NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1.
NATURE OF OPERATIONS
Advaxis,
Inc. (“Advaxis” or the “Company”) is a clinical-stage biotechnology company focused on the development and commercialization
of proprietary Listeria monocytogenes (“Lm”)-based antigen delivery products. The Company is using its Lm
platform directed against tumor-specific targets in order to engage the patient’s immune system to destroy tumor cells. Through
a license from the University of Pennsylvania, Advaxis has exclusive access to this proprietary formulation of attenuated Lm called
Lm TechnologyTM. Advaxis’ proprietary approach is designed to deploy a unique mechanism of action that redirects
the immune system to attack cancer in three distinct ways:
|
●
|
Alerting
and training the immune system by activating multiple pathways in Antigen-Presenting Cells (“APCs”) with the equivalent
of multiple adjuvants;
|
|
●
|
Attacking
the tumor by generating a strong, cancer-specific T cell response; and
|
|
●
|
Breaking
down tumor protection through suppression of the protective cells in the tumor microenvironment (“TME”) that shields
the tumor from the immune system. This enables the activated T cells to begin working to attack the tumor cells.
|
Advaxis’
proprietary Lm platform technology has demonstrated clinical activity in several of its programs and has been dosed in over 470
patients across multiple clinical trials and in various tumor types. The Company believes that Lm Technology immunotherapies can
complement and address significant unmet needs in the current oncology treatment landscape. Specifically, its product candidates have
the potential to work synergistically with other immunotherapies, including checkpoint inhibitors, while having a generally well-tolerated
safety profile.
Liquidity
and Capital Resources
Liquidity
and Management’s Plans
Similar
to other development stage biotechnology companies, the Company’s products that are being developed have not generated significant
revenue. As a result, the Company has suffered recurring losses and requires significant cash resources to execute its business plans.
These losses are expected to continue for the foreseeable future.
As
of April 30, 2021, the Company had approximately $48.1 million in cash and cash equivalents. Although the Company expects to have sufficient
capital to fund its obligations, as they become due, in the ordinary course of business until at least July 2022, the actual amount of
cash that it will need to operate is subject to many factors. Over the past year, the Company has taken steps to obtain additional financing,
including conducting sales of its common stock through its at-the-market (“ATM”) program through A.G.P./Alliance Global Partners,
an equity line financing arrangement with Lincoln Park Capital and the completion of a registered direct offering and concurrent private
placement with two healthcare-focused, institutional investors in April 2021, as further described below. The Company received aggregate
proceeds of about $3.8 million during the six months ended April 30, 2021 upon the exercise of outstanding warrants, which were payable
upon exercise.
On
April 12, 2021, the Company entered into definitive agreements with two healthcare-focused, institutional investors for the purchase
of (i) 17,577,400 shares of common stock, (ii) 7,671,937 pre-funded warrants to purchase 7,671,937 shares of common stock and (iii) registered
common share purchase warrants to purchase 11,244,135 shares of common stock ("Accompanying Warrants") in a registered direct
offering (the “April 2021 Registered Direct Offering”). The Company also issued to the investors, in a concurrent private
placement (the “April 2021 Private Placement” and together with the April 2021 Registered Direct Offering, the “April
2021 Offering”), unregistered common share purchase warrants to purchase 14,005,202 shares of the Company’s common stock
(the “Private Placement Warrants”).. The Company received gross proceeds of approximately $20 million, before deducting the
fees and expenses payable by us in connection with the April 2021 Offering.
On November 27, 2020, the Company completed an underwritten
public offering of 26,666,666 shares of common stock and common stock warrants to purchase up to 13,333,333 shares of common stock (the
“November 2020 Offering”). On November 24, 2020, the underwriters notified us that they had exercised their option to purchase
an additional 3,999,999 shares of common stock and 1,999,999 warrants in full. The Company received gross proceeds of approximately $9.2
million, before deducting the fees and expenses payable by us in connection with the November 2020 Offering. With these funds raised
and a reduction in the operating expenses the Company believes that it has enough cash to fund its operations for one year from the date
of filing.
The
Company recognizes it will need to raise additional capital in order to continue to execute its business plan in the future. There is
no assurance that additional financing will be available when needed or that management will be able to obtain financing on terms acceptable
to the Company or whether the Company will become profitable and generate positive operating cash flow. If the Company is unable to raise
sufficient additional funds, it will have to further scale back its operations.
The
Company does not have any current plans to raise capital in the near term, absent an extraordinary change in circumstances, such as unforeseen
liabilities or if we acquire new assets that require additional investment. We do not believe we will need to raise additional capital
in the near term because we have a) built a strong balance sheet (including the proceeds from the financing completed in April 2021)
and b) executed on our cost reduction plans that have reduced our annual cash burn by greater than 75% over the past few years, securing
a cash runway through potential future clinical and corporate milestones.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
Basis
of Presentation/Estimates
The
accompanying unaudited interim condensed financial statements and related notes have been prepared in accordance with accounting principles
generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with
the rules and regulations of the Securities and Exchange Commission (“SEC”) with respect to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements and
the accompanying unaudited interim condensed balance sheet as of April 30, 2021 has been derived from the Company’s October 31,
2020 audited financial statements. In the opinion of management, the unaudited interim condensed financial statements furnished include
all adjustments (consisting of normal recurring accruals) necessary for a fair statement of the results for the interim periods presented.
