Annovis Bio, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Annovis is a clinical-stage biotechnology company developing oral ANVS401 for Alzheimer’s disease (AD), Parkinson’s disease (PD), and Down syndrome-associated AD (DS-AD). It reported no product revenue.
Financial results and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Research and development expense | $1.82 million | $0.86 million | $4.21 million | $0.92 million |
| General and administrative expense | $0.71 million | $1.69 million | $1.55 million | $2.20 million |
| Net loss | $2.52 million | $2.31 million | $5.72 million | $2.75 million |
| Loss per share, basic and diluted | $0.34 | $0.34 | $0.80 | $0.48 |
| Operating cash used | Not stated for quarter | Not stated for quarter | $5.62 million | $2.28 million |
At June 30, cash and cash equivalents were $49.22 million, versus $8.07 million at December 31, 2020. Total current liabilities were $0.88 million, with no debt reported on the balance sheet. The company had an accumulated deficit of $19.96 million. Gross margin is not applicable because it had no product sales.
Changes versus prior period
- Q2 research and development expense rose $0.97 million year over year, principally due to the AD/PD Trial. Six-month R&D expense rose $3.29 million, including $2.92 million related to that trial and higher personnel costs.
- Q2 general and administrative expense declined $0.98 million, mainly because share-based compensation was lower. Six-month G&A declined $0.65 million, partly offset by increased incentive compensation and recruiting costs.
- Six-month net loss increased by $2.97 million and operating cash use increased by $3.34 million year over year.
- A May 2021 common-stock offering generated $50.0 million gross and approximately $46.7 million net proceeds. Financing activities provided $46.77 million in the first half of 2021.
Outlook, risks, and notable items
- Management expected cash to fund operations and capital requirements for at least 12 months, including completion of the Phase 2a AD/PD Trial and a potential Phase 3 DS-AD study. It stated that additional capital would be needed for planned Phase 3 trials in AD and PD; no committed external funding was available.
- The company was conducting two placebo-controlled Phase 2a trials: an ADCS study in 24 early-AD patients and an AD/PD study in 14 AD and 54 PD patients. Management expected higher 2021 R&D spending as it completed the AD/PD Trial and planned a Phase 3 study. The filing does not provide a numeric earnings or revenue forecast.
- Key risks include clinical-trial execution and outcomes, regulatory approval, reliance on third parties, future financing availability, and possible COVID-19 effects on trials. The company has not achieved profitability or positive operating cash flow.
- The NIH toxicology-study grant had no remaining funds available at June 30, 2021; grant income fell substantially as the studies were largely completed.
- In July 2021, Annovis gave notice terminating its license agreement. The filing also disclosed July option grants covering 84,200 shares at an exercise price of $102.85.
Investor facts to verify
- Progress, timing, and results of the AD/PD Phase 2a and ADCS trials, and the basis for the potential Phase 3 DS-AD plan.
- Cash runway assumptions and the timing, size, and terms of any financing needed for planned AD and PD Phase 3 trials.
- Financial and operational implications of terminating the license agreement, including any amounts payable or effect on product rights.
- Actual R&D spending and cash burn against management’s expectations, given the rising trial costs and absence of product revenue.