the “Tranche B Warrants”).
Each unit consisted of (i) one share of Common Stock, (ii) one warrant to purchase one share of Common Stock at an exercise price of $22.00 per share (the “Tranche A Warrants”), and (iii) one warrant to purchase one share of Common Stock at an exercise price of $30.00 per share (the “Tranche B Warrants”).
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.
Convertible Notes In accordance with ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , we classified a portion of the 2021 Avenue Loan as convertible notes payable in the consolidated balance sheets as of December 31, 2023 and did not separate the conversion option from the host contract as it did not meet the requirements for accounting as a derivative instrument.
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.
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.
Research and development costs are charged to operations as incurred, and nonrefundable advance payments related to future research and development activities are initially recorded as assets and are expensed when we receive the related goods or services.
Research and development costs are charged to operations as incurred, and nonrefundable advance payments related to future research and development activities are initially recorded as assets and are expensed when we receive the related goods or services. Grant funding is recognized as a reduction in research and development costs.
(“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.
Additionally, pursuant to our 2024 SSCP Notes, we are required to maintain unrestricted cash and cash equivalents of at least $2.0 million to avoid acceleration of the full balance of the 2024 SSCP Notes (see Note 8 to the consolidated financial statements). These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
We have not generated significant revenues since our inception, and we do not anticipate generating significant revenues unless we successfully complete development and obtain regulatory approval for commercialization of a drug candidate.
We have incurred significant losses and negative cash flows from operations since our inception. We have not generated significant revenues since our inception, and we do not anticipate generating significant revenues unless we successfully complete development and obtain regulatory approval for commercialization of a drug candidate.
Our development and clinical efforts are currently focused on addressing the high unmet medical needs in central nervous system disorders including amyotrophic lateral sclerosis (“ALS”), multiple sclerosis (“MS”), and Parkinson’s disease (“PD”). We currently have no drugs approved for commercial sale and have not generated any revenue from drug sales.
Our nanotherapeutics target cellular energy impairments that are common to many diseases and we are currently focused on addressing the high unmet medical needs in central nervous system disorders including amyotrophic lateral sclerosis (“ALS”), multiple sclerosis (“MS”), and Parkinson’s disease (“PD”). We currently have no drugs approved for commercial sale and have not generated any revenue from drug sales.
The net change in operating assets and liabilities was primarily attributable to the following: (a) an increase in accounts receivable of $0.1 million and an increase in accounts payable of $0.3 million due to the timing of vendor invoicing and payments; (b) an increase in prepaid expenses and other current assets of $1.4 million due to the timing of vendor invoicing and payments, the timing of receipt of metals to be used in research and development, and an increase in research and development tax credits receivable; (c) an increase in accrued liabilities of $0.3 million primarily due to decreased accrued compensation and benefits; and (d) a decrease in operating lease obligations of $0.5 million.
The net change in operating assets and liabilities was primarily attributable to: (A) a decrease in accounts receivable of $0.1 million and a decrease in accounts payable of $0.3 million due to the timing of vendor invoicing and payments, (B) an increase in prepaid expenses and other current assets of $0.2 million due to the timing of vendor invoicing and payments, the timing of receipt of metals to be used in research and development, and an increase in prepaid ACT-EAP expenses, partially offset by a decrease in research and development tax credits receivable, (C) an increase in accrued liabilities of $4.1 million primarily due to increased accrued compensation and benefits, increased deferred grants, and an increase in accrued CRO and clinical fees, partially offset by a decrease in other miscellaneous accrued liabilities, and (D) a decrease in operating lease obligations of $0.4 million.
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.
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 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.
The unobservable valuation inputs were as follows: Year Ended December 31, 2024 2023 Expected stock price volatility 97.78% –111.49 % 96.22% –103.31 % Risk-free interest rate 3.52% –4.58 % 3.26% –4.66 % Expected dividend yield 0.00 % 0.00 % Expected term of options (in years) 5.00 –10.00 5.00 –6.43 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 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.
