Anavex Life Sciences Corp. — Q2 FY2022 Form 10-Q
Reporting period: Fiscal quarter and six months ended March 31, 2022; filed May 10, 2022. Interim financial statements are unaudited. Anavex is a clinical-stage biopharmaceutical company developing CNS drug candidates, primarily ANAVEX 2-73. It reported no revenue from product sales or other operations to date.
Financial results and liquidity
| Metric | Three months ended Mar. 31, 2022 | Three months ended Mar. 31, 2021 | Six months ended Mar. 31, 2022 | Six months ended Mar. 31, 2021 |
|---|---|---|---|---|
| Operating expenses | $11.52 million | $8.95 million | $23.24 million | $18.35 million |
| Net loss | $10.44 million | $8.16 million | $21.32 million | $16.01 million |
| Basic and diluted loss per share | $0.14 | $0.12 | $0.28 | $0.24 |
| Net cash used in operations | Not provided separately for the quarter | Not provided separately for the quarter | $13.14 million | $15.19 million |
- Quarterly operating expenses rose about 29% and six-month expenses about 27% year over year. Management attributed higher costs mainly to increased stock-based compensation and, for G&A, higher corporate insurance costs. Six-month R&D costs were partly offset by lower clinical-trial spending following completion of the PDD trial and Alzheimer’s enrollment activities.
- Six-month stock-based compensation was $8.35 million, versus $2.79 million a year earlier. The company expected approximately $16.03 million of additional compensation expense over the remaining terms of awards through fiscal 2025.
- Other income was $1.11 million for the quarter and $1.98 million for the six months, mainly reflecting Australian R&D incentive income and foreign-exchange effects. These amounts are not product revenue.
- At March 31, cash and cash equivalents were $153.34 million; working capital was $152.21 million, compared with $150.82 million at September 30, 2021. Total liabilities were $8.07 million. The filing reports no debt balance.
- Cash increased $1.23 million over the six months: $13.14 million was used in operating activities and $14.38 million was provided by financing activities. Financing was primarily ATM share sales and option exercises.
- Under the ATM Sales Agreement, Anavex sold 1,066,389 shares for gross proceeds of $14.80 million and reported net proceeds of approximately $14.27 million. About $148.59 million remained registered and available for sale under the agreement at March 31, subject to its terms. The company also reported 77.16 million shares outstanding at March 31 and 77.41 million at May 10.
- No operating margins are meaningful given the absence of product revenue. The filing provides no quantified financial guidance.
Material developments and outlook
- Rett syndrome: The company reported that the 33-patient AVATAR study met its primary and secondary efficacy and safety endpoints; cited results included RSBQ AUC (p=0.037), ADAMS (p=0.010), and CGI-I (p=0.037). An open-label extension was ongoing. Recruitment continued for the pediatric EXCELLENCE Phase 2/3 study, with sites activated in the UK and Canada.
- Alzheimer’s disease: The Phase 2b/3 study had completed enrollment of 509 patients in June 2021; the filing provides no outcome results for that study. The ATTENTION-AD open-label extension was also described.
- Parkinson’s disease dementia: The Phase 2 trial had been completed before the reporting period. The company described prior results as showing safety and encouraging cognitive findings, and said it anticipated seeking FDA guidance before further trials.
- ANAVEX 3-71: The company reported completion of a Phase 1 study in healthy volunteers, with no serious adverse events or dose-limiting toxicities, and stated its intention to advance a biomarker-driven dementia program. This is management’s reported interpretation, not regulatory approval or proof of efficacy.
- Management expects negative operating cash flows for the foreseeable future but believed existing working capital would meet requirements for more than 12 months after issuance of the statements. It may adjust spending to clinical-trial timing and stated that unavailable financing could force delays or reductions in R&D.
Risks, contingencies and other notable items
- All candidates remain in clinical or preclinical development; trial success, safety, regulatory approval, commercialization and future revenue are uncertain. The company depends on external research and clinical parties and may need additional financing.
- COVID-19 had not materially affected results or financial condition as of March 31, 2022, but management said future effects could not be estimated.
- The company disclosed ordinary-course legal matters and stated it did not believe pending matters would have a material adverse effect. It reported no material change to the risk factors in its latest Form 10-K.
- Disclosure controls were assessed as effective at March 31, 2022; no material change in internal control over financial reporting was reported during the quarter.
Important facts for investors to verify
- Review the full AVATAR results and underlying trial data, including endpoint definitions, analysis populations, effect sizes, safety findings and biomarker subgroup claims.
- Check subsequent filings and company updates for Alzheimer’s Phase 2b/3 results, EXCELLENCE recruitment and timelines, and FDA feedback on PDD development.
- Track quarterly operating cash burn, Australian R&D incentive receipts, cash runway assumptions and whether financing needs lead to additional ATM share sales.
- Monitor dilution from equity offerings, outstanding options and warrants, and the 2022 incentive plan, which was subject to stockholder approval.
- Confirm trial, regulatory and financing risks against the latest filings; management’s statements about future development and cash sufficiency are forward-looking and not guarantees.