Item
1. FINANCIAL STATEMENTS
ANAVEX
LIFE SCIENCES CORP.
INTERIM
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March
31, 2020
(Unaudited)
ANAVEX
LIFE SCIENCES CORP.
INTERIM
CONDENSED CONSOLIDATED BALANCE SHEETS
March
31, 2020 and September 30, 2019
|
|
March
31,
|
|
September 30,
|
|
|
2020
|
|
2019
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
26,563,071
|
|
|
$
|
22,185,630
|
|
Incentive
and tax receivables
|
|
|
4,151,947
|
|
|
|
2,642,745
|
|
Prepaid
expenses and deposits
|
|
|
305,559
|
|
|
|
500,998
|
|
Total
Assets
|
|
$
|
31,020,577
|
|
|
$
|
25,329,373
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders'
Equity
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
3,649,734
|
|
|
$
|
3,523,332
|
|
Accrued
liabilities
|
|
|
2,579,097
|
|
|
|
1,516,342
|
|
Total
Liabilities
|
|
|
6,228,831
|
|
|
|
5,039,674
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
- Note 5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock
|
|
|
|
|
|
|
|
|
Authorized:
|
|
|
|
|
|
|
|
|
10,000,000 preferred
stock, par value $0.001 per share
100,000,000 common stock, par value $0.001 per share
|
|
|
|
|
|
|
|
|
Issued
and outstanding:
|
|
|
|
|
|
|
|
|
58,664,946 common
shares
(September 30, 2019 - 52,650,251)
|
|
|
58,666
|
|
|
|
52,652
|
|
Additional paid-in
capital
|
|
|
171,958,462
|
|
|
|
153,633,807
|
|
Accumulated
deficit
|
|
|
(147,225,382
|
)
|
|
|
(133,396,760
|
)
|
Total
Stockholders' Equity
|
|
|
24,791,746
|
|
|
|
20,289,699
|
|
Total
Liabilities and Stockholders' Equity
|
|
$
|
31,020,577
|
|
|
$
|
25,329,373
|
|
See
Accompanying Notes to Condensed Consolidated Interim Financial Statements
ANAVEX
LIFE SCIENCES CORP.
INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For
the three and six months ended March 31, 2020 and 2019
(Unaudited)
|
|
Three
months ended
March 31,
|
|
Six
months ended
March 31,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
$
|
1,720,142
|
|
|
$
|
2,061,251
|
|
|
$
|
3,072,176
|
|
|
$
|
3,822,559
|
|
Research
and development
|
|
|
6,053,047
|
|
|
|
6,078,786
|
|
|
|
12,401,715
|
|
|
|
11,790,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
(7,773,189
|
)
|
|
|
(8,140,037
|
)
|
|
|
(15,473,891
|
)
|
|
|
(15,613,555
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant income
|
|
|
74,944
|
|
|
|
74,527
|
|
|
|
149,888
|
|
|
|
149,055
|
|
Research and development
incentive income
|
|
|
717,328
|
|
|
|
760,990
|
|
|
|
1,660,543
|
|
|
|
1,174,672
|
|
Interest income, net
|
|
|
70,180
|
|
|
|
51,465
|
|
|
|
116,900
|
|
|
|
130,265
|
|
Foreign
exchange (loss) gain, net
|
|
|
(325,960
|
)
|
|
|
54,199
|
|
|
|
(272,848
|
)
|
|
|
49,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
other income, net
|
|
|
536,492
|
|
|
|
941,181
|
|
|
|
1,654,483
|
|
|
|
1,503,685
|
|
Net loss before provision
for income taxes
|
|
|
(7,236,697
|
)
|
|
|
(7,198,856
|
)
|
|
|
(13,819,408
|
)
|
|
|
(14,109,870
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax expense, current
|
|
|
—
|
|
|
|
(48,048
|
)
|
|
|
(9,214
|
)
|
|
|
(56,765
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss and comprehensive loss
|
|
$
|
(7,236,697
|
)
|
|
$
|
(7,246,904
|
)
|
|
$
|
(13,828,622
|
)
|
|
$
|
(14,166,635
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted
|
|
$
|
(0.12
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
(0.30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted
|
|
|
58,353,954
|
|
|
|
47,134,686
|
|
|
|
56,554,037
|
|
|
|
46,726,649
|
|
See
Accompanying Notes to Condensed Consolidated Interim Financial Statements
ANAVEX
LIFE SCIENCES CORP.
INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For
the six months ended March 31, 2020 and 2019
|
|
2020
|
|
2019
|
|
|
|
|
|
Cash Flows used in
Operating Activities
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(13,828,622
|
)
|
|
$
|
(14,166,635
|
)
|
Adjustments to reconcile
net loss to net cash used in operations:
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
2,965,177
|
|
|
|
3,960,139
|
|
Changes in non-cash
working capital balances related to operations:
|
|
|
|
|
|
|
|
|
Incentive
and tax receivables
|
|
|
(1,509,202
|
)
|
|
|
(1,210,661
|
)
|
Prepaid
expenses and deposits
|
|
|
195,439
|
|
|
|
439,552
|
|
Accounts
payable
|
|
|
126,402
|
|
|
|
2,434,633
|
|
Accrued
liabilities
|
|
|
1,062,755
|
|
|
|
51,345
|
|
Net cash used in operating
activities
|
|
|
(10,988,051
|
)
|
|
|
(8,491,627
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows provided
by Financing Activities
|
|
|
|
|
|
|
|
|
Issuance of common shares
|
|
|
15,365,492
|
|
|
|
5,068,834
|
|
Deferred
financing charges
|
|
|
—
|
|
|
|
(50,000
|
)
|
Net cash provided by
financing activities
|
|
|
15,365,492
|
|
|
|
5,018,834
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease)
in cash and cash equivalents during the period
|
|
|
4,377,441
|
|
|
|
(3,472,793
|
)
|
Cash
and cash equivalents, beginning of period
|
|
|
22,185,630
|
|
|
|
22,930,638
|
|
Cash
and cash equivalents, end of period
|
|
$
|
26,563,071
|
|
|
$
|
19,457,845
|
|
See
Accompanying Notes to Condensed Consolidated Interim Financial Statements
ANAVEX
LIFE SCIENCES CORP.
INTERIM
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For
the three months ended March 31, 2020 and 2019
|
|
Common
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid-in
|
|
|
Shares
to be
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Par
Value
|
|
|
Capital
|
|
|
Issued
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2020
|
|
|
57,080,356
|
|
|
$
|
57,082
|
|
|
$
|
165,891,753
|
|
|
$
|
-
|
|
|
$
|
(139,988,685
|
)
|
|
$
|
25,960,150
|
|
Shares issued under 2019 Purchase Agreement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
Purchase shares
|
|
|
1,570,424
|
|
|
|
1,571
|
|
|
|
4,365,969
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,367,540
|
|
Commitment shares
|
|
|
14,166
|
|
|
|
13
|
|
|
|
(13
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Share based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
1,700,753
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,700,753
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(7,236,697
|
)
|
|
|
(7,236,697
|
)
|
Balance, March 31, 2020
|
|
|
58,664,946
|
|
|
$
|
58,666
|
|
|
$
|
171,958,462
|
|
|
$
|
-
|
|
|
$
|
(147,225,382
|
)
|
|
$
|
24,791,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2019
|
|
|
46,887,056
|
|
|
$
|
46,888
|
|
|
$
|
133,438,276
|
|
|
$
|
-
|
|
|
$
|
(114,021,512
|
)
|
|
$
|
19,463,652
|
|
Shares issued under 2015 Purchase Agreement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Purchase shares
|
|
|
1,279,592
|
|
|
|
1,279
|
|
|
|
3,365,555
|
|
|
|
(292,700
|
)
|
|
|
-
|
|
|
|
3,074,134
|
|
Commitment shares
|
|
|
6,047
|
|
|
|
7
|
|
|
|
(7
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Shares issued pursuant to cashless exercise
of warrants
|
|
|
546
|
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Share based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
1,893,152
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,893,152
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(7,246,904
|
)
|
|
|
(7,246,904
|
)
|
Balance, March 31, 2019
|
|
|
48,173,241
|
|
|
$
|
48,175
|
|
|
$
|
138,696,975
|
|
|
$
|
(292,700
|
)
|
|
$
|
(121,268,416
|
)
|
|
$
|
17,184,034
|
|
See
Accompanying Notes to Condensed Consolidated Interim Financial Statements
ANAVEX
LIFE SCIENCES CORP.
INTERIM
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For
the six months ended March 31, 2020 and 2019
|
|
Common
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid-in
|
|
|
Shares
to be
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Par
Value
|
|
|
Capital
|
|
|
Issued
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, October 1, 2019
|
|
|
52,650,521
|
|
|
$
|
52,652
|
|
|
$
|
153,633,807
|
|
|
$
|
-
|
|
|
$
|
(133,396,760
|
)
|
|
$
|
20,289,699
|
|
Shares issued under 2019 Purchase Agreement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Purchase shares
|
|
|
5,964,584
|
|
|
|
5,965
|
|
|
|
15,359,527
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,365,492
|
|
Commitment shares
|
|
|
49,841
|
|
|
|
49
|
|
|
|
(49
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Share based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
2,965,177
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,965,177
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,828,622
|
)
|
|
|
(13,828,622
|
)
|
Balance, March 31, 2020
|
|
|
58,664,946
|
|
|
$
|
58,666
|
|
|
$
|
171,958,462
|
|
|
$
|
-
|
|
|
$
|
(147,225,382
|
)
|
|
$
|
24,791,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, October 1, 2018
|
|
|
45,933,472
|
|
|
|
45,935
|
|
|
|
129,377,542
|
|
|
|
-
|
|
|
|
(107,101,781
|
)
|
|
|
22,321,696
|
|
Shares issued under 2015 Purchase Agreement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase shares
|
|
|
2,229,592
|
|
|
|
2,229
|
|
|
|
5,359,305
|
|
|
|
(292,700
|
)
|
|
|
-
|
|
|
|
5,068,834
|
|
Commitment shares
|
|
|
9,631
|
|
|
|
10
|
|
|
|
(10
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Shares issued pursuant to cashless exercise
of warrants
|
|
|
546
|
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Share based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
3,960,139
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,960,139
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(14,166,635
|
)
|
|
|
(14,166,635
|
)
|
Balance, March 31, 2019
|
|
|
48,173,241
|
|
|
$
|
48,175
|
|
|
$
|
138,696,975
|
|
|
$
|
(292,700
|
)
|
|
$
|
(121,268,416
|
)
|
|
$
|
17,184,034
|
|
See
Accompanying Notes to Condensed Consolidated Interim Financial Statements
Anavex
Life Sciences Corp.
