Anavex Life Sciences Corp. — Form 10-Q Summary
Reporting period: Fiscal second quarter and six months ended March 31, 2018. The interim financial statements are unaudited.
Business context
Anavex is a clinical-stage biopharmaceutical company with no product revenue. Its lead candidate, ANAVEX 2-73, is being developed for Alzheimer’s disease and other neurological conditions, including Parkinson’s disease and Rett syndrome. Other pipeline programs remain preclinical.
Financial performance and liquidity
| Metric | Three months ended March 31, 2018 | Six months ended March 31, 2018 |
|---|---|---|
| Revenue | None | None |
| Operating expenses | $4.73 million | $8.83 million |
| Net loss | $4.75 million | $8.81 million |
| Basic and diluted loss per share | $0.11 | $0.20 |
| Cash used in operating activities | Not separately stated | $6.44 million |
At March 31, cash and cash equivalents were $25.66 million, total assets $25.90 million, current liabilities $3.42 million, and working capital $22.40 million. Total liabilities consisted of accounts payable and accrued liabilities; the filing reports no long-term debt. There were no material off-balance-sheet arrangements. Lease commitments totaled $136,926.
Cash declined $1.78 million from September 30, 2017. Financing provided $4.66 million net, principally from issuing shares under the Lincoln Park purchase agreement. An additional $16.68 million remained available under that agreement at March 31, 2018. The company reported 44.57 million shares outstanding at March 31 and 44.66 million as of May 10.
Changes versus prior comparable periods
- Second-quarter operating expenses rose from $3.61 million to $4.73 million; six-month expenses rose from $6.78 million to $8.83 million. Research and development spending increased about 30% in both comparisons, driven by clinical-trial preparation, preclinical work, and personnel. General and administrative costs also increased, mainly from staffing, compensation, insurance, and professional fees.
- Second-quarter net loss widened from $1.55 million to $4.75 million; six-month net loss widened from $4.70 million to $8.81 million.
- Other income fell sharply: the prior-year periods included approximately $2.02 million of Australian research and development incentive income. Anavex said receipt of the annual incentive was delayed and expected in the second half of fiscal 2018. The company also cited the completion of a grant-funded preclinical program.
- Six-month operating cash use increased from $3.85 million to $6.44 million. Share issuance proceeds fell from $18.02 million in the prior-year period to $4.69 million.
Outlook, risks, and notable items
- Management said existing cash and anticipated future equity or debt financing were expected to fund operations for the next 12 months after issuance of the statements. This outlook depends in part on access to financing; further equity issuance could dilute shareholders, and unavailable financing could require the company to delay, scale back, or cease development activities.
- Management expects research and development spending to increase as it advances planned ANAVEX 2-73 studies for Alzheimer’s disease, Rett syndrome, and Parkinson’s disease. The filing describes the Alzheimer’s Phase 2/3 study as in preparation, the Rett syndrome Phase 2 study as subject to FDA approval of its IND, and the Parkinson’s disease dementia Phase 2 study as planned for the second half of calendar 2018, subject to regulatory approval. Management also referred to three trials scheduled to commence in the second half of calendar 2018.
- The company described positive exploratory findings from its small, open-label Alzheimer’s Phase 2a study, but these are not confirmatory efficacy evidence. Clinical and preclinical results may not translate into approved treatments; trials may be delayed, fail, or require further funding.
- Risks include dependence on future financing, clinical and regulatory uncertainty, potential share dilution, and foreign-currency exposure. The company reported ordinary-course legal matters but did not believe pending claims would have a material adverse effect. Disclosure controls were assessed as effective as of March 31, 2018.
Important facts for investors to verify
- Whether the Australian research and development incentive payment was received in the second half of fiscal 2018, and its amount.
- Actual timing, regulatory status, funding needs, and progress of the planned clinical trials.
- Cash burn and remaining financing availability under the Lincoln Park agreement, including the resulting dilution from any share sales.
- Whether subsequent clinical data substantiates the exploratory Phase 2a Alzheimer’s findings and supports progression to larger controlled trials.