Clene Inc.
11/13/2025 | Press release | Distributed by Public on 11/13/2025 06:51
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements reflecting our or our management team's expectations, hopes, beliefs, intentions, strategies, estimates, and assumptions concerning events and financial trends that may affect our future financial condition or results of operations. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "intends," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "will," "would," and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the section titled "Risk Factors" in our Annual Report on Form 10-K. We undertake no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws. Unless the context otherwise requires, for purposes of this section, the terms the "Company," "we," "us," or "our" are intended to mean the business and operations of Clene Inc. and its consolidated subsidiaries.
Business Overview
We are a clinical-stage pharmaceutical company pioneering the discovery, development, and commercialization of novel clean-surfaced nanotechnology ("CSN®") therapeutics. CSN® therapeutics are comprised of atoms of transition elements that, when assembled in nanocrystal form, possess unusually high, unique catalytic activities not present in those same elements in bulk form. These catalytic activities drive, support, and maintain beneficial metabolic and energetic cellular reactions within diseased, stressed, and damaged cells.
Our patent-protected, proprietary position affords us the potential to develop a broad and deep pipeline of novel CSN therapeutics to address a range of diseases with high impact on human health. We innovated an electro-crystal-chemistry drug development platform that draws from advances in nanotechnology, plasma and quantum physics, material science, and biochemistry. Our platform process results in nanocrystals with faceted structures and surfaces that are free of the chemical surface modifications that accompany other production methods. Many traditional methods of nanoparticle synthesis involve the unavoidable deposition of potentially toxic organic residues and stabilizing surfactants on the particle surfaces. Synthesizing stable nanocrystals that are both nontoxic and highly catalytic has overcome this significant hurdle in harnessing transition metal catalytic activity for therapeutic use. Our clean-surfaced nanocrystals exhibit catalytic activities many-fold higher than 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. 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. We have never been profitable and have incurred operating losses in each year since inception. We generate revenue from sales of dietary supplements through our wholly owned subsidiary, dOrbital, Inc., or through an exclusive license with 4Life Research LLC ("4Life"), an international supplier of health supplements, stockholder, and related party. We anticipate these revenues to be small compared to our operating expenses and to the revenue we expect to generate from potential future sales of our drug candidates, for which we are currently conducting clinical trials.
Reverse Recapitalization
Clene Nanomedicine, Inc. ("Clene Nanomedicine") became a public company on December 30, 2020 (the "Closing Date") when it completed a reverse recapitalization (the "Reverse Recapitalization") with Tottenham Acquisition I Limited ("Tottenham"), and with Tottenham's wholly-owned subsidiary and our predecessor, Chelsea Worldwide Inc., and Creative Worldwide Inc., a wholly-owned subsidiary of Chelsea Worldwide Inc. 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.
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. 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. 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.
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. All outstanding stock options, warrants, rights to restricted stock awards, convertible debt, and contingent earn-out shares entitling their holders to purchase or receive shares of Common Stock were adjusted as a result of the Reverse Stock Split, in accordance with the terms of each such security. In addition, the number of shares reserved for issuance pursuant to our Amended 2020 Stock Plan was also appropriately adjusted. All historical share and per share data for the periods presented in our condensed consolidated financial statements, including for periods ending prior to July 11, 2024, has been adjusted to reflect the 1-for-20 Reverse Stock Split on a retroactive basis as if the Reverse Stock Split occurred as of the earliest period presented.
Recent Developments of Our Clinical Programs
Amyotrophic Lateral Sclerosis
In December 2024, we announced that we received written guidance from the Division of Neurology 1 ("DN1") of the U.S. Food and Drug Administration ("FDA") regarding a potential accelerated approval pathway for CNM-Au8® in ALS. As announced previously in September 2024, we were initially advised that the data presented in our briefing package for CNM-Au8 was not adequate to support an NDA submission under the accelerated approval pathway. However, following our November 2024 meeting with DN1 and presentation of additional data and analyses, the FDA provided guidance on meeting the regulatory standard for substantial evidence of effectiveness supporting accelerated approval. The FDA recommended three potential paths that could be leveraged to increase the persuasiveness of our data, including the effect of CNM-Au8 on neurofilament light ("NfL") decline. We intend to follow the FDA's recommendation to provide data from the HEALEY ALS Platform Trial and our ongoing National Institutes of Health ("NIH")-sponsored Expanded Access Program ("EAP") and believe we can address the FDA's requests. The additional data collection and analyses to support NDA submission is planned to be completed shortly, as summarized below:
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ACT-EAP NfL biomarker analyses-Provide supportive evidence of NfL declines in participants from our ongoing NIH-sponsored compassionate-use EAP (the "ACT-EAP"). We met with the FDA in the second quarter of 2025 to review our statistical analysis plan for the NfL biomarker analyses, during which the FDA provided constructive feedback on our proposed analyses methodology. NfL change will be analyzed following nine months of treatment (primary NfL analysis) and after six months of treatment (supportive NfL analysis), including several prespecified sub-group analyses. These analyses are planned to provide supportive data of the NfL change demonstrated in the HEALEY ALS Platform Trial double-blind period following six months of treatment with CNM-Au8. |
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Placebo NfL biomarker analyses-Provide an analysis of change from baseline in NfL for original placebo subjects that switched to CNM-Au8 in the open-label extension ("OLE") of the HEALEY ALS Platform Trial with baseline based on the time the placebo participants initiated treatment with CNM-Au8. |
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○ |
Survival pharmacometric modeling-Provide evidence of the magnitude of NfL change and other related disease-specific biomarkers that are associated with clinical survival benefit and clinical outcomes in ALS patients. |
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Additional ALS-specific biomarkers-Provide analyses of additional ALS disease-specific biomarkers to support the effects of CNM-Au8 for treatment of ALS. |
The FDA noted that whether NfL or other related disease-specific biomarkers can serve as a reasonably likely surrogate endpoint for the effects of CNM-Au8 in ALS and whether the magnitude of change observed on NfL or other related disease-specific biomarkers in patients treated with CNM-Au8 can reasonably likely predict clinical benefit for ALS would be a matter of review. We recently had a Type C meeting with the FDA to review the long-term survival benefit from CNM-Au8 30 mg treatment compared to concurrently randomized controls from another HEALEY ALS Platform Trial Regimen. The FDA recommended using the evidence of CNM-Au8 30 mg treatment effects on long-term survival as supportive evidence for the clinical meaningfulness of observed NfL or other disease-specific biomarker changes. We plan to continue dialogue with the FDA including presenting additional long-term survival data and biomarker changes with the goal of filing an NDA under an accelerated approval pathway. In addition, the FDA recommended that we conduct further survival analyses comparing Regimen C to other regimens in the HEALEY ALS Platform Trial to strengthen the inference of a survival benefit. Assuming the data from one or more of the FDA potential paths is positive, we plan to submit an NDA in the first quarter of 2026 under an accelerated approval pathway. We also plan to request a Type C meeting with the FDA to review data from these additional biomarker analyses and anticipate this meeting will occur in the first quarter of 2026. Finally, we plan to commence a confirmatory Phase 3 trial, RESTORE-ALS, in the first half of 2026, contingent on funding. The trial is designed to investigate the effects of CNM-Au8 on improved survival (primary endpoint) and delayed time to ALS clinical worsening events (secondary efficacy endpoint).