Operating
results for interim periods are not necessarily indicative of the results to be expected for the full year. 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,
liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period.
Significant estimates include the timelines associated with revenue recognition on upfront payments received, fair value and recoverability
of the carrying value of property and equipment and intangible assets, fair value of warrant liability, grant date fair value of options,
deferred tax assets and any related valuation allowance and related disclosure of contingent assets and liabilities. On an on-going basis,
the Company evaluates its estimates, based on historical experience and on various other assumptions that it believes to be reasonable
under the circumstances. Actual results could materially differ from these estimates.
These
unaudited interim condensed financial statements should be read in conjunction with the financial statements of the Company as of and
for the fiscal year ended October 31, 2020 and notes thereto contained in the Company’s 2020 Annual Report on Form 10-K, as filed
with the SEC on January 22, 2021, and as amended by Amendment No. 1 thereto on Form 10-K/A filed on February 26, 2021.
Net
Income (Loss) per Share
Basic
net income or loss per common share is computed by dividing net income or loss available to common stockholders by the weighted average
number of common shares outstanding during the period. Diluted earnings per share give effect to dilutive options, warrants, restricted
stock units and other potential common stock outstanding during the period. In the case of a net loss, the impact of the potential common
stock resulting from warrants, outstanding stock options and convertible debt are not included in the computation of diluted loss per
share, as the effect would be anti-dilutive. In the case of net income, the impact of the potential common stock resulting from these
instruments that have intrinsic value are included in the diluted earnings per share. The table below sets forth the number of potential
shares of common stock that have been excluded from diluted net loss per share as of April 30, 2021 and April 30, 2020, 0 and 343,838
warrants, respectively, are included in the basic earnings per share computation because the exercise price was $0.
|
|
As of April 30,
|
|
|
|
2021
|
|
|
2020
|
|
Warrants
|
|
|
30,225,397
|
|
|
|
5,398,226
|
|
Stock options
|
|
|
1,031,323
|
|
|
|
252,296
|
|
Restricted stock units
|
|
|
-
|
|
|
|
5,818
|
|
Total
|
|
|
31,256,720
|
|
|
|
5,946,322
|
|
Sequencing Policy
The Company adopted a sequencing policy under
ASC 815-40-35, if reclassification of contracts from equity to liabilities is necessary pursuant to ASC 815 due to the Company’s
inability to demonstrate it has sufficient authorized shares. This was due to the Company committing more shares than authorized. Certain
instruments are classified as liabilities, after allocating available authorized shares on the basis of the most recent grant date of
potentially dilutive instruments. Pursuant to ASC 815, issuances of securities granted as compensation in a share-based payment arrangement
are not subject to the sequencing policy.
Leases
At
the inception of an arrangement, the Company determines whether an arrangement is or contains a lease based on the facts and circumstances
present in the arrangement. An arrangement is or contains a lease if the arrangement conveys the right to control the use of an identified
asset for a period of time in exchange for consideration. Most leases with a term greater than one year are recognized on the balance
sheet as operating lease right-of-use assets and current and long-term operating lease liabilities, as applicable. In accordance with
the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification (“ASC”) Topic
842, Leases “ASC 842”), The Company has elected not to recognize on the balance sheet leases with terms of 12 months
or less. The Company typically only includes the initial lease term in its assessment of a lease arrangement. Options to extend a lease
are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew.
Operating
lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected
remaining lease term. Certain adjustments to the right-of-use asset may be required for items such as prepaid or accrued rent. The interest
rate implicit in the Company’s leases is typically not readily determinable. As a result, the Company utilizes its incremental
borrowing rate, which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments
in the same currency, for a similar term, in a similar economic environment.
Recent
Accounting Standards
Management
does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact
on the accompanying condensed financial statements.
3.
PROPERTY AND EQUIPMENT
Property
and equipment, net consisted of the following (in thousands):
|
|
April 30, 2021
|
|
|
October 31, 2020
|
|
|
|
|
|
|
|
|
Leasehold improvements
|
|
$
|
-
|
|
|
$
|
2,335
|
|
Laboratory equipment
|
|
|
413
|
|
|
|
1,218
|
|
Furniture and fixtures
|
|
|
-
|
|
|
|
744
|
|
Computer equipment
|
|
|
409
|
|
|
|
409
|
|
Construction in progress
|
|
|
-
|
|
|
|
19
|
|
Total property and equipment
|
|
|
822
|
|
|
|
4,725
|
|
Accumulated depreciation and amortization
|
|
|
(489
|
)
|
|
|
(2,332
|
)
|
Net property and equipment
|
|
$
|
333
|
|
|
$
|
2,393
|
|
Depreciation
expense for the three months ended April 30, 2021 and 2020 was $0.1 million and $0.2 million, respectively. Depreciation expense for
the six months ended April 30, 2021 and 2020 was $0.3 million and $0.5 million, respectively. During the three months ended
April 30, 2021, the Company incurred a loss on disposal of equipment of $1.5 million, $0.97 million of which is reflected in the research
and development expenses and $0.53 million of which is reflected in the general and administrative expenses in the statement of operations.
