Anavex Life Sciences Corp. — Q3 FY2021 Form 10-Q
Reporting period: Fiscal third quarter and nine months ended June 30, 2021; filed August 12, 2021. The interim financial statements are unaudited. Anavex is a clinical-stage biopharmaceutical company focused on CNS diseases; it has not generated operating revenue.
Financial performance and position
| Metric | Three months ended June 30, 2021 | Nine months ended June 30, 2021 | Prior-year comparable period |
|---|---|---|---|
| Revenue | None | None | None |
| Operating expenses | $11.4 million | $29.7 million | $8.1 million and $23.6 million |
| Research and development | $9.0 million | $23.6 million | $6.7 million and $19.1 million |
| General and administrative | $2.4 million | $6.1 million | $1.4 million and $4.5 million |
| Net loss | $10.2 million; $0.14 per share | $26.2 million; $0.39 per share | $6.5 million and $20.3 million; $0.11 and $0.35 per share |
| Net cash used in operations | Not provided for the quarter | $22.7 million | $15.0 million for nine months |
| Cash and cash equivalents | $157.6 million at June 30, 2021 | $29.2 million at September 30, 2020 | |
| Working capital | $157.1 million at June 30, 2021 | $27.2 million at September 30, 2020 |
Other income was $1.3 million for the quarter and $3.7 million year to date, including Australian R&D incentive income and grant income. The company reported no debt in the presented balance sheet; total liabilities were $9.3 million at June 30, 2021. No margin is meaningful given the absence of operating revenue.
Changes versus prior periods
- Quarterly net loss increased to $10.2 million from $6.5 million; nine-month net loss increased to $26.2 million from $20.3 million.
- Operating expenses rose year over year, primarily because of ongoing clinical-trial activity and higher staffing, corporate activity, and stock-based compensation. Quarterly stock-based compensation was $2.3 million versus $1.3 million.
- Operating cash use increased to $22.7 million from $15.0 million for the nine months, including higher R&D spending and growth in R&D incentive receivables.
- Cash increased by $128.3 million from fiscal year-end, largely because of equity financing. Financing activities provided $151.0 million net during the nine months.
Outlook, programs, and risks
- Management expects negative cash flows for the foreseeable future but believes available working capital will meet requirements for more than 12 months after issuance of the statements. Spending can be adjusted to trial timing; further financing may be needed, and its availability and terms are not assured.
- The 450-patient Phase 2b/3 Alzheimer’s trial completed enrollment in June 2021. The filing describes the study and its endpoints but does not report results.
- The company reported previously announced positive findings from a small, seven-week Phase 2 Rett syndrome study and said AVATAR and EXCELLENCE studies remained underway. These are company-reported clinical findings and do not establish regulatory approval or commercial efficacy.
- The company reported completion of a Phase 2 Parkinson’s disease dementia study in October 2020 and described favorable safety and efficacy findings; further trials were subject to regulatory guidance. ANAVEX 3-71 Phase 1 testing was underway.
- Key risks include clinical and regulatory uncertainty, inability to commercialize candidates, dependence on external financing, intellectual-property challenges, reliance on third parties, and stock-price volatility. The filing added risks related to sharp share-price movements and possible short squeezes.
- COVID-19 had no material impact on the reported period’s results or financial condition, but future effects were uncertain. Ordinary-course legal matters were disclosed; management did not expect pending claims to have a material adverse effect.
- The company raised $46.9 million net in a June registered direct offering and $76.7 million net through its at-the-market program during the nine months. It issued 13.1 million shares from September 30, 2020 through June 30, 2021; authorized common shares were increased from 100 million to 200 million.
Important facts for investors to verify
- Subsequent Alzheimer’s, Rett, Parkinson’s, and ANAVEX 3-71 trial updates, including prespecified endpoints, safety data, statistical methods, and regulatory feedback.
- Cash burn, receivable collection and R&D incentive eligibility, and whether management’s greater-than-12-month liquidity assessment remains valid.
- Future financing requirements, potential share issuance and dilution, and remaining capacity under the company’s financing arrangements.
- Whether clinical findings reported by the company are confirmed in larger, controlled studies and support eventual regulatory approval.