Multiple Sclerosis
In September 2025, we announced combined results for REPAIR-MS, an open-label, investigator blinded Phase 2 clinical trial in relapsing MS and non-active progressive MS patients, including the results of the recently-completed second dosing cohort. The primary endpoint was the change in brain NAD+/NADH ratio-a measure of energetic capacity-from baseline to week 12. Participants analyzed for the primary efficacy outcome (all evaluable with post-baseline scans at the week 12 visit) included REPAIR-MS Cohort 1 (relapsing MS, n=11), REPAIR-MS Cohort 2 (non-active progressive MS, n=15), and REPAIR-PD (n=13) in prespecified analyses across the overall population (total n=39). Key findings included:
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The mean NAD+/NADH ratio in the brain was significantly increased following 12 weeks of treatment with CNM-Au8 in the full REPAIR population (+0.449 units, 95% CI: 0.093 to 0.805, p=0.0148; percent change: 8.65%, 95% CI: 2.6% to 14.7%, p=0.0006). |
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The change in REPAIR-MS participants alone demonstrated consistent increases in the NAD+/NADH ratio to week 12 (+0.480 units, 95% CI: -0.018 to 0.979, p=0.058; percent change: +9.49%, 95% CI: 1.14% to 17.85%, p=0.0275), a measure of how efficiently the brain makes energy. |
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Secondary endpoints: the change in the percent fraction of brain NAD+ and NADH similarly demonstrated statistically significant increases in NAD+ and decreases in NADH for both the full REPAIR population (p=0.0058) and REPAIR-MS (p=0.0232), respectively. |
Striking relationships between MS disease activity and brain energy metabolic indices were present at the pre-treatment baseline visit.
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The Expanded Disability Status Scale ("EDSS"), a global measure of MS disease severity, was significantly associated with the baseline deficits in the NAD+/NADH ratio (Pearson Correlation: ρ=-0.429, p=0.0127). |
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Baseline measures of working memory and cognitive processing speed, measured by the Symbol Digit Modalities Test, were significantly associated with average brain ATP levels (peak signal area average for α-ATP, β-ATP, γ-ATP; Pearson Correlation: ρ=0.542, p=0.0009). |
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Baseline measures of upper extremity function, measured by the 9-Hole Peg Test time (total time across hands), was also significantly associated with average brain ATP levels (peak signal area average for α-ATP, β-ATP, γ-ATP; Pearson Correlation: ρ=-0.513, p=0.0032). |
Collectively, these data reinforce the insight that bioenergetic failure in the brain is a key contributor to neurodegeneration and disease progression in MS. By improving brain energy metabolism, CNM-Au8 may help slow progression of disability.
We met with the FDA in a Type B end of Phase 2 meeting during the third quarter of 2025 to review results from the Phase 2 VISIONARY-MS trial and discuss a planned Phase 3 study focusing on cognition improvement as an adjunct to standard-of-care MS therapies, addressing a critical unmet medical need for people struggling with MS. The FDA aligned with Clene acknowledging the limitations of the EDSS and expressed openness to considering other potential primary endpoints, including cognition, to evaluate broader treatment effects. 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.
Parkinson's Disease
In September 2025, we announced preclinical data showing that CNM-Au8 improved key measures of cellular health in a novel dopaminergic neuron model of PD. The study used skin cells from 8 sporadic PD ("sPD") patients, 14 familial PD ("fPD") patients-13 with LRRK2 gene mutations and 1 with a PARK gene mutation-and 13 healthy individuals. The skin cells were directly converted into dopaminergic neurons, the brain cells essential for movement and the most vulnerable to degeneration in PD. This innovative method retains age-related characteristics from PD patient donors, enabling researchers to study disease processes as they occur in aged disease-relevant neurons. Key findings included:
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Improved mitochondrial health in familial PD-CNM-Au8 increased mitochondrial health (membrane potential) and mitochondrial volume, while reducing harmful reactive oxygen species ("ROS") in fPD neurons. |
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Reduced inflammation in sporadic PD-CNM-Au8 lowered levels of senescence-related inflammatory proteins, including CD40 and CXCL10, in sPD neurons, helping to reduce neuroinflammation that exacerbates PD progression. |
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Restored cellular metabolism-CNM-Au8 dose-dependently increased the NAD+/NADH ratio, a measure of cellular energy metabolism. Further, CNM-Au8 corrected the intracellular levels of 36% of metabolites in fPD neurons and 17% in sPD neurons, particularly in the tricarboxylic acid ("TCA") cycle for energy production and in nucleotide metabolism (e.g., xanthine, inosine) demonstrated by semi-targeted metabolomic analyses. |
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Normalized dysregulated gene expression-CNM-Au8 treatment of PD neurons resulted in a reversal of the global disease-associated gene expression profiles in both sPD and fPD dopaminergic neurons, normalizing the expression of the majority of all top up- and down-regulated PD differentially expressed gene transcripts to near-control levels. |
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Favorable safety profile-CNM-Au8 did not demonstrate evidence of toxicity toward the PD dopaminergic cells at all tested doses, a finding consistent with the clinical observation that CNM-Au8 treatment in humans has over 1,000 patient-years of exposure data in ALS and MS without significant safety concerns. |
The chart below reflects the growing body of evidence for CSN therapeutics from our completed and ongoing clinical programs.
