Annovis Bio, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Annovis is a clinical-stage drug company developing buntanetap for Alzheimer’s disease, Parkinson’s disease, and other neurodegenerative conditions. It has no product revenue and is not profitable.
Financial performance and position
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $2.81 million | $2.39 million; up $0.42 million |
| General and administrative expense | $3.10 million | $0.84 million; up $2.26 million |
| Total operating expenses | $5.91 million | $3.23 million |
| Net loss | $5.89 million | $3.20 million |
| Loss per share, basic and diluted | $0.72 | $0.46 |
| Operating cash used | $3.02 million | $2.47 million |
| Cash and cash equivalents | $42.67 million at March 31, 2022 | $45.69 million at December 31, 2021 |
| Total liabilities | $1.26 million | $1.51 million at December 31, 2021 |
No debt is reported on the balance sheet. Margins are not meaningful because the company reported no revenue. Cash declined by $3.02 million during the quarter; financing activities provided $4,613, primarily from stock-option exercises.
Material changes and business developments
- R&D expense rose 18% year over year, primarily because of $1.19 million in R&D stock-based compensation; clinical-trial expenses fell by $0.74 million after the AD/PD trial was completed in 2021.
- G&A expense increased substantially, mainly due to $2.22 million more stock-based compensation and $0.11 million more professional fees. Total stock-based compensation was $3.43 million, versus $24,000 in Q1 2021.
- The company reported completing two Phase 2a trials in 2021: an AD/PD trial and a separate early-AD study conducted with the Alzheimer’s Disease Cooperative Study.
- Common shares outstanding increased to 8,163,923 from 8,100,570 at year-end 2021. The company reported 1,607,941 options outstanding at quarter-end.
Outlook, risks, and contingencies
- Management expected existing cash to fund operations and capital requirements for at least 12 months, including a planned six-month Phase 3 trial in early Parkinson’s disease and a potential additional short-term early-Alzheimer’s trial.
- Management expects higher R&D expense in 2022 as clinical development advances, and higher G&A expense due to personnel costs. The company expects operating cash use to increase.
- Additional capital will be needed to fund further expected Phase 3 trials. The company had no committed external funding, and financing may not be available on acceptable terms.
- Key risks include clinical-trial execution and results, regulatory approval, reliance on third parties, and the need to raise capital. Management noted that COVID-19 effects on current or future trials remained uncertain.
- The company disclosed potential aggregate executive severance of approximately $986,000. It reported no pending legal actions or material legal proceedings.
- The 2021 public offering generated $50.0 million gross and approximately $46.6 million net proceeds. The NIH toxicology-study grant had no remaining funds available as of March 31, 2022.
Important facts for investors to verify
- Timing, design, enrollment, and funding needs for the planned early-PD Phase 3 trial and any early-AD study.
- Whether cash burn and expenses remain consistent with management’s stated 12-month runway, and when additional financing may be needed.
- Clinical evidence supporting buntanetap’s efficacy and safety, and the regulatory path for each target indication.
- The scale and future impact of stock-based compensation, including option grants and potential dilution.