We account for the convertible note as a single liability measured at its amortized cost as of December 31, 2024 and 2023, with a carrying value of $5.3 million and $5.3 million, respectively.
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.
Results of Operations Our results of operations for the years ended December 31, 2024 and 2023 were as follows: Year Ended December 31, (in thousands) 2024 2023 Change Revenue: Product revenue $ 237 $ 498 (52 )% Royalty revenue 105 156 (33 )% Total revenue 342 654 (48 )% Operating expenses: Cost of revenue 70 121 (42 )% Research and development 20,058 26,655 (25 )% General and administrative 13,307 14,418 (8 )% Total operating expenses 33,435 41,194 (19 )% Loss from operations (33,093 ) (40,540 ) (18 )% Total other income (expense), net (6,307 ) (8,964 ) (30 )% Net loss $ (39,400 ) $ (49,504 ) (20 )% 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.
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.
We have financed our operations principally through the following sources: ● gross proceeds of $187.6 million from equity financing, including sales of common stock, preferred stock, common stock warrants, and pre-funded common stock warrants; ● gross proceeds of $69.6 million from borrowings under notes payable, convertible notes payable, and convertible promissory notes; ● gross proceeds of $9.4 million from the Reverse Recapitalization; ● gross proceeds of $10.1 million from refundable research and development tax credits; ● gross proceeds of $8.1 million from grants from various organizations; and ● gross proceeds of $1.1 million from stock option and warrant exercises.
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.
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 miscellaneous accrued liabilities, and (D) a decrease in operating lease obligations of $0.6 million. 99 Table of Contents Investing Activities Net cash provided by investing activities was $6.3 million for the year ended December 31, 2024, which consisted of proceeds from maturities of marketable securities of $12.5 million, partially offset by purchases of marketable securities of $6.2 million and purchases of property and equipment of $15,000.
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.
The unobservable valuation inputs were as follows: December 31, October 1, 2024 2024 Expected stock price volatility 107.50 % 110.00 % Risk-free interest rate 4.40 % 3.50 % Expected dividend yield 0.00 % 0.00 % Expected term (in years) 4.75 5.00 Probability of dissolution 45.00 % 55.00 % Probability of other outcome 55.00 % 45.00 % 102 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.
Public Offering In June 2023, we sold 50,000,000 units at a sale price of $0.80 per unit pursuant to an underwriting agreement with Canaccord Genuity LLC (“Canaccord”) as underwriter.
Public Offerings In June 2023, we sold 2,500,000 units at a sale price of $16.00 per unit pursuant to an underwriting agreement with Canaccord Genuity LLC (“Canaccord”).
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 remeasure the SSCPN Derivative 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, 2024, the change in fair value of the SSCPN Derivative Liabilities resulted in a loss of $0.4 million.
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.
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.
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.
We expect to meet our long-term liquidity requirements primarily through equity financing, debt financing, or other capital sources. 98 Table of Contents Use of Funds Our cash flows for the years ended December 31, 2024 and 2023 were as follows: Year Ended December 31, (in thousands) 2024 2023 Net cash used in operating activities $ (21,326 ) $ (30,171 ) Net cash provided by (used in) investing activities 6,316 (1,499 ) Net cash provided by (used in) financing activities (1,529 ) 42,163 Effect of foreign exchange rate changes on cash (127 ) (4 ) Net increase (decrease) in cash, cash equivalents and restricted cash $ (16,666 ) $ 10,489 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.
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.
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.
Additionally, if we are able to file an NDA under an accelerated pathway with the FDA, contingent upon our discussions with the FDA regarding our accumulation of clinical evidence which is expected in the first half of 2024, we anticipate that our research and development expenses related to regulatory activities would increase in advance of receiving regulatory approval.
Additionally, if we are able to file an NDA with the FDA under an accelerated approval pathway or subsequent to future Phase 3 clinical development activities, if any, we anticipate that our research and development expenses related to regulatory activities would increase in advance of receiving regulatory approval.
