Annovis Bio, Inc. 2019 Annual Report (10-K) Summary
Business Context and Reporting Period
Company: Annovis Bio, Inc. (ANVS)
Reporting Period: Fiscal year ended December 31, 2019
Business Model: Clinical-stage drug platform company focused on neurodegenerative diseases, specifically Alzheimer's disease (AD), Parkinson's disease (PD), and Alzheimer's disease in Down syndrome (AD-DS).
Lead Asset: ANVS401, an orally administered small molecule designed to inhibit the synthesis of multiple neurotoxic proteins (APP, tau, and alpha-synuclein) to improve axonal transport.
Development Status: As of the filing date, the company was conducting a Phase 2a proof-of-concept study in AD patients and planned to initiate a Phase 2a study in PD patients in early 2020. The company had no commercial products and no product revenue.
Key Financial Metrics
| Metric (in thousands) | 2019 | 2018 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(990,980) | $(713,871) |
| Research & Development Expenses | $776,256 | $111,608 |
| General & Administrative Expenses | $829,366 | $602,329 |
| Grant Income | $735,075 | $0 |
| Cash and Cash Equivalents (Year End) | $1,858 | $35,312 |
| Accumulated Deficit | $(8,777,028) | $(7,786,048) |
| Debt (Convertible Promissory Notes) | $530,000 (Principal) | $0 |
Note: The company reported a net loss of approximately $0.99 million for 2019, partially offset by $0.74 million in grant income from the National Institutes of Health (NIH).
Material Changes vs. Prior Period
- Increased R&D Spend: Research and development expenses increased by approximately $665,000 (497% increase) compared to 2018. This was primarily driven by the initiation of long-term toxicology studies in rats and dogs in November 2019.
- Grant Income: The company recognized $735,075 in grant income in 2019, compared to none in 2018, related to an NIH award for toxicology studies.
- Debt Financing: In March 2019, the company issued $530,000 in convertible promissory notes, resulting in interest expense and a derivative liability not present in 2018.
- Liquidity Position: Cash and cash equivalents decreased significantly from $35,312 in 2018 to $1,858 in 2019, reflecting high operating burn rates prior to the IPO.
Guidance, Outlook, and Risks
Outlook and Capitalization:
- Initial Public Offering (IPO): Subsequent to the reporting period, the company completed its IPO on January 31, 2020, raising net proceeds of approximately $12.1 million. Management believes these proceeds will fund operations for at least the next 18 months.
- Development Plan: The company plans to complete its Phase 2a AD trial and commence a Phase 2a PD trial. Long-term goals include filing New Drug Applications (NDAs) by the end of 2024.
Risks and Contingencies:
- Going Concern: The filing notes that prior to the IPO, the company had substantial doubt about its ability to continue as a going concern due to recurring losses and negative cash flows.
- Regulatory Approval: There is no assurance that ANVS401 will receive regulatory approval. The company has never commercialized a product.
- Intellectual Property: The company relies on a license from Horizon Therapeutics for its core technology. Failure to comply with license terms could result in loss of rights.
- COVID-19 Impact: The filing notes that the pandemic temporarily suspended enrollment in the Phase 2a AD trial, though the company believed trials would eventually complete on time.
Investor Verification Checklist
- Post-IPO Liquidity: Verify the actual cash balance and burn rate following the January 2020 IPO to confirm the 18-month runway estimate.
- Clinical Trial Progress: Confirm the status of the Phase 2a AD and PD trials, specifically regarding patient enrollment numbers and any delays caused by the pandemic.
- Grant Utilization: Review the utilization of the NIH grant funds and ensure compliance with grant terms to avoid clawbacks.
- License Agreement Status: Verify that all minimum annual fees and milestone obligations under the Horizon Therapeutics license are current and that no breach has occurred.
- Convertible Note Conversion: Confirm that the $530,000 in convertible notes were converted into equity upon the IPO closing as disclosed in subsequent events.