Anixa Biosciences, Inc. — Form 10-Q summary
Reporting period: Fiscal second quarter and six months ended April 30, 2020. The company develops cancer therapeutics and diagnostics and COVID-19 antiviral candidates; it reported no revenue in the current quarter or six-month period.
Financial highlights
| Metric | Three months ended April 30, 2020 | Six months ended April 30, 2020 | Comparable 2019 period |
|---|---|---|---|
| Revenue | $0 | $0 | $250,000 in each period |
| Operating expenses | $2.67 million | $5.30 million | $2.84 million and $7.83 million, respectively |
| Net loss | $2.66 million | $5.27 million | $2.57 million and $7.54 million, respectively |
| Net loss per common share | $0.12 | $0.25 | $0.13 and $0.38, respectively |
- Six-month research and development expense was $2.72 million, down from $3.52 million; general and administrative expense was $2.58 million, down from $3.35 million. For the quarter, R&D declined slightly to $1.23 million, while G&A rose to $1.44 million from $1.28 million.
- Cash used in operating activities was $3.47 million for the six months, versus $2.76 million in 2019. Cash and cash equivalents were $2.89 million and short-term certificates of deposit were $2.62 million at April 30, totaling $5.51 million in cash and short-term investments.
- Current assets were $5.66 million and current liabilities were $1.08 million. The company reported no borrowings; operating lease liabilities totaled $81,712.
- Cash provided by financing was $3.15 million, including $3.03 million net proceeds from at-the-market stock sales. The company issued 1,094,063 shares through those offerings during the six months.
- No meaningful operating margin comparison is available because current-period revenue was zero.
Changes and unusual items
- Six-month operating expenses fell year over year, partly because 2019 included patent amortization and impairment charges, and higher stock-based compensation. Patent assets were fully amortized in fiscal 2019.
- Despite lower six-month expenses, net loss improved to $5.27 million from $7.54 million. In the quarter, net loss increased to $2.66 million from $2.57 million; the prior-year quarter included $250,000 of licensing revenue.
- G&A expense benefited in the six-month comparison from a $337,000 disputed-liability discharge in January 2020 and lower legal and accounting fees. The company also cited higher employee costs, Cchek commercialization consulting, and directors’ and officers’ insurance costs.
- Share-based compensation remained significant: $2.13 million for the six months, included in operating expenses.
Outlook, risks and contingencies
- Management said cash, cash equivalents, short-term investments and expected cash flows were expected to fund activities for the next 12 months, based on information available June 9, 2020. It cautioned that additional capital may be needed and may not be available on acceptable terms; further equity issuance could dilute shareholders. Approximately $47.25 million remained available under the current ATM program.
- Management anticipated filing an IND for the triple-negative breast cancer vaccine in calendar Q3 2020 and for the ovarian cancer CAR-T program by year-end 2020. Manufacturing, laboratory capacity and testing disruptions from COVID-19 could delay these timelines.
- The Cchek prostate test had been commercially launched in December 2019, but clinical validation and partner discussions were affected by reduced patient sample flow and pandemic disruption.
- The OntoChem COVID-19 drug-discovery collaboration had identified a lead molecule and three similar compounds for biological testing. The filing cautions that activity, animal or human efficacy, funding for trials, and eventual commercialization are uncertain, amid substantial competition.
- The company reported no litigation expected to have a material adverse effect. It said disclosure controls were effective and that no material change in internal control over financial reporting occurred during the quarter.
Important facts for investors to verify
- Whether the stated 12-month cash runway remains supportable given operating cash use, development spending and the absence of recurring revenue.
- Progress and timing of the breast cancer vaccine and CAR-T IND submissions, including any pandemic-related delays.
- Results of biological testing of the COVID-19 compounds and the resources or partners required for further testing.
- Clinical validation, sample availability and commercialization or partnering prospects for Cchek.
- Future ATM issuance, share dilution and the effects of substantial stock-based compensation.