The change in fair value of the Tranche A Warrants out resulted in a gain of $5.8 million for the year ended December 31, 2023.
The change in fair value of the Tranche A Warrants resulted in a gain of $0.6 million and a gain of $5.8 million during the years ended December 31, 2024 and 2023, respectively.
The issuance and sale of Common Stock under the Purchase Agreement is made pursuant to our registration statement on Form S-3 (file number 333-264299), which was declared effective by the SEC on April 26, 2022.
We did not effect any sales during any of the other periods presented herein. The sale of Common Stock under the Purchase Agreement was made pursuant to our registration statement on Form S-3 (file number 333-264299), declared effective by the SEC on April 26, 2022, and a related prospectus supplement.
Common Stock Sales Agreement During the year ended December 31, 2023, we sold 2,895,090 shares of Common Stock under our Equity Distribution Agreement (the “ATM Agreement”) with Canaccord, generated gross proceeds of $4.5 million, and paid commissions of $0.1 million.
Common Stock Sales Agreement During the years ended December 31, 2024 and 2023, we sold 504,292 and 144,755 shares of Common Stock, respectively, under the ATM Agreement with Canaccord, generated gross proceeds of $2.7 million and $4.5 million, respectively, and paid commissions of $0.1 million and $0.1 million, respectively.
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.
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.
The change in fair value of the New Avenue Warrant resulted in a gain of $0.5 million for the year ended December 31, 2023.
The change in fair value of the 2023 Avenue Warrant resulted in a loss of $49,000 and a gain of $0.5 million during the years ended December 31, 2024 and 2023, respectively.
The change in total other income (expense), net, was primarily due to the following: (i) an increase in interest income primarily due to increased balances of cash and cash equivalents and increasing interest rates on cash and cash equivalents; and 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 termination of lease due to the termination of an operating lease for office space during the year ended December 31, 2022; (iii) commitment share expense, due to the shares of Common Stock issued to Lincoln Park Capital Fund, LLC (“Lincoln Park”), as an initial fee for Lincoln Park’s commitment to purchase shares of Common Stock under a purchase agreement with the Company during the year ended December 31, 2023; (iv) issuance costs from a public equity offering allocated to liability-classified warrants during the year ended December 31, 2023; (v) a loss on initial issuance of equity from the fair value in excess of proceeds from a public equity offering during the year ended December 31, 2023; (vi) a gain from a change in fair value of the common stock warrant liability due to the Original Avenue Warrant during the year ended December 31, 2022 and the New Avenue Warrant and Tranche A Warrants during the year ended December 31, 2023.
(“Avenue”) during the year ended December 31, 2024; (iv) commitment share expense, due to the shares of Common Stock issued to Lincoln Park Capital Fund, LLC (“Lincoln Park”), as an initial fee for Lincoln Park’s commitment to purchase shares of Common Stock under a purchase agreement with the Company during the year ended December 31, 2023; (v) issuance costs from public equity offerings allocated to liability-classified warrants during the years ended December 31, 2024 and 2023; (vi) losses on initial issuance of equity from the fair value in excess of proceeds from public equity offerings during the years ended December 31, 2024 and 2023; (vii) a loss from the changes in fair value of the 2023 Avenue Warrant, Tranche A Warrants, and 2024 Common Warrants during the year ended December 31, 2024 and a gain from a change in fair value of the 2023 Avenue Warrant and Tranche A Warrants during the year ended December 31, 2023.
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.
The offering was made pursuant to our registration statement on Form S-3 (file number 333-264299), declared effective on April 26, 2022, and a related prospectus supplement.
Common Stock Warrant Liabilities Pursuant to a June 2023 amendment to the 2021 Avenue Loan, we issued a warrant to purchase 3,000,000 shares of Common Stock at $0.80 per share (the “New Avenue Warrant”).
