Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The
following discussion and analysis contains forward-looking statements about our plans and expectations of what may happen in the
future. Forward-looking statements are based on a number of assumptions and estimates that are inherently subject to significant
risks and uncertainties, and our results could differ materially from the results anticipated by our forward-looking statements
as a result of many known or unknown factors, including, but not limited to, those factors discussed in “Risk Factors”
and incorporated by reference herein. See also the “Special Cautionary Notice Regarding Forward-Looking Statements”
set forth at the beginning of this report.
You
should read the following discussion and analysis in conjunction with the unaudited financial statements, and the related footnotes
thereto, appearing elsewhere in this report, and in conjunction with management’s discussion and analysis and the audited
financial statements included in our annual report on Form 10-K for the fiscal year ended October 31, 2019. In addition, we intend
to use our media and investor relations website (www.advaxis.com/investor-relations), SEC filings, press releases, public conference
calls and webcasts to communicate the public about Advaxis, its services and other issues.
Overview
Advaxis,
Inc. (“Advaxis”) is a clinical-stage biotechnology company focused on the development and commercialization of proprietary
Listeria monocytogenes (“Lm”)-based antigen delivery products. We are using our 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, we have exclusive access to this proprietary formulation of attenuated Lm called Lm
TechnologyTM. Our proprietary approach is designed to deploy a unique mechanism of action that redirects the immune
system to attack cancer in three distinct ways:
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Alerting
and training the immune system by activating multiple pathways in Antigen-Presenting Cells (“APCs”) with the equivalent
of multiple adjuvants;
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●
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Attacking
the tumor by generating a strong, cancer-specific T cell response; and
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●
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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.
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Our
proprietary Lm platform technology has demonstrated clinical activity in several of our programs and has been dosed in
over 470 patients across multiple clinical trials and in various tumor types. We believe that Lm Technology immunotherapies
can complement and address significant unmet needs in the current oncology treatment landscape. Specifically, our product candidates
have the potential to work synergistically with other immunotherapies, including checkpoint inhibitors, while having a generally
well-tolerated safety profile.
The
Advaxis Corporate Strategy
Our
strategy is to advance the Lm Technology platform and leverage its unique capabilities to design and develop an array of
cancer treatments. We are currently conducting or have conducted clinical studies of Lm Technology immunotherapies in HPV-associated
cancers (including cervical and head and neck), prostate cancer, non-small cell lung cancer and other solid tumor types. We are
working with, or are in the process of identifying, collaborators for many of our programs.
Moving
forward, we expect that we will continue to invest in our core clinical program areas and will also remain opportunistic in evaluating
Investigator Sponsored Trials (“ISTs”) as well as licensing opportunities. The Lm Technology platform is protected
by a range of patents, covering both product and process, some of which we believe can be maintained into 2040.
Advaxis
Pipeline of Product Candidates
Disease
focused hotspot/’off the shelf’ neoantigen therapies (ADXS-HOT)
We
are creating a new group of immunotherapy constructs for major solid tumor cancers that combines our optimized Lm Technology
vector with promising targets designed to generate potent anti-cancer immunity. The ADXS-HOT program is a series of novel cancer
immunotherapies that will target somatic mutations, or hotspots, cancer testis antigens, or CTAs, and oncofetal antigens, or OFAs.
These three types of targets form the basis of the ADXS-HOT program because they are designed to be more capable of generating
potent, tumor specific, and high strength killer T cells, versus more traditional over-expressed native sequence tumor associated
antigens. Most hotspot mutations and OFA/CTA proteins play critical roles in oncogenesis; targeting both at once could significantly
impair cancer proliferation. The ADXS-HOT products will combine many of the potential high avidity targets that are expressed
in all patients with the target disease into one “off-the-shelf,” ready to administer treatment. We believe the ADXS-HOT
technology has a strong intellectual property, or IP, position, with potential protection into 2040, and an IP filing strategy
providing for broad coverage opportunities across multiple disease platforms and combination therapies.