Notes
to the Condensed Consolidated Interim Financial Statements
March
31, 2020
(Unaudited)
Note 1
|
Business
Description and Basis of Presentation
|
Business
Anavex
Life Sciences Corp. (the “Company”) is a clinical stage biopharmaceutical company engaged in the development of differentiated
therapeutics by applying precision medicine to central nervous system (“CNS”) diseases with high unmet need. Anavex
analyzes genomic data from clinical studies to identify biomarkers, which are used to select patients that will receive the therapeutic
benefit for the treatment of neurodegenerative and neurodevelopmental diseases. The Company’s lead compound ANAVEX®2-73
is being developed to treat Alzheimer’s disease, Parkinson’s disease and potentially other central nervous system
diseases, including rare diseases, such as Rett syndrome, a rare severe neurological monogenic disorder caused by mutations in
the X-linked gene, methyl-CpG-binding protein 2 (“MECP2”).
Basis
of Presentation
These
unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States of America
(“U.S. GAAP”) for interim reporting. Accordingly, certain information and note disclosures normally included in the
annual financial statements in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.
In the opinion of management, the disclosures are adequate to make the information presented not misleading.
These
accompanying unaudited interim condensed consolidated financial statements reflect all adjustments, consisting of normal recurring
adjustments, which in the opinion of management are necessary for fair presentation of the information contained herein. The consolidated
balance sheet as of September 30, 2019 was derived from the audited annual financial statements but does not include all disclosures
required by U.S. GAAP. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K
for the year ended September 30, 2019 filed with the SEC on December 16, 2019. The Company follows the same accounting policies
in the preparation of interim reports.
Operating
results for the six months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year
ending September 30, 2020.
Liquidity
All
of the Company’s potential drug compounds are in the clinical development stage and the Company cannot be certain that its
research and development efforts will be successful or, if successful, that its potential drug compounds will ever be approved
for sales to pharmaceutical companies or generate commercial revenues. To date, we have not generated any revenues from our operations.
The Company expects the business to continue to experience negative cash flows for the foreseeable future and cannot predict when,
if ever, our business might become profitable.
Anavex
Life Sciences Corp.
Notes
to the Condensed Consolidated Interim Financial Statements
March
31, 2020
(Unaudited)
Note 1
|
Business
Description and Basis of Presentation – (continued)
|
The
Company believes that its existing cash and cash equivalents, along with existing financial commitments from third parties, will
be sufficient to meet its cash commitments for at least the next two years after the date that these interim condensed consolidated
financial statements are issued. The process of drug development can be costly, and the timing and outcomes of clinical trials
is uncertain. The assumptions upon which the Company has based its estimates are routinely evaluated and may be subject to
change. The actual amount of the Company’s expenditures will vary depending upon a number of factors including but
not limited to the design, timing and duration of future clinical trials, the progress of the Company’s research and development
programs and the level of financial resources available. The Company has the ability to adjust its operating plan spending levels
based on the timing of future clinical trials.
Other
than our rights related to the Sales Agreement and the 2019 Purchase Agreement (each as defined below), there can be no assurance
that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable
terms. If we are not able to obtain the additional financing on a timely basis, if and when it is needed, we will be forced to
delay or scale down some or all of our research and development activities.
In
December 2019, a novel strain of coronavirus, COVID-19, was reported to have surfaced in Wuhan, China. In March 2020, the World
Health Organization (“WHO”) declared COVID-19 to be a global pandemic as a result of the rapid spread of the virus
beyond its point of origin.
The
global outbreak of COVID-19 continues to rapidly evolve as of the date these interim condensed consolidated financial statements
are issued. As such, it is uncertain as to the full magnitude that the outbreak will have on the Company’s financial condition
and future results of operations. Management is actively monitoring the global situation on its business, including on its clinical
trials and operations and financial condition. Given the daily evolution of the COVID-19 situation, and the global responses to
curb its spread, the Company is not able to estimate the effects of COVID-19 on its results of operations or financial condition
for the year ending September 30, 2020.
On
March 27, 2020, the President of the United States signed into law the “Coronavirus Aid, Relief, and Economic Security (CARES)
Act.” The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer
side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to
the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections
to tax depreciation methods for qualified improvement property. The enactment of the CARES Act did not have any impact on the
Company’s interim condensed consolidated financial statements.
Anavex
Life Sciences Corp.
Notes
to the Condensed Consolidated Interim Financial Statements
March
31, 2020
(Unaudited)
Note 1
|
Business
Description and Basis of Presentation – (continued)
|
Use
of Estimates
The
preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and
expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to accounting for research
and development costs, valuation and recoverability of deferred tax assets, asset impairment, stock-based compensation and loss
contingencies. The Company bases its estimates and assumptions on current facts, historical experience and various other factors
that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the
carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources.
The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent
there are material differences between the estimate s and the actual results, future results of operations will be affected.
Adjustment
of Prior Period Financial Statements
As
previously disclosed in Note 1 to the Company’s consolidated financial statements included in the Company’s annual
report on Form 10-K for the year ended September 30, 2019, the Company adjusted amounts to previously reported consolidated financial
statements which were immaterial. These adjustments were identified in connection with the preparation of the consolidated financial
statements for the year ended September 30, 2019 and related to the timing of recognition of research and development incentive
income. Previously the Company accounted for research and development incentive income when received in cash. During the year
ended September 30, 2019, based on a continuing assessment regarding the Company’s eligibility for the incentive programs
under which it was receiving such income, the Company determined that the income should have been accrued and recorded in the
period in which the qualifying research and development expenditures were incurred.
These
interim condensed consolidated financial statements for the three and six months ended March 31, 2019 have been similarly adjusted
to reflect the adjusted research and development incentive income for the three and six months accordingly in the amount of $510,990
and $924,672, respectively and should be read in conjunction with Note 1 to the Company’s consolidated financial statements
for the year ended September 30, 2019.
Principles
of Consolidation
These
consolidated financial statements include the accounts of Anavex Life Sciences Corp. and its wholly-owned subsidiaries, Anavex
Australia Pty Limited, a company incorporated under the laws of Australia, Anavex Germany GmbH, a company incorporated under the
laws of Germany, and Anavex Canada Ltd., a company incorporated under the laws of the Province of Ontario, Canada. All inter-company
transactions and balances have been eliminated.
Anavex
Life Sciences Corp.
Notes
to the Condensed Consolidated Interim Financial Statements
March
31, 2020
(Unaudited)
Note 1
|
Business
Description and Basis of Presentation – (continued)
|
Fair
Value Measurements
The
fair value hierarchy under GAAP is based on three levels of inputs, of which the first two are considered observable and the last
unobservable, that may be used to measure fair value which are the following:
|
Level
1 -
|
quoted
prices (unadjusted) in active markets for identical assets or liabilities;
|
|
|
|
|
Level
2 -
|
observable
inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical
or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or
whose significant value drivers are observable; and
|
|
|
|
|
Level
3 -
|
assets
and liabilities whose significant value drivers are unobservable by little or no market activity and that are significant
to the fair value of the assets or liabilities.
|
The
book value of cash and cash equivalents and accounts payable and accrued liabilities approximate their fair values due to the
short-term maturity of those instruments.
At
March 31, 2020 and September 30, 2019, the Company did not have any Level 3 assets or liabilities.
Basic
and Diluted Loss per Share
Basic
loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common
shares outstanding during the period. Diluted loss per common share is computed similar to basic loss per common share except
that the denominator is increased to include the weighted average number of all potentially dilutive securities convertible into
shares of common stock that were outstanding during the period.
As
of March 31, 2020, loss per share excludes 10,486,266 (September 30, 2019 – 8,812,933) potentially dilutive common shares
related to outstanding options and warrants, as their effect was anti-dilutive.
Anavex
Life Sciences Corp.
Notes
to the Condensed Consolidated Interim Financial Statements
March
31, 2020
(Unaudited)
Note 2
|
Recent
Accounting Pronouncements
|
Recently
Adopted Accounting Pronouncements
In
February 2016, Topic 842, Leases was issued to replace the leases requirements in Topic 840, Leases. The main difference
between previous U.S. GAAP and Topic 842 is the recognition of lease assets and lease liabilities by lessees for those leases
classified as operating leases under previous U.S. GAAP. A lessee should recognize in the balance sheet a liability to make
lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the
lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class
of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize
lease expense for such leases generally on a straight-line basis over the lease term. The accounting applied by a lessor is
largely unchanged from that applied under previous U.S. GAAP. The Company elected to the package of practical expedients
permitted under the transition guidance that allowed, among other things, the historical lease classifications to be carried
forward without reassessment. Further, the Company elected to not recognize lease assets and lease liabilities for leases
with a term of 12 months or less. The adoption of this standard on October 1, 2019 did not have any impact on the Company's
results of operations, financial condition, cash flows, and financial statement disclosures.
In
June 2018, the FASB issued ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based
Payment Accounting, which simplifies the accounting for share-based payments to nonemployees for goods and services by aligning
it with the accounting for share-based payments to employees, with certain exceptions. The new guidance was effective for the
Company beginning on October 1, 2019 and was required to be applied retrospectively with the cumulative effect recognized at the
date of initial application. The adoption of this standard on October 1, 2019 did not have any impact on the Company's results
of operations, financial condition, cash flows, and financial statement disclosures.
Recent
Accounting Pronouncements Not Yet Adopted
In
December 2019, the FASB issued ASU 2019-12, "Simplifying the Accounting for Income Taxes (ASC 740)", which is intended
to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in
Topic 740 and clarifying and amending existing guidance to improve consistent application. ASU 2019-12 is effective for the Company
on October 1, 2021. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated
financial statements but does not expect such guidance to have a material impact.
Anavex
Life Sciences Corp.
Notes
to the Condensed Consolidated Interim Financial Statements
March
31, 2020
(Unaudited)
Grant
Income
During
the year ended September 30, 2017, the Company was awarded grant funding in the amount of $597,886. The grant was being received
in equal quarterly installments over a period of two years beginning during the year ended September 30, 2018 in exchange for
a commitment to complete clinical testing for a therapeutic drug candidate for the treatment of Rett syndrome.
The
grant income has been deferred when received and amortized to other income as the related research and development expenditures
are incurred. During the three and six months ended March 31, 2020, the Company recognized $74,944 and $149,888, respectively
(2019:$74,527 and $149,055, respectively) of this grant on its statement of operations within grant income.
