Anavex Life Sciences Corp. — FY2018 Form 10-K
Reporting period: Fiscal year ended September 30, 2018. This is an annual filing, not a standalone fourth-quarter report. Anavex is a clinical-stage biopharmaceutical company focused on CNS diseases and precision-medicine approaches. It reported no product revenue.
Financial results and liquidity
| Metric | FY2018 | FY2017 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $19.33 million | $15.68 million |
| Research and development expense | $13.34 million | $10.67 million |
| General and administrative expense | $5.99 million | $5.01 million |
| Net loss | $17.45 million | $13.46 million |
| Basic and diluted loss per share | $0.39 | $0.33 |
| Operating cash flow | $(12.58) million | $(9.02) million |
| Cash and cash equivalents, year-end | $22.93 million | $27.44 million |
| Working capital | $20.44 million | $24.20 million |
| Total assets | $24.38 million | $27.84 million |
| Total liabilities | $3.88 million | $3.58 million |
| Long-term debt | $0 | $0 |
Operating and net margins are not meaningful because the company had no revenue. Net loss includes substantial non-cash stock-based compensation of $5.52 million, versus $4.14 million in FY2017. Other income was $1.95 million, including $1.63 million of Australian research and development incentive income, $0.15 million of grant income, and $0.26 million of interest income.
Material changes and financing
- Operating expenses rose by $3.65 million year over year, driven by higher R&D spending in preparation for clinical trials and expansion of the scientific team. About $5.0 million of FY2018 R&D spending related to manufacturing and trial preparation; approximately $2.7 million related to preclinical work.
- Operating cash use increased by $3.57 million. The company raised $8.17 million in gross proceeds by issuing approximately 2.38 million shares under its Lincoln Park purchase agreement; cash declined by $4.51 million overall.
- At September 30, 2018, $13.20 million remained available under the Lincoln Park agreement. A separate at-the-market sales agreement with Cantor Fitzgerald permitted up to $50 million of offerings; no shares had been sold under it by year-end.
- Shares outstanding were 45.93 million at September 30 and 46.59 million as of December 12, 2018. The filing identifies potential dilution from future equity issuance and outstanding options and warrants.
Outlook, development programs, and risks
- Management expected R&D expense to increase as ANAVEX 2-73 trials in Alzheimer’s disease, Parkinson’s disease dementia, and Rett syndrome progressed. The company intended to use most available capital for clinical trials and related development work.
- After fiscal year-end, a 48-week, placebo-controlled Phase 2b/3 Alzheimer’s study began in October 2018, targeting approximately 450 patients. A Phase 2 Parkinson’s disease dementia study also began in October 2018, targeting approximately 120 patients. FDA confirmation that the Rett syndrome IND was open was received in October 2018.
- Management stated that cash and existing third-party financial commitments were expected to cover cash commitments for at least two years after the financial statements were issued. However, the filing also describes continuing losses, no operating revenue, expected negative cash flows, substantial future funding needs, and substantial doubt about the ability to continue as a going concern. Further financing may be unavailable or dilutive; operations could be scaled back if funding is not obtained.
- Reported Alzheimer’s Phase 2a extension results included exploratory associations between drug concentration, cognitive and functional measures, and genomic biomarkers. These small-study and exploratory findings do not establish efficacy; the larger placebo-controlled study is a key test.
- Material risks include clinical failure or adverse events, regulatory delay or denial, reliance on third parties, competition, intellectual-property challenges, and dependence on external financing. Foreign-currency movements may increase costs for research conducted in Australia and Europe.
- No material pending legal proceeding was identified. The auditor issued unqualified opinions on the financial statements and internal control over financial reporting; management reported controls effective as of September 30, 2018.
Key facts for investors to verify
- Current cash runway against actual trial costs and the stated two-year funding expectation.
- Progress, enrollment, data timing, and outcomes for the Alzheimer’s, Parkinson’s disease dementia, and Rett syndrome studies.
- Whether Australian R&D incentives and grants continue at expected levels, and how their timing affects cash flow.
- Remaining availability and terms of the Lincoln Park facility and Cantor Fitzgerald ATM, including the potential share dilution from use.
- Whether exploratory biomarker findings are prospectively validated and translate into clinically meaningful benefit in controlled trials.