Pursuant to amendments to the 2021 Avenue Loan in June 2023 and September 2024, we issued a warrant to purchase 150,000 shares of Common Stock at $4.6014 per share (the “2023 Avenue Warrant”).
We anticipate enrollment concluding in the first half of 2024 with topline results available by the end of 2024. We plan to work closely with regulatory health authorities from the FDA and EMA, MS experts, and patient representatives to determine the proper path to advance CNM-Au8 into Phase 3 and potential future approval.
We plan to work closely with regulatory health authorities from the FDA, European Medicines Agency and other international regulatory bodies, MS experts, and patient representatives to determine the proper path to advance CNM-Au8 into Phase 3 and potential future approval.
We also received indirect financial support for the HEALEY ALS Platform Trial, administered by Massachusetts General Hospital, which conducted a platform trial for the treatment of ALS with certain drug candidates, including CNM-Au8, at significantly lower costs than we would have otherwise incurred if we had conducted a comparably designed clinical trial at reasonable market rates.
We also received indirect financial support for the HEALEY ALS Platform Trial, administered by Massachusetts General Hospital, which conducted an ALS platform trial of CNM-Au8 alongside multiple other drug candidates, at significantly lower costs than we would have otherwise incurred if we had conducted a comparably designed clinical trial at reasonable market rates. 97 Table of Contents Going Concern We incurred a loss from operations of $33.1 million and $40.5 million for the years ended December 31, 2024 and 2023, respectively.
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.
Firm commitments for funds include approximately $1.4 million of payments under operating lease obligations, payment of principal and interest on notes payable totaling $1.9 million, and a commitment for capital expenditures totaling $0.2 million related to the construction of our manufacturing facilities. We expect to meet our short-term liquidity requirements primarily through cash on hand.
Additional 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.
Additional funds may be spent to initiate new clinical trials, at our discretion. Known obligations beyond the next twelve months include $5.2 million of payments under operating lease obligations, and interest and principal repayment of notes payable of $18.0 million.
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.
Our accumulated deficit was $282.1 million and $242.7 million as of December 31, 2024 and 2023. Our cash, cash equivalents, and marketable securities totaled $12.2 million and $35.0 million as of December 31, 2024 and 2023, respectively, and net cash used in operating activities was $21.3 million and $30.2 million for the years ended December 31, 2024 and 2023, respectively.
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.
Additionally, sodium phenylbutyrate and taurursodiol, a drug from Amylyx Pharmaceuticals, Inc. that previously received approval from the FDA and conditional approval from Health Canada based on the results of a Phase 2 trial, was voluntarily withdrawn from the market in the U.S. and Canada following the negative outcome of a Phase 3 clinical trial. 91 Table of Contents 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 requires 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.
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.
Financing Activities Net cash used in financing activities was $1.5 million for the year ended December 31, 2024, which consisted of payments of finance lease obligations of $27,000 and payments of notes payable principal of $20.8 million due to principal repayments and the ultimate payoff of the 2021 Avenue Loan, partially offset by proceeds from the exercise of stock options of $0.1 million, proceeds from the issuance of common stock, warrants, and pre-funded warrants, net of offering costs, of $9.2 million, and proceeds from the issuance of notes payable and convertible notes payable of $9.9 million.
Significant non-cash items included (i) depreciation expense of $1.0 million relating to laboratory and office equipment and leasehold improvements; (ii) non-cash lease expense of $0.4 million; (iii) stock-based compensation expense of $8.5 million; (iv) gain on termination of lease of $0.4 million; (v) accretion of debt discount of $0.9 million; (vi) non-cash interest expense of $0.1 million; and (vii) the changes in fair value of the Clene Nanomedicine and Initial Stockholders Contingent Earn-outs of $15.8 million and $2.0 million, respectively, and the change in fair value of common stock warrant liability of $0.2 million.