Research
and development incentive income
The
Company is eligible to obtain certain research and development tax credits, including the New York City Biotechnology Tax Credit
(“NYC Biotech credit”), and the Australian research and development tax incentive credit (the “Australia R&D
credit”) through a program administered through the Australian Tax Office (the “ATO”), which provides for a
cash refund based on a percentage of certain research and development activities undertaken in Australia by the Company’s
wholly owned subsidiary, Anavex Australia Pty Ltd. (“Anavex Australia”). Research and development incentive income
during the three and six months ended March 31, 2020 and 2019 represents the receipt by the Company’s Australian subsidiary,
of the Australian research and development incentive credit, (the “ATO R&D Credit”), as well as receipt by the
Company of the New York City Biotechnology Credit (“NYC Biotech credit”).
During the
three and six months ended March 31, 2020, the Company recorded research and development incentive income of $717,328 (AUD 1,203,000)
and $1,660,543 (AUD 2,548,000), respectively (2019: $510,990 and $924,672, respectively) in respect of the ATO R&D Credit for
eligible research and development expenses incurred during the period.
During the
three and six months ended March 31, 2019, the Company recorded research and development incentive income of $250,000 and $250,000
respectively, in respect of the NYC Biotech credit.
Anavex
Life Sciences Corp.
Notes
to the Condensed Consolidated Interim Financial Statements
March
31, 2020
(Unaudited)
Note 4
|
Equity
Offering Agreements
|
Sales Agreement
The Company has entered into a Sales
Agreement dated July 6, 2018, as amended May 1, 2020 (the “Sales Agreement”) with Cantor Fitzgerald & Co.,
(“Cantor Fitzgerald”) and SVB Leerink LLC (“Leerink”), and together with Cantor Fitzgerald as Sales Agents,
pursuant to which the Company may offer and sell shares of common stock, for aggregate gross sale proceeds of up to $50,000,000
from time to time through the Sales Agents (the “Offering”).
Upon delivery of a placement notice
based on the Company’s instructions and subject to the terms and conditions of the Sales Agreement, the Sales Agents may
sell the Shares by methods deemed to be an “at the market offering” offering, in negotiated transactions at market
prices prevailing at the time of sale or at prices related to such prevailing market prices, or by any other method permitted by
law, including negotiated transactions, subject to the prior written consent of the Company. The Company is not obligated to make
any sales of Shares under the Sales Agreement. The Company or the Sales Agents may suspend or terminate the offering of Shares
upon notice to the other party, subject to certain conditions. The Sales Agents will act as sales agent on a commercially
reasonable efforts basis consistent with its normal trading and sales practices and applicable state and federal law, rules and
regulations and the rules of Nasdaq.
The Company has agreed to pay the
Sales Agents commissions for their services of acting as agents of 3.0% of the gross proceeds from the sale of the Shares pursuant
to the Sales Agreement. The Company also agreed to provide the Sales Agents with customary indemnification and contribution
rights. As of March 31, 2020, no shares had been sold pursuant to the Offering.
2015 Purchase Agreement
On October 21, 2015, the Company
entered into a $50,000,000 purchase agreement (the “2015 Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln
Park”), pursuant to which the Company could sell and issue to Lincoln Park, and Lincoln Park was obligated to purchase, up
to $50,000,000 in value of its shares of common stock from time to time over a 36-month period.
During the six months ended March
31, 2019, the Company issued an aggregate of 2,239,223 shares of common stock under the 2015 Purchase Agreement, including 2,229,592
shares of common stock for an aggregate purchase price of $5,361,534 and 9,631 commitment shares. At March 31, 2020 and September
30, 2019, all remaining purchase amounts available for issuance under the 2015 Purchase Agreement had been utilized and the 2015
Purchase Agreement has expired pursuant to its terms. As such, no further shares will be sold under the 2015 Purchase Agreement.
Anavex
Life Sciences Corp.
Notes
to the Condensed Consolidated Interim Financial Statements
March
31, 2020
(Unaudited)
Note 4
|
Equity
Offering Agreements – (continued)
|
2019
Purchase Agreement
On
June 7, 2019, the Company entered into a $50,000,000 purchase agreement (the “2019 Purchase Agreement”) with Lincoln
Park, pursuant to which the Company may sell and issue to Lincoln Park, and Lincoln Park is obligated to purchase, up to $50,000,000
in value of its shares of common stock from time to time from June 12, 2019, the date a prospectus supplement under which shares
of common stock issuable under the 2019 Purchase Agreement was filed with the SEC, until July 1, 2022, which is the first day
of the next month following the 36-month anniversary of June 12, 2019.
The
Company may direct Lincoln Park, at its sole discretion, and subject to certain conditions, to purchase up to 200,000 shares of
common stock on any business day (a “Regular Purchase”). The amount of a Regular Purchase may be increased under certain
circumstances up to 250,000 shares, provided that Lincoln Park’s committed obligation for Regular Purchases on any business
day shall not exceed $2,000,000. In the event we purchase the full amount allowed for a Regular Purchase on any given business
day, we may also direct Lincoln Park to purchase additional amounts as accelerated and additional accelerated purchases. The purchase
price of shares of common stock related to the future funding will be based on the then prevailing market prices of such shares
at the time of sales as described in the 2019 Purchase Agreement.
The
2019 Purchase Agreement limits the Company’s sale of shares of Common Stock to Lincoln Park to 10,076,680 shares of Common
Stock, representing 19.99% of the shares of the Common Stock outstanding on the date of the 2019 Purchase Agreement unless (i)
shareholder approval is obtained to issue more than such amount or (ii) the average price of all applicable sales of Common Stock
to Lincoln Park under the 2019 Purchase Agreement equals or exceeds the lower of (A) the closing price of the Common Stock on
the Nasdaq Capital Market immediately preceding the Execution Date or (B) the average of the closing prices of the Common Stock
on the Nasdaq Capital Market for the five Business Days immediately preceding the Execution Date, and it also limits the Company’s
sale of shares to Lincoln Park to the extent it would cause Lincoln Park to beneficially own more than 4.99% of the Company’s
outstanding shares of Common Stock at any given time.
In
consideration for entering into the 2019 Purchase Agreement, the Company issued to Lincoln Park 324,383 shares of common stock
as a commitment fee and agreed to issue up to 162,191 shares pro rata, when and if, Lincoln Park purchases at the Company’s
discretion the $50,000,000 aggregate commitment.
During the six months ended March
31, 2020, the Company issued to Lincoln Park an aggregate of 6,014,425 (2019: Nil) shares of common stock under the 2019 Purchase
Agreement, including 5,964,584 (2019: Nil) shares of common stock for an aggregate purchase price of $15,365,492 (2019: $Nil) and
49,841 (2019: Nil) commitment shares. At March 31, 2020, an amount of $30,000,000 remained available under the 2019 Purchase Agreement.
Anavex
Life Sciences Corp.
Notes
to the Condensed Consolidated Interim Financial Statements
March
31, 2020
(Unaudited)
Note 5
|
Commitments
and Contingencies
|
During
the three and six months ended March 31, 2020, the Company incurred office lease expense of $60,861 and $110,915, respectively
(2019: $40,507 and $78,261, respectively).
The
Company is subject to claims and legal proceedings that arise in the ordinary course of business. Such matters are inherently
uncertain, and there can be no guarantee that the outcome of any such matter will be decided favorably to the Company or that
the resolution of any such matter will not have a material adverse effect upon the Company's consolidated financial statements.
The Company does not believe that any of such pending claims and legal proceedings will have a material adverse effect on its
consolidated financial statements.
|
c)
|
Share
Purchase Warrants
|
A
summary of the status of the Company’s outstanding share purchase warrants is presented below:
|
|
|
Number
of Shares
|
|
|
Weighted
Average Exercise Price ($)
|
|
|
Balance, September 30, 2018
|
|
|
678,379
|
|
|
|
2.87
|
|
|
Exercised
|
|
|
(8,750
|
)
|
|
|
1.13
|
|
|
Expired
|
|
|
(319,629
|
)
|
|
|
1.46
|
|
|
Balance, September 30, 2019
|
|
|
350,000
|
|
|
|
4.19
|
|
|
Granted
|
|
|
150,000
|
|
|
|
3.17
|
|
|
Balance, March 31, 2020
|
|
|
500,000
|
|
|
|
3.88
|
|
At
March 31, 2020, the Company had share purchase warrants outstanding as follows:
Number
|
|
|
Exercise
Price
|
|
|
Expiry
Date
|
|
350,000
|
|
|
$
|
4.19
|
|
|
June 30,
2021
|
|
150,000
|
|
|
$
|
3.17
|
|
|
May
6, 2024
|
|
500,000
|
|
|
|
|
|
|
|
Anavex
Life Sciences Corp.
Notes
to the Condensed Consolidated Interim Financial Statements
March
31, 2020
(Unaudited)
Note
5
|
Commitments
and Contingencies – (continued)
|
|
c)
|
Stock–based
Compensation Plan
|
2015
Stock Option Plan
On
September 18, 2015, the Company’s board of directors (the “Board”) approved a 2015 Omnibus Incentive Plan (the
“2015 Plan”), which provides for the grant of stock options and restricted stock awards to directors, officers, employees
and consultants of the Company.
The
maximum number of our common shares reserved for issue under the plan is 6,050,553 shares, subject to adjustment in the event
of a change of the Company’s capitalization. As a result of the adoption of the 2015 Plan, no further option awards were
granted under any previously existing stock option plan. Stock option awards previously granted under the previously existing
stock option plans remain outstanding in accordance with their terms.
The
2015 Plan provides that it may be administered by the Board, or the Board may delegate such responsibility to a committee. The
exercise price will be determined by the Board at the time of grant shall be at least equal to the fair market value on such date.
If the grantee is a 10% stockholder on the grant date, then the exercise price shall not be less than 110% of fair market value
of the Company’s shares of common stock on the grant date. Stock options may be granted under the 2015 Plan for an exercise
period of up to ten years from the date of grant of the option or such lesser periods as may be determined by the Board, subject
to earlier termination in accordance with the terms of the 2015 Plan.
2019
Stock Option Plan
On
January 15, 2019, the Board approved the 2019 Omnibus Incentive Plan (the “2019 Plan”), which provides for the grant
of stock options and restricted stock awards to directors, officers, employees, consultants and advisors of the Company. Under
the terms of the 2019 Plan, 6,000,000 additional shares of Common Stock are available for issuance under the 2019 Plan, in addition
to the shares available under the 2015 Plan. Any awards outstanding under the 2015 Plan or the Company’s 2007 Stock Option
Plan (the “2007 Plan”) will remain subject to and be paid under the 2015 Plan or the 2007 Plan, respectively, and
any shares subject to outstanding awards under the 2015 Plan or the 2007 Plan that subsequently cease to be subject to such awards
(other than by reason of settlement of the awards in shares) will automatically become available for issuance under the 2019 Plan.