4.
INTANGIBLE ASSETS
Intangible
assets, net consisted of the following (in thousands):
|
|
April 30, 2021
|
|
|
October 31, 2020
|
|
|
|
|
|
|
|
|
Patents
|
|
$
|
4,674
|
|
|
$
|
4,479
|
|
Licenses
|
|
|
777
|
|
|
|
777
|
|
Software
|
|
|
117
|
|
|
|
117
|
|
Total intangibles
|
|
|
5,568
|
|
|
|
5,373
|
|
Accumulated amortization
|
|
|
(2,243
|
)
|
|
|
(2,112
|
)
|
Intangible assets
|
|
$
|
3,325
|
|
|
$
|
3,261
|
|
The
expiration dates of the existing patents range from 2021 to 2040 but the expiration dates can be extended based on market approval if
granted and/or based on existing laws and regulations. Capitalized costs associated with patent applications that are abandoned without
future value are charged to expense when the determination is made not to further pursue the application. Patent applications having
a net book value of $0.1 million and $0.4 million were abandoned and were charged to general and administrative expenses in the statement
of operations for each of the three months ended April 30, 2021 and 2020, respectively. Patent applications having a net book value of
$0.1 million and $0.6 million were abandoned and were charged to general and administrative expenses in the statement of operations for
the six months ended April 30, 2021 and 2020, respectively. Amortization expense for intangible assets that was charged to general and
administrative expense in the statement of operations aggregated approximately $0.1 million for each of the three months ended April
30, 2021 and 2020, respectively. Amortization expense for intangible assets that was charged to general and administrative expense
in the statement of operations aggregated $0.1 and $0.2 million for each of the six months ended April 30, 2021 and 2020, respectively.
Management
has reviewed its long-lived assets for impairment whenever events and circumstances indicate that the carrying value of an asset might
not be recoverable. Net assets are recorded on the balance sheet for patents and licenses related to axalimogene filolisbac (AXAL), ADXS-HOT,
ADXS-PSA and ADXS-HER2 and other products that are in development. However, if a competitor were to gain FDA approval for a treatment
before us or if future clinical trials fail to meet the targeted endpoints, the Company will likely record an impairment related to these
assets. In addition, if an application is rejected or fails to be issued, the Company would record an impairment of its estimated book
value. Lastly, if the Company is unable to raise enough capital to continue funding its studies and developing its intellectual property,
the Company would likely record an impairment to these assets.
As
of April 30, 2021, the estimated amortization expense by fiscal year based on the current carrying value of intangible assets is as follows
(in thousands):
|
|
Fiscal
year ending October 31,
|
|
|
|
|
|
2021
(Remaining)
|
|
$
|
136
|
|
2022
|
|
|
273
|
|
2023
|
|
|
273
|
|
2024
|
|
|
273
|
|
2025
|
|
|
273
|
|
Thereafter
|
|
|
2,097
|
|
Total
|
|
$
|
3,325
|
|
5.
ACCRUED EXPENSES:
The
following table summarizes accrued expenses included in the condensed balance sheets (in thousands):
|
|
April 30, 2021
|
|
|
October 31, 2020
|
|
|
|
|
|
|
|
|
Salaries and other compensation
|
|
$
|
445
|
|
|
$
|
737
|
|
Vendors
|
|
|
1,357
|
|
|
|
671
|
|
Professional fees
|
|
|
331
|
|
|
|
329
|
|
Total accrued expenses
|
|
$
|
2,133
|
|
|
$
|
1,737
|
|
6.
COMMON STOCK PURCHASE WARRANTS AND WARRANT LIABILITY
Warrants
As
of April 30, 2021, there were outstanding and exercisable warrants to purchase 30,225,397 and 16,220,195 shares, respectively, of our
common stock with exercise prices ranging from $0.30 to $281.25 per share. Information on the outstanding warrants is as follows:
Exercise
Price
|
|
|
Number of Shares
Underlying Warrants
|
|
|
Expiration Date
|
|
Type of Financing
|
$
|
281.25
|
|
|
|
25
|
|
|
N/A
|
|
Other warrants
|
$
|
0.30
|
|
|
|
70,297
|
|
|
July 2024
|
|
September 2018 Public Offering
|
$
|
2.80
|
|
|
|
327,338
|
|
|
September 2024
|
|
July 2019 Public Offering
|
$
|
0.35
|
|
|
|
4,578,400
|
|
|
November 2025
|
|
November 2020 Public Offering
|
$
|
0.70
|
|
|
|
11,244,135
|
|
|
April 2026
|
|
April 2021 Registered Direct Offering (Accompanying Warrants)
|
$
|
0.70
|
|
|
|
14,005,202
|
|
|
5 years after the date such warrants become exercisable, if ever
|
|
April 2021 Private Placement (Private Placement Warrants)
|
|
Grand Total
|
|
|
|
30,225,397
|
|
|
|
|
|
As
of October 31, 2020, there were outstanding warrants to purchase 398,226 shares of our common stock with exercise prices ranging from