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. As a result of this commitment, our pipeline of drug candidates has been advancing, with substantially all our research and development expenses relating to our lead asset, CNM-Au8.
Our research and development expenses are affected by the scope and advancement of our existing product pipeline and the commencement of new drug programs. Drug candidates in later stages of clinical development generally have higher development costs than those in earlier stages, primarily due to costs and fees for per patient clinical trial sites for larger clinical trials, opening and monitoring clinical sites, contract research organization ("CRO") activity, and manufacturing. We anticipate that our research and development expenses will increase in future years if and when we advance our assets into Phase 3. 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.
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. 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.
Our clinical trial accrual process seeks to account for expenses resulting from obligations under contracts with CROs, consultants, and clinical sites in connection with conducting clinical trials. The financial terms of these contracts vary and may result in payment flows that do not match the periods over which materials or services are provided to us under such contracts. We reflect the appropriate clinical trial expenses in the condensed consolidated financial statements by matching the appropriate expenses with the period in which services are performed. In the event advance payments are made to CROs, the payments are recorded as prepaid assets and expensed over the period in which services are performed.
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 other costs related to our facilities.
We anticipate that our general and administrative expenses in future periods will be contingent upon our discussions with the FDA. If we are able to file an NDA with the FDA under an accelerated approval 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. 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. If we are unable to file an NDA with the FDA under an accelerated approval 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 manufacturing 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.
Total Other Income (Expense), Net
Total other income (expense), net, consists primarily of (i) interest income and interest expense, (ii) changes in the fair value of our common stock warrant liabilities and derivative liabilities, and (iii) research and development tax credits, unrestricted grants, and conditional grants for which applicable conditions have been met.
Results of Operations
Our results of operations for the three and nine months ended September 30, 2025 and 2024 were as follows:
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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(in thousands) |
2025 |
2024 |
Change |
2025 |
2024 |
Change |
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Revenue: |
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Product revenue |
$ | - | $ | 65 | * | $ | 65 | $ | 173 | (62 | )% | |||||||||||||
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Royalty revenue |
15 | 22 | (32 | )% | 58 | 78 | (26 | )% | ||||||||||||||||
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Total revenue |
15 | 87 | (83 | )% | 123 | 251 | (51 | )% | ||||||||||||||||
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Operating expenses: |
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Cost of revenue |
- | 18 | * | 20 | 52 | (62 | )% | |||||||||||||||||
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Research and development |
3,513 | 4,471 | (21 | )% | 8,508 | 14,490 | (41 | )% | ||||||||||||||||
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General and administrative |
2,150 | 3,413 | (37 | )% | 7,183 | 10,147 | (29 | )% | ||||||||||||||||
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Total operating expenses |
5,663 | 7,902 | (28 | )% | 15,711 | 24,689 | (36 | )% | ||||||||||||||||
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Loss from operations |
(5,648 | ) | (7,815 | ) | (28 | )% | (15,588 | ) | (24,438 | ) | (36 | )% | ||||||||||||
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Total other income (expense), net |
(3,129 | ) | (171 | ) | 1,730 | % | (1,359 | ) | (1,413 | ) | (4 | )% | ||||||||||||
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Net loss |
$ | (8,777 | ) | $ | (7,986 | ) | 10 | % | $ | (16,947 | ) | $ | (25,851 | ) | (34 | )% | ||||||||
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. During the three and nine months ended September 30, 2025 and 2024, changes in product and royalty revenues were due to the timing of purchases and sales of Zinc Factor and Gold Factor by 4Life under the supply and license agreements.
Cost of Revenue
Cost of revenue relates to production and distribution costs for the sales of Gold Factor, Zinc Factor, and rMetx dietary supplements.
Research and Development Expense
Research and development expense during the three and nine months ended September 30, 2025 and 2024 was as follows:
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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(in thousands) |
2025 |
2024 |
Change |
2025 |
2024 |
Change |
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CNM-Au8: |
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Amyotrophic lateral sclerosis |
$ | 1,775 | $ | 694 | 156 | % | $ | 4,586 | $ | 2,074 | 121 | % | ||||||||||||
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Multiple sclerosis |
41 | 178 | (77 | )% | 230 | 339 | (32 | )% | ||||||||||||||||
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Parkinsonʼs disease |
- | - | * | - | 2 | * | ||||||||||||||||||
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Regulatory activities |
75 | 168 | (55 | )% | 335 | 630 | (47 | )% | ||||||||||||||||
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General/pre-clinical/non-clinical |
(108 | ) | (35 | ) | 209 | % | (26 | ) | 293 | * | ||||||||||||||
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CNM-ZnAg |
- | 4 | * | - | 17 | * | ||||||||||||||||||
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Unallocated: |
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Facilities |
436 | 411 | 6 | % | 1,241 | 1,193 | 4 | % | ||||||||||||||||
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Depreciation |
337 | 339 | (1 | )% | 1,012 | 1,040 | (3 | )% | ||||||||||||||||
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Manufacturing |
363 | 226 | 61 | % | 633 | 887 | (29 | )% | ||||||||||||||||
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Research |
1 | 46 | (98 | )% | 8 | 362 | (98 | )% | ||||||||||||||||
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Equipment |
30 | 39 | (23 | )% | 58 | 103 | (44 | )% | ||||||||||||||||
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Maintenance |
53 | 47 | 13 | % | 117 | 84 | 39 | % | ||||||||||||||||
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Information technology |
68 | 43 | 58 | % | 187 | 109 | 72 | % | ||||||||||||||||
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Other |
13 | 16 | (19 | )% | 117 | 75 | 56 | % | ||||||||||||||||
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Personnel |
1,945 | 2,516 | (23 | )% | 6,205 | 7,725 | (20 | )% | ||||||||||||||||
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Stock-based compensation |
754 | 1,062 | (29 | )% | 2,300 | 2,842 | (19 | )% | ||||||||||||||||
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Grant revenue as a reduction of research and development expense |
(2,270 | ) | (1,283 | ) | 77 | % | (8,495 | ) | (3,285 | ) | 159 | % | ||||||||||||