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 $0.5 million, (iii) issuance costs of $0.2 million from a public equity offering allocated to liability-classified warrants, (iv) a loss on initial issuance of equity of $2.1 million from the fair value in excess of proceeds from a public equity offering, (v) stock-based compensation expense of $8.0 million, (vi) a loss on extinguishment of notes payable of $0.2 million from the repayment in full of the 2021 Avenue Loan, (vii) a loss on disposal of property and equipment of $0.2 million, (viii) accretion of debt discount of $1.1 million, (ix) non-cash interest income on marketable securities of $0.2 million, (x) non-cash interest expense on notes payable of $0.1 million due to amortization of debt discounts on notes payable, (xi) a change in fair value of our common stock warrant liabilities of $0.7 million due to changes in the price of our Common Stock on Nasdaq and changes in valuation model inputs, (xii) a change in fair value of our derivative liabilities of $0.4 million due to changes in the price of our Common Stock on Nasdaq and changes in valuation model inputs, and (xiii) a change in fair value of the Clene Nanomedicine and Initial Stockholders Contingent Earn-outs of $0.1 million and $10,000, respectively, due to changes in the price of our Common Stock on Nasdaq and changes in valuation model inputs.
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.
If we are unable to file an NDA with the FDA under an accelerated pathway, we would need to continue investing in clinical research activities and we anticipate our general and administrative expenses would decrease in future periods as we decrease commercial expansion projects, including at our Elkton, Maryland facility, and as we implement cost-saving initiatives, such as a reduction in compensation, a hiring freeze, and elimination of certain staff positions. 92 Table of Contents Total Other Income (Expense), Net Total other income (expense), net, consists primarily of (i) interest income and interest expense, (ii) commitment share expense from shares of Common Stock issued as a commitment fee, (iii) issuance costs for common stock warrant liabilities, (iv) a loss on initial issuance of equity from the fair value in excess of proceeds from public equity offerings, (v) changes in the fair value of our common stock warrant liabilities, derivative liabilities, and Contingent Earn-outs, (vi) research and development tax credits, unrestricted grants, and conditional grants for which applicable conditions have been met, and (vii) realized gains and losses on foreign currency transactions and other miscellaneous income and expense items.
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.
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. 88 Table of Contents Reverse Stock Split Effective July 11, 2024 (the “Effective Date”), we filed a Certificate of Amendment to our Fourth Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, to effect a 1-for-20 reverse stock split (the “Reverse Stock Split”) of our Common Stock.
Recently, in April 2023, the FDA granted accelerated approval to tofersen, branded as Qalsody, a drug from Biogen Inc. for the treatment of SOD1-ALS. A marketing authorization application for tofersen is currently under review by the EMA. Additionally, sodium phenylbutyrate and taurursodiol, a drug from Amylyx Pharmaceuticals, Inc.
In April 2023, the FDA granted accelerated approval to tofersen, branded as Qalsody, a drug from Biogen Inc. for the treatment of SOD1-ALS, a rare genetic form of ALS. In May 2024, the European Commission granted marketing authorization under exceptional circumstances for Qalsody in the European Union.
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.
We anticipate that our research and development expenses will increase in future years if and when we advance our assets into Phase 3.
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.
Our clean-surfaced nanocrystals exhibit catalytic activities many-fold higher than other commercially available nanoparticles, produced using various techniques, that we have comparatively evaluated. Our development and clinical efforts are dedicated to revolutionizing the treatment of neurodegenerative diseases to restore and protect neuronal health and function.
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 Expense General and administrative expenses consist primarily of payroll and personnel expenses for salaries, benefits, and stock-based compensation; fees for legal, finance, accounting, tax, and information technology services; insurance costs; expenses for public and investor relations; rent, utilities, depreciation, and facility costs.
On June 16, 2023, we suspended and terminated the prospectus supplement related to the offering, and on November 7, 2023, we filed a prospectus supplement for future sales pursuant to the ATM Agreement having an aggregate offering price of up to $15.0 million. 95 Table of Contents Common Stock Purchase Agreement During the year ended December 31, 2023, we sold 400,000 shares of Common Stock under the purchase agreement (the “Purchase Agreement”) with Lincoln Park, issued 2,893 Additional Commitment Shares, and generated proceeds of $0.4 million.