$0 to $281.25 per share. Information on the outstanding warrants is as follows:
Exercise
Price
|
|
|
Number of Shares
Underlying Warrants
|
|
|
Expiration Date
|
|
Type of Financing
|
$
|
-
|
|
|
|
327,338
|
|
|
July 2024
|
|
July 2019 Public Offering
|
$
|
281.25
|
|
|
|
25
|
|
|
N/A
|
|
Other Warrants
|
$
|
0.372
|
|
|
|
70,863
|
|
|
September 2024
|
|
September 2018 Public Offering
|
|
Grand Total
|
|
|
|
398,226
|
|
|
|
|
|
A
summary of warrant activity for the six months ended April 30, 2021 is as follows (in thousands, except share and per share data):
|
|
Warrants
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Remaining
Contractual
Life
In
Years
|
|
|
Aggregate
Intrinsic
Value
|
|
Outstanding
and exercisable warrants at October 31, 2020
|
|
|
398,226
|
|
|
$
|
0.08
|
|
|
|
3.76
|
|
|
$
|
110,640
|
|
Issued
|
|
|
48,254,606
|
|
|
|
0.48
|
|
|
|
5.00
|
|
|
|
|
|
Exercised
|
|
|
(18,427,435
|
)
|
|
|
0.20
|
|
|
|
|
|
|
|
|
|
Outstanding
and exercisable warrants at April 30, 2021
|
|
|
30,225,397
|
|
|
$
|
0.67
|
|
|
|
4.89
|
|
|
$
|
809,752
|
|
As
of April 30, 2021, the Company had 18,910,965 of its total 30,225,397 outstanding warrants classified as equity (equity warrants). At
October 31, 2020, the Company had 327,363 of its total 398,226 outstanding warrants classified as equity (equity warrants). At issuance,
equity warrants are recorded at their relative fair values, using the relative fair value method, in the stockholders’ equity section
of the condensed balance sheets.
Warrant
Liability
As
of April 30, 2021, the Company had 11,314,432 of its total 30,225,397 outstanding warrants from April 2021 Private Placement Offering
and September 2018 Public Offering classified as liabilities (liability warrants). At October 31, 2020, the Company had 70,863 of its
total 398,226 outstanding warrants classified as liabilities (liability warrants).
The
warrants issued in the April 2021 Private Placement will become exercisable only on such day, if ever, that is fourteen
(14) days after the Company files an amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the
number of authorized shares of common stock, $0.001 par value per share from 170,000,000 shares to 300,000,000 shares. These warrants
expire five years after the date they become exercisable. As a result, liability classification is warranted. For these liability
warrants, the Company utilized the Black Scholes model to calculate the fair value of these warrants at issuance and at each subsequent
reporting date.
In
measuring the warrant liability for the warrants issued in the April 2021 Private Placement at April 30, 2021 and April 14,
2021 (issuance date), the Company used the following inputs in its Black Scholes model:
|
|
April 30, 2021
|
|
|
April 14, 2021
|
|
Exercise Price
|
|
$
|
0.70
|
|
|
$
|
0.70
|
|
Stock Price
|
|
$
|
0.49
|
|
|
$
|
0.57
|
|
Expected Term
|
|
|
5.00 years
|
|
|
|
5.00 years
|
|
Volatility %
|
|
|
106
|
%
|
|
|
106
|
%
|
Risk Free Rate
|
|
|
0.86
|
%
|
|
|
0.85
|
%
|
The
September 2018 Public Offering warrants contain a down round feature, except for exempt issuances as defined in the warrant agreement,
in which the exercise price would immediately be reduced to match a dilutive issuance of common stock, options, convertible securities
and changes in option price or rate of conversion. As of April 30, 2021, the down round feature was triggered three times and the exercise
price of the warrants were reduced from $22.50 to $0.30. The warrants require liability classification as the warrant agreement requires
the Company to maintain an effective registration statement and does not specify any circumstances under which settlement in other than
cash would be permitted or required. As a result, net cash settlement is assumed and liability classification is warranted. For these
liability warrants, the Company utilized the Monte Carlo simulation model to calculate the fair value of these warrants at issuance and
at each subsequent reporting date.
In
measuring the warrant liability for the September 2018 Public Offering warrants at April 30, 2021 and October 31, 2020, the Company used
the following inputs in its Monte Carlo simulation model:
|
|
April 30, 2021
|
|
|
October 31, 2020
|
|
Exercise Price
|
|
$
|
0.30
|
|
|
$
|
0.37
|
|
Stock Price
|
|
$
|
0.49
|
|
|
$
|
0.34
|
|
Expected Term
|
|
|
3.37 years
|
|
|
|
3.87 years
|
|
Volatility %
|
|
|
120
|
%
|
|
|
106
|
%
|
Risk Free Rate
|
|
|
0.35
|
%
|
|
|
0.29
|
%
|
7.