The
2019 Plan provides that it may be administered by the Board, or the Board may delegate such responsibility to a committee. The
exercise price will be determined by the board of directors at the time of grant shall be at least equal to the fair market value
on such date. If the grantee is a 10% stockholder on the grant date, then the exercise price shall not be less than 110% of fair
market value of the Company’s shares of common stock on the grant date. Stock options may be granted under the 2019 Plan
for an exercise period of up to ten years from the date of grant of the option or such lesser periods as may be determined by
the Board, subject to earlier termination in accordance with the terms of the 2019 Plan.
Anavex
Life Sciences Corp.
Notes
to the Condensed Consolidated Interim Financial Statements
March
31, 2020
(Unaudited)
Note
5
|
Commitments
and Contingencies – (continued)
|
|
d)
|
Stock-based
Compensation Plan – (continued)
|
A
summary of the status of Company’s outstanding stock purchase options is presented below:
|
|
|
Number
of Shares
|
|
|
Weighted
Average Exercise Price ($)
|
|
|
Weighted
Average Grant Date Fair Value ($)
|
|
|
Aggregate
intrinsic value ($)
|
|
|
Outstanding,
September 30, 2018
|
|
|
6,506,917
|
|
|
|
3.83
|
|
|
|
|
|
|
|
2,353,088
|
|
|
Granted
|
|
|
2,265,399
|
|
|
|
2.79
|
|
|
|
2.27
|
|
|
|
|
|
|
Forfeited
|
|
|
(309,383
|
)
|
|
|
3.25
|
|
|
|
|
|
|
|
|
|
|
Outstanding,
September 30, 2019
|
|
|
8,462,933
|
|
|
|
3.58
|
|
|
|
|
|
|
|
4,115,032
|
|
|
Granted
|
|
|
1,525,000
|
|
|
|
2.86
|
|
|
|
2.17
|
|
|
|
|
|
|
Forfeited
|
|
|
(1,667
|
)
|
|
|
2.64
|
|
|
|
|
|
|
|
|
|
|
Outstanding,
March 31, 2020
|
|
|
9,986,266
|
|
|
|
3.47
|
|
|
|
|
|
|
|
4,517,080
|
|
|
Exercisable,
March 31, 2020
|
|
|
6,925,642
|
|
|
|
3.70
|
|
|
|
|
|
|
|
3,815,680
|
|
The
aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted market
price of the Company’s stock for the options that were in-the-money at March 31, 2020.
During
the three and six months ended March 31, 2020, the Company recognized stock-based compensation expense of $1,700,753 and $2,965,177,
respectively (2019: $1,893,152 and $3,960,139, respectively) in connection with the issuance and vesting of stock options
and warrants in exchange for services. These amounts have been included in general and administrative expenses and research
and development expenses on the Company’s interim condensed consolidated statements of operations as follows:
|
|
|
Three
months ended
March 31,
|
|
|
Six
months ended
March 31,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
General and administrative
|
|
$
|
810,309
|
|
|
$
|
950,999
|
|
|
$
|
1,291,410
|
|
|
$
|
2,006,587
|
|
|
Research and development
|
|
|
890,444
|
|
|
|
942,153
|
|
|
|
1,673,767
|
|
|
|
1,953,552
|
|
|
Total share based compensation
|
|
$
|
1,700,753
|
|
|
$
|
1,893,152
|
|
|
$
|
2,965,177
|
|
|
$
|
3,960,139
|
|
An
amount of approximately $5,708,800 in stock-based compensation is expected to be recorded over the remaining vesting period of
such options through fiscal 2022.
The
fair value of each option award is estimated on the date of grant using the Black Scholes option pricing model based on the following
weighted average assumptions:
|
|
2020
|
|
|
2019
|
|
Risk-free interest
rate
|
|
|
1.68
|
%
|
|
|
2.91
|
%
|
Expected life of options
(years)
|
|
|
5.44
|
|
|
|
5.59
|
|
Annualized volatility
|
|
|
97.61
|
%
|
|
|
105.96
|
%
|
Dividend rate
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking
Statements
This
Quarterly Report on Form 10-Q includes forward-looking statements. All statements other than statements of historical facts contained
in this Quarterly Report on Form 10-Q, including statements regarding our anticipated future clinical and regulatory milestone
events, future financial position, business strategy and plans and objectives of management for future operations, are forward-looking
statements. The words “believe,” “may,” “estimate,” “continue,” “anticipate,”
“intend,” “expect” “should,” “forecast,” “could,” “suggest,”
“plan” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Such forward-looking
statements include, without limitation, statements regarding:
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●
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our
ability to generate any revenue or to continue as a going concern;
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●
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our
ability to successfully conduct clinical and preclinical trials for our product candidates;
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●
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our
ability to raise additional capital on favorable terms and the impact of such activities on our stockholders and stock price;
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●
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the
impact of the COVID-19 outbreak and its effect on us;
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●
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our
ability to execute our research and development plan on time and on budget;
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|
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●
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our
products ability to demonstrate efficacy or an acceptable safety profile of our product candidates;
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●
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our
ability to obtain the support of qualified scientific collaborators;
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●
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our
ability, whether alone or with commercial partners, to successfully commercialize any of our product candidates that may be
approved for sale;
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●
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our
ability to identify and obtain additional product candidates;
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●
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our
reliance on third parties in non-clinical and clinical studies;
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●
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our
ability to defend against product liability claims;
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●
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our
ability to safeguard against security breaches;
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●
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our
ability to obtain and maintain sufficient intellectual property protection for our product candidates;
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●
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our
ability to comply with our intellectual property licensing agreements;
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|
●
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our
ability to defend against claims of intellectual property infringement;
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|
●
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our
ability to comply with the maintenance requirements of the government patent agencies;
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|
|
|
●
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our
ability to protect our intellectual property rights throughout the world;
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●
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competition;
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|
●
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the
anticipated start dates, durations and completion dates of our ongoing and future clinical studies;
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|
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●
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the
anticipated designs of our future clinical studies;
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|
|
|
●
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our
anticipated future regulatory submissions and our ability to receive regulatory approvals to develop and market our product
candidates; and
|
|
|
|
|
●
|
our
anticipated future cash position.
|
We
have based these forward-looking statements largely on our current expectations and projections about future events, including
the responses we expect from the U.S. Food and Drug Administration, (“FDA”), and other regulatory authorities and
financial trends that we believe may affect our financial condition, results of operations, business strategy, preclinical and
clinical trials, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions
including without limitation the risks described in “Risk Factors” in Part I, Item 1A of our Annual Report on Form
10-K filed with the Securities and Exchange Commission on December 16, 2019. These risks are not exhaustive. Other sections of
this Quarterly Report on Form 10-Q include additional factors which could adversely impact our business and financial performance.
Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it
is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or
the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained
in any forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We cannot
assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur and actual
results could differ materially from those projected in the forward-looking statements. Except as required by applicable laws
including the securities laws of the United States, we assume no obligation to update or supplement forward-looking statements.
As
used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” and “Anavex”
mean Anavex Life Sciences Corp., unless the context clearly requires otherwise.
Our
Current Business
Anavex
Life Sciences Corp. is a clinical stage biopharmaceutical company engaged in the development of differentiated therapeutics by
applying precision medicine to central nervous system (“CNS”) diseases with high unmet need. We analyze genomic data
from clinical studies to identify biomarkers, which we use to select patients that will receive the therapeutic benefit for the
treatment of neurodegenerative and neurodevelopmental diseases.
Our
lead compound, ANAVEX®2-73, is being developed to treat Alzheimer’s disease, Parkinson’s disease and potentially
other central nervous system diseases, including rare diseases, such as Rett syndrome, a rare severe neurological monogenic disorder
caused by mutations in the X-linked gene, methyl-CpG-binding protein 2 (“MECP2”).
Our
total portfolio currently consists of five programs. To prioritize the allocation of our resources, we designate certain programs
as core programs and others as seed programs. We currently have two core programs and three seed programs. Our core programs are
at various stages of clinical and preclinical development, in neurodegenerative and neurodevelopmental diseases.
The
following table summarizes key information about our programs:
Anavex
has a portfolio of compounds varying in sigma-1 receptor (S1R) binding activities. The SIGMAR1 gene encodes the S1R protein, which
is an intracellular chaperone protein with important roles in cellular communication. S1R is also involved in transcriptional
regulation at the nuclear envelope and restores homeostasis and stimulates recovery of cell function when activated. In order
to validate the ability of our compounds to activate quantitatively the S1R, we performed, in collaboration with Stanford University,
a quantitative Positron Emission Tomography (PET) imaging scan in mice, which demonstrated a dose-dependent ANAVEX®2-73 target
engagement or receptor occupancy (RO) with S1R in the brain.
Cellular
Homeostasis
Many
diseases are possibly directly caused by chronic homeostatic imbalances or cellular stress of brain cells. In pediatric diseases
like Rett syndrome or infantile spasms, the chronic cellular stress is possibly caused by the presence of a constant genetic mutation.
In neurodegenerative diseases, such as Alzheimer’s and Parkinson’s diseases, chronic cellular stress is possibly caused
by age-correlated buildup of cellular insult and hence chronic cellular stress. Specifically, defects in homeostasis of protein
or ribonucleic acid (“RNA”) lead to the death of neurons and dysfunction of the nervous system. The spreading of protein
aggregates resulting in a proteinopathy, a characteristic finding in Alzheimer’s and Parkinson’s diseases that results
from disorders of protein synthesis, trafficking, folding, processing or degradation in cells. The clearance of macromolecules
in the brain is particularly susceptible to imbalances that result in aggregation and degeneration in nerve cells. For example,
Alzheimer’s disease pathology is characterized by the presence of amyloid plaques, neurofibrillary tangles, which are aggregates
of hyperphosphorylated Tau protein that are a marker of other diseases known as tauopathies as well as inflammation of microglia.
With the SIGMAR1 activation through SIGMAR1 agonists like ANAVEX®2-73, our approach is to restore cellular balance, i.e. homeostasis.
Therapies that correct defects in cellular homeostasis might have the potential to halt or delay neurodevelopmental and neurodegenerative
disease progression.
