Annovis Bio, Inc. — 2022 Form 10-K
Business context and reporting period
Clinical-stage biotechnology company developing treatments for neurodegenerative diseases. The fiscal year ended December 31, 2022; the 10-K was filed March 31, 2023. Annovis has no approved products and has not generated product revenue. Its lead candidate, oral buntanetap, is being studied for Alzheimer’s disease (AD) and Parkinson’s disease (PD); ANVS405 and ANVS301 are earlier-stage programs.
Financial performance and liquidity
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue from product sales | None | None |
| Research and development expense | $16.5 million | $8.5 million |
| General and administrative expense | $9.0 million | $6.1 million |
| Total operating expenses | $25.5 million | $14.5 million |
| Net loss | $25.3 million | $14.5 million |
| Loss per share, basic and diluted | $3.10 | $1.90 |
| Net cash used in operations | $17.3 million | $9.1 million |
| Cash and cash equivalents at year-end | $28.4 million | $45.7 million |
Operating expenses rose about 76% year over year, primarily from clinical-trial and manufacturing costs and higher stock-based compensation. Net loss increased about 75%. Gross profit and operating margins are not meaningful because the company has no product sales. Year-end current assets were $36.0 million, including $7.6 million of prepaid expenses and clinical-trial costs; current liabilities were $7.7 million. The balance sheet reports no debt. Accumulated deficit was $54.1 million.
Material changes and unusual items
- Cash declined $17.3 million during 2022. Financing cash flow was only $4,613, compared with $46.7 million in 2021, when the company completed a $50.0 million gross equity offering.
- The company restated its previously issued unaudited 2022 quarterly and year-to-date statements for March, June and September. Research and development expense recognition errors overstated reported interim expenses and losses and understated prepaid assets; the largest cumulative balance-sheet correction was $4.6 million at September 30. The restatement did not change total operating cash flow, financing cash flow or cash balances. Investors should rely on the restated figures in this 10-K, not the original quarterly reports.
- The auditor’s report includes a substantial-doubt-about-going-concern paragraph. Management stated cash and existing grant funding were expected to fund operations into late 2023, but the filing gives differing estimates: the MD&A says through the fourth quarter, while the financial-statement note says through the third quarter and not for more than one year after issuance. Additional capital is required, with no committed external funding source.
Outlook, clinical program and risks
- At the time of filing, the Phase 3 PD study, started in August 2022, was planned for 450 early-PD patients; the Phase 2/3 AD study, started in February 2023, was planned for 320 mild-to-moderate AD patients. Management expected both studies to finish by year-end 2023, with final analyses announced in the first quarter of 2024. These are forward-looking expectations, not reported outcomes.
- A two-month PD interim analysis covered 132 patients. Annovis said it would continue the study as planned, but remained blinded and reported no safety or efficacy data from the trial. The company cautioned that interim findings may differ from final results. An AD interim analysis was expected in fall 2023.
- Management’s goal was to complete required pivotal studies and be positioned to file two NDAs by the end of 2026. Future development plans and timing depend on trial data, FDA feedback, financing and other factors; the filing provides no assurance of approval.
- Prior small, short, early-stage studies reported safety/tolerability and exploratory biomarker and functional findings. These results do not establish efficacy in the larger ongoing trials. Buntanetap’s safety and effectiveness remain unproven; the filing cites nausea, vomiting and dizziness at higher doses among potential adverse effects.
- Key risks include dependence on buntanetap, clinical and regulatory uncertainty, ongoing losses and financing needs, reliance on contract manufacturers and research organizations, competition, potential trial delays, and uncertainty around reimbursement and commercialization.
Investor facts to verify
- Confirm the company’s current cash runway, financing plans and any subsequent capital raises; reconcile the third- versus fourth-quarter 2023 runway estimates in the filing.
- Review full, final AD and PD trial results, including prespecified endpoints, patient populations, statistical analyses and safety data; distinguish them from interim or exploratory findings.
- Track remediation and testing of the material weakness in financial reporting. Management said disclosure controls were ineffective and internal control over financial reporting was not effective at year-end 2022.
- Assess whether projected clinical timelines, trial costs and the 2026 NDA objective remain feasible, and whether manufacturing capacity and supply arrangements are adequate.
- Check the restated quarterly statements and related disclosures against the superseded 2022 10-Qs; the company said it did not intend to file amendments to those reports.