SHARE BASED COMPENSATION
The
following table summarizes share-based compensation expense included in the condensed statements of operations (in thousands):
|
|
Three Months Ended April 30,
|
|
|
Six Months Ended April 30,
|
|
|
|
|
2021
|
|
|
|
2020
|
|
|
|
2021
|
|
|
|
2020
|
|
Research and development
|
|
$
|
56
|
|
|
$
|
62
|
|
|
$
|
113
|
|
|
$
|
153
|
|
General and administrative
|
|
|
159
|
|
|
|
148
|
|
|
|
338
|
|
|
|
299
|
|
Total
|
|
$
|
215
|
|
|
$
|
210
|
|
|
$
|
451
|
|
|
$
|
452
|
|
Restricted
Stock Units (RSUs)
A
summary of the Company’s RSU activity and related information for the six months ended April 30, 2021 is as follows:
|
|
|
Number of
RSUs
|
|
|
Weighted-Average
Grant
Date Fair Value
|
|
|
|
|
|
|
|
|
|
Balance at October 31, 2020
|
|
|
|
5,556
|
|
|
$
|
24.32
|
|
Vested
|
|
|
|
(5,555
|
)
|
|
|
|
|
Cancelled
|
|
|
|
(1
|
)
|
|
|
|
|
Balance at April 30, 2021
|
|
|
|
-
|
|
|
$
|
-
|
|
As
of April 30, 2021, there was no unrecognized compensation cost related to non-vested RSUs.
Employee
Stock Awards
Common
Stock issued to executives and employees related to vested incentive retention awards, employment inducements, management purchases and
employee excellence awards totaled 5,888 shares and 5,561 shares during the three months ended April 30, 2021 and 2020, respectively.
Total stock compensation expense associated with employee awards for the three months ended April 30, 2021 and 2020 was approximately
$30,000 and $40,000, respectively.
Common
Stock issued to executives and employees related to vested incentive retention awards, employment inducements, management purchases and
employee excellence awards totaled 5,888 shares and 8,608 shares during the six months ended April 30, 2021 and 2020, respectively. Total
stock compensation expense associated with employee awards for the six months ended April 30, 2021 and 2020 was approximately $0.1 million
and $0.1 million, respectively.
Stock
Options
A
summary of changes in the stock option plan for the six months ended April 30, 2021 is as follows:
|
|
Shares
|
|
|
Weighted
Average
Exercise Price
|
|
|
Weighted
Average
Remaining
Contractual Life
In Years
|
|
|
Aggregate
Intrinsic Value
(in thousands)
|
|
Outstanding as of October 31, 2020
|
|
|
1,011,768
|
|
|
$
|
33.43
|
|
|
|
8.04
|
|
|
$
|
4
|
|
Granted
|
|
|
50,000
|
|
|
|
0.39
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(333
|
)
|
|
|
0.30
|
|
|
|
|
|
|
|
|
|
Cancelled or expired
|
|
|
(30,112
|
)
|
|
|
10.57
|
|
|
|
|
|
|
|
|
|
Outstanding as of April 30, 2021
|
|
|
1,031,323
|
|
|
$
|
32.51
|
|
|
|
7.62
|
|
|
$
|
28
|
|
Vested and exercisable at April 30, 2021
|
|
|
352,747
|
|
|
$
|
93.53
|
|
|
|
4.87
|
|
|
$
|
8
|
|
Options Outstanding
|
|
Options Exercisable
|
|
|
|
|
|
|
Weighted
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
Average
|
|
Exercise
|
|
Number
|
|
|
Remaining
|
|
|
Exercise
|
|
|
Number
|
|
|
Remaining
|
|
|
Exercise
|
|
Price Range
|
|
Outstanding
|
|
|
Contractual
|
|
|
Price
|
|
|
Exercisable
|
|
|
Contractual
|
|
|
Price
|
|
$
|
.30-$10.00
|
|
|
|
777.385
|
|
|
|
8.95
|
|
|
$
|
1.04
|
|
|
|
100,404
|
|
|
|
8.27
|
|
|
$
|
3.02
|
|
$
|
10.01-$100.00
|
|
|
|
91,700
|
|
|
|
6.69
|
|
|
$
|
29.17
|
|
|
|
90,105
|
|
|
|
6.68
|
|
|
$
|
29.35
|
|
$
|
100.01-$200.00
|
|
|
|
92,847
|
|
|
|
2.26
|
|
|
$
|
166.04
|
|
|
|
92,847
|
|
|
|
2.26
|
|
|
$
|
166.04
|
|
$
|
200.01-$277.50
|
|
|
|
69,391
|
|
|
|
1.09
|
|
|
$
|
210.79
|
|
|
|
69,391
|
|
|
|
1.09
|
|
|
$
|
210.79
|
|
During
the six months ended April 30, 2021, the Company granted options to purchase 50,000 shares of its common stock to an employee. The stock
options have a ten-year term, vest over three years from the date of grant, and have an exercise price of $0.39.
Total
compensation cost related to the Company’s outstanding stock options, recognized in the statement of operations for the three months
ended April 30, 2021 and 2020 was approximately $0.2 million and $0.2 million, respectively. For the six months ended April 30, 2021
and 2020, compensation cost related to the Company’s outstanding stock options was approximately $0.4 million and $0.4 million,
respectively
As
of April 30, 2021, there was approximately $0.3 million of unrecognized compensation cost related to non-vested stock option awards,
which is expected to be recognized over a remaining weighted average vesting period of 1.75 years.
As
of April 30, 2021, the aggregate intrinsic value of vested and exercisable options was $8 thousand and the aggregate intrinsic value
of non-vested options was approximately $28 thousand.
