Anixa Biosciences, Inc. — Q3 2020 Form 10-Q
Business context and reporting period. The unaudited quarter and nine-month periods ended July 31, 2020; Anixa filed the report on September 8, 2020. The company is developing cancer therapies and vaccines and COVID-19 drug candidates, with no revenue from these programs to date. On July 2, 2020, it suspended Anixa Diagnostics and Cchek development, redirecting resources to therapeutics and vaccines. The company retained limited legacy licensing activities.
Financial performance and liquidity
| Metric | Three months ended July 31, 2020 | Nine months ended July 31, 2020 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $1.254 million | $3.974 million |
| General and administrative expense | $1.182 million | $3.762 million |
| Net loss attributable to common shareholders | $2.562 million | $7.794 million |
| Basic and diluted loss per share | $0.11 | $0.36 |
| Cash used in operating activities | Not provided for the quarter | $4.762 million |
- At July 31, cash and cash equivalents were $5.928 million and short-term certificates of deposit were $3.140 million, totaling $9.068 million. Current assets were $9.264 million and current liabilities were $1.213 million.
- Nine-month cash flows included $0.806 million used in investing activities and $8.004 million provided by financing activities. The latter included $7.866 million net proceeds from at-the-market (ATM) stock sales.
- Total liabilities were $1.224 million, including $0.069 million of operating lease liabilities; the filing reports no borrowings or other debt. The company reported a $8.618 million shareholders’ equity balance and $0.480 million negative noncontrolling interest.
- Margins are not meaningful because the company reported no revenue. Non-cash share-based compensation was $1.250 million in R&D and $1.923 million in G&A for the nine-month period.
Material changes versus comparable periods
- Quarterly net loss attributable to common shareholders increased to $2.562 million from $2.140 million; quarterly R&D and G&A expenses also rose. The current-quarter results included a $0.148 million loss on disposal of property and equipment.
- Nine-month net loss attributable to common shareholders narrowed to $7.794 million from $9.560 million. Total operating costs and expenses declined to $7.736 million from $10.011 million, reflecting lower share-based compensation and the absence of prior-year patent amortization and impairment charges, among other items.
- The prior-year nine-month period included $0.250 million revenue from a licensing agreement; the 2020 period had none. The company’s shares issued and outstanding increased to 23.654 million from 20.332 million at October 31, 2019, primarily reflecting ATM sales.
Outlook, commentary, and risks
- Management said existing cash, cash equivalents, short-term investments, and expected cash flows were expected to fund activities for the next 12 months, based on information available September 8, 2020. It cautioned that forecasts may differ from actual results and additional funding may be needed; future equity or convertible-debt financing could dilute shareholders, and funding may not be available on acceptable terms.
- Management anticipated filing an IND for the breast cancer vaccine during calendar Q3 2020 and for the CAR-T ovarian cancer therapy by year-end 2020. COVID-19-related laboratory and supplier closures and reduced capacity had slowed progress; the filing says timelines were not assured.
- The COVID-19 discovery program had identified four candidate compounds targeting viral NSP-15 and 27 targeting the main protease through computational screening. NSP-15 compounds were undergoing biological testing; main-protease compounds were being evaluated for synthesis. These were early-stage candidates, not established treatments.
- Management identified COVID-19 disruption, development and regulatory uncertainty, and uncertain future financing as risks. The filing said there had been no material changes to previously disclosed risk factors and no known litigation expected to materially affect results or financial condition.
Important facts for investors to verify
- Whether the anticipated IND filings occurred and whether manufacturing, testing, or regulatory review changed program timelines.
- Whether COVID-19 candidate compounds demonstrate biological activity and advance beyond early testing.
- Cash burn and runway relative to management’s 12-month liquidity estimate, and any subsequent ATM sales, financing, or share dilution.
- Financial and operational effects of discontinuing Cchek and suspending Anixa Diagnostics, including related severance and other transition costs.