Annovis Bio, Inc. — Q3 2020 Form 10-Q
Reporting period: Three and nine months ended September 30, 2020; filed November 4, 2020. Annovis is a clinical-stage company developing ANVS401 for neurodegenerative diseases, including Alzheimer’s and Parkinson’s disease. It has not generated product revenue.
Financial performance and liquidity
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Research and development expense | $0.719 million | $0.002 million | $1.642 million | $0.014 million |
| General and administrative expense | $0.885 million | $0.240 million | $3.089 million | $0.721 million |
| Total operating expenses | $1.604 million | $0.242 million | $4.731 million | $0.735 million |
| Net loss | $1.006 million | $0.254 million | $3.757 million | $0.790 million |
| Net loss per share | $0.15 | $0.90 | $0.61 | $2.79 |
Grant income was $0.587 million in Q3 and $0.953 million for the nine-month period, related to an NIH award supporting ANVS401 toxicology studies. There was no product revenue; therefore, a revenue-based margin is not meaningful.
At September 30, cash and cash equivalents were $8.841 million, current assets $9.402 million, and current liabilities $0.281 million. The company reported no outstanding debt; its convertible notes converted to common stock at the January 2020 IPO. Nine-month operating cash use was $3.205 million, compared with $0.424 million in 2019. Financing provided $12.044 million, primarily from the IPO. Accumulated deficit was $12.534 million.
Material changes and financing
- Operating expenses and net loss increased year over year as clinical and toxicology work advanced and public-company costs and share-based compensation rose. Nine-month share-based compensation was $1.740 million.
- R&D expense increases reflected long-term rat and dog toxicology studies and the AD/PD trial. G&A increases primarily reflected share-based compensation, personnel, insurance, and public-company costs.
- The January 2020 IPO of 2.3 million shares generated approximately $13.8 million gross and $12.0 million net proceeds. Preferred stock and convertible notes also converted into common shares.
Outlook, risks, and contingencies
- Management said cash and existing grant funding should support operations and capital requirements for at least 12 months, including completion of the Phase 2a trials and planning for a Phase 3 study. Additional capital will be needed for further clinical and commercial development; no external funding is committed, and future financing may not be available on acceptable terms.
- The company was conducting a 24-patient Phase 2a Alzheimer’s trial with ADCS and an AD/PD trial. COVID-19 temporarily paused new enrollment at ADCS sites; 14 patients had completed treatment before the pause, and treatment had begun in the 15th patient. Not all expected AD/PD trial sites were open. Management expected timely completion but acknowledged substantial uncertainty.
- The company expects higher R&D and G&A expenses in 2020 and 2021 and anticipates losses for the foreseeable future. Clinical success, regulatory approval, and commercial viability are uncertain.
- The NIH grant was awarded at $1.9 million; $0.425 million was recorded as a receivable at quarter-end. License agreements include future milestone payments, royalties, and sublicense-income obligations; no milestones had been achieved. No pending legal actions or material proceedings were reported.
Most important facts for investors to verify
- Clinical-trial enrollment, site availability, timelines, and emerging ANVS401 safety and efficacy data, particularly given COVID-19 disruption.
- Cash burn relative to the stated 12-month runway, grant reimbursements, and the timing and terms of any additional financing.
- Drivers of rising operating expenses, including trial costs, public-company expenses, and stock-based compensation.
- Future obligations under the compound license and the assumptions underlying management’s expected trial completion and Phase 3 planning.
- Share count and potential dilution: 6,871,608 shares were outstanding at September 30, 2020; 6,891,608 were outstanding as of November 2, 2020, in addition to options and warrants.