ANAVEX®2-73-specific
Biomarkers
A
full genomic analysis of Alzheimer’s disease (AD) patients treated with ANAVEX®2-73 resulted in the identification of
actionable genetic variants. A significant impact of the genomic biomarkers SIGMAR1, the direct target of ANAVEX®2-73 and
COMT, a gene involved in memory function, on the drug response level was identified, leading to an early ANAVEX®2-73-specific
biomarker hypothesis. It is expected that excluding patients with these two identified biomarker variants (approximately
10%-20% of the population) in prospective studies would identify approximately 80%-90% patients that would display clinically
significant improved functional and cognitive scores. The consistency between the identified DNA and RNA data related to ANAVEX®2-73,
which are considered independent of AD pathology, as well as multiple endpoints and time-points, provides support for precision
medicine clinical development of ANAVEX®2-73 by using genetic biomarkers identified within the study population itself to
target patients who are most likely to respond to ANAVEX®2-73 treatment in AD as well as indications like Parkinson’s
disease dementia (PDD) or Rett syndrome (RTT) in which ANAVEX®2-73 is currently studied.
Clinical
Studies Overview
Alzheimer’s
Disease
In
November 2016, we completed a Phase 2a clinical trial, consisting of PART A and PART B, which lasted a total of 57 weeks, for
ANAVEX®2-73 in mild-to-moderate Alzheimer’s patients. This open-label randomized trial met both primary and secondary
endpoints and was designed to assess the safety and exploratory efficacy of ANAVEX®2-73 in 32 patients. ANAVEX®2-73 targets
sigma-1 and muscarinic receptors, which have been shown in preclinical studies to reduce stress levels in the brain believed to
restore cellular homeostasis and to reverse the pathological hallmarks observed in Alzheimer’s disease. In October 2017,
we presented positive pharmacokinetic (PK) and pharmacodynamic (PD) data from the Phase 2a study, which established a concentration-effect
relationship between ANAVEX®2-73 and study measurements. These measures obtained from all patients who participated in the
entire 57 weeks include exploratory cognitive and functional scores as well as biomarker signals of brain activity. Additionally,
the study appears to show that ANAVEX®2-73 activity is enhanced by its active metabolite (ANAVEX19-144), which also targets
the sigma-1 receptor and has a half-life approximately twice as long as the parent molecule.
In
March 2016, we received approval from the Ethics Committee in Australia to extend the Phase 2a clinical trial by an additional
108 weeks, which had been requested by patients and their caregivers. Subsequently, in May 2018, we received approval from the
Ethics Committee in Australia to further extend the Phase 2a extension trial for an additional two years. The two consecutive
trial extensions have allowed participants who completed the 52-week PART B of the study to continue taking ANAVEX®2-73, providing
an opportunity to gather extended safety data for a cumulative time period of five years.
In
October 2018, we presented new long-term clinical data for ANAVEX®2-73 in a presentation at the 2018 Clinical Trials on Alzheimer’s
Disease (CTAD) Meeting. At 148 weeks into the five-year extended Phase 2a clinical study, data confirmed a significant association
between ANAVEX®2-73 concentration and both exploratory functional and cognitive endpoints as measured by the Alzheimer’s
Disease Cooperative Study-Activities of Daily Living (ADCS-ADL) evaluation and the Mini Mental State Examination (MMSE),
respectively. The cohort of patients treated with higher ANAVEX®2-73 concentration maintained ADCS-ADL performance compared
to the lower concentration cohort (p<0.0001). As well, the patient cohort with the higher ANAVEX®2-73 concentration performed
better at MMSE compared to the lower concentration cohort (p<0.0008). A significant impact on the drug response levels of both
the SIGMAR1 (p<0.0080) and COMT (p<0.0014) genomic biomarkers, identified and specified at week 57, was also confirmed over
the 148-week period. Further, ANAVEX®2-73 demonstrated continued favorable safety and tolerability through 148 weeks.
A
larger Phase 2b/3 double-blind, placebo-controlled study of ANAVEX®2-73 in Alzheimer’s disease commenced in August 2018,
which is independent of the ongoing Phase 2a extension study. The Phase 2b/3 study will enroll approximately 450 patients for
48 weeks, randomized 1:1:1 to two different ANAVEX®2-73 doses or placebo. The trial is currently taking place in Australia;
however, additional regions are being added. The ANAVEX®2-73 Phase 2b/3 study design incorporates genomic precision medicine
biomarkers identified in the ANAVEX®2-73 Phase 2a study. Primary and secondary endpoints will assess safety and both cognitive
and functional efficacy, measured through Alzheimer’s Disease Assessment Scale – Cognition (ADAS-Cog), ADCS-ADL and
Clinical Dementia Rating – Sum of Boxes for cognition and function (CDR-SB).
In
October 2019, we initiated a long-term open label extension study of ANAVEX®2-73, entitled the ATTENTION-AD study, for patients
who have completed the 48-week Phase 2b/3 placebo-controlled trial referenced above. This study is expected to last two years
and will give patients the opportunity to continue their treatment.
Rett
Syndrome
In
February 2016, we presented positive preclinical data for ANAVEX®2-73 in Rett syndrome, a rare neurodevelopmental disease.
The study was funded by the International Rett Syndrome Foundation (“Rettsyndrome.org”). In January 2017, we were
awarded a financial grant from Rettsyndrome.org of a minimum of $0.6 million to cover some of the costs of a multicenter Phase
2 clinical trial of ANAVEX®2-73 for the treatment of Rett syndrome. This award is being received in quarterly instalments
which commenced during fiscal 2018.
In
March 2019, we commenced the first Phase 2 clinical trial in a planned Rett syndrome program of ANAVEX®2-73 for the treatment
of Rett syndrome. The studies will be conducted in a range of patient age demographics and geographic regions.
The
first Phase 2 study, which commenced in March 2019, is taking place in the United States and is a randomized double-blind, placebo-controlled
safety, tolerability, pharmacokinetic and efficacy study of oral liquid ANAVEX®2-73 formulation to treat Rett syndrome. Pharmacokinetic
and dose findings will be investigated in a total of 21 patients over a 7-week treatment period including ANAVEX®2-73-specific
genomic precision medicine biomarkers. All patients who participate in the study will be eligible to receive ANAVEX®2-73 under
a voluntary open label extension protocol. Primary and secondary endpoints include safety as well as Rett syndrome conditions
such as cognitive impairment, motor impairment, behavioral symptoms and seizure activity. The ANAVEX®2-73 Phase 2 Rett syndrome
study designs incorporate genomic precision medicine biomarkers identified in the ANAVEX®2-73 Phase 2a Alzheimer’s disease
study.
In
June 2019, we commenced the second Phase 2 study of ANAVEX®2-73 for the treatment of Rett syndrome, called the AVATAR study.
This study is taking place in Australia using a convenient once-daily oral liquid ANAVEX®2-73 formulation. Similar to the
United States-based Phase 2 study for Rett syndrome, the study will evaluate the safety and efficacy of ANAVEX®2-73 in approximately
33 patients over a 7-week treatment period including ANAVEX®2-73 specific precision medicine biomarkers. All patients who
participate in the study will be eligible to receive ANAVEX®2-73 under a voluntary open label extension protocol.
In
September 2019, we announced approval from the Australian Human Research Ethics Committee to commence the third study of ANAVEX®2-73
for the treatment of Rett syndrome, called the EXCELLENCE study. Similar to the AVATAR study, this study is taking place in Australia
and is using a convenient once-daily oral liquid ANAVEX®2-73 formulation. The study will evaluate the safety and efficacy
of ANAVEX®2-73 in at least 69 pediatric patients, aged 5 to 18, over a 12-week treatment period incorporating ANAVEX®2-73
specific precision medicine biomarkers. All patients who participate in the study will be eligible to receive ANAVEX®2-73
under a voluntary open label extension protocol.
Parkinson’s
Disease
In
September 2016, we presented positive preclinical data for ANAVEX®2-73 in Parkinson’s disease, which demonstrated significant
improvements on all measures: behavioral, histopathological, and neuroinflammatory endpoints. The study was funded by the Michael
J. Fox Foundation. Additional data was announced in October 2017 from the model for experimental parkinsonism. The data presented
indicates that ANAVEX®2-73 induces robust neurorestoration in experimental parkinsonism. The encouraging results we have gathered
in this model, coupled with the favorable profile of this compound in the Alzheimer’s disease trial, support the notion
that ANAVEX®2-73 is a promising clinical candidate drug for Parkinson’s disease dementia.
In
October 2018, we initiated a double-blind, randomized, placebo-controlled Phase 2 trial with ANAVEX®2-73 in Parkinson’s
Disease Dementia (PDD), which will study the effect of the compound on both the cognitive and motor impairment of Parkinson’s
disease. The Phase 2 study has enrolled approximately 120 patients for 14 weeks, randomized 1:1:1 to two different ANAVEX®2-73
doses or placebo. The ANAVEX®2-73 Phase 2 PDD study design incorporates genomic precision medicine biomarkers identified in
the ANAVEX®2-73 Phase 2a study. The study has completed enrollment and topline results are expected by mid-2020.
Our
Pipeline
Our
research and development pipeline includes ANAVEX®2-73 currently in three different clinical studies, and several other compounds
in different stages of pre-clinical study.
Our
proprietary SIGMACEPTOR™ Discovery Platform produced small molecule drug candidates with unique modes of action, based on
our understanding of sigma receptors. Sigma receptors may be targets for therapeutics to combat many human diseases, both of neurodegenerative
nature, including Alzheimer’s disease, as well as of neurodevelopmental nature, like Rett syndrome. When bound by the appropriate
ligands, sigma receptors influence the functioning of multiple biochemical signals that are involved in the pathogenesis (origin
or development) of disease.
Compounds
that have been subjects of our research include the following:
ANAVEX®2-73
ANAVEX®2-73
may offer a disease-modifying approach in neurodegenerative and neurodevelopmental diseases by activation of sigma-1 receptors.
In
Rett syndrome, administration of ANAVEX®2-73 resulted in both significant and dose related improvements in an array of behavioral
paradigms in the MECP2 HET Rett syndrome disease model. In addition, in a further experiment sponsored by Rettsyndrome.org, ANAVEX®2-73
was evaluated in automatic visual response and respiration tests in 7-month old mice, an age at which advanced pathology is evident.
Vehicle-treated MECP2 mice demonstrated fewer automatic visual responses than wild-type mice. Treatment with ANAVEX®2-73 for
four weeks significantly increased the automatic visual response in the MECP2 Rett syndrome disease mouse. Additionally, chronic
oral dosing daily for 6.5 weeks of ANAVEX®2-73 starting at ~5.5 weeks of age was conducted in the MECP2 HET Rett syndrome
disease mouse model assessed the different aspects of muscular coordination, balance, motor learning and muscular strengths, some
of the core deficits observed in Rett syndrome. Administration of ANAVEX®2-73 resulted in both significant and dose related
improvements in an array of these behavioral paradigms in the MECP2 HET Rett syndrome disease model.
