Anavex Life Sciences Corp. — Q2 FY2024 Form 10-Q
Reporting period: Quarter and six months ended March 31, 2024; filed May 9, 2024. Anavex is a clinical-stage biopharmaceutical company developing CNS treatments, led by blarcamesine (ANAVEX 2-73). It has not generated operating revenue.
Financial performance and liquidity
Amounts below are in millions of U.S. dollars except per-share data. “Q2” means the three months ended March 31.
| Metric | Q2 FY2024 | Q2 FY2023 | Six months FY2024 | Six months FY2023 |
|---|---|---|---|---|
| Operating revenue | None | None | None | None |
| Research and development expense | $9.7 | $11.3 | $18.4 | $23.4 |
| General and administrative expense | $2.8 | $2.9 | $5.4 | $6.2 |
| Total operating expenses / operating loss | $12.5 | $14.2 | $23.8 | $29.6 |
| Other income, net | $2.1 | $1.1 | $4.8 | $3.5 |
| Net loss | $10.5 | $13.1 | $19.2 | $26.1 |
| Basic and diluted loss per share | $0.13 | $0.17 | $0.23 | $0.33 |
| Net cash used in operating activities | Not provided for quarter | Not provided for quarter | $19.0 | $14.3 |
- Cash and cash equivalents: $139.4 million at March 31, 2024, down from $151.0 million at September 30, 2023.
- Working capital: $135.0 million, versus $141.9 million at September 30, 2023. Current assets were $144.5 million and current liabilities $9.6 million.
- Debt: No debt balance is reported in the supplied financial statements. Total liabilities were $9.6 million.
- Cash flows and financing: Six-month operating cash outflow was $19.0 million; financing provided $7.3 million, primarily from issuing shares under the Lincoln Park agreement. Cash declined by $11.6 million.
- Margins: Not meaningful because the company reports no operating revenue.
Changes versus prior comparable periods
- Q2 operating expenses declined 12% and six-month expenses declined 19% year over year; lower R&D costs, including reduced stock compensation and Rett and Alzheimer’s program spending, were key drivers.
- Net loss narrowed to $10.5 million for Q2 and $19.2 million for six months. Higher interest income and lower operating expenses contributed; the prior-year periods included a $0.9 million financing charge.
- Six-month operating cash use increased by $4.7 million year over year, partly because accounts payable and accrued liabilities were paid down rather than increased.
- Shares outstanding increased to 83.6 million at March 31 from 82.1 million at September 30, 2023. The company issued 1.5 million purchase shares under the Lincoln Park agreement for $7.4 million during the six-month period.
Outlook, programs, and risks
- Management expects negative operating cash flows to continue, but believes existing working capital is sufficient for requirements beyond 12 months after the financial statements’ issuance. The company may adjust spending to clinical-trial timing; further financing may be needed and is not assured.
- Management expects R&D spending to rise as it advances clinical programs, including Alzheimer’s and Rett extension studies, ANAVEX 3-71 schizophrenia development, planned Parkinson’s work, and a planned Fragile X trial.
- The EXCELLENCE pediatric Rett trial’s topline results, announced in January 2024, showed improvement on the RSBQ co-primary endpoint but did not meet the other co-primary endpoint, CGI-I. An ad hoc analysis found the 12-week RSBQ difference was not statistically significant (p=0.063); the reported four-week difference was significant (p=0.041). The filing reports no new safety signals.
- The company commenced a Phase 2 schizophrenia trial of ANAVEX 3-71 in March 2024. Alzheimer’s extension testing is ongoing; further Parkinson’s development is planned.
- Clinical efficacy, safety, regulatory approval, trial timing and financing remain uncertain. The company says it has no material changes to the risk factors in its FY2023 Form 10-K.
- A shareholder class action filed March 13, 2024 alleges securities-law violations concerning disclosures about ANAVEX 2-73 trials. The company disputes the claims and is pursuing dismissal.
- Australian R&D tax incentive claims for 2020–2023 remain open to review. The company has recorded no allowance for possible adjustments, repayments, penalties or interest.
- The Lincoln Park agreement had $114.7 million remaining available through February 2026, subject to its terms. The company said it was currently unable to sell shares under its separate at-the-market Sales Agreement.
Important facts for investors to verify
- Review the complete EXCELLENCE trial results and statistical analyses, particularly the unmet CGI-I co-primary endpoint and the non-significant 12-week RSBQ result.
- Track trial timelines, enrollment, regulatory interactions, and independently assess the evidence supporting efficacy and safety across the company’s programs.
- Monitor cash burn against the stated runway, expected R&D spending increases, and the availability and potential dilution of future equity financing.
- Assess the status and potential financial exposure of the shareholder litigation and any Australian R&D credit review.
- Check subsequent share issuance, outstanding options and warrants, and the terms and practical availability of the Lincoln Park financing facility.