The sale of Common Stock under the ATM Agreement was made pursuant to our registration statement on Form S-3 (file number 333-264299), declared effective by the SEC on April 26, 2022, and a related prospectus supplement. 100 Table of Contents Common Stock Purchase Agreement During the year ended December 31, 2023, we sold 20,000 shares of Common Stock under our purchase agreement (the “Purchase Agreement”) with Lincoln Park, issued 145 Additional Commitment Shares, and generated proceeds of $0.4 million.
The aggregate gross proceeds were $40.0 million, excluding the proceeds, if any, from the exercise of the Tranche A Warrants and Tranche B Warrants. We cannot predict when or if the Tranche A Warrants or Tranche B Warrants will be exercised, and it is possible they may expire and/or never be exercised.
The aggregate gross proceeds were $40.0 million, excluding the proceeds, if any, from the exercise of the Tranche A and Tranche B Warrants, and we paid underwriting discounts and commissions of $2.4 million and offering expenses of $0.2 million.
The 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.
The changes in fair value of common stock warrant liabilities were due to the change in price of our Common Stock on Nasdaq and updates in the valuation model assumptions (see “Critical Accounting Estimates” ); (viii) a loss from the change in fair value of the derivative liabilities separated from our senior secured convertible promissory notes (the “2024 SSCP Notes”) during the year ended December 31, 2024.
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 changes were due to the price of our Common Stock on Nasdaq and updates in the valuation model assumptions (see “Critical Accounting Estimates” ); and (x) a decrease in research and development tax credits and unrestricted grants due to changes in the amount of qualifying research and development expenses incurred. 96 Table of Contents 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%.
We expect to meet with the FDA in an end of Phase 2 meeting in the second half of 2024.
We expect to meet with the FDA in an end of Phase 2 meeting in the second half of 2025. 90 Table of Contents The chart below reflects the growing body of evidence for CSN therapeutics from our completed and ongoing clinical programs.
In accordance with ASC 815, we recognized the Tranche A Warrants as derivative liabilities measured at fair value and will remeasure the Tranche A Warrants at each reporting date and record the change in fair value as a component of other income (expense), net, in the consolidated statements of operations and comprehensive loss (the Tranche B Warrants qualified for equity classification at issuance).
The unobservable valuation inputs were as follows: December 31, December 20, 2024 2024 Expected stock price volatility 101.50 % 100.40 % Risk-free interest rate 4.20 % 4.30 % Expected dividend yield 0.00 % 0.00 % Expected term (in years) 0.50 – 1.47 0.53 – 1.50 Probability of change of control 10.00 % 10.00 % Probability of dissolution 45.00 % 45.00 % Probability of other outcome 45.00 % 45.00 % 101 Table of Contents Common Stock Warrant Liabilities In accordance with ASC 815, we recognized the below common stock warrants as derivative liabilities measured at fair value and will remeasure them at each reporting date and record the change in fair value as a component of other income (expense), net, in the consolidated statements of operations and comprehensive loss.
We account for the convertible note as a single liability measured at its amortized cost.
We accounted for the convertible note as a single liability measured at its amortized cost as of December 31, 2023, with a carrying value of $4.9 million. As of December 31, 2024, the 2021 Avenue Loan was repaid in full.
As of December 31, 2022, Tranche 2 of the Original Avenue Warrant expired, we recognized income of $0.2 million, and the warrant liability was extinguished; 91 Table of Contents (vii) a gain from a change in fair value of the Clene Nanomedicine Contingent Earn-out liability and Initial Stockholders Contingent Earn-out liability during the years ended December 31, 2023 and 2022.