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Total research and development |
$ | 3,513 | $ | 4,471 | (21 | )% | $ | 8,508 | $ | 14,490 | (41 | )% | ||||||||||||
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* |
Not meaningful. |
The change in research and development expenses was primarily due to the following:
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(i) |
an increase in expenses related to our lead drug candidate, CNM-Au8, primarily due to (A) an increase in expenses related to our ALS clinical programs, including our ACT-EAP due to higher enrollment in the EAP, and an increase in expenses for planning activities for our RESTORE-ALS clinical trial; partially offset by a decrease in expenses related to the HEALEY ALS Platform Trial due to the previous completion of the blinded and open-label extension portions of the trial and a decrease in expenses related to our two other ongoing EAPs with Massachusetts General Hospital, (B) a decrease in expenses related to our MS clinical programs primarily due to a decrease in expenses related to our REPAIR-MS clinical trial due to the conclusion of the second dosing cohort, partially offset by an increase in expenses for our MS EAP which began enrollment in September 2024, (C) a decrease in expenses for regulatory activities primarily driven by lower expenses 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 primarily due to the renegotiation of a vendor contract upon completion; |
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(ii) |
an increase in unallocated expenses during the three months ended September 30, 2025, primarily due to: (A) an increase in manufacturing expenses to support higher enrollment in our ongoing and expanded EAPs, and (B) a decrease in expenses related to general research activities; and a decrease in unallocated expenses during the nine months ended September 30, 2025, primarily due to: (A) a decrease in manufacturing expenses due to the conclusion of various clinical programs, partially offset by increased manufacturing expenses to support higher enrollment in our ongoing and expanded EAPs, and (B) a decrease in expenses for general research activities with external vendors and consultants, partially offset by (C) an increase in information technology-related expenses; |
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(iii) |
a decrease in personnel expenses, primarily due to cost-saving initiatives and a decrease in expenses for manufacturing personnel due to the conclusion of various clinical programs; |
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(iv) |
a decrease in stock-based compensation expense, primarily due to the timing of award grants, vesting, and forfeitures for research and development personnel; and |
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(v) |
an increase in grant revenue, recorded as a reduction to research and development expense, due to an increase in enrollment and study operations in the ACT-EAP which resulted in higher reimbursable expenses, partially offset by a decrease in grant revenue related to our REPAIR-MS clinical trial due to the conclusion of the second dosing cohort. |
General and Administrative Expense
General and administrative expense during the three and nine months ended September 30, 2025 and 2024 was as follows:
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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(in thousands) |
2025 |
2024 |
Change |
2025 |
2024 |
Change |
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Insurance |
$ | 182 | $ | 188 | (3 | )% | $ | 544 | $ | 561 | (3 | )% | ||||||||||||
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Legal |
70 | 290 | (76 | )% | 393 | 649 | (39 | )% | ||||||||||||||||
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Finance and accounting |
270 | 192 | 41 | % | 800 | 565 | 42 | % | ||||||||||||||||
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Public and investor relations |
63 | 156 | (60 | )% | 293 | 589 | (50 | )% | ||||||||||||||||
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Facilities |
29 | 28 | 4 | % | 90 | 91 | (1 | )% | ||||||||||||||||
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Depreciation |
28 | 67 | (58 | )% | 123 | 200 | (39 | )% | ||||||||||||||||
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Information technology |
27 | 79 | (66 | )% | 123 | 245 | (50 | )% | ||||||||||||||||
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Personnel |
569 | 1,000 | (43 | )% | 2,189 | 3,140 | (30 | )% | ||||||||||||||||
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Stock-based compensation |
949 | 1,126 | (16 | )% | 2,717 | 3,310 | (18 | )% | ||||||||||||||||
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Grant revenue as a reduction of general and administrative expense |
(130 | ) | (41 | ) | 217 | % | (358 | ) | (147 | ) | 144 | % | ||||||||||||
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Other |
93 | 328 | (72 | )% | 269 | 944 | (72 | )% | ||||||||||||||||
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Total general and administrative |
$ | 2,150 | $ | 3,413 | (37 | )% | $ | 7,183 | $ | 10,147 | (29 | )% | ||||||||||||
The change in general and administrative expense was primarily due to the following:
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(i) |
a decrease in legal fees, primarily due to a decrease in legal fees related to intellectual property and regulatory activities; partially offset by an increase in legal fees related to financing and fundraising and other general corporate legal fees; |
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(ii) |
an increase in finance and accounting fees, primarily due to an increase in audit and tax fees and fees from consultants, advisors, and other financial vendors; |
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(iii) |
a decrease in fees related to our public and investor relations efforts; |
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(iv) |
a decrease in depreciation expense due to certain assets reaching the end of their depreciable life; |
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(v) |
a decrease in information technology-related expenses, primarily due to a decrease in fees for managed services, security services, and software licenses; partially offset by an increase in expenses related to maintenance and subscriptions; |
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(vi) |
a decrease in personnel expenses, primarily due to cost-saving initiatives; |
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(vii) |
a decrease in stock-based compensation expense, primarily due to the timing of award grants, vesting, and forfeitures for general and administrative personnel; |
| (viii) |
an increase in grant revenue, recorded as a reduction to general and administrative expense, due to an increase in enrollment and study operations in the ACT-EAP which resulted in higher reimbursable expenses; and |
|
(ix) |
a decrease in other expenses due to a decrease in expenses related to lobbying activities, postage, continuing education, office, and other miscellaneous expenses; partially offset by an increase in travel expenses. |
Total Other Income (Expense), Net
Total other income (expense), net, during the three and nine months ended September 30, 2025 and 2024 was as follows:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||||||
|
(in thousands) |
2025 |
2024 |
Change |
2025 |
2024 |
Change |
||||||||||||||||||
|
Interest income |
$ | 40 | $ | 127 | (69 | )% | $ | 183 | $ | 755 | (76 | )% | ||||||||||||
|
Interest expense |
(649 | ) | (1,022 | ) | (36 | )% | (1,936 | ) | (3,548 | ) | (45 | )% | ||||||||||||
|
