10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2022

 

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____________ to _____________

 

Commission file number: 01-39834

 

 

CLENE INC.

 

 

(Exact name of registrant as specified in its charter)

 

Delaware

 

85-2828339

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification No.)

 

6550 South Millrock Drive, Suite G50

Salt Lake City, Utah

 

84121

(Address of principal executive offices)

 

(Zip Code)

 

(801) 676-9695

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address, and former fiscal year, if changed since last report.)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.0001 par value

 

CLNN

 

The Nasdaq Capital Market

Warrants, to acquire one-half of one share of Common Stock for $11.50 per share

 

CLNNW

 

The Nasdaq Capital Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

The number of shares outstanding of the Registrant’s common stock as of November 2, 2022 was 73,820,010.

 


 

CLENE INC.

Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2022

 

PART I—FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

2

 

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

3

 

Condensed Consolidated Statements of Cash Flows

4

 

Notes to Condensed Consolidated Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

26

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

40

Item 4.

Controls and Procedures

40

 

 

 

PART II—OTHER INFORMATION

43

Item 1.

Legal Proceedings

43

Item 1A.

Risk Factors

43

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

43

Item 3.

Defaults Upon Senior Securities

43

Item 4.

Mine Safety Disclosures

43

Item 5.

Other Information

43

Item 6.

Exhibits

44

 

 

 

SIGNATURES

45

 

i


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

CLENE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

7,267

 

 

$

50,288

 

Marketable securities

 

 

8,966

 

 

 

 

Accounts receivable

 

 

126

 

 

 

49

 

Inventory

 

 

38

 

 

 

41

 

Prepaid expenses and other current assets

 

 

5,089

 

 

 

4,205

 

Total current assets

 

 

21,486

 

 

 

54,583

 

Restricted cash

 

 

58

 

 

 

58

 

Right-of-use assets

 

 

4,707

 

 

 

3,250

 

Property and equipment, net

 

 

9,753

 

 

 

5,172

 

TOTAL ASSETS

 

$

36,004

 

 

$

63,063

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

3,454

 

 

$

1,923

 

Accrued liabilities

 

 

2,136

 

 

 

3,610

 

Operating lease obligations, current portion

 

 

467

 

 

 

347

 

Finance lease obligations, current portion

 

 

97

 

 

 

146

 

Total current liabilities

 

 

6,154

 

 

 

6,026

 

Operating lease obligations, net of current portion

 

 

5,711

 

 

 

4,370

 

Finance lease obligations, net of current portion

 

 

45

 

 

 

97

 

Notes payable

 

 

15,726

 

 

 

14,484

 

Convertible notes payable

 

 

4,763

 

 

 

4,598

 

Common stock warrant liability

 

 

18

 

 

 

474

 

Clene Nanomedicine contingent earn-out liability

 

 

11,438

 

 

 

18,100

 

Initial Stockholders contingent earn-out liability

 

 

1,468

 

 

 

2,317

 

TOTAL LIABILITIES

 

 

45,323

 

 

 

50,466

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

Common stock, $0.0001 par value: 150,000,000 shares authorized; 63,541,984 and 62,312,097 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

 

 

6

 

 

 

6

 

Additional paid-in capital

 

 

182,760

 

 

 

175,659

 

Accumulated deficit

 

 

(192,165

)

 

 

(163,301

)

Accumulated other comprehensive income

 

 

80

 

 

 

233

 

TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

(9,319

)

 

 

12,597

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

$

36,004

 

 

$

63,063

 

See accompanying notes to the condensed consolidated financial statements.

1


 

CLENE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except share and per share amounts)

(Unaudited)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Product revenue

 

$

130

 

 

$

63

 

 

$

139

 

 

$

400

 

Royalty revenue

 

 

44

 

 

 

47

 

 

 

100

 

 

 

124

 

Total revenue

 

 

174

 

 

 

110

 

 

 

239

 

 

 

524

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

19

 

 

 

14

 

 

 

19

 

 

 

812

 

Research and development

 

 

6,403

 

 

 

6,146

 

 

 

24,149

 

 

 

18,893

 

General and administrative

 

 

3,557

 

 

 

4,400

 

 

 

12,807

 

 

 

16,739

 

Total operating expenses

 

 

9,979

 

 

 

10,560

 

 

 

36,975

 

 

 

36,444

 

Loss from operations

 

 

(9,805

)

 

 

(10,450

)

 

 

(36,736

)

 

 

(35,920

)

Other income (expense), net:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(857

)

 

 

80

 

 

 

(2,390

)

 

 

(497

)