In
determining the fair value of the stock options granted during the six months ended April 30, 2021, the Company used the following inputs
in its Black Scholes Merton model:
|
|
Six Months
Ended
April 30, 2021
|
|
|
|
|
|
Expected Term
|
|
|
6 years
|
|
Expected Volatility
|
|
|
103.27
|
%
|
Expected Dividends
|
|
|
0
|
%
|
Risk Free Interest Rate
|
|
|
0.53
|
%
|
Employee
Stock Purchase Plan
During
the six months ended April 30, 2021 and 2020, the Company issued 1,000 and 8,249 shares, respectively, that were purchased under the
2018 Employee Stock Purchase Plan (“ESPP”).
8.
COLLABORATION AND LICENSING AGREEMENTS
OS
Therapies LLC
On
September 4, 2018, the Company entered into a development, license and supply agreement with OS Therapies (“OST”) for the
use of ADXS31-164, also known as ADXS-HER2, for evaluation in the treatment of osteosarcoma in humans. Under the terms of the license
agreement, as amended, OST will be responsible for the conduct and funding of a clinical study evaluating ADXS-HER2 in recurrent, completely
resected osteosarcoma. Under the most recent amendment to the licensing agreement, OST agreed to pay Advaxis $25,000 per month (“Monthly
Payment”) starting on April 30, 2020 until it achieved its funding milestone of $2,337,500. Upon receipt of the first Monthly Payment,
Advaxis initiated the transfer of the intellectual property and licensing rights of ADXS31-164, which were licensed pursuant to the Penn
Agreement, back to the University of Pennsylvania. Contemporaneously, OST will enter negotiations with the University of Pennsylvania
to establish a licensing agreement for ADXS31-164 to OST for clinical and commercial development of the ADXS31-164 technology.
In
December 2020 and January 2021, the Company received an aggregate of $1,615,000 from OS Therapies upon achievement of the funding milestone
set forth in the license agreement. The Company therefore transferred and OST took full ownership of, the IND application for ADXS31-164
in its entirety along with agreements and promises contained therein, as well as all obligations associated with this IND or any HER2
product/program development.
On
April 26, 2021, the Company achieved the second milestone set forth in the license agreement for evaluation in the treatment of osteosarcoma
in humans. The Company has a receivable due from OS Therapies of $1.375 million at April 30, 2021.
9.
COMMITMENTS AND CONTINGENCIES
Legal
Proceedings
The
Company is from time to time involved in legal proceedings in the ordinary course of our business. The Company does not believe that
any of these claims or proceedings against us is likely to have, individually or in the aggregate, a material adverse effect on the financial
condition or results of operations.
10.
LEASES
Operating
Leases
The
Company previously leased a corporate office and manufacturing facility in Princeton, New Jersey under an operating lease
that was set to expire in November 2025. On March 26, 2021, the Company entered into a Lease Termination and Surrender
Agreement with respect to this lease agreement. The Lease Termination and Surrender Agreement provides for the early
termination of the lease, which became effective on March 31, 2021. In connection with the early termination of the lease,
the Company was required to pay a $1,000,000 termination payment. The unapplied security deposit totaling approximately $182,000 was
credited against the termination fee for a net payment of approximately $817,000. During the three months ended April 30, 2021, the Company
wrote off of the remaining right-of-use asset of $4.5 million and lease liability of $5.6 million. After consideration of the termination
payment and write off of remaining right-of-use asset and lease liability, the Company recorded a net gain of $0.1 million.
On
March 25, 2021, the Company entered into a new lease agreement for its corporate office/lab with base rent of approximately $29,000 per
year, plus other expenses. The lease expires on March 25, 2022 and the Company has the option to renew
the lease for one additional successive one year term upon six months written notice to the landlord. This
new lease is accounted for as a short-term lease and the Company has elected to not recognize the right-of-use asset and lease liability.
As
a result of the termination of the Company's prior lease agreement
pursuant to the Lease Termination and Surrender Agreement, the Company does not have an outstanding lease liability or operating
right-of-use asset recorded as of April 30, 2021.
Supplemental
lease expense related to leases was as follows (in thousands):
Lease Cost (in thousands)
|
|
Statements of Operations Classification
|
|
For the Three
Months Ended
April 30, 2021
|
|
|
For the Six
Months Ended
April 30, 2021
|
|
Operating lease cost
|
|
General and administrative
|
|
|
1,011
|
|
|
|
1,301
|
|
Short-term lease cost
|
|
General and administrative
|
|
|
16
|
|
|
|
16
|
|
Variable lease cost
|
|
General and administrative
|
|
$
|
61
|
|
|
|
159
|
|
Total lease expense
|
|
|
|
$
|
1,088
|
|
|
|
1,476
|
|
Lease Cost (in thousands)
|
|
Statements of Operations Classification
|
|
For the Three
Months Ended
April 30, 2020
|
|
|
For the Six
Months Ended
April 30, 2020
|
|
Operating lease cost
|
|
General and administrative
|
|
|
289
|
|
|
|
579
|
|
Short-term lease cost
|
|
General and administrative
|
|
|
85
|
|
|
|
169
|
|
Variable lease cost
|
|
General and administrative
|
|
$
|
129
|
|
|
|
270
|
|
Total lease expense
|
|
|
|
$
|
503
|
|
|
|
1,018
|
|
Supplemental
cash flow information related to operating leases was as follows:
|
|
For the Three
Months Ended
April 30, 2021
|
|
|
For the Six
Months Ended
April 30, 2021
|
|
Cash paid for operating lease liabilities
|
|
$
|
1,039
|
|
|
|
1,363
|
|
|
|
For the Three
Months Ended
April 30, 2020
|
|
|
For the Six
Months Ended
April 30, 2020
|
|
Cash paid for operating lease liabilities
|
|
$
|
311
|
|
|
|
611
|
|
11.