Change in fair value of common stock warrant liabilities |
(1,728 | ) | 697 | * | 267 | 956 | (72 | )% | ||||||||||||||||
|
Change in fair value of derivative liabilities |
(797 | ) | - | * | (89 | ) | - | * | ||||||||||||||||
|
Change in fair value of Clene Nanomedicine contingent earn-out liability |
- | - | * | - | 75 | * | ||||||||||||||||||
|
Change in fair value of Initial Stockholders contingent earn-out liability |
- | - | * | - | 10 | * | ||||||||||||||||||
|
Research and development tax credits and unrestricted grants |
5 | 27 | (81 | )% | 216 | 339 | (36 | )% | ||||||||||||||||
|
Total other income (expense), net |
$ | (3,129 | ) | $ | (171 | ) | 1,730 | % | $ | (1,359 | ) | $ | (1,413 | ) | (4 | )% | ||||||||
|
* |
Not meaningful. |
The change in total other income (expense), net, was primarily due to the following:
|
(i) |
a decrease in interest income primarily due to lower average balances of cash and cash equivalents and lower interest rates in 2025; |
|
(ii) |
a decrease in interest expense primarily due to (A) declining balances of notes payable following principal repayments, including repayment of notes payable with higher stated interest rates, and (B) a decrease in amortization of debt discounts due to repayment of notes payable with higher monthly amortization; partially offset by (C) an increase in non-cash interest expense due to the capitalization of interest on senior secured convertible promissory notes beginning in August 2025; |
|
(iii) |
a loss from the changes in fair value of the 2023 Avenue Warrant, Tranche A Warrants, and 2024 Common Warrants during the three months ended September 30, 2025, and a gain during the nine months ended September 30, 2025. The changes in fair value were due to changes in price of our Common Stock on Nasdaq and updates in valuation model assumptions (see "Critical Accounting Estimates"); |
| (iv) |
a loss from the change in fair value of the derivative liabilities separated from our senior secured convertible promissory notes. The changes in fair value were due to changes in price of our Common Stock on Nasdaq and updates in valuation model assumptions (see "Critical Accounting Estimates"); |
|
(v) |
a gain from the change in fair value of the Clene Nanomedicine Contingent Earn-out liability and Initial Stockholders Contingent Earn-out liability. The changes were due to changes in price of our Common Stock on Nasdaq and updates in valuation model assumptions; and |
|
(vi) |
a decrease in research and development tax credits and unrestricted grants due to changes in the amount of qualifying research and development expenses incurred. |
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 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 4.55% for the nine months ended September 30, 2025 and 2024, respectively. As of September 30, 2025 and December 31, 2024, 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%. Clene Australia had no taxable income or provision for income taxes for the nine months ended September 30, 2025 and 2024. We recorded other income of $45,000 and $68,000 for the nine months ended September 30, 2025 and 2024, respectively, for research and development tax credits pertaining to Clene Australia for the 2025 and 2024 tax years, respectively.
Netherlands
Our wholly-owned subsidiary, Clene Netherlands B.V. ("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 nine months ended September 30, 2025 and 2024. Clene Netherlands had no taxable income or provision for income taxes for the nine months ended September 30, 2025 and 2024.
Liquidity and Capital Resources
Sources of Capital
We have incurred significant losses and negative cash flows from operations since our inception. We expect to incur additional losses in the future to fund our operations and conduct research and development of our drug candidates. We recognize the need to raise additional capital to fully implement our business plan. The long-term continuation of our business plan is dependent upon the generation of sufficient revenues from our products to offset expenses and capital expenditures. In the event that we do not generate sufficient revenues and are unable to obtain funding, we will be forced to delay, reduce, or eliminate some or all of our research and development programs, product portfolio expansion, commercialization efforts, or capital expenditures, which could adversely affect our business prospects, ability to meet long-term liquidity needs, or we may be unable to continue operations.
Since our inception, we have dedicated substantially all our resources to the development of our drug candidates. We have financed our operations principally through the following sources:
| ● |
gross proceeds of $194.7 million from equity financing, including sales of common stock, preferred stock, common stock warrants, and pre-funded common stock warrants; |
| ● |
gross proceeds of $71.1 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 $14.8 million from grants from various organizations; and |
| ● |
gross proceeds of $1.1 million from stock option and warrant exercises. |
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.
Going Concern
We incurred a loss from operations of $5.6 million and $7.8 million for the three months ended September 30, 2025 and 2024, respectively; and $15.6 million and $24.4 million for the nine months ended September 30, 2025 and 2024, respectively. Our accumulated deficit was $299.1 million and $282.1 million as of September 30, 2025 and December 31, 2024, respectively. Our cash and cash equivalents totaled $7.9 million and $12.2 million as of September 30, 2025 and December 31, 2024, respectively, and net cash used in operating activities was $13.7 million and $16.5 million for the nine months ended September 30, 2025 and 2024, respectively.
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. We expect to incur additional losses in the future, particularly as we advance the development of our clinical-stage drug candidates, continue research and development of our preclinical drug candidates, and initiate additional clinical trials of, and seek regulatory approval for, these and other future drug candidates. 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 senior secured convertible promissory notes issued in December 2024 (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 condensed consolidated financial statements). These conditions raise substantial doubt about the Company's ability to continue as a going concern.
To mitigate our funding needs, we plan to raise additional funding, including exploring equity financing and offerings, debt financing, licensing or collaboration arrangements with third parties, as well as utilizing our existing at-the-market facility and equity purchase agreement and potential proceeds from the exercise of outstanding warrants and stock options. 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. During the three and nine months ended September 30, 2025, we generated $3.3 million and $8.4 million, respectively, of gross proceeds from our equity distribution agreement and $1.5 million from the issuance of senior secured convertible promissory notes (see Note 8 to the condensed consolidated financial statements). Subsequent to September 30, 2025, we generated $1.2 million of gross proceeds from our equity distribution agreement. We have implemented cost-saving initiatives, including delaying and reducing certain research and development programs and commercialization efforts, reducing employee compensation, and elimination of certain staff positions. We have concluded that our plans do not alleviate the substantial doubt about our ability to continue as a going concern beyond one year from the date the condensed consolidated financial statements are issued.
