Anavex Life Sciences Corp. — Form 10-Q Summary
Reporting period: Fiscal second quarter and six months ended March 31, 2021; filed May 13, 2021. Financial statements are unaudited. Anavex is a clinical-stage biopharmaceutical company developing CNS treatments, led by ANAVEX 2-73 for Alzheimer’s disease, Parkinson’s disease and Rett syndrome. The company reported no product revenue.
Financial performance and position
| Metric | Three months ended March 31, 2021 | Six months ended March 31, 2021 | Comparable 2020 period |
|---|---|---|---|
| Revenue | None | None | None |
| Operating expenses | $9.0 million | $18.35 million | $7.77 million; $15.47 million |
| Net loss | $8.16 million | $16.01 million | $7.24 million; $13.83 million |
| Net loss per share, basic and diluted | $0.12 | $0.24 | $0.12; $0.24 |
| Net cash used in operations | Not separately provided | $15.19 million | $10.99 million |
- Quarterly R&D expense was $6.72 million, up from $6.05 million; first-half R&D was $14.65 million versus $12.40 million. Management attributed the increases mainly to advancing clinical programs, including international Alzheimer’s and Rett syndrome trials.
- Quarterly G&A expense was $2.23 million versus $1.72 million; first-half G&A was $3.70 million versus $3.07 million. The company attributed the increase mainly to professional and consulting fees.
- Other income was $0.83 million for the quarter and $2.43 million for the half-year, including Australian R&D incentive income. No operating margin is meaningful because the company has no revenue.
- At March 31, cash and cash equivalents were $75.86 million, compared with $29.25 million at September 30, 2020. Working capital was $75.81 million versus $27.24 million. Total liabilities were $7.76 million; the filing presents no debt balance.
- First-half financing cash inflow was $61.80 million, largely from common-stock issuances; cash increased $46.61 million. The company issued approximately 7.56 million shares through its purchase and at-the-market agreements, plus shares from option exercises and commitment shares. Shares outstanding increased from 62.05 million at fiscal year-end to 70.03 million at March 31.
Material developments, outlook and risks
- The $50 million 2019 Lincoln Park purchase agreement had no remaining availability at March 31, 2021. The separate at-the-market sales agreement remained available, but the company was not obligated to sell shares under it.
- Management stated that cash and existing third-party financial commitments should cover cash commitments for up to three years after issuance of the statements. It expects negative cash flows for the foreseeable future and cannot predict when, if ever, it will become profitable. This is management’s estimate, not a guarantee; additional financing may be needed, and unavailable financing could force delays or reductions in R&D.
- Clinical updates described by the company include completion of a U.S. Phase 2 Rett syndrome study in December 2020, with reported positive secondary efficacy findings; ongoing AVATAR and EXCELLENCE Rett studies; an ongoing approximately 450-patient Alzheimer’s Phase 2b/3 trial; and reported positive results from a completed Phase 2 Parkinson’s disease dementia trial. The filing says further Parkinson’s trials were anticipated after submission of results to the FDA for regulatory guidance. These are company-reported findings and remain subject to clinical and regulatory uncertainty.
- ANAVEX 3-71 was in a Phase 1 study begun in July 2020. The company’s pipeline candidates remain investigational; preclinical activity does not ensure human efficacy or approval.
- The company reported no material COVID-19 impact on the period’s results or financial condition, but said future effects could not be estimated. It reported no material changes to previously disclosed risk factors other than heightened share-price volatility and the possibility of a short squeeze. Ordinary-course litigation was disclosed, with no material adverse effect expected by management.
- Disclosure controls were concluded effective as of March 31, 2021; no material change in internal control over financial reporting was reported.
Important facts for investors to verify
- Clinical-trial status, full datasets, statistical analyses, safety findings and next regulatory steps for ANAVEX 2-73 programs.
- Whether the claimed cash runway assumptions and third-party commitments remain adequate as trial spending and enrollment evolve.
- Potential dilution from future at-the-market sales, outstanding options and warrants; the filing reported 11.01 million options and 0.50 million warrants outstanding at March 31.
- Timing and collection of Australian R&D incentive receivables, which totaled $7.33 million at March 31.
- Share-price volatility and the clinical, regulatory, intellectual-property and financing risks described in the filing and the company’s latest Form 10-K.