Gain on extinguishment of notes payable

 

 

 

 

 

 

 

 

 

 

 

647

 

Gain on termination of lease

 

 

 

 

 

 

 

 

420

 

 

 

 

Change in fair value of common stock warrant liability

 

 

149

 

 

 

414

 

 

 

151

 

 

 

547

 

Change in fair value of Clene Nanomedicine contingent earn-out liability

 

 

(1,591

)

 

 

35,042

 

 

 

6,662

 

 

 

18,072

 

Change in fair value of Initial Stockholders contingent earn-out liability

 

 

(205

)

 

 

3,439

 

 

 

849

 

 

 

1,710

 

Australia research and development credit

 

 

1,346

 

 

 

364

 

 

 

2,001

 

 

 

1,078

 

Other income (expense), net

 

 

(13

)

 

 

(14

)

 

 

179

 

 

 

(13

)

Total other income (expense), net

 

 

(1,171

)

 

 

39,325

 

 

 

7,872

 

 

 

21,544

 

Net income (loss) before income taxes

 

 

(10,976

)

 

 

28,875

 

 

 

(28,864

)

 

 

(14,376

)

Income tax benefit

 

 

 

 

 

69

 

 

 

 

 

 

213

 

Net income (loss)

 

 

(10,976

)

 

 

28,944

 

 

 

(28,864

)

 

 

(14,163

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale securities

 

 

33

 

 

 

 

 

 

(54

)

 

 

 

Foreign currency translation adjustments

 

 

(39

)

 

 

(87

)

 

 

(99

)

 

 

(124

)

Total other comprehensive loss

 

 

(6

)

 

 

(87

)

 

 

(153

)

 

 

(124

)

Comprehensive income (loss)

 

$

(10,982

)

 

$

28,857

 

 

$

(29,017

)

 

$

(14,287

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share (Note 16)

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.17

)

 

$

0.47

 

 

$

(0.46

)

 

$

(0.23

)

Diluted

 

$

(0.17

)

 

$

0.42

 

 

$

(0.46

)

 

$

(0.23

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding (Note 16)

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

63,508,928

 

 

 

62,071,754

 

 

 

63,234,757

 

 

 

61,307,699

 

Diluted

 

 

63,508,928

 

 

 

70,038,634

 

 

 

63,234,757

 

 

 

61,307,699

 

See accompanying notes to the condensed consolidated financial statements.

2


 

CLENE INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands, except share amounts)

(Unaudited)

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders’
Equity

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

(Deficit)

 

Balances at December 31, 2021

 

 

62,312,097

 

 

$

6

 

 

$

175,659

 

 

$

(163,301

)

 

$

233

 

 

$

12,597

 

Reclassification of common stock warrant liability to equity

 

 

 

 

 

 

 

 

305

 

 

 

 

 

 

 

 

 

305

 

Exercise of stock options

 

 

934,448

 

 

 

 

 

 

267

 

 

 

 

 

 

 

 

 

267

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

2,202

 

 

 

 

 

 

 

 

 

2,202

 

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(50

)

 

 

(50

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

50

 

 

 

50

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(13,354

)

 

 

 

 

 

(13,354

)

Balances at March 31, 2022

 

 

63,246,545

 

 

$

6

 

 

$

178,433

 

 

$

(176,655

)

 

$

233

 

 

$

2,017

 

Exercise of stock options

 

 

110,000

 

 

 

 

 

 

17

 

 

 

 

 

 

 

 

 

17

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

2,184

 

 

 

 

 

 

 

 

 

2,184

 

Issuance of common stock upon vesting of restricted stock awards

 

 

65,363

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(37

)

 

 

(37

)

Offering costs

 

 

 

 

 

 

 

 

(100

)

 

 

 

 

 

 

 

 

(100

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(110

)

 

 

(110

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(4,534

)

 

 

 

 

 

(4,534

)

Balances at June 30, 2022

 

 

63,421,908

 

 

$

6

 

 

$

180,534

 

 

$

(181,189

)

 

$

86

 

 

$

(563

)

Issuance of common stock, net of issuance costs

 

 

40,000

 

 

 

 

 

 

128

 

 

 

 

 

 

 

 

 

128

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

2,098

 

 

 

 

 

 

 

 

 

2,098

 

Issuance of common stock upon vesting of restricted stock awards

 

 

80,076

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33

 

 

 

33

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(39

)

 

 

(39

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(10,976

)

 

 

 

 

 

(10,976

)

Balances at September 30, 2022

 

 

63,541,984

 

 

$

6

 

 

$

182,760

 

 

$

(192,165