Chemomab Therapeutics Ltd.

Chemomab Therapeutics Ltd. is a clinical-stage biotechnology company focused on discovering and developing innovative therapeutics for fibrotic and inflammatory diseases with high unmet needs. The company's core business model revolves around the therapeutic targeting of CCL24, a soluble protein that plays a pivotal role in promoting fibrosis and inflammation. Chemomab generates revenue through the potential future sales of its product candidates, and through licensing agreements with third parties, as it currently has no products approved for commercial sale ¹. The primary customer segments are patients suffering from rare, difficult-to-treat fibrotic and inflammatory diseases.

The company's lead clinical product candidate is CM-101, a first-in-class humanized monoclonal antibody designed to bind and block CCL24 activity. CM-101 is being advanced in Phase 2 clinical studies for two orphan indications: Primary Sclerosing Cholangitis (PSC) and Systemic Sclerosis (SSc). PSC is a rare obstructive and cholestatic liver disease, affecting an estimated 77 thousand patients in the U.S., EU, and Japan, representing a market opportunity over $1 billion ². SSc is a rare autoimmune rheumatic disease characterized by fibrosis in the skin, lung, and other organs, affecting approximately 170 thousand patients in the U.S., EU, and Japan, representing a market opportunity over $1.5 billion ³. CM-101 has demonstrated dual anti-fibrotic and anti-inflammatory activity by modulating the complex interplay of these mechanisms. The company also completed a Phase 2a clinical study in patients with liver fibrosis due to non-alcoholic steatohepatitis (NASH), which provided safety and pharmacokinetic data and showed encouraging activity in liver fibrosis biomarkers ⁴.

For the fiscal year ended December 31, 2022, Chemomab reported total operating expenses of $28.533 million ⁵. The company incurred a net loss of $27.646 million ⁶. Basic and diluted loss per Ordinary Share was $0.121 ⁷. Net cash used in operating activities for the year was approximately $20.370 million ⁸. As of December 31, 2022, cash and cash equivalents were $13.519 million ⁹, short-term bank deposits were $26.374 million ¹⁰, and restricted cash was $77 thousand ¹¹. The company had an accumulated deficit of $63.819 million ¹². Total current liabilities were $6.749 million ¹³, and total non-current liabilities were $91 thousand ¹⁴.

Comparing the fiscal year 2022 to 2021, research and development expenses increased by approximately $10.7 million, or 168%, to $16.977 million ¹⁵ from $6.334 million ¹⁶. General and administrative expenses increased by approximately $5.6 million, or 92%, to $11.556 million ¹⁷ from $6.033 million ¹⁸. Financing expenses, net, shifted from a net loss of $111 thousand ¹⁹ in 2021 to a net income of $353 thousand ²⁰ in 2022, an increase of approximately $464 thousand, or 418% ²¹. Net cash used in operating activities increased by $7.996 million ²², or 65% ²³, from $12.374 million ²⁴ in 2021 to $20.370 million ²⁵ in 2022. Net cash provided by investing activities was $19.533 million ²⁶ in 2022, a significant change from net cash used in investing activities of $45.186 million ²⁷ in 2021. Net cash used in financing activities was $808 thousand ²⁸ in 2022, a decrease of $61.882 million ²⁹, or 101% ³⁰, from net cash provided by financing activities of $61.074 million ³¹ in 2021.

During the reported period, Chemomab received U.S. Food and Drug Administration (FDA) clearance for its Investigational New Drug (IND) Application to evaluate CM-101 in a Phase 2 trial in adults with systemic sclerosis (SSc) on February 21, 2023 ³². The company also reported positive topline results from its Phase 2a liver fibrosis biomarker trial of CM-101 in NASH patients on January 3, 2023, which met its primary endpoint of safety and tolerability and showed encouraging activity in secondary endpoints ³³. Additionally, positive clinical data from an investigator-initiated clinical study assessing CM-101 activity and safety in hospitalized patients with severe lung injury derived from COVID-19 was presented on November 9, 2022 ³⁴. The company repurchased 582,023 ADSs from its co-founders for approximately $1,213,400 ³⁵ on November 16, 2022, following court approval ³⁶.

Chemomab estimates that its current liquidity resources, including existing cash, cash equivalents, and bank deposits, will be sufficient to fund its operating expenses and capital expenditure requirements at least through March 31, 2024 ³⁷. The company anticipates needing to raise substantial additional funds to achieve its strategic objectives, including advancing product candidates through clinical trials, obtaining regulatory approvals, securing commercial manufacturing capabilities, and commercializing products.