STOCKHOLDERS’ EQUITY
Public
Offerings
On
April 12, 2021, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain investors.
The Purchase Agreement provided for the sale and issuance by the Company of an aggregate of 17,577,400 shares (the “Shares”)
of the Company’s common stock, $0.001 par value (the “Common Stock”), at an offering price of $0.7921 per Share and
7,671,937 pre-funded warrants to certain purchasers whose purchase of additional Shares would otherwise result in the purchaser, together
with its affiliates and certain related parties, beneficially owning more than 9.99% of the Company’s outstanding Common Stock
immediately following the consummation of the offering (the “Pre-Funded Warrants”). The Shares and Pre-Funded Warrants were
sold together with warrants to purchase up to 11,244,135 shares of Common Stock (the “Accompanying Warrants” and together
with the Shares and the Pre-Funded Warrants, the “Securities”). The Pre-Funded Warrants were sold for a purchase price of
$0.7911 per share and have an exercise price of $0.001 per share. The Pre-Funded Warrants were immediately exercisable and may be exercised
at any time until all of the Pre-Funded Warrants are exercised in full. Each Accompanying Warrant has an exercise price per share of
$0.70, became exercisable immediately and will expire on the fifth anniversary of the original issuance date.
The Purchase Agreement also provided for a concurrent private placement
(the “Private Placement”) of 14,005,202 warrants to purchase the Company’s Common Stock (the “Private Placement
Warrants”) with the purchasers in the Registered Offering. The Private Placement Warrants will be exercisable for an aggregate of
14,005,202 shares of Common Stock at any time on or after such date, if ever, that is fourteen (14) days after the Company files an amendment
(the “Authorized Shares Amendment”) to the Company’s Amended and Restated Certificate of Incorporation to increase the
number of authorized shares of Common Stock, $0.001 par value per share from 170,000,000 shares to 300,000,000 shares with the Delaware
Secretary of State and on or prior to the date that is five years after such date. The Private Placement Warrants have an exercise price
of $0.70 per share.
In
March 2021, the Company sold 886,048 shares of its common stock via the at-the-market (“ATM”) program through A.G.P./Alliance
Global Partners netting about $0.7 million in proceeds.
In
November 2020, the Company closed on a public offering of 30,666,665 shares of its common stock at a public offering price of $0.30 per
share, for gross proceeds of $9.2 million, which gives effect to the exercise of the underwriter’s option in full. In addition,
the Company also undertook a concurrent private placement of warrants to purchase up to 15,333,332 shares of common stock. The warrants
have an exercise price per share of $0.35, are exercisable immediately and will expire five years from the date of issuance. The warrants
also provide that if there is no effective registration statement registering, or no current prospectus available for, the issuance or
resale of the warrant shares, the warrants may be exercised via a cashless exercise. After deducting the underwriting discounts and commissions
and other offering expenses, the net proceeds from the offering were approximately $8.5 million.
During
the six months ended April 30, 2021, warrant holders from the Company’s November 2020 offering exercised 10,754,932 warrants in
exchange for 10,754,932 shares of the Company’s common stock and warrant holders from the Company’s April 2021 Offering
exercised 7,671,937 pre-funded warrants in exchange for 7,671,937 shares of the Company’s common stock. Pursuant to these warrant
exercises, the Company received aggregate proceeds of approximately $3.8 million which were payable upon exercise.