The accompanying condensed consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As a result, the accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and their carrying amounts, or the amounts and classification of liabilities that may result should we be unable to continue as a going concern.
Short-Term Material Cash Requirements
For at least the next twelve months, our primary capital requirements are to fund our operations, including research and development, personnel, regulatory, and other clinical trial costs related to development of our lead drug candidate, CNM-Au8; general and administrative costs to support our drug development and pre-commercial activities in advance of receiving regulatory approval for our drug candidates; and principal and interest payments on our notes payable and convertible notes payable. Firm commitments for funds include approximately $1.2 million of payments under operating lease obligations, payment of principal and interest on notes payable and convertible notes payable totaling $1.9 million, and a commitment for capital expenditures totaling $0.3 million related to the construction of our manufacturing facilities. We expect to meet our short-term liquidity requirements primarily through cash on hand. Additional sources of funds include equity financing, debt financing, or other capital sources.
We 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. These commitments are not deemed significant.
Long-Term Material Cash Requirements
Beyond the next twelve months, our primary capital requirements are to fund our operations, including research and development, personnel, regulatory, and other clinical trial costs related to development of our lead drug candidate, CNM-Au8; general and administrative costs to support our drug development activities in advance of receiving regulatory approval for our drug candidates; and principal and interest payments on our notes payable and convertible notes payable. Additional funds may be spent to initiate new clinical trials, at our discretion. Known obligations beyond the next twelve months include $4.2 million of payments under operating lease obligations, and interest and principal repayment of notes payable and convertible notes payable of $19.6 million. We expect to meet our long-term liquidity requirements primarily through equity financing, debt financing, or other capital sources.
Use of Funds
Our cash flows for the nine months ended September 30, 2025 and 2024 were as follows:
|
Nine Months Ended September 30, |
||||||||
|
(in thousands) |
2025 |
2024 |
||||||
|
Net cash used in operating activities |
$ | (13,747 | ) | $ | (16,461 | ) | ||
|
Net cash provided by (used in) investing activities |
(11 | ) | 6,318 | |||||
|
Net cash provided by (used in) financing activities |
9,448 | (4,057 | ) | |||||
|
Effect of foreign exchange rate changes on cash |
80 | 24 | ||||||
|
Net decrease in cash, cash equivalents and restricted cash |
$ | (4,230 | ) | $ | (14,176 | ) | ||
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.
Operating Activities
Net cash used in operating activities was $13.7 million for the nine months ended September 30, 2025, which resulted from a net loss of $16.9 million, adjusted for non-cash items totaling $7.4 million and a net change in operating assets and liabilities of $4.2 million. Significant non-cash items included: (i) depreciation expense of $1.1 million related to laboratory and office equipment and leasehold improvements, (ii) non-cash lease expense of $0.4 million, (iii) stock-based compensation expense of $5.0 million, (iv) accretion of debt discount of $0.7 million, (v) non-cash interest expense on notes payable of $0.2 million, (vi) a change in fair value of our common stock warrant liabilities of $0.3 million due to changes in the price of our Common Stock on Nasdaq and changes in valuation model inputs, and (vii) a change in fair value of our derivative liabilities of $0.1 million due to changes in the price of our Common Stock on Nasdaq and changes in valuation model inputs. The net change in operating assets and liabilities was primarily attributable to: (A) a decrease in accounts receivable of $0.1 million and an increase in accounts payable of $0.1 million due to the timing of vendor invoicing and payments, (B) an increase in prepaid expenses and other current assets of $0.8 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, partially offset by a decrease in prepaid clinical and CRO expenses related to the ACT-EAP, (C) a decrease in accrued liabilities of $2.8 million primarily due to a decrease in deferred grants, accrued CRO and clinical fees, and other miscellaneous accrued liabilities, and (D) a decrease in operating lease obligations of $0.8 million.
Net cash used in operating activities was $16.5 million for the nine months ended September 30, 2024, which resulted from a net loss of $25.9 million, adjusted for non-cash items totaling $7.8 million and a net change in operating assets and liabilities of $1.6 million. Significant non-cash items included: (i) depreciation expense of $1.2 million related to laboratory and office equipment and leasehold improvements, (ii) non-cash lease expense of $0.4 million, (iii) stock-based compensation expense of $6.2 million, (iv) accretion of debt discount of $1.2 million, (v) non-cash interest expense of $40,000, (vi) non-cash interest income on marketable securities of $0.2 million, (vii) a change in fair value of our common stock warrant liabilities of $1.0 million due to changes in the price of our Common Stock on Nasdaq and changes in valuation model inputs, and (viii) 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. The net change in operating assets and liabilities was primarily attributable to: (A) a decrease in accounts receivable of $0.1 million and an increase in accounts payable of $0.2 million due to the timing of vendor invoicing and payments, (B) an increase in prepaid expenses and other current assets of $1.2 million due to the timing of vendor invoicing and payments, the timing of receipt of metals to be used in research and development, 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 $2.9 million primarily due to increased accrued compensation and benefits, deferred grants, and accrued CRO and clinical fees, and (D) a decrease in operating lease obligations of $0.4 million.
Investing Activities
Net cash provided by investing activities was $11,000 for the nine months ended September 30, 2025, which consisted of purchases of property and equipment. Net cash provided by investing activities was $6.3 million for the nine months ended September 30, 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 $14,000.