The company is actively advancing CM-101 in Phase 2 clinical studies for Primary Sclerosing Cholangitis (PSC) and Systemic Sclerosis (SSc). The ongoing Phase 2 clinical study in PSC is actively recruiting patients in the U.S., Europe, and Israel and is being expanded to include an additional high-dose arm (20mg/kg) ³⁸ and an open-label extension ³⁹. The company plans to open a Phase 2 clinical trial in SSc around midyear 2023 ⁴⁰, which will enroll 45 patients ⁴¹ with clinically active dermatologic, vascular, or pulmonary SSc, with a topline data read-out targeted for the second half of 2024 ⁴². This SSc trial will include a 24-week double-blind period where active treatment patients will receive 10 mg/kg of CM-101 by intravenous infusion every three weeks ⁴³, followed by a 24-week open-label extension at the same dose ⁴⁴. The company believes the recent encouraging results from its Phase 2 liver fibrosis trial in NASH patients, dosed at 5mg/kg ⁴⁵, along with positive Phase 1b data in NAFLD patients dosed at 5mg/kg and 2.5mg/kg ⁴⁶, provide sufficient data on the performance of the lower dose to focus the current PSC trial on 10mg/kg and 20mg/kg doses ⁴⁷.

Chemomab expects its research and development expenses to increase substantially over the next several years as it continues to advance the development of its product candidates ⁴⁸. General and administrative expenses are also anticipated to increase due to increased headcount and professional fees to support continued research and development, as well as costs associated with being a public company and preparing for commercial operations, particularly sales and marketing, if regulatory approval is obtained ⁴⁹.

The company's planned capital allocation includes continued investment in research and development. It expects to incur additional expenses related to milestone and royalty payments payable to third parties with whom it has entered into license agreements ⁵⁰. The company sold 130,505 ADSs ⁵¹ at an average price of USD 2.11 per ADS ⁵² through its ATM facility during 2022, generating gross proceeds of $275,000 ⁵³. It also repurchased 582,023 ADSs ⁵⁴ for approximately $1,213,400 ⁵⁵ from its co-founders.

Chemomab's future capital requirements depend on factors such as the progress and costs of preclinical and clinical trials, the scope and prioritization of R&D programs, revenues from future licensing and collaboration arrangements, costs of developing operational infrastructure, and costs of obtaining regulatory approval and securing manufacturing and commercialization arrangements ⁵⁶. The company is exposed to foreign currency exchange rate risk as some of its clinical studies and operations expenses are incurred in New Israeli Shekels (NIS) ⁵⁷.

Chemomab faces several material risks, including its limited operating history and funding, with no products approved for commercial sale and no revenue generated to date, making it difficult to evaluate its prospects and likelihood of success. The business is highly dependent on the success of its lead product candidate, CM-101, which is in early clinical development and requires substantial additional development, clinical research, and resources before regulatory approvals and commercial sales can occur. The company believes its cash and cash equivalents and bank deposits as of December 31, 2022, will be sufficient to fund operations only through March 31, 2024 ⁵⁸, necessitating substantial additional funding through equity or debt transactions or strategic partnerships, which may not be available on acceptable terms or at all, potentially leading to delays or discontinuation of development activities. The novel approach of targeting CCL24 for fibrotic diseases is unproven and may not result in marketable products, and clinical development is a lengthy, complex, and expensive process with uncertain outcomes, including potential delays in initiating or completing studies, difficulties in patient enrollment (exacerbated by public health emergencies like COVID-19), or negative or inconclusive results. CM-101 or any other product candidate may reveal significant adverse events or immunogenicity, leading to a safety profile that could delay or prevent regulatory approval or market acceptance. The market opportunities for CM-101 in PSC and SSc, while estimated at over $1 billion ⁵⁹ and over $1.5 billion ⁶⁰ respectively, may be smaller than anticipated, and the company may not successfully identify or discover additional product candidates. Furthermore, the company relies completely on third-party suppliers for manufacturing clinical drug supplies, exposing it to risks if these suppliers fail to comply with regulatory requirements or meet contractual obligations. Operating internationally, with research and development facilities in Israel, exposes the company to political, economic, and military conditions in the region, which could disrupt operations, and its commercial insurance does not cover losses from war and terrorism. Additionally, the company received Israeli government grants, which impose restrictions on transferring IIA-funded know-how or product manufacturing outside of Israel, potentially impairing its ability to sell technology internationally.

Management emphasizes Chemomab's position as a clinical-stage biotechnology company focused on innovative therapeutics for fibrotic and inflammatory diseases with high unmet needs, leveraging the unique role of CCL24. They highlight CM-101 as a first-in-class humanized monoclonal antibody with dual anti-fibrotic and anti-inflammatory activity, currently being advanced in Phase 2 clinical studies for PSC and SSc. Management has communicated that the company's current liquidity resources are expected to fund operations at least through March 31, 2024 ⁶¹. They are actively expanding the PSC Phase 2 study to include an additional high-dose arm of 20mg/kg ⁶² and an open-label extension ⁶³, and plan to initiate a Phase 2 SSc trial around midyear 2023 ⁶⁴ with a topline data read-out targeted for the second half of 2024 ⁶⁵. Strategic priorities include advancing CM-101 through clinical development to approval for PSC and SSc, expanding the next-generation pipeline with novel products or in-licensed candidates, selectively evaluating partnership opportunities to accelerate CM-101's time to market or expand into new indications, exploring CM-101 in additional inflammatory/fibrotic indications, and strengthening the intellectual property portfolio.