Annovis Bio, Inc. — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022; filed November 8, 2022. Annovis is a clinical-stage biotechnology company developing buntanetap for Alzheimer’s disease, Parkinson’s disease, and other neurodegenerative conditions. The company has no product revenue and has not achieved profitability.
Financial results and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | No product revenue | No product revenue | No product revenue | No product revenue |
| Research and development expense | $5.31 million | $1.38 million | $14.94 million | $5.59 million |
| General and administrative expense | $2.36 million | $1.47 million | $7.40 million | $3.02 million |
| Net loss | $7.62 million | $2.85 million | $22.23 million | $8.57 million |
| Basic and diluted loss per share | $0.93 | $0.35 | $2.72 | $1.15 |
At September 30, 2022, cash and cash equivalents were $31.99 million, down from $45.69 million at December 31, 2021. Current assets were $32.49 million and current liabilities were $2.53 million; total liabilities were also $2.53 million. The filing reports no debt. No meaningful revenue-based margins are available.
For the first nine months, operating cash use was $13.70 million versus $7.36 million in 2021. Financing provided $4,613 in 2022, compared with $46.74 million in 2021, which included net proceeds from an equity offering. Cash declined by $13.70 million during the 2022 period. Stock-based compensation was $7.69 million for the nine months.
Material changes and unusual items
- Operating expenses rose substantially year over year. Management attributed higher R&D costs principally to clinical-trial activity, materials, and stock-based compensation as the company prepared for and initiated its Phase 3 early-Parkinson’s study.
- Q3 G&A included $1.22 million of stock-option modification expense related to an employee no longer employed by the company.
- Q3 interest income increased to $52,886 from $5,554; nine-month interest income increased to $108,559 from $7,885, reflecting higher cash balances and interest rates. The NIH grant had no remaining funds available; no grant income was recorded in the first nine months of 2022.
- Shares outstanding were 8,163,923 at September 30, 2022, compared with 8,100,570 at year-end 2021.
Outlook, risks, and contingencies
- Management said existing cash was expected to fund operations and capital requirements for 12 months from the financial-statement issuance date, including a six-month Phase 3 early-Parkinson’s trial and a planned early-Alzheimer’s study. The company nevertheless expects to need additional capital for operations and further clinical trials; it had no committed external funding, and financing may not be available on acceptable terms.
- Recruitment for the Phase 3 early-Parkinson’s trial began in August 2022. The company expected recruitment for its early-Alzheimer’s Phase 2/3 trial to begin in January 2023. These are company expectations, not assurances of timing or success.
- Key risks include clinical and regulatory uncertainty, rising development costs, dependence on additional financing and third-party organizations, and possible effects of COVID-19 on clinical trials. The company cautioned that it expects continued losses and cannot predict when, if ever, it will become profitable.
- No pending legal actions or material legal proceedings were reported. Executive employment agreements could require aggregate severance payments of approximately $823,500 under specified circumstances. The office lease is month-to-month.
Important facts for investors to verify
- Actual cash runway and spending against management’s 12-month estimate, including the cost and duration of both planned trials.
- Recruitment progress, trial timelines, and clinical results for buntanetap in Parkinson’s and Alzheimer’s disease.
- Future financing needs, potential dilution or debt terms, and whether funding is available on acceptable terms.
- How much of expense growth reflects recurring trial and operating costs versus noncash stock-based compensation, including the option-modification charge.