Anavex Life Sciences Corp. — Form 10-Q Summary
Reporting period: Fiscal third quarter and nine months ended June 30, 2017. The interim financial statements are unaudited. Anavex is a clinical-stage biopharmaceutical company; it reported no revenue and is developing ANAVEX 2-73 and other drug candidates.
Financial performance and position
| Metric | Three months ended June 30, 2017 | Nine months ended June 30, 2017 | Comparable 2016 period |
|---|---|---|---|
| Revenue | None | None | None |
| Operating expenses | $3.71 million | $10.48 million | $2.29 million; $9.01 million |
| Net loss | $3.61 million | $8.31 million | $2.24 million; $8.23 million |
| Loss per share, basic and diluted | $0.09 | $0.21 | $0.06; $0.24 |
| Cash used in operating activities | Not provided separately for the quarter | $6.83 million | $7.37 million |
- At June 30, 2017, cash and cash equivalents were $24.79 million, versus $9.19 million at September 30, 2016. Working capital was $23.40 million, versus $6.26 million.
- Current liabilities totaled $1.45 million. The balance sheet reported no debt; contractual obligations were $196,330, all operating lease commitments.
- Cash increased by $15.61 million over the nine months, principally reflecting $22.43 million of net proceeds from share issuance. Financing cash flow was $22.43 million.
- Nine-month other income included $2.02 million from the Australian research and development incentive program. The company also recorded $3.02 million in stock-based compensation for the period.
Changes versus comparable periods
- Third-quarter operating expenses rose $1.41 million year over year, including a $1.14 million increase in research and development (R&D); management attributed this to expanded preclinical work, clinical preparation, the Phase 2a extension, and additional R&D staff.
- Nine-month operating expenses increased $1.48 million. R&D rose $2.95 million, partly offset by lower general and administrative expense, which management attributed in part to prior-period one-time charges and financing-related legal fees.
- Third-quarter net loss increased $1.37 million year over year. Nine-month net loss was slightly higher, up approximately $0.08 million, despite increased R&D incentive income.
- Shares issued and outstanding increased from 36.17 million at September 30, 2016 to 42.17 million at June 30, 2017. The company issued 5.91 million shares for $22.43 million under its Lincoln Park purchase agreement and additional commitment shares.
Outlook, development, and risks
- Management said it expected to fund operations for the next 12 months using cash on hand, further sales under the Lincoln Park agreement, and potential additional equity financing. The agreement had $26.21 million remaining available at June 30, 2017. The company cautioned that additional financing may not be available on acceptable terms and that equity financing would dilute existing shareholders.
- Management expected R&D spending to increase as it prepared for a Phase 2/3 Alzheimer’s study, a Phase 2 Rett syndrome trial, a Parkinson’s study, and other R&D. The filing said the Alzheimer’s Phase 2/3 study was in preparation and the Rett syndrome Phase 2 trial was scheduled to begin in calendar 2017.
- The filing describes the completed Alzheimer’s Phase 2a study as open-label and exploratory, involving a small patient group. Management reported favorable safety observations and encouraging efficacy measures, but those findings are not confirmation of efficacy in a controlled trial. The filing notes that preclinical results may not translate to human studies.
- The company intends to pursue discussions with potential commercial partners. It reported no material pending legal proceedings beyond ordinary-course matters and stated that previously disclosed risk factors had not materially changed.
- Market risks include foreign-exchange exposure from Australian and euro-denominated spending. Management considered interest-rate and currency risks not likely to have a material adverse effect, but actual effects could differ.
Key facts for investors to verify
- Progress, timing, design, funding, and regulatory status of the planned Alzheimer’s and Rett syndrome trials, and any Parkinson’s clinical study.
- Whether cash burn and anticipated trial costs remain consistent with management’s 12-month funding expectation.
- Use and availability of the remaining Lincoln Park financing commitment, including the extent of future share dilution.
- Eligibility, timing, and repeatability of Australian R&D incentive receipts; the filing records $2.02 million for the nine-month period.
- Clinical significance and reproducibility of the reported Phase 2a Alzheimer’s findings in adequately controlled studies.