Anavex Life Sciences Corp. — Q3 FY2019 Form 10-Q
Reporting period: Three and nine months ended June 30, 2019; interim financial statements are unaudited. Anavex is a clinical-stage biopharmaceutical company developing CNS therapies, led by ANAVEX 2-73. It reported no operating revenue.
Financial results and liquidity
| Metric | Three months ended June 30, 2019 | Nine months ended June 30, 2019 | Comparable 2018 period |
|---|---|---|---|
| Operating expenses | $7.1 million | $22.8 million | $4.6 million and $13.4 million, respectively |
| Research and development expense | $5.8 million | $17.5 million | $3.0 million and $8.9 million, respectively |
| Net loss | $7.1 million; $0.14 per share | $22.4 million; $0.47 per share | $2.8 million and $11.7 million; $0.06 and $0.26 per share, respectively |
| Net cash used in operations | Not provided for the quarter | $16.0 million | $8.5 million for nine months |
| Cash and cash equivalents | $21.2 million at June 30, 2019 | $22.9 million at September 30, 2018 |
Gross margins are not applicable because the company had no revenue. The nine-month increase in R&D spending primarily reflected clinical development, including three ANAVEX 2-73 programs; management reported $9.7 million of nine-month spending on clinical-stage development of that candidate. Stock-based compensation was $5.2 million for nine months, including $1.2 million in the quarter.
Working capital was $17.5 million, down from $20.3 million at September 30, 2018. Total liabilities were $4.3 million, all reported as accounts payable and accrued liabilities; the filing shows no debt balance. Nine-month operating cash use rose to $16.0 million from $8.5 million, while financing provided $14.3 million, primarily from common-share sales. Cash decreased by $1.7 million over the nine months.
Changes, financing and outlook
- Quarterly operating expenses increased $2.5 million year over year, chiefly due to a $2.8 million increase in R&D. Nine-month operating expenses increased $9.4 million.
- Quarterly net loss widened to $7.1 million from $2.8 million. Other income was $0.1 million versus $1.8 million; management attributed the decline to delayed Australian R&D incentive income. The company subsequently received $1.66 million after June 30, to be recognized in Q4 FY2019.
- The company sold shares under its Lincoln Park purchase agreements, raising $14.4 million in the nine-month period, and issued 5.58 million shares in total under those agreements, including commitment shares. Shares outstanding were 51.51 million at June 30 and 52.65 million as of August 7, 2019.
- The 2015 Lincoln Park purchase facility was fully utilized. The 2019 agreement provides up to $50 million in potential equity purchases, with $48.84 million remaining available at June 30, subject to agreement terms and a share limit. The separate $50 million at-the-market facility had no sales through June 30.
- Management said cash and existing third-party financial commitments were expected to cover cash commitments for more than two years from issuance of the statements. The company expects continued negative cash flows and has no stated profitability timeline. Further financing may be needed; equity financing could dilute shareholders, and unavailable financing could require delaying or reducing development activities.
Programs, risks and other notable items
- ANAVEX 2-73 was in a Phase 2b/3 Alzheimer’s study, a Phase 2 Parkinson’s disease dementia study, and Phase 2 Rett syndrome studies in the U.S. and Australia; the Alzheimer’s Phase 2a extension also continued. These are clinical programs, not approved products, and results are uncertain.
- Management’s forward-looking statements depend on clinical efficacy and safety, regulatory outcomes, trial timing and costs, access to capital, intellectual-property protection, and third parties. The company cautioned that preclinical results may not translate to human trials.
- The company reported no material changes to the risk factors in its prior Form 10-K, no material pending legal proceedings, and no material off-balance-sheet arrangements. Management concluded disclosure controls were effective as of June 30, 2019.
- No specific financial guidance or expected trial-result dates are provided in the filing text.
Investor facts to verify
- Trial enrollment, timing, endpoints and results for the Alzheimer’s, Parkinson’s disease dementia and Rett syndrome studies.
- Whether management’s stated runway remains adequate as clinical spending and cash use evolve, and the timing and amount of future R&D incentive receipts.
- Actual drawdowns under the 2019 Lincoln Park facility and at-the-market agreement, including share issuance, pricing and dilution.
- Potential clinical, regulatory, financing and intellectual-property risks; the filing does not assure approval or commercialization of any candidate.