In
July 2018, we announced that the U.S. Food and Drug Administration, or FDA, allowed our investigational new drug, or IND, application
for its ADXS-HOT drug candidate (ADXS-503) for non-small cell lung cancer, or NSCLC. ADXS-503 is currently being evaluated in
a Phase 1/2 clinical trial, enrolling patients at five sites throughout the U.S. The first and second dose levels with monotherapy
in Part A, (1 X108 and 5 X108 CFU) have been completed, and Part B in combination with a checkpoint inhibitor
is currently open to enrollment. In February 2020, we announced the initial clinical data from the study, which showed that ADXS-503
has been safe and tolerable with potential signs of clinical activity in 4 of 7 evaluable patients achieving stable disease in
the refractory setting. In addition, the first two patients evaluated in Part B who previously progressed on pembrolizumab showed
stable disease with a 25% reduction in site lesion in the first patient and the second patient in Part B achieved a partial response.
We are continuing to enroll patients in Part B and anticipate entering Part C, in combination with a checkpoint inhibitor as a
first-line therapy, later in 2020.
Additionally,
in January 2020, we announced that the FDA has allowed our IND for the initiation for a Phase 1 clinical study of ADXS-504, our
ADXS-HOT drug candidate for prostate cancer.
Prostate
Cancer (ADXS-PSA)
According
to the American Cancer Society, prostate cancer is the second most common type of cancer found in American men and is the second
leading cause of cancer death in men, behind only lung cancer. More than 191,000 men are estimated to be diagnosed with prostate
cancer in 2020, with approximately 33,000 deaths each year. Unfortunately, in about 10-20% of cases, men with prostate cancer
will go on to develop castration-resistant prostate cancer, or CRPC, which refers to prostate cancer that progresses despite androgen
deprivation therapy. Metastatic CRPC, or mCRPC, occurs when the cancer spreads to other parts of the body and there is a rising
prostate-specific antigen, PSA, level. This stage of prostate cancer has an average survival of 9-13 months, is associated with
deterioration in quality of life, and has few therapeutic options available.
We
have entered into a clinical trial collaboration and supply agreement with Merck & Co., or Merck, to evaluate the safety and
efficacy of ADXS-PSA as monotherapy and in combination with KEYTRUDA®, Merck’s anti PD-1 antibody, in a Phase
1/2, open-label, multicenter, dose determination and expansion trial in patients with previously treated metastatic, castration-resistant
prostate cancer (KEYNOTE-046). ADXS-PSA was tested alone or in combination with KEYTRUDA in an advanced and heavily pretreated
patient population who had progressed on androgen deprivation therapy. A total of 13 and 37 patients were evaluated on monotherapy
and combination therapy, respectively. For the ADXS-PSA monotherapy dose escalation and determination portion of the trial, cohorts
were started at a dose of 1 x 109 cfu (n=7) and successfully escalated to higher dose levels of 5x109 cfu
(n=3) and 1x1010 cfu (n=3) without achieving a maximum tolerated dose. Treatment-related adverse events, or TRAEs,
noted at these higher dose levels were generally consistent with those observed at the lower dose level (1 x 109 cfu)
other than a higher occurrence rate of Grade 2/3 hypotension. The Recommended Phase II Dose of ADXS-PSA monotherapy was determined
to be 1x 109 cfu based on a review of the totality of the clinical data. This dose was used in combination with 200mg
of pembrolizumab in a cohort of six patients to evaluate the safety of the combination before moving into an expanded cohort of
patients. The safety of the combination was confirmed and enrollment in the expansion cohort phase was initiated. Enrollment in
the study was completed in January 2017.
Data
regarding checkpoint inhibitor monotherapy (KEYNOTE-199) has shown some antitumor activity that provides disease control in a
subset of patients with bone-predominant mCRPC previously treated with next generation hormonal agents and docetaxel. Data from
the KEYNOTE-199 trial in bone-predominant mCRPC patients treated with KEYTRUDA®, or pembrolizumab, was presented at the ASCO
GU meeting in 2019. In this trial, the total stable disease/disease stabilization rate was 39% with no responses reported so far,
and only one patient with ≥50% decrease in the post-baseline PSA value. It is hypothesized that the limited activity in mCRPC
may be due to 1) the inability of the checkpoint inhibitor to infiltrate the tumor microenvironment and 2) the presence of an
immunosuppressive tumor micro-environment, or TME. The combination therapy with agents—like Lm constructs—that
induce T cell infiltration within the tumor and decrease negative regulators in the TME may improve performance of checkpoints
in prostate cancer.
