Anixa Biosciences, Inc. — Form 10-Q Summary
Reporting period: Third quarter of fiscal 2022, three months ended July 31, 2022; year-to-date period covers nine months ended July 31, 2022. Financial amounts below are in U.S. dollars, in thousands unless otherwise noted. The filing was signed September 9, 2022.
Business context and programs
Anixa is a development-stage biotechnology company focused on cancer therapies and vaccines and COVID-19 antiviral drug discovery. It reported no revenue from its current therapeutic or vaccine programs and does not expect those programs to generate revenue in the near term. Its stated strategy is to develop programs and potentially license them to pharmaceutical companies, subject to progress including clinical results.
- CAR-T: FDA-authorized Phase 1 ovarian cancer trial; recruitment began in March 2022 and the first patient was treated in August 2022, after quarter-end. The dose-escalation study is planned for 24–48 patients.
- Breast cancer vaccine: Phase 1 trial for patients with early-stage triple-negative breast cancer was about one-fourth complete. The company reported initial indications of an immune response and estimated completion by the end of calendar 2022.
- Ovarian cancer vaccine: Preclinical development supported by the NCI PREVENT program; the company said this support was expected to cover substantially all preclinical work, manufacturing and IND-enabling studies without material company expenditure.
- COVID-19 antiviral: Drug discovery and optimization remained in development. The company reported favorable animal-study observations and an in-vitro assay suggesting its compounds might inhibit the viral protease more effectively than nirmatrelvir; these are early-stage findings, not clinical efficacy results.
Financial results and position
| Metric | Three months ended July 31, 2022 | Three months ended July 31, 2021 | Nine months ended July 31, 2022 | Nine months ended July 31, 2021 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $513 |
| Operating costs and expenses | $2,797 | $4,388 | $10,266 | $9,572 |
| Operating loss | $(2,797) | $(4,388) | $(10,266) | $(9,059) |
| Net loss | $(2,775) | $(4,388) | $(10,242) | $(9,057) |
| Net loss attributable to common shareholders | $(2,746) | $(4,334) | $(10,119) | $(8,941) |
| Basic and diluted loss per share | $(0.09) | $(0.14) | $(0.33) | $(0.32) |
Margins are not meaningful because the company had no revenue in the 2022 periods. The 2021 year-to-date revenue was a one-time technology license payment; related inventor royalties, contingent legal fees, litigation and licensing expense were $385. Interest income was $22 for the quarter and $24 year to date in 2022, compared with $0 and $2, respectively, in 2021.
- Cash and investments: At July 31, 2022, cash and cash equivalents were $24,254 and short-term investments were $7,410, totaling $31,664. Total liquidity was down $4,063 from $35,727 at October 31, 2021. Total assets were $32,563.
- Cash flow: For the nine months, operating activities used $4,899; investing activities used $811; financing activities provided $836. Financing inflows were principally $830 from option exercises. Cash and cash equivalents alone decreased by $4,874 to $24,254; purchases and maturities of short-term investments also affected reported investing cash flows.
- Debt and liquidity: The balance sheet reports no borrowings. Total liabilities were $1,656, including operating lease liabilities of $231; current liabilities were $1,469. Shareholders’ equity was $31,701, and accumulated deficit was $214,909.
- Share-based compensation: Non-cash share-based compensation was $1,438 for the quarter and $5,474 for the nine months. Common shares outstanding rose to 30,653,418 from 30,050,894 at October 31, 2021.
Changes versus prior comparable periods
- Quarterly revenue remained zero; quarterly net loss narrowed to $2,775 from $4,388, largely alongside lower research and development and general and administrative expenses. The filing attributes much of the expense reduction to lower share-based compensation.
- Nine-month revenue fell to zero from $513, reflecting the absence of the prior-year one-time licensing revenue. Nine-month net loss increased to $10,242 from $9,057; R&D expense rose by $1,001 to $5,018, while G&A rose by $78 to $5,248.
- Operating cash use increased to $4,899 from $3,893 year over year. The prior-year period included $31,126 of gross public and at-the-market stock offering proceeds, versus no such proceeds in the 2022 period.
- Cash and short-term investments declined from $35,727 at fiscal 2021 year-end to $31,664 at July 31, 2022. The company also issued shares through option exercises and employee/consultant arrangements.
Outlook, risks and other disclosures
Management stated that, based on information available September 9, 2022, cash, cash equivalents, short-term investments and expected cash flows should fund activities for at least the next 12 months. This is management’s estimate, not a guarantee. The company may seek additional capital through equity, an at-the-market program, credit facilities or debt; availability and terms are uncertain, and equity or convertible financing could dilute shareholders. Management also cautioned that actual cash needs may differ from projections.
- Key uncertainties include clinical-trial progress and recruitment, whether preclinical findings translate into human benefit, development costs and timing, and reliance on collaborators. The filing notes that COVID-19-related disruptions at partners could affect planned activities.
- The company reported no material change in risk factors from its fiscal 2021 Form 10-K. Other than patent-rights enforcement matters, it reported no material pending legal proceedings expected to adversely affect results or financial condition.
- There is no formal financial or revenue guidance in the filing. Management said it does not expect near-term revenue from current therapy or vaccine programs and that licensing may take years, if it occurs.
- Disclosure controls and procedures were concluded to be effective as of period-end; no material change in internal control over financial reporting was reported during the quarter.
Important facts for investors to verify
- Whether the company’s stated 12-month funding runway remains adequate as clinical and R&D spending evolves, and whether additional financing is needed.
- Subsequent enrollment, safety, dose-escalation and other updates from the ovarian CAR-T and breast cancer vaccine Phase 1 trials; the first CAR-T patient treatment occurred after July 31.
- Whether the reported antiviral assay and animal-study observations can be replicated and progress into further development; they do not establish clinical effectiveness.
- The sustainability of spending and the role of non-cash share-based compensation in reported operating expenses and losses.
- Potential dilution from outstanding options and warrants, future equity issuance, and the timing and likelihood of any licensing revenue.