Anixa Biosciences, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended July 31, 2021. Anixa is a development-stage biotechnology company focused on cancer therapeutics and vaccines and COVID-19 antivirals; it has not generated revenue from these programs.
Financial results and liquidity
| Metric | Three months ended July 31, 2021 | Nine months ended July 31, 2021 | Comparable 2020 period |
|---|---|---|---|
| Revenue | $0 | $512,500 | $0 in both periods |
| Operating costs and expenses | $4.39 million | $9.57 million | $2.44 million and $7.74 million |
| Net loss | $4.39 million | $9.06 million | $2.58 million and $7.85 million |
| Net loss per common share | $0.14 | $0.32 | $0.11 and $0.36 |
| Cash used in operating activities | Not presented quarterly | $3.89 million | $4.76 million |
The nine-month revenue came from a single one-time patent license agreement. There was no revenue in the quarter. With no quarterly revenue, a meaningful operating margin is not available. Nine-month research and development expense was $4.02 million and general and administrative expense was $5.17 million.
At July 31, cash and cash equivalents were $27.22 million and short-term investments were $9.40 million, totaling $36.62 million. Current assets were $37.05 million versus current liabilities of $1.21 million. The balance sheet reported no borrowings; it included a $10,567 current operating lease liability. Management said available funds and expected cash flows should fund activities for at least 12 months, while cautioning that future funding may be needed and may not be available on acceptable terms.
Cash increased by $20.81 million during the nine months. Financing provided $31.42 million, including net proceeds of $20.29 million from a public offering and $10.83 million from an at-the-market offering. Operating activities used $3.89 million; investing activities used $6.72 million, mainly reflecting purchases of short-term investments. Shares outstanding were 29,949,905 at July 31, versus 24,248,695 at October 31, 2020.
Changes and notable items
- Quarterly net loss increased from $2.58 million to $4.39 million year over year, primarily alongside higher expenses. For the nine-month period, net loss rose from $7.85 million to $9.06 million.
- Quarterly operating expenses included $3.19 million of non-cash share-based compensation, compared with $1.04 million a year earlier. Nine-month share-based compensation was $5.22 million versus $3.17 million.
- The company raised equity capital, increasing its share count; its at-the-market equity program was terminated June 16, 2021. The March public offering also included underwriter warrants for 300,000 shares.
- Development spending shifted away from cancer diagnostics, whose development had been suspended in July 2020, toward CAR-T, cancer vaccines, and antiviral programs.
Outlook, programs, and risks
- In August 2021, after responding to FDA information requests on its ovarian-cancer CAR-T program, Anixa received authorization to begin a Phase 1 trial and anticipated treating the first patient in early 2022.
- The company anticipated the first patient in its Phase 1a triple-negative breast-cancer vaccine trial in September 2021. The ovarian-cancer vaccine’s preclinical, manufacturing, and IND-enabling work was selected for NCI PREVENT program support, which Anixa said would require no material company expenditure.
- For its COVID-19 antiviral program, the company reported promising animal-study observations for two compounds and was optimizing a selected candidate. It said analysis of some Delta-variant enzyme mutations suggested its compounds could be stronger inhibitors; these are preclinical findings, not clinical efficacy results.
- Anixa does not expect near-term revenue from its current therapeutic or vaccine programs; eventual licensing may take years and may depend on positive human-trial results. Clinical, regulatory, development, and financing outcomes remain uncertain.
- The company reported that pandemic-related laboratory and service-provider shutdowns and capacity limits had slowed progress and could affect timelines. It also cited the possibility of future capital needs and dilution from additional equity or convertible-debt financing.
- Management reported no material change to the risk factors in its 2020 Form 10-K and no litigation expected to materially affect results or financial condition. The office lease was extended in August 2021 through September 30, 2024.
Important facts for investors to verify
- Whether cash burn and planned clinical-development spending remain consistent with management’s stated 12-month funding assessment.
- Actual initiation, enrollment, and progress of the CAR-T and breast-cancer vaccine trials, including any changes to anticipated timelines.
- Whether the antiviral program advances beyond preclinical work and whether claims about activity against variants are validated in further testing.
- The sustainability of funding given the absence of recurring program revenue, and the potential dilution or terms of any future capital raises.
- The extent to which non-cash stock compensation and equity awards affect reported expenses and future share dilution.