Anixa Biosciences, Inc. — Q2 FY2021 Form 10-Q
Reporting period: Three and six months ended April 30, 2021. The company develops cancer therapies and vaccines and COVID-19 antiviral candidates; its programs have not generated revenue. Financial statements are unaudited.
Financial performance and liquidity
| Metric | Three months ended Apr. 30, 2021 | Six months ended Apr. 30, 2021 | Prior-year comparison |
|---|---|---|---|
| Revenue | $0 | $512,500 | $0 in both comparable 2020 periods |
| Operating costs and expenses | $2.44 million | $5.18 million | $2.67 million and $5.30 million, respectively |
| Net loss | $2.44 million | $4.67 million | $2.66 million and $5.27 million, respectively |
| Net loss attributable to common shareholders | $2.40 million | $4.61 million | $2.64 million and $5.23 million, respectively |
| Basic and diluted loss per share | $0.08 | $0.17 | $0.12 and $0.25, respectively |
| Research and development expense | $1.02 million | $1.85 million | $1.23 million and $2.72 million, respectively |
| General and administrative expense | $1.42 million | $2.95 million | $1.44 million and $2.58 million, respectively |
- Six-month revenue came from a one-time patent license agreement; it was not recurring revenue from therapeutics or vaccines. Associated inventor royalties, contingent legal fees, litigation and licensing expenses were $385,000.
- Six-month operating cash used was $2.41 million, compared with $3.47 million in 2020. Investing activities used $7.72 million, primarily reflecting purchases of short-term investments; financing activities provided $31.42 million.
- At April 30, cash and cash equivalents were $27.70 million and short-term investments were $10.40 million, totaling $38.10 million. Current liabilities were $1.44 million; total liabilities were $1.44 million. The balance sheet reports no borrowings or other debt.
- Management reported working capital resources sufficient for at least 12 months, based on information available June 10, 2021. The filing provides no gross-margin measure; revenue was limited and development costs dominate results.
Changes versus prior comparable periods
- Quarterly operating costs and net loss declined year over year. For the six-month period, operating costs also declined, but G&A expense rose by approximately $367,000, partly because the prior-year period included a non-recurring $337,000 benefit from discharge of a disputed liability.
- Lower R&D expense mainly reflected suspension of the cancer diagnostics program; spending on other development programs increased. Management reported six-month R&D of approximately $910,000 for CAR-T, $630,000 for cancer vaccines, $288,000 for antivirals and $2,000 for diagnostics.
- Cash and short-term investments increased from approximately $9.06 million at October 31, 2020 to $38.10 million at April 30, 2021, substantially funded by equity issuance. The company raised net proceeds of approximately $20.29 million in a public offering and $10.83 million through its at-the-market program.
- Shares issued and outstanding rose from 24.25 million at October 31, 2020 to 31.45 million at April 30, 2021. The public offering included 4.29 million shares; the ATM program issued 2.81 million shares during the six-month period.
Outlook, management commentary and risks
- CAR-T: The company submitted an IND for its ovarian cancer program in March 2021. The FDA requested additional information; Anixa said it expected to respond in June and, subject to FDA acceptance, anticipated beginning human trials in Q4 2021.
- Breast cancer vaccine: The FDA had authorized a Phase 1a trial. The company anticipated being ready to treat the first enrolled patient in July 2021.
- Ovarian cancer vaccine: The National Cancer Institute’s PREVENT program received an award to support virtually all preclinical research, manufacturing and IND-enabling studies, using NCI resources.
- COVID-19 antiviral: After animal studies, the company selected a compound for further medicinal chemistry to improve potency and pharmacokinetics, with completion anticipated by early Q4 2021. OntoChem assigned its collaboration rights and obligations to MolGenie in May 2021.
- Management does not expect near-term revenue from its current therapeutic or vaccine programs; eventual licensing may take years, if achieved, and may depend on positive clinical results. The company’s stated strategy relies on collaborations to conserve funds.
- Further capital may be needed if cash needs exceed expectations or the company pursues investments or acquisitions. The ATM program had approximately $29.6 million of capacity remaining at April 30; further equity or convertible-debt financing could dilute shareholders, and financing may not be available on acceptable terms.
- COVID-19-related laboratory and partner disruptions had slowed program progress; management cautioned that previously announced timelines might not be met. The filing reported no material change in risk factors from the prior annual report and no litigation expected to materially affect the company.
Important facts for investors to verify
- Whether the company submitted the FDA’s requested information and whether the CAR-T trial began on the anticipated schedule.
- Whether the breast vaccine trial treated its first patient as expected, and the timing and scope of NCI-supported ovarian vaccine work.
- Progress and results of antiviral compound optimization, including any changes to the stated development timeline.
- Cash use against the 12-month runway estimate, remaining ATM capacity, and any subsequent financing or share-count changes.
- The sustainability and composition of reported revenue: the six-month license payment was one-time, and the filing reports no revenue from therapeutic or vaccine programs.