Financing Activities
Net cash provided by financing activities was $9.5 million for the nine months ended September 30, 2025, which consisted of proceeds from the issuance of common stock of $8.2 million and proceeds from the issuance of debt and derivative liabilities of $1.5 million, partially offset by payments of notes payable of $0.3 million. Net cash used in financing activities was $4.1 million for the nine months ended September 30, 2024, which consisted of proceeds from the exercise of stock options of $0.1 million, proceeds from the issuance of common stock of $2.0 million, and proceeds from share subscriptions receivable of $3.8 million due to receipt of investor subscriptions from a registered direct offering in advance of the closing date of October 1, 2024; partially offset by payments of finance lease obligations of $27,000 and payments of notes payable of $10.0 million.
Public Offerings
In October 2024, pursuant to a placement agency agreement with Canaccord Genuity LLC ("Canaccord"), we sold 725,000 shares of Common Stock and pre-funded warrants to purchase up to 17,626 shares of Common Stock at an exercise price of $0.001 per share. The aggregate gross proceeds were approximately $3.5 million, excluding the proceeds, of any, from the exercise of the pre-funded warrants and before deducting placement agent fees and expenses and other expenses payable by us. We paid Canaccord a placement agent fee of 6.00% of the aggregate gross proceeds of 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, and a related prospectus supplement. Additionally, in separate, concurrent private placements, we also sold 379,930 shares of Common Stock, pre-funded warrants to purchase up to 424,358 shares of Common Stock at an exercise price of $0.001 per share, and warrants to purchase up to 1,546,914 shares of Common Stock at an exercise price of $4.82 per share. The aggregate gross proceeds from the private placements were approximately $3.8 million, of which $1.3 million was contributed by certain of our directors, executive officers and their affiliated entities, and excludes the proceeds, if any, from the exercise of the warrants and pre-funded warrants.
Common Stock Sales Agreement
During the three and nine months ended September 30, 2025, we sold 757,875 and 2,095,070 shares of Common Stock, respectively, under our April 2022 equity distribution agreement (the "2022 ATM Agreement") and April 2025 equity distribution agreement (the "2025 ATM Agreement," and collectively with the 2022 ATM Agreement, the "ATM Agreements") with Canaccord, generated gross proceeds of $3.3 million and $8.4 million, respectively, and paid commissions of $0.1 million and $0.1 million, respectively. During the three and nine months ended September 30, 2024, we sold 394,453 shares of Common Stock, generated gross proceeds of $2.1 million, and paid commissions of $0.1 million. The issuance and sale of Common Stock by us under the 2022 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, which expired on April 26, 2025. The issuance and sale of Common Stock by us under the 2025 ATM Agreement was made pursuant to our registration statement on Form S-3 (file number 333-286058), declared effective by the SEC on April 25, 2025, and a related prospectus supplement.
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. Generally Accepted Accounting Principles. The preparation of these condensed consolidated financial statements requires us to make estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities, revenues, costs, and expenses. We evaluate our estimates and judgments on an ongoing basis, and our actual results may differ from these estimates. We base our estimates on historical experience, known trends and events, contractual milestones, and other various factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
We consider the following estimates to be critical as they involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations.
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 the 2022 DHCD Loan as convertible notes payable in the condensed consolidated balance sheets and did not separate the conversion option from the host contract as it did not meet the requirements for accounting as a derivative instrument. We account for the convertible note as a single liability measured at its amortized cost as of September 30, 2025 and December 31, 2024, with a carrying value of $5.3 million and $5.3 million, respectively.
We classified a portion of the senior secured convertible promissory notes (the "SSCP Notes") as convertible notes payable in the consolidated balance sheets and separated three features from the host contract as derivative instruments measured at fair value: (i) the conversion option (the "SSCPN Conversion Feature"), (ii) the redemption option upon a change of control or any bankruptcy, liquidation, or other restructuring process consisting of a cash payment equal to 115% of the outstanding principal (the "SSCPN Redemption Feature"), and (iii) the acceleration option plus a penalty equal to 10% of all outstanding principal and accrued and unpaid interest upon the occurrence and continuation of certain events of default (the "SSCPN Default Feature," collectively with the SSCPN Conversion Feature and SSCPN Redemption Feature, the "SSCPN Derivative Liabilities"). We accounted for the remainder of the SSCP Notes as liabilities measured at their amortized cost, with carrying values of (i) $8.7 million and $8.6 million for the 2024 SSCP Notes as of September 30, 2025 and December 31, 2024, respectively, and (ii) $1.3 million for the 2025 SSCP Notes as of September 30, 2025. 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 condensed consolidated statements of operations and comprehensive loss. During the three and nine months ended September 30, 2025, the change in fair value of the SSCPN Derivative Liabilities resulted in a loss of $0.8 million and a loss of $0.1 million, respectively. We estimate the fair value of the SSCP Notes with and without the SSCPN Derivative Liabilities and calculate the difference as the implied fair value of the SSCPN Derivative Liabilities. The valuation model consists of a discounted cash flow model and a Black-Scholes option-pricing model with probability weights for the occurrence of the following events: (i) a change of control transaction, (ii) dissolution of the Company, or (iii) another outcome outside of (i)-(ii). These estimates require significant judgment. The unobservable valuation inputs were as follows:
|
September 30, |
August 13, |
August 13, |
December 31, |
|||||||||||||
|
2025 |
2025(1) |
2025(2) |
2024(3) |
|||||||||||||
|
Expected stock price volatility |
100.70 | % | 96.30 | % | 89.20 | % | 101.50 | % | ||||||||
|
Discount rate |
15.00 | % | 21.00 | % | 21.00 | % | 12.00 | % | ||||||||
|
Risk-free interest rate |
3.70% - 3.80 | % | 3.80% - 4.10 | % | 3.90% - 4.10 | % | 4.20 | % | ||||||||
|
Expected dividend yield |
0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||||||
|
Expected term (in years) |
0.50 - 1.37 | 0.47 - 1.50 | 0.44 - 0.85 | 0.50 - 1.47 | ||||||||||||
|
Probability of change of control |
20.00 | % | 20.00 | % | 20.00 | % | 10.00 | % | ||||||||
|
Probability of dissolution |
45.00 | % | 45.00 | % | 45.00 | % | 45.00 | % | ||||||||
|
Probability of other outcome |
35.00 | % | 35.00 | % | 35.00 | % | 45.00 | % | ||||||||
| (1) |
Represents the unobservable inputs to the valuation of the SSCPN Derivative Liabilities related to: (i) the 2024 SSCP Notes immediately following an amendment in August 2025, and (ii) the 2025 SSCP Notes at issuance. |
| (2) |
Represents the unobservable inputs to the valuation of the SSCPN Derivative Liabilities related to the 2024 SSCP Notes immediately preceding an amendment in August 2025. |
| (3) |
Represents the unobservable inputs to the valuation of the SSCPN Derivative Liabilities related to the 2024 SSCP Notes only. |
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 condensed consolidated statements of operations and comprehensive loss.
