Anixa Biosciences, Inc. — Q1 FY2021 Form 10-Q
Reporting period: Three months ended January 31, 2021; comparative period is the three months ended January 31, 2020. The filing was signed March 11, 2021. Anixa is a development-stage biotechnology company focused on cancer therapeutics and vaccines and COVID-19 antivirals, with limited legacy licensing activity. It reported no revenue from its therapy or vaccine programs.
Financial results and position
| Metric | Q1 FY2021 | Q1 FY2020 / comparison |
|---|---|---|
| Revenue | $512,500 | $0 |
| Operating costs and expenses | $2.746 million | $2.630 million |
| Operating loss | $2.233 million | $2.630 million |
| Net loss attributable to common shareholders | $2.208 million; $0.09 per share | $2.593 million; $0.13 per share |
| Cash used in operating activities | $1.170 million | $1.914 million |
| Cash, cash equivalents and short-term investments at period end | $13.983 million | $9.057 million at October 31, 2020 |
The quarter’s $512,500 revenue came from a single, one-time patent license agreement; related royalties, contingent legal fees and licensing expenses were $385,002. Gross margin is not presented as a separate measure. Cash and cash equivalents were $11.983 million, with a further $2.000 million in short-term certificates of deposit. Current assets were $14.564 million and current liabilities $1.525 million. The balance sheet lists no debt; liabilities included accounts payable, accrued expenses and an operating lease liability.
Cash increased by $5.566 million during the quarter, principally because of $6.061 million in financing cash flow, including $5.957 million of net proceeds from an at-the-market (ATM) stock offering. Investing activities provided $675,447. The company issued 1,900,547 shares through the ATM and 29,880 shares upon option exercises. Shares outstanding increased from 24,248,695 at October 31, 2020 to 26,179,122 at January 31, 2021.
Changes versus the prior comparable period
- Revenue rose from zero, but was nonrecurring licensing revenue rather than revenue from product or program development.
- Operating loss narrowed by about $397,000, and common-shareholder net loss narrowed by about $384,000. Loss per share improved from $0.13 to $0.09.
- Research and development expense declined about $663,000 to $828,000, primarily because of reduced activity following suspension of the cancer diagnostics program; this was partly offset by increased vaccine license expense. Q1 FY2021 R&D included approximately $363,000 for CAR-T, $294,000 for cancer vaccines, $169,000 for antivirals and $2,000 for diagnostics.
- General and administrative expense increased about $394,000 to $1.533 million. The comparison was affected by approximately $337,000 of prior-year nonrecurring income from discharge of a disputed liability; other drivers included higher director compensation, patent expense and consultant equity compensation.
- Operating cash use decreased from $1.914 million to $1.170 million. Cash, cash equivalents and short-term investments rose, supported substantially by equity issuance.
Outlook, commentary and risks
- Management said existing cash, cash equivalents, short-term investments and expected cash flows should fund activities for the next 12 months, based on information available March 11, 2021. It cautioned that actual cash needs may differ and additional funding may be required. The ATM program allowed approximately $34.67 million of additional stock sales as of January 31, 2021; future equity or convertible-debt financing could dilute shareholders, and funding may not be available on acceptable terms.
- Management anticipated filing the ovarian CAR-T investigational new drug application in calendar Q1 2021 and, subject to FDA approval, beginning human trials in the second half of 2021. It also anticipated completing COVID-19 animal proof-of-concept studies by the end of calendar Q1 2021 and being ready to treat the first enrolled patient in the breast cancer vaccine Phase 1a trial by mid-2021. These are expectations, not assurances.
- The FDA had authorized enrollment and treatment in the breast cancer vaccine Phase 1a trial in December 2020. The filing describes the CAR-T program as preparing an IND and the ovarian cancer vaccine as being advanced under a joint development agreement with Cleveland Clinic.
- COVID-19-related laboratory and service-provider shutdowns and reduced capacity had slowed program progress; the company said previously announced timelines might not be met and the pandemic could materially adversely affect its business and prospects.
- The company had not generated revenue from its therapy or vaccine programs and did not expect near-term revenue from them; eventual licensing could take years or may not occur. It reported no material pending litigation known to management and no material change in risk factors from its FY2020 Form 10-K.
Important facts for investors to verify
- Whether the projected CAR-T, COVID-19 animal-study and breast-vaccine milestones were achieved, and whether clinical or regulatory timelines changed.
- How quickly operating cash is being used relative to management’s 12-month funding estimate, and whether additional capital is needed.
- Further ATM issuance, share-count growth and potential dilution; the filing’s share-count date and reported outstanding-share figure should also be checked against later company disclosures.
- Whether one-time licensing revenue recurs, and the level and composition of R&D and other expenses as programs advance.
- The continuing operational impact of COVID-19 disruptions and any resulting changes to development timelines or costs.