In
March 2019, we commenced the first Phase 2 clinical trial in a planned Rett syndrome program of ANAVEX®2-73 for the treatment
of Rett syndrome. The studies will be conducted in a range of patient age demographics and geographic regions, as more fully described
above under Clinical Studies Overview – Rett Syndrome.
In
May 2016 and June 2016, the FDA granted Orphan Drug Designation to ANAVEX®2-73 for the treatment of Rett syndrome and infantile
spasms, respectively. In November 2019, the FDA granted to ANAVEX®2-73 the Rare Pediatric Disease (RPD) designation for the
treatment of Rett syndrome. The RPD designation provides priority review by the FDA to encourage the development of treatments
for rare pediatric diseases.
Further,
in February 2020, the FDA granted Fast Track designation for the ANAVEX®2-73 clinical development program for the treatment
of Rett syndrome. The FDA Fast Track program is designed to facilitate and expedite the development and review of new drugs to
address unmet medical needs in the treatment of serious and life-threatening conditions.
For
Parkinson’s disease, data demonstrates significant improvements and restoration of function in a disease modifying animal
model of Parkinson’s disease. Significant improvements were seen on all measures tested: behavioral, histopathological,
and neuroinflammatory endpoints. In July 2018 the Company received approval from the Spanish Agency for Medicinal Products and
Medical Devices (AEMPS), to initiate its Phase 2, double-blind, placebo-controlled 14-week trial of the safety and efficacy of
ANAVEX®2-73 for the treatment of Parkinson’s disease dementia. The Phase 2 study commenced in October 2018 and has enrolled
120 patients, randomized 1:1:1 to two different ANAVEX®2-73 doses or placebo, in approximately 24 clinical study sites across
Spain and Australia. The study has completed enrollment and topline results are expected by mid-2020.
In
Alzheimer’s disease (AD) animal models, ANAVEX®2-73 has shown pharmacological, histological and behavioral evidence
as a potential neuroprotective, anti-amnesic, anti-convulsive and anti-depressive therapeutic agent, due to its potent affinity
to sigma-1 receptors and moderate affinities to M1-4 type muscarinic receptors. In addition, ANAVEX®2-73 has shown a potential
dual mechanism which may impact both amyloid and tau pathology. In a transgenic AD animal model Tg2576, ANAVEX®2-73 induced
a statistically significant neuroprotective effect against the development of oxidative stress in the mouse brain, as well as
significantly increased the expression of functional and synaptic plasticity markers that is apparently amyloid-beta independent.
It also statistically alleviated the learning and memory deficits developed over time in the animals, regardless of sex, both
in terms of spatial working memory and long-term spatial reference memory.
Based
on the results of pre-clinical testing, we initiated and completed a Phase 1 single ascending dose (SAD) clinical trial of ANAVEX®2-73.
In this Phase 1 SAD trial, the maximum tolerated single dose was defined per protocol as 55-60 mg. This dose is above the equivalent
dose shown to have positive effects in mouse models of AD. There were no significant changes in laboratory or electrocardiogram
(ECG) parameters. ANAVEX®2-73 was well tolerated below the 55-60 mg dose with only mild adverse events in some subjects. Observed
adverse events at doses above the maximum tolerated single dose included headache and dizziness, which were moderate in severity
and reversible. These side effects are often seen with drugs that target CNS conditions, including AD.
The
ANAVEX®2-73 Phase 1 SAD trial was conducted as a randomized, placebo-controlled study. Healthy male volunteers between the
ages of 18 and 55 received single, ascending oral doses over the course of the trial. Study endpoints included safety and tolerability
together with pharmacokinetic parameters. Pharmacokinetics includes the absorption and distribution of a drug, the rate at which
a drug enters the blood and the duration of its effect, as well as chemical changes of the substance in the body. This study was
conducted in Germany in collaboration with ABX-CRO, a clinical research organization that has conducted several Alzheimer’s
disease studies, and the Technical University of Dresden.
In
December 2014, a Phase 2a clinical trial was initiated for ANAVEX®2-73, for the treatment of Alzheimer’s disease. The
open-label randomized trial was designed to assess the safety and exploratory efficacy of ANAVEX®2-73 in 32 patients with
mild-to-moderate Alzheimer’s disease. ANAVEX®2-73 targets sigma-1 and muscarinic receptors, which have been shown in
preclinical studies to reduce stress levels in the brain believed to restore cellular homeostasis and to reverse the pathological
hallmarks observed in Alzheimer’s disease.
The
Phase 2a study met both primary and secondary objectives of the study. The 31-week preliminary exploratory safety
and efficacy data from the Phase 2a study of ANAVEX®2-73 in Alzheimer’s patients, with most receiving
also donepezil, the current standard of care, demonstrated favorable safety, maximum tolerated dose, positive dose
response, sustained efficacy response through 31 weeks for both cognitive and functional measures, as well as positive unexpected
therapeutic response events. ANAVEX®2-73 continued to demonstrate a favorable adverse event (AE) profile through 31 weeks
in a patient population of elderly Alzheimer’s patients with varying degrees of physical fragility. The most common side
effects across all AE categories tended to be of mild severity grade 1 and were resolved with dose reductions that were anticipated
within the adaptive design of the study protocol.
Through
57 weeks, Alzheimer’s patients taking a daily oral dose between 10mg and 50mg of ANAVEX®2-73 was well tolerated. There
were no clinically significant treatment-related adverse events and no serious adverse events. Despite non-optimized dosing of
ANAVEX®2-73 throughout the 57-week study, continued significant improvements from baseline of cognitive, functional and behavioral
scores in a group of patients were observed, respectively. This data was analyzed using refined mathematical modeling methods
in conjunction with the detailed pharmacokinetic (PK) information.
In
October 2017, we presented positive PK and PD data from the Phase 2a study, which established a concentration-effect relationship
between ANAVEX®2-73 and study measurements. These measures, obtained from all patients who participated in the entire 57 weeks,
include exploratory cognitive and functional scores as well as biomarker signals of brain activity. Additionally, the study appears
to show that ANAVEX®2-73 activity is enhanced by its active metabolite (ANAVEX19-144), which also targets the sigma-1 receptor
and has a half-life approximately twice as long as the parent molecule.
Pre-specified
exploratory analyses included the cognitive (MMSE) and the functional (ADCS-ADL) changes from baseline. A continued stabilization
of both cognitive and functional measures in patients treated with ANAVEX®2-73 was observed. This correlation was positive
within all measured scores (MMSE, ADCS-ADL, Cogstate, HAM-D and EEG/ERP).
In
July 2018, we presented the results of a genomic DNA and RNA evaluation of the participants in the Phase 2a study. More than 33,000
genes were analyzed using unbiased, data driven, machine learning, artificial intelligence (AI) system for analyzing DNA &
RNA data in patients exposed to ANAVEX®2-73. The analysis identified genetic variants that impacted response to ANAVEX®2-73,
among them variants related to the Sigma-1 receptor (SIGMAR1), the target for ANAVEX®2-73. Results showed that study participants
without the SIGMAR1 (rs1800866) variants, which is about 80 percent of the population worldwide, demonstrated improved cognitive
(MMSE) and the functional (ADCS-ADL) scores. The results from this evaluation may enable a precision medicine approach, since
these signatures can now be applied to neurological indications tested in clinical studies with ANAVEX®2-73 including Alzheimer’s
disease, Parkinson’s disease dementia and Rett syndrome.
ANAVEX®2-73
data presented met prerequisite information in order to progress into a Phase 2b/3 placebo-controlled study. On July 2, 2018,
the Human Research Ethics Committee in Australia approved the initiation of our Phase 2b/3, double-blind, randomized, placebo-controlled
48-week safety and efficacy trial of ANAVEX®2-73 for the treatment of early Alzheimer’s disease. This Phase 2b/3 study
design incorporates inclusion of genomic precision medicine biomarkers identified in the ANAVEX®2-73 Phase 2a study. The Phase
2b/3 study, which is expected to enroll approximately 450 patients, randomized 1:1:1 to either two different ANAVEX®2-73 doses
or placebo, commenced in October 2018.
Preclinical
data also validates ANAVEX®2-73 as a prospective platform drug for other neurodegenerative diseases beyond Alzheimer’s
disease, Parkinson’s disease or Rett syndrome, more specifically, epilepsy, infantile spasms, Fragile X syndrome, Angelman
syndrome, multiple sclerosis and, more recently, tuberous sclerosis complex (TSC). ANAVEX®2-73 demonstrated significant improvements
in all of these indications in the respective preclinical animal models.
In
a study sponsored by the Foundation for Angelman Syndrome, ANAVEX®2-73 was assessed in a mouse model for the development of
audiogenic seizures. The results indicated that ANAVEX®2-73 administration significantly reduced audiogenic-induced
seizures. In a study sponsored by FRAXA Research Foundation regarding Fragile X syndrome, data demonstrated that ANAVEX®2-73
restored hippocampal brain-derived neurotrophic factor (BDNF) expression to normal levels. BDNF under-expression has been observed
in many neurodevelopmental and neurodegenerative pathologies. BDNF signaling promotes maturation of both excitatory and inhibitory
synapses. ANAVEX®2-73 normalization of BDNF expression could be a contributing factor for the positive data observed in both
neurodevelopmental and neurodegenerative disorders like Angelman and Fragile X syndromes.
Preclinical
data presented also indicates that ANAVEX®2-73 demonstrates protective effects of mitochondrial enzyme complexes during pathological
conditions, which, if impaired, are believed to play a role in the pathogenesis of neurodegenerative and neurodevelopmental diseases.
Preclinical
data on ANAVEX®2-73 related to multiple sclerosis indicates that ANAVEX®2-73 may promote remyelination in multiple sclerosis
disease. Further, data also demonstrates that ANAVEX®2-73 provides protection for oligodendrocytes (“OL’s”)
and oligodendrocyte precursor cells (“OPC’s”), as well as central nervous system neurons in addition to helping
repair by increasing OPC proliferation and maturation in tissue culture.
In
March 2018, we presented preclinical data of ANAVEX®2-73 in a genetic mouse model of tuberous sclerosis complex (“TSC”).
TSC is a rare genetic disorder characterized by the growth of numerous benign tumors in many parts of the body with a high incidence
of seizures. The new preclinical data demonstrates that treatment with ANAVEX®2-73 significantly increases survival and reduces
seizures.