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"). The change in fair value of the 2023 Avenue Warrant resulted in a loss of $0.1 million and a gain of $0.1 million during the three months ended September 30, 2025 and 2024, respectively; and a gain of $4,000 and a gain of $39,000 during the nine months ended September 30, 2025 and 2024, respectively. We estimate the fair value using a Black-Scholes option-pricing model with probability weights for the occurrence of the following events: (i) settlement of the instrument upon a change of control transaction, (ii) dissolution of the Company, or (iii) another outcome outside of (i)-(ii). These estimates require significant judgment. The unobservable valuation inputs were as follows:
|
September 30, |
December 31, |
|||||||
|
2025 |
2024 |
|||||||
|
Expected stock price volatility |
96.10% - 110.10 | % | 100.20% - 101.40 | % | ||||
|
Risk-free interest rate |
3.60% - 3.80 | % | 4.20% - 4.30 | % | ||||
|
Expected dividend yield |
0.00 | % | 0.00 | % | ||||
|
Expected term (in years) |
0.50 - 2.75 | 0.75 - 3.50 | ||||||
|
Probability of change of control |
20.00 | % | 10.00 | % | ||||
|
Probability of dissolution |
45.00 | % | 45.00 | % | ||||
|
Probability of other outcome |
35.00 | % | 45.00 | % | ||||
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. The change in fair value of the Tranche A Warrants resulted in a loss of $0.1 million and a gain of $0.6 million during the three months ended September 30, 2025 and 2024, respectively; and a gain of $0.5 million and a gain of $0.9 million during the nine months ended September 30, 2025 and 2024, respectively. We estimate the fair value using a Black-Scholes option-pricing model with probability weights for the occurrence of the following events: (i) FDA acceptance of an NDA for CNM-Au8, (ii) settlement upon a fundamental transaction, (iii) dissolution of the Company, and (iv) another outcome outside of (i)-(iii). These estimates require significant judgment. The unobservable valuation inputs were as follows:
|
September 30, |
December 31, |
|||||||
|
2025 |
2024 |
|||||||
|
Expected stock price volatility |
98.40% - 100.40 | % | 97.80% - 101.90 | % | ||||
|
Risk-free interest rate |
3.80% - 4.10 | % | 4.20 | % | ||||
|
Expected dividend yield |
0.00 | % | 0.00 | % | ||||
|
Expected term (in years) |
0.21 - 0.71 | 0.71 - 1.46 | ||||||
|
Probability of NDA acceptance |
20.00 | % | 20.00 | % | ||||
|
Probability of fundamental transaction |
20.00 | % | 10.00 | % | ||||
|
Probability of dissolution |
45.00 | % | 45.00 | % | ||||
|
Probability of other outcome |
15.00 | % | 25.00 | % | ||||
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. The change in fair value of the 2024 Common Warrants resulted in a loss of $1.5 million and a loss of $0.2 million during the three and nine months ended September 30, 2025, respectively. We estimate the fair value using a Black-Scholes option-pricing model with probability weights for the occurrence of the following events: (i) dissolution of the Company and (ii) another outcome outside of (i). These estimates require significant judgment. The unobservable valuation inputs were as follows:
|
September 30, |
December 31, |
|||||||
|
2025 |
2024 |
|||||||
|
Expected stock price volatility |
100.00 | % | 107.50 | % | ||||
|
Risk-free interest rate |
3.70 | % | 4.40 | % | ||||
|
Expected dividend yield |
0.00 | % | 0.00 | % | ||||
|
Expected term (in years) |
4.00 | 4.75 | ||||||
|
Probability of dissolution |
45.00 | % | 45.00 | % | ||||
|
Probability of other outcome |
55.00 | % | 55.00 | % | ||||
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 condensed consolidated financial statements. First, the tax position is evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. Additionally, we assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. The estimation of these factors requires significant judgment. Based on our evaluation of these factors, we have not recorded income tax benefits for the net operating losses or for research and development tax credits or other deferred tax assets due to uncertainty of realizing benefits from these items.
Stock-Based Compensation
We account for stock-based compensation arrangements using a fair value-based method for costs related to all share-based payments including stock options and stock awards. The fair value is recognized over the period during which a grantee was required to provide services in exchange for the option award and service-based stock awards, known as the requisite service period (usually the vesting period), on a straight-line basis. For stock awards with market conditions, the fair value is recognized over the period based on the expected milestone achievement dates as the derived service period (usually the vesting period), on a straight-line basis. For stock awards with performance conditions, the grant-date fair value of these awards is the market price on the applicable grant date, and compensation expense will be recognized when the conditions become probable of being satisfied. We will recognize a cumulative true-up adjustment once the conditions become probable of being satisfied as the related service period had been completed in a prior period. We elect to account for forfeitures as they occur, rather than estimating expected forfeitures.
We estimate the fair value of stock options using a Black-Scholes option-pricing model, which requires significant judgment. The unobservable inputs include the expected price volatility, risk-free interest rate, expected dividend yield, and expected term. The unobservable valuation inputs were as follows:
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Nine Months Ended September 30, |
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2025 |
2024 |
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Expected stock price volatility |
96.77% - 110.25 | % | 97.78% - 111.49 | % | ||||
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Risk-free interest rate |
3.67% - 4.24 | % | 3.62% - 4.58 | % | ||||
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Expected dividend yield |
0.00 | % | 0.00 | % | ||||
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Expected term of options (in years) |
5.00 - 6.25 | 5.00 - 10.00 | ||||||
Clene Inc. published this content on November 13, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 13, 2025 at 12:52 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]