For
KEYNOTE-046, as of the final data cutoff, September 16, 2019, the median overall survival (mOS) for 37 patients in the combination
arm was 33.7 months (95% CI, range 15.4-33.7 months) and the median overall survival (95% CI) of 16.4 months (4.0-NR) for patients
with prior visceral metastasis (n=11; 10 pts with prior docetaxel). This updated median overall survival is an increase from the
previous data presented at the American Association for Cancer Research Annual Meeting in April 2019, where median overall survival
was 21.1 months in the combination arm. The majority of TRAEs consisted of transient and reversible Grade 1-2 chills/rigors, fever,
hypotension, nausea and fatigue. The combination of ADXS-PSA and KEYTRUDA® has appeared to be well-tolerated to date, with
no additive toxicity observed. We are in discussions with potential partners regarding opportunities to expand or advance this
mCRPC program.
HPV-Related
Cancers
We
conducted several studies evaluating axalimogene filolisbac, or AXAL, for HPV-related cancers. AXAL is an Lm-based antigen
delivery product directed against HPV and designed to target cells expressing HPV.
In
June 2019, we announced the closing of our AIM2CERV Phase 3 clinical trial with axalimogene filolisbac (AXAL) in high-risk locally
advanced cervical cancer. The decision to close the study was based on the estimated remaining cost to complete the AIM2CERV trial
of $80 million to $90 million, in addition to the timing to complete the study. The initial efficacy data was not anticipated
for at least three years. No results from the clinical trial were to be available for at least three more years and therefore,
results of the study were not the basis for the decision to close the study, nor was safety as the trial recently underwent its
third Independent Data Monitoring Committee (IDMC) review with no safety issues noted. We are in the process of winding down the
study and plan to publish the results in a medical journal in the future. We have no plans to further fund studies using AXAL.
In
2014, Advaxis granted Global BioPharma, or GBP, an exclusive license for the development and commercialization of AXAL in Asia,
Africa, and the former Soviet Union territory, exclusive of India and certain other countries. GBP is responsible for all development
and commercial costs and activities associated with the development in their territories. GBP anticipates initiating its Phase
2, open-label controlled trial in HPV-associated NSCLC in patients following first-line chemotherapy by the end of 2019. The study
will be assessing the effects of AXAL when combined with pemetrexed in patients with HPV+ NSCLC, following first line induction
therapy.
Personalized
Neoantigen-directed Therapies (ADXS-NEO)
ADXS-NEO
is an individualized Lm Technology antigen delivery product developed using whole-exome sequencing of a patient’s
tumor to identify neoantigens. ADXS-NEO is designed to work by presenting a large payload of neoantigens directly into dendritic
cells within the patient’s immune system and stimulating a T cell response against cancerous cells. In October 2019, we
announced that we dosed our last patient in Part A, in monotherapy, and we do not intend to continue into Part B, in combination
with a checkpoint inhibitor. As a result, we are in the process of winding down this study and we intend to publish the final
results from Part A of the ADXS-NEO study in a medical journal in the future.
Other
Lm Technology Products
HER2
Expressing Solid Tumors
HER2
is overexpressed in a percentage of solid tumors including osteosarcoma. According to published literature, up to 60% of osteosarcomas
are HER2 positive, and this overexpression is associated with poor outcomes for patients. ADXS-HER2 is an Lm Technology
antigen delivery product candidate designed to target HER2 expressing solid tumors including human and canine osteosarcoma. ADXS-HER2
has received FDA and EMA orphan drug designation for osteosarcoma and has received Fast Track designation from the FDA for patients
with newly-diagnosed, non-metastatic, surgically-resectable osteosarcoma.
In
September 2018, we announced that we had granted a license to OS Therapies, LLC, or OS Therapies, 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, OS Therapies
will be responsible for the conduct and funding of a clinical study evaluating ADXS-HER2 in recurrent, completely resected osteosarcoma.
Pursuant to the agreement, upon OS Therapies’ successful completion of a financing, Advaxis expects to receive an upfront
payment, reimbursement for product supply and other support, clinical, regulatory, and sales-based milestone payments, and royalties
on future product sales. Additional details of the financial terms have not been disclosed.