ANAVEX®3-71
ANAVEX®3-71
is a preclinical drug candidate with a novel mechanism of action via sigma-1 receptor activation and M1 muscarinic allosteric
modulation, which has been shown to enhance neuroprotection and cognition in Alzheimer’s disease models. ANAVEX®3-71
is a CNS-penetrable mono-therapy that bridges treatment of both cognitive impairments with disease modifications. It is highly
effective in very small doses against the major Alzheimer’s hallmarks in transgenic (3xTg-AD) mice, including cognitive
deficits, amyloid and tau pathologies, and also has beneficial effects on inflammation and mitochondrial dysfunctions. ANAVEX®3-71
indicates extensive therapeutic advantages in Alzheimer’s and other protein-aggregation-related diseases given its ability
to enhance neuroprotection and cognition via sigma-1 receptor activation and M1 muscarinic allosteric modulation.
A
preclinical study examined the response of ANAVEX®3-71 in aged transgenic animal models and showed a significant reduction
in the rate of cognitive deficit, amyloid beta pathology and inflammation with the administration of ANAVEX 3-71. In April 2016,
the FDA granted Orphan Drug Designation to ANAVEX®3-71 for the treatment of Frontotemporal dementia (FTD).
During
pathological conditions ANAVEX®3-71 demonstrated the formation of new synapses between neurons (synaptogenesis) without causing
an abnormal increase in the number of astrocytes. In neurodegenerative diseases such as Alzheimer’s and Parkinson’s
disease, synaptogenesis is believed to be impaired. Additional preclinical data presented also indicates that in addition to reducing
oxidative stress, ANAVEX®3-71 demonstrates protective effects of mitochondrial enzyme complexes during pathological conditions,
which, if impaired, are believed to play a role in the pathogenesis of neurodegenerative and neurodevelopmental diseases.
ANAVEX®1-41
ANAVEX®1-41
is a sigma-1 agonist. Pre-clinical tests revealed significant neuroprotective benefits (i.e., protects nerve cells from degeneration
or death) through the modulation of endoplasmic reticulum, mitochondrial and oxidative stress, which damages and impairs cell
viability. In addition, in animal models, ANAVEX®1-41 prevented the expression of caspase-3, an enzyme that plays a key role
in apoptosis (programmed cell death) and loss of cells in the hippocampus, the part of the brain that regulates learning, emotion
and memory. These activities involve both muscarinic and sigma-1 receptor systems through a novel mechanism of action.
Preclinical
data presented also indicates that ANAVEX®1-41 demonstrates protective effects of mitochondrial enzyme complexes during pathological
conditions, which, if impaired, are believed to play a role in the pathogenesis of neurodegenerative and neurodevelopmental diseases.
ANAVEX®1066
ANAVEX®1066,
a mixed sigma-1/sigma-2 ligand is designed for the potential treatment of neuropathic and visceral pain. ANAVEX®1066 was tested
in two preclinical models of neuropathic and visceral pain that have been extensively validated in rats. In the chronic constriction
injury model of neuropathic pain, a single oral administration of ANAVEX®1066 dose-dependently restored the nociceptive threshold
in the affected paw to normal levels while leaving the contralateral healthy paw unchanged. Efficacy was rapid and remained significant
for two hours. In a model of visceral pain, chronic colonic hypersensitivity was induced by injection of an inflammatory agent
directly into the colon and a single oral administration of ANAVEX®1066 returned the nociceptive threshold to control levels
in a dose-dependent manner. Companion studies in rats demonstrated the lack of any effects on normal gastrointestinal transit
with ANAVEX®1066 and a favorable safety profile in a battery of behavioral measures.
ANAVEX®1037
ANAVEX®1037
is designed for the treatment of prostate and pancreatic cancer. It is a low molecular weight, synthetic compound exhibiting high
affinity for sigma-1 receptors at nanomolar levels and moderate affinity for sigma-2 receptors and sodium channels at micromolar
levels. In advanced pre-clinical studies, this compound revealed antitumor potential. It has also been shown to selectively kill
human cancer cells without affecting normal/healthy cells and also to significantly suppress tumor growth in immune-deficient
mice models. Scientific publications highlight the possibility that these ligands may stop tumor growth and induce selective cell
death in various tumor cell lines. Sigma receptors are highly expressed in different tumor cell types. Binding by appropriate
sigma-1 and/or sigma-2 ligands can induce selective apoptosis. In addition, through tumor cell membrane reorganization and interactions
with ion channels, our drug candidates may play an important role in inhibiting the processes of metastasis (spreading of cancer
cells from the original site to other parts of the body), angiogenesis (the formation of new blood vessels) and tumor cell proliferation.
Our
compounds are in the pre-clinical and clinical testing stages of development, and there is no guarantee that the activity demonstrated
in pre-clinical models will be shown in human testing.
We
continue to identify and initiate discussions with potential strategic and commercial partners to most effectively advance our
programs and realize maximum shareholder value. Further, we may acquire or develop new intellectual property and assign, license,
or otherwise transfer our intellectual property to further our goals.
Our
Target Indications
We
have developed compounds with potential application to two broad categories and several specific indications. including:
Central
Nervous System Diseases
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Alzheimer’s
disease – In 2019, an estimated 5.8 million Americans were suffering from Alzheimer’s disease. The Alzheimer’s
Association® reports that by 2025, 7.2 million Americans will be afflicted by the disease, about a 24 percent increase
from currently affected patients. Medications on the market today treat only the symptoms of Alzheimer’s disease and
do not have the ability to stop its onset or its progression. There is an urgent and unmet need for both a disease modifying
cure for Alzheimer’s disease as well as for better symptomatic treatments.
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Parkinson’s
disease – Parkinson’s disease is a progressive disease of the nervous system marked by tremors, muscular rigidity,
and slow, imprecise movement. It is associated with degeneration of the basal ganglia of the brain and a deficiency of the
neurotransmitter dopamine. Parkinson’s disease afflicts more than 10 million people worldwide, typically middle-aged
and elderly people. The Parkinson’s disease market is expected to expand to $3.2 billion by 2021, according to business
intelligence provider GBI Research.
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Rett
syndrome - Rett syndrome is a rare X-linked genetic neurological and developmental disorder that affects the way the brain
develops, including protein transcription, which is altered and as a result leads to severe disruptions in neuronal homeostasis.
It is considered a rare, progressive neurodevelopmental disorder and is caused by a single mutation in the MECP2 gene. Because
males have a different chromosome combination from females, boys who have the genetic MECP2 mutation are affected in devastating
ways. Most of them die before birth or in early infancy. For females who survive infancy, Rett syndrome leads to severe impairments,
affecting nearly every aspect of the child’s life; severe mental retardation, their ability to speak, walk and eat,
sleeping problems, seizures and even the ability to breathe easily. Rett syndrome affects approximately 1 in every 10,000-15,000
females.
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Depression
- Depression is a major cause of morbidity worldwide according to the World Health Organization. Pharmaceutical treatment
for depression is dominated by blockbuster brands, with the leading nine brands historically accounting for approximately
75% of total sales. However, the dominance of the leading brands is waning, largely due to the effects of patent expiration
and generic competition.
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Epilepsy
- Epilepsy is a common chronic neurological disorder characterized by recurrent unprovoked seizures. These seizures are transient
signs and/or symptoms of abnormal, excessive or synchronous neuronal activity in the brain. According to the Centers for Disease
Control and Prevention, in 2015 epilepsy affected 3.4 million Americans. Today, epilepsy is often controlled, but not cured,
with medication that is categorized as older traditional anti-epileptic drugs and second generation anti-epileptic drugs.
Because epilepsy afflicts sufferers in different ways, there is a need for drugs used in combination with both traditional
anti-epileptic drugs and second generation anti-epileptic drugs.
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Neuropathic
Pain – We define neuralgia, or neuropathic pain, as pain that is not related to activation of pain receptor cells in
any part of the body. Neuralgia is more difficult to treat than some other types of pain because it does not respond well
to normal pain medications. Special medications have become more specific to neuralgia and typically fall under the category
of membrane stabilizing drugs or antidepressants.
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Cancer
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Malignant
Melanoma - Predominantly a skin cancer, malignant melanoma can also occur in melanocytes found in the bowel and the eye. Malignant
melanoma accounts for 75% of all deaths associated with skin cancer. The treatment includes surgical removal of the tumor,
adjuvant treatment, chemo and immunotherapy, or radiation therapy. According to IMS Health the worldwide malignant melanoma
market is expected to grow to $4.4 billion by 2022.
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Prostate
Cancer – Specific to men, prostate cancer is a form of cancer that develops in the prostate, a gland in the male reproductive
system. The cancer cells may metastasize from the prostate to other parts of the body, particularly the bones and lymph nodes.
Drug therapeutics for prostate cancer are expected to increase to nearly $13.5 billion in 2024 according to Datamonitor Healthcare.
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Pancreatic
Cancer - Pancreatic cancer is a malignant neoplasm of the pancreas. In the United States, approximately 55,000 new cases of
pancreatic cancer will be diagnosed this year and approximately 44,000 patients will die as a result of their cancer, according
to the American Cancer Society. Sales predictions by GBI Research forecast that the market for the pharmaceutical treatment
of pancreatic cancer in the United States and five largest European countries will increase to $2.9 billion by 2021.
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Patents,
Trademarks and Intellectual Property
We
hold ownership or exclusive rights to nine U.S. patents, ten U.S. patent applications, and various PCT or ex-U.S. patent applications
relating to our drug candidates, methods associated therewith, and to our research programs.
We
own one issued U.S. patent entitled “ANAVEX®2-73 and certain anticholinesterase inhibitors composition and method for
neuroprotection” claims a composition of matter of ANAVEX®2-73 directed to a novel and synergistic neuroprotective compound
combined with donepezil and other cholinesterase inhibitors. This patent is expected to expire in June 2034, absent any
patent term extension for regulatory delays. We own two issued U.S. patents each with claims directed to crystalline forms of
ANAVEX®2-73. The first of these two patents claims crystalline forms of ANAVEX®2-73, dosage forms and compositions containing
crystalline ANAVEX®2-73, and methods of treatment for Alzheimer’s disease using them. This patent is expected to expire
in July 2036, absent any patent term extension for regulatory delays. The second of these two patents claims pharmaceutical compositions
containing a crystalline form of ANAVEX®2-73, and methods of treatment for Alzheimer’s disease using the compositions.
This patent is expected to expire in June 2037, absent any patent term extension for regulatory delays. We also own an issued
U.S. patent that claims methods and dosage forms for treating seizures, the dosage forms containing a low-dose anti-epilepsy drug
combined with either: (i) ANAVEX®2-73 and its active metabolite ANAVEX®19-144; or (ii) ANAVEX®19-144. This patent
is expected to expire in October 2035, absent any patent term extension for regulatory delays. We also own an issued U.S. patent
that claims methods for treating a neurodevelopmental disorder or multiple sclerosis by administering ANAVEX®2-73, ANAVEX®19-144,
and/or ANAVEX®1-41, another sigma receptor ligand similar to ANAVEX®2-73. This patent is expected to expire in January
2037, absent any patent term extension for regulatory delays. In addition, we own one issued U.S. Patent with claims directed
to methods of treating melanoma with a compound related to ANAVEX®2-73. This patent is expected to expire in February 2030,
absent any patent term extension for regulatory delays.