The change was due to the price of our Common Stock on Nasdaq and updates in the valuation model assumptions (see “Critical Accounting Estimates” ); (ix) a gain from a change in fair value of the Clene Nanomedicine Contingent Earn-out liability and Initial Stockholders Contingent Earn-out liability during the years ended December 31, 2024 and 2023.
Cost 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.
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) a decrease in expenses related to our ALS clinical programs, including the HEALEY ALS Platform Trial and RESCUE-ALS due to the previous completion of the blinded portion of each trial; partially offset by an increase in expenses related our two ongoing EAPs with Massachusetts General Hospital due to increased enrollment and expansion of one EAP, and an increase in expenses related to our ongoing EAP funded by a National Institutes of Health grant (the “ACT-EAP”), due to increased enrollment in the EAP, and an increase in expenses for planning activities for our RESTORE ALS clinical trial; (B) a decrease in expenses related to our MS clinical programs, including VISIONARY-MS and its long-term extension, due to the completion of the studies; partially offset by an increase in expenses related to REPAIR-MS, due the full enrollment of the ongoing second dosing cohort, and an increase in expenses for our MS EAP which began enrollment in September 2024; (C) an increase in expenses for regulatory activities related to our ongoing FDA discussions and NDA submission-related activities; and (D) a decrease in pre-clinical, non-clinical, and other general CNM-Au8-related expenses; (ii) a decrease in expenses related to CNM-ZnAg, primarily due to completion of the clinical trial for treatment of COVID-19 in late 2022 with expenses continuing through 2023; (iii) a decrease in unallocated expenses, primarily due to: (A) a decrease in depreciation expense, (B) a decrease in manufacturing expenses due to the conclusion of various clinical programs, (C) a decrease in expenses related to research activities, and (D) a decrease in equipment-related expenses such as equipment service contracts; partially offset by an increase in maintenance expenses related to equipment and facilities; (iv) an increase in personnel expenses, primarily due to an increase in compensation expense related to the ACT-EAP and our regulatory activities in advance of an NDA submission, partially offset by a decrease in expenses for manufacturing personnel due to the conclusion of various clinical programs; (v) a decrease in stock-based compensation expense, primarily due to the timing of award grants, vesting, and forfeitures for research and development personnel.
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.
The unobservable valuation inputs were as follows: December 31, December 31, 2024 2023 Expected stock price volatility 97.80% –101.90 % 100.00% –110.00 % Risk-free interest rate 4.20 % 4.13% –4.74 % Expected dividend yield 0.00 % 0.00 % Expected term (in years) 0.71 –1.46 1.08 –2.46 Probability of NDA acceptance 20.00 % 20.00 % Probability of fundamental transaction 10.00 % 25.00 % Probability of dissolution 45.00 % 50.00 % Probability of other outcome 25.00 % 5.00 % Pursuant to a registered direct public offering in October 2024, we issued the 2024 Common Warrants to purchase 1,546,914 shares of Common Stock at $4.82 per share.
Removed
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.
Added
Beginning with the opening of trading on the Effective Date, our Common Stock began trading on Nasdaq on a split-adjusted basis under the same symbol, “CLNN.” As a result of the Reverse Stock Split, every 20 shares of our Common Stock issued and outstanding were automatically combined and converted into 1 validly issued, fully paid and non-assessable share of Common Stock.
Removed
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.
Added
In lieu of any fractional shares, stockholders received an amount in cash (without interest) equal to: (i) the number of shares of Common Stock held by such stockholder before the Reverse Stock Split that would otherwise have been exchanged for such fractional shares multiplied by (ii) the closing price of our Common Stock on Nasdaq on the trading day immediately preceding the Effective Date.
Removed
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.
Added
The Reverse Stock Split did not reduce the total number of authorized shares of Common Stock or preferred stock, par value $0.0001 per share (“Preferred Stock”), or change the par values of the Company’s Common Stock or Preferred Stock.
Removed
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).

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Other CLNN 10-K year-over-year comparisons