Annovis Bio, Inc. — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. The filing was signed March 29, 2024. Annovis is a clinical-stage biotechnology company with no approved products and no product revenue; it is primarily developing oral candidate buntanetap for Alzheimer’s disease (AD) and Parkinson’s disease (PD).
Financial performance and position
| Metric | 2023 | 2022 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $38.79 million | $16.52 million |
| General and administrative expense | $6.24 million | $9.00 million |
| Total operating expenses | $45.04 million | $25.51 million |
| Net loss | $56.20 million | $25.33 million |
| Net loss per share, basic and diluted | $6.23 | $3.10 |
| Net cash used in operating activities | $39.97 million | $17.31 million |
Revenue-based margins are not meaningful because the company has not commercialized a product. No debt is reported on the year-end balance sheet. Cash and cash equivalents were $5.75 million at December 31, 2023, down from $28.38 million a year earlier. Current assets were $10.21 million and current liabilities were $4.28 million; the company also reported a $13.68 million warrant liability. Accumulated deficit reached $110.26 million, and stockholders’ equity was a deficit of $7.75 million.
Material changes and financing
- Net loss more than doubled year over year, reflecting higher clinical and manufacturing costs and an $11.84 million noncash loss from remeasuring Canaccord warrant liabilities. The warrant valuation was sensitive to the company’s share price and other Level 3 assumptions.
- R&D expense rose $22.28 million, primarily as CROs and other vendors conducted the PD Phase 3 and AD Phase 2/3 studies throughout 2023. G&A expense fell $2.75 million, mainly due to lower stock-based compensation, partly offset by higher professional fees related to internal-control remediation.
- Net cash used in operations increased to $39.97 million. Financing activities provided $17.34 million, principally from equity and warrant-related transactions. The October 2023 offering generated approximately $6.83 million net; the company also sold shares through its ATM and in private placements.
- After year-end, March 2024 stock sales generated $4.025 million in aggregate gross proceeds. Management nevertheless stated that cash and existing grant funding were insufficient for the 12 months following issuance of the financial statements.
Outlook, development status, and risks
- Management estimated that available resources would fund operations into the second quarter of 2024. It expects to seek additional equity or debt financing, partnerships, licensing, or other funding; none was committed. The auditor’s report includes a going-concern explanatory paragraph, and management concluded substantial doubt remained about the company’s ability to continue as a going concern. Failure to obtain funding could force reductions in operations or development programs.
- The Phase 3 PD study was completed December 4, 2023. The Phase 2/3 AD study was completed February 13, 2024. At the time of the filing, the company said it remained blinded to both studies while data were being cleaned and analyzed; it reported no final efficacy or safety results. AD topline data were expected in April 2024. Earlier interim analyses led the company to continue both studies as planned, but the filing cautions that interim results may differ from final results.
- Management’s goal is to complete pivotal studies needed to file two NDAs by the end of 2026. Future studies and regulatory plans depend on full trial results and FDA feedback; the timeline is not assured.
- Key risks include buntanetap’s unproven efficacy and safety in pivotal trials, regulatory uncertainty, dependence on a single lead candidate, continuing losses and financing needs, reliance on third-party manufacturers and CROs, competition, and potential dilution from future financing. The company also disclosed that cash balances are held at two financial institutions and may exceed insured limits.
- The company reported that a previously identified material weakness in R&D expense classification was remediated as of year-end; management assessed internal control over financial reporting as effective. The company’s independent auditor was not engaged to attest to that assessment.
Investor verification priorities
- Confirm the final AD and PD trial results, including prespecified endpoints, statistical significance, safety findings, and any changes from interim analyses.
- Track cash runway, operating cash use, and the amount and terms of any additional financing; assess the resulting dilution and whether funding addresses the going-concern uncertainty.
- Review the warrant liability’s valuation and potential share dilution, including the $9 exercise price and the conditions for company redemption.
- Verify FDA feedback, required follow-on studies, and the feasibility of management’s end-2026 NDA objective.
- Assess whether the reported remediation of the prior material weakness is sustained and whether future filings disclose any new control deficiencies.