We
also own one issued patent with claims directed to methods for treating or preventing pain with ANAVEX®1066. This patent is
expected to expire in November 2036, absent any patent term extension for regulatory delays.
With
regard to ANAVEX®3-71, we own exclusive rights to two issued U.S. patents with claims respectively directed to the ANAVEX®3-71
compound and methods of treating various diseases including Alzheimer’s with the same. These patents are expected to expire
in April 2030, and January 2030, respectively, absent any patent term extension for regulatory delays. We also own exclusive rights
to related patents or applications that are granted or pending in Australia, Canada, China, Europe, Japan, Korea, New Zealand,
Russia, and South Africa, and are expected to expire in January 2030.
We
also own other patent applications directed to enantiomers, formulations and uses that may provide additional protection for one
or more of our product candidates.
We
regard patents and other intellectual property rights as corporate assets. Accordingly, we attempt to optimize the value of intellectual
property in developing our business strategy including the selective development, protection, and exploitation of our intellectual
property rights. In addition to filings made with intellectual property authorities, we protect our intellectual property and
confidential information by means of carefully considered processes of communication and the sharing of information, and by the
use of confidentiality and non-disclosure agreements and provisions for the same in contractor’s agreements. While no agreement
offers absolute protection, such agreements provide some form of recourse in the event of disclosure, or anticipated disclosure.
Our
intellectual property position, like that of many biomedical companies, is uncertain and involves complex legal and technical
questions for which important legal principles are unresolved. For more information regarding challenges to our existing or future
patents, see “Risk Factors” ” in Part I, Item 1A of our Annual Report on Form 10-K filed with the Securities
and Exchange Commission on December 16, 2019.
Financial
Highlights
Operating
expenses for the second quarter of fiscal 2020 were $7.8 million, compared to $8.1 million for the comparable quarter in fiscal
2019. The operating expenses include an aggregate of $1.7 million, as compared to $1.9 million in the second quarter of fiscal
2019, in non-cash charges.
Net
loss for the second quarter of fiscal 2020 was $7.2 million, or $0.12 per share, as compared to $7.2 million, or $0.15 per share
in the comparative quarter of fiscal 2019.
Results
of Operations
Revenue
We
are in the development stage and have not earned any revenues since our inception and we do not anticipate earning any revenues
until we can establish an alliance with other companies to develop, co-develop, license, acquire or market our products.
Three
and six months ended March 31, 2020 compared to three and six months ended March 31, 2019
Operating
Expenses
Total
operating expenses for the second quarter of fiscal 2020 were $7.8 million, compared to $8.1 million for the second quarter of
fiscal 2019. Total operating expenses for the first half of fiscal 2020 were $15.5 million compared to $15.6 million for the same
period in fiscal 2019. This represents a decrease of $0.3 million for the three-month period and $0.1 million for the six-month
period.
General
and administrative expenses have decreased by $0.4 million to $1.7 million for the three months ended March 31, 2020, as compared
to $2.1 million for the second quarter of fiscal 2019. General and administrative expenses decreased by $0.7 million to $3.1 million
for the six-month period ended March 31, 2020, as compared to $3.8 million for the applicable prior year period. The decrease
in general and administrative expenses was primarily related to a decrease in stock option compensation charges.
Research
and development expenses have remained consistent at $6.1 million for the three months ended March 31, 2020 and increased by $0.6
million to $12.4 million for the six-month period ended March 31, 2020, as compared to $11.8 million for the applicable prior
year period. The increase is related to an increase in clinical trial activity.
Other
income (net)
The
net amount of other income was $0.5 million as compared to $0.9 million for the three-month ended March 31, 2020 and $1.7 million
for the six-month period as compared to $1.5 million for the comparable six-month period in fiscal 2019. The decrease in other
income in the second quarter of fiscal 2020 is due to an increase in foreign exchange loss, which is the impact of the fluctuation
in the value of the Australian Dollar on the Company’s incentive and tax receivables.
Liquidity
and Capital Resources
Working
Capital
|
|
March
31, 2020
|
|
|
September 30,
2019
|
|
Current
Assets
|
|
$
|
31,020,577
|
|
|
$
|
25,329,373
|
|
Current
Liabilities
|
|
|
6,228,831
|
|
|
|
5,039,674
|
|
Working
Capital
|
|
$
|
24,791,746
|
|
|
$
|
20,289,699
|
|
At March 31, 2020, we had $26.6 million in
cash and cash equivalents, an increase of $4.4 million from September 30, 2019. The principal reason for this increase is due to
cash received from financing activities of $15.4 million from the issuance of shares of common stock under the 2019 Purchase Agreement
(as defined below), offset by cash used in operations of $11.0 million.
Cash
Flows
|
|
Six
months ended
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Net
cash flows used in operating activities
|
|
$
|
(10,988,051
|
)
|
|
$
|
(8,491,627
|
)
|
Net cash flows from
financing activities
|
|
|
15,365,492
|
|
|
|
5,018,834
|
|
Increase (decrease)
in cash and cash equivalents
|
|
$
|
4,377,441
|
|
|
$
|
(3,472,793
|
)
|
Cash
flow used in operating activities
Net
cash used in operating activities for the first six months in fiscal 2020 was $11.0 million, compared to $8.5 million during the
comparable period of fiscal 2019. The principal reason for this increase in net cash used from operating activities in the current
period is due to an increase in operating expenses, net of non-cash charges, and an increase in research and development incentive
income receivables, as compared to the comparable period.
Cash
flow provided by financing activities
Cash
provided by financing activities for the first six months in fiscal 2020 was $15.4 million, attributable to cash received from
the issuance of common shares at various market prices under the 2019 Purchase Agreement.
Cash provided by financing activities for the
first six months in fiscal 2019 was $5.0 million, primarily attributable to cash received from the issuance of common shares at
various market prices under the 2015 Purchase Agreement.
Other
Financing
Purchase
Agreement
On
June 7, 2019, we entered into the 2019 Purchase Agreement (the “2019 Purchase Agreement”) with Lincoln Park Capital
Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park committed to purchase up to $50,000,000 of our common stock.
Concurrently with the execution of the 2019 Purchase Agreement, we issued 324,383 shares of our common stock to Lincoln Park as
a fee for its commitment to purchase shares of our common stock under the 2019 Purchase Agreement and shall issue up to 162,191
shares pro rata, when and if Lincoln Park purchases, at our discretion, the $50,000,000 aggregate commitment. The purchase shares
that may be sold pursuant to the 2019 Purchase Agreement may be sold by us to Lincoln Park at our discretion from time to time
until July 1, 2022.
We
may direct Lincoln Park, at our sole discretion, and subject to certain conditions, to purchase up to 200,000 shares of common
stock on any business day (a “Regular Purchase”). The amount of a Regular Purchase may be increased under certain
circumstances up to 250,000 shares provided that Lincoln Park’s committed obligation for Regular Purchases on any business
day shall not exceed $2,000,000. In the even we purchase the full amount allowed for a Regular Purchase on any given business
day, we may also direct Lincoln Park to purchase additional amounts as accelerated and additional purchases. The purchase price
of shares of common stock related to the future funding will be based on the then prevailing market prices of such shares at the
time of sales as described in the Purchase Agreement.
At
March 31, 2020, approximately $30.0 million in shares of our common stock remained available for purchase by Lincoln Park under
the 2019 Purchase Agreement.
Sales Agreement
On May 1 2020, we entered into an Amended and
Restated Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor Fitzgerald”)
and SVB Leerink LLC (“Leerink”) and together with Cantor Fitzgerald as Sales Agents, pursuant to which we may offer
and sell shares of common stock, for aggregate gross sale proceeds of up to $50,000,000 from time to time through the Sales Agents
(the “At-the-Market Offering”).
Upon
delivery of a placement notice based on our instructions and subject to the terms and conditions of the Sales Agreement, the Sales
Agents may sell shares of common stock by methods deemed to be an “at the market offering” offering, in negotiated
transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, or by any
other method permitted by law, including negotiated transactions, subject to our prior written consent. We are not obligated to
make any sales of shares under the Sales Agreement. We or the Sales Agents may suspend or terminate the At-the-Market Offering
upon notice to the other party, subject to certain conditions. The Sales Agents will act as sales agent on a commercially
reasonable efforts basis consistent with its normal trading and sales practices and applicable state and federal law, rules and
regulations and the rules of Nasdaq.
We
have agreed to pay the Sales Agents commissions for their services of acting as agent of 3.0% of the gross proceeds from the sale
of the Shares pursuant to the Sales Agreement. We have also agreed to provide the Sales Agents with customary indemnification
and contribution rights. To date, no shares of common stock have been sold pursuant to the Sales Agreement.
Liquidity
We
expect that we will be able to continue to fund our operations through existing cash on hand and through equity and debt financing
in the future. If we raise additional financing by issuing equity securities, our existing stockholders’ ownership will
be diluted. Obtaining commercial loans, assuming these loans would be available, would increase our liabilities and future cash
commitments.
Other
than our rights related to the Lincoln Park financing and the At-the-Market Offering, there can be no assurance that additional
financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we
are not able to obtain the additional financing on a timely basis, if and when it is needed, we will be forced to delay or scale
down some or all of our research and development activities or perhaps even cease the operation of our business.
Off-Balance
Sheet Arrangements
We
have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to our stockholders.
CRITICAL
ACCOUNTING POLICIES
We
prepare our interim condensed consolidated financial statements in accordance with accounting principles generally accepted in
the United States of America, and make estimates and assumptions that affect our reported amounts of assets, liabilities, revenue
and expenses, and the related disclosures of contingent liabilities. We base our estimates on historical experience and other
assumptions that we believe are reasonable in the circumstances. Actual results may differ from these estimates.
Other
than as described in Note 2 “Recent Accounting Pronouncements” to our Consolidated Financial Statements included herein,
there have been no significant changes in the critical accounting policies and estimates described in our Annual Report on Form
10-K for the year ended September 30, 2019 as filed with the SEC on December 16, 2019.
RECENT
ACCOUNTING PRONOUNCEMENTS
Please
refer to Note 2 “Recent Accounting Pronouncements” in notes to our Interim Condensed Consolidated Financial Statements
included in this Form 10-Q.