A
summary of the changes in stockholders’ equity for the three and six months ended April 30, 2021 and 2020 is presented below (in
thousands, except share data):
|
|
Preferred Stock
|
|
Common Stock
|
|
Additional
Paid-In
|
|
Accumulated
|
|
Total
Shareholders’
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit
|
|
Equity
|
Balance at November 1, 2019
|
|
|
-
|
|
|
$
|
-
|
|
|
|
50,201,671
|
|
|
$
|
50
|
|
|
$
|
423,750
|
|
|
$
|
(384,269
|
)
|
|
$
|
39,531
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
2,957
|
|
|
|
-
|
|
|
|
242
|
|
|
|
-
|
|
|
|
242
|
|
Advaxis public offerings, net of offering costs
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000,000
|
|
|
|
10
|
|
|
|
9,618
|
|
|
|
-
|
|
|
|
9,628
|
|
Warrant exercises
|
|
|
-
|
|
|
|
-
|
|
|
|
26,416
|
|
|
|
-
|
|
|
|
2
|
|
|
|
-
|
|
|
|
2
|
|
Issuance of shares to employees under ESPP Plan
|
|
|
-
|
|
|
|
-
|
|
|
|
5,555
|
|
|
|
-
|
|
|
|
2
|
|
|
|
-
|
|
|
|
2
|
|
Net Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(7,857
|
)
|
|
|
(7,857
|
)
|
Balance at January 31, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
60,236,599
|
|
|
$
|
60
|
|
|
$
|
433,614
|
|
|
$
|
(392,126
|
)
|
|
$
|
41,548
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
5,651
|
|
|
|
-
|
|
|
|
210
|
|
|
|
-
|
|
|
|
210
|
|
Warrant exercises
|
|
|
-
|
|
|
|
-
|
|
|
|
7,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Issuance of shares to employees under ESPP Plan
|
|
|
-
|
|
|
|
-
|
|
|
|
2,694
|
|
|
|
-
|
|
|
|
2
|
|
|
|
-
|
|
|
|
2
|
|
Net Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,323
|
)
|
|
|
(6,323
|
)
|
Balance at April 30, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
60,252,444
|
|
|
$
|
60
|
|
|
$
|
433,826
|
|
|
$
|
(398,449
|
)
|
|
$
|
35,437
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Additional Paid-In
|
|
|
Accumulated
|
|
|
Total Shareholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
Balance at November 1, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
78,074,023
|
|
|
$
|
78
|
|
|
$
|
440,840
|
|
|
$
|
(410,738
|
)
|
|
$
|
30,180
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
236
|
|
|
|
-
|
|
|
|
236
|
|
Advaxis public offerings, net of offering costs
|
|
|
-
|
|
|
|
-
|
|
|
|
30,666,665
|
|
|
|
31
|
|
|
|
8,519
|
|
|
|
-
|
|
|
|
8,550
|
|
Warrant exercises
|
|
|
-
|
|
|
|
-
|
|
|
|
7,390,000
|
|
|
|
7
|
|
|
|
2,579
|
|
|
|
-
|
|
|
|
2,586
|
|
Net Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,977
|
)
|
|
|
(3,977
|
)
|
Balance at January 31, 2021
|
|
|
-
|
|
|
$
|
-
|
|
|
|
116,130,688
|
|
|
$
|
116
|
|
|
$
|
452,174
|
|
|
$
|
(414,715
|
)
|
|
$
|
37,575
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
5,888
|
|
|
|
-
|
|
|
|
215
|
|
|
|
-
|
|
|
|
215
|
|
Advaxis public offerings, net of offering costs
|
|
|
-
|
|
|
|
-
|
|
|
|
18,463,448
|
|
|
|
19
|
|
|
|
13,664
|
|
|
|
-
|
|
|
|
13,683
|
|
Warrant exercises
|
|
|
-
|
|
|
|
-
|
|
|
|
11,037,435
|
|
|
|
11
|
|
|
|
1,174
|
|
|
|
-
|
|
|
|
1,185
|
|
Issuance of shares to employees under ESPP Plan
|
|
|
-
|
|
|
|
-
|
|
|
|
1,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,107
|
)
|
|
|
(5,107
|
)
|
Balance at April 30, 2021
|
|
|
-
|
|
|
$
|
-
|
|
|
|
145,638,459
|
|
|
$
|
146
|
|
|
$
|
467,227
|
|
|
$
|
(419,822
|
)
|
|
$
|
47,551
|
|
12.
FAIR VALUE
The
authoritative guidance for fair value measurements defines fair value as the exchange price that would be received for an asset or paid
to transfer a liability (an exit price) in the principal or the most advantageous market for the asset or liability in an orderly transaction
between market participants on the measurement date. Market participants are buyers and sellers in the principal market that are (i)
independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact. The guidance describes a fair value hierarchy
based on the 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 in active markets for identical assets or liabilities.
●
Level 2— Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets
or liabilities; quoted prices in markets that are not active; or other inputs that are observable or corroborated by observable market
data or substantially the full term of the assets or liabilities.
●
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the value of the assets
or liabilities.
The
following table provides the assets and liabilities carried at fair value measured on a recurring basis as of April 30, 2021 and October
31, 2020 (in thousands):
April 30, 2021
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Common stock warrant liability, warrants exercisable at $0.30 through September 2024
|
|
|
-
|
|
|
|
-
|
|
|
$
|
29
|
|
|
$
|
29
|
|
Common stock warrant liability, warrants exercisable at $0.70 through 5 years
after the date such warrants become exercisable, if ever (Private Placement Warrants)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
4,902
|
|
|
$
|
4,902
|
|
Total
|
|
|
-
|
|
|
|
-
|
|
|
$
|
4,931
|
|
|
$
|
4,931
|
|
October 31, 2020
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Common stock warrant liability, warrants exercisable at $0.372 through September 2024
|
|
|
-
|
|
|
|
-
|
|
|
$
|
17
|
|
|
$
|
17
|
|
The
following table sets forth a summary of the changes in the fair value of the Company’s warrant liabilities (in thousands):
|
|
For the
Six Months
Ended
April 30, 2021
|
|
Beginning balance
|
|
$
|
17
|
|
Warrants issued
|
|
|
5,882
|
|
Warrant exercises
|
|
|
-
|
|
Change in fair value
|
|
|
(968
|
)
|
Ending Balance
|
|
$
|
4,931
|
|
13.
Subsequent Events
None.