Canine
Osteosarcoma
On
March 19, 2014, we entered into a definitive Exclusive License Agreement, or Aratana Agreement, with Aratana Therapeutics, Inc.,
or Aratana, where we granted Aratana an exclusive, worldwide, royalty-bearing license, with the right to sublicense, certain of
our proprietary technology that enables Aratana to develop and commercialize animal health products that will be targeted for
treatment of osteosarcoma and other cancer indications in animals. A product license request was filed by Aratana for ADXS-HER2
(also known as AT-014 by Aratana) for the treatment of canine osteosarcoma with the United States Department of Agriculture, or
USDA. Aratana received communication in December 2017 that the USDA granted Aratana conditional licensure for AT-014 for the treatment
of dogs diagnosed with osteosarcoma, one year of age or older.
Under
the terms of the Aratana Agreement, Aratana paid an upfront payment to Advaxis in the amount of $1,000,000 upon signing of the
Aratana Agreement. Aratana will also pay Advaxis: (a) up to $36.5 million based on the achievement of milestone relating to the
advancement of products through the approval process with the USDA in the United States and the relevant regulatory authorities
in the European Union, or E.U., in all four therapeutic areas and up to an additional $15 million in cumulative sales milestones
based on achievement of gross sales revenue targets for sales of any and all products for use in non-human animal health applications,
or the Aratana Field, (regardless of therapeutic area), and (b) tiered royalties starting at 5% and going up to 10%, which will
be paid based on net sales of any and all products (regardless of therapeutic area) in the Aratana Field in the United States.
Royalties for sales of products outside of the United States will be paid at a rate equal to half of the royalty rate payable
by Aratana on net sales of products in the United States (starting at 2.5% and going up to 5%). Royalties will be payable on a
product-by-product and country-by-country basis from first commercial sale of a product in a country until the later of (a) the
10th anniversary of first commercial sale of such product by Aratana, its affiliates or sub licensees in such country or (b) the
expiration of the last-to-expire valid claim of our patents or joint patents claiming or covering the composition of matter, formulation
or method of use of such product in such country. Aratana will also pay us 50% of all sublicense royalties received by Aratana
and its affiliates. In fiscal year 2019, we received approximately $8,000 in royalty revenue from Aratana. Additionally, in July
2019, Aratana announced that their shareholders approved a merger agreement with Elanco Animal Health, or Elanco, whereby Elanco
is now the majority shareholder of Aratana. All of the terms of the Aratana Agreement remain in effect.
Results
of Operations for the Three Months Ended January 31, 2020 and 2019
Discussions
of January 31, 2018 activity and period-to-period comparisons between 2019 and 2018 that are not included in this Form 10-Q can
be found in Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our
Form 10-Q for the quarterly period ended January 31, 2019.
Revenue
Revenue
decreased $19.7 million to approximately $3,000 for the three months ended January 31, 2020 compared to the three months ended
January 31, 2019. The reduction is attributable to revenue recognized in connection with the termination of the collaboration
agreement with Amgen. On December 10, 2018, we received a written notice of termination from Amgen with respect to the Amgen Agreement,
which termination was effective as of February 8, 2019. As a result, in the quarter ended January 31, 2019, we recognized the
remaining upfront payments under ASC 606.
Research
and Development Expenses
We
invest in research and development to advance our Lm Technology through our pre-clinical and clinical development programs.
Research and development expenses for the three months ended January 31, 2020 and January 31, 2019 were categorized as follows
(in thousands):
Research
and Development (in thousands)
|
|
Three Months Ended
January 31,
|
|
|
Increase
(Decrease)
|
|
|
|
2020
|
|
|
2019
|
|
|
$
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotspot/Off-the-Shelf therapies
|
|
$
|
553
|
|
|
$
|
717
|
|
|
$
|
(164
|
)
|
|
|
(30
|
)%
|
Prostate cancer
|
|
|
378
|
|
|
|
578
|
|
|
|
(200
|
)
|
|
|
(53
|
)
|
HPV-associated cancers
|
|
|
1,735
|
|
|
|
1,213
|
|
|
|
552
|
|
|
|
30
|
|
Personalized neoantigen-directed therapies
|
|
|
350
|
|
|
|
1,206
|
|
|
|
(856
|
)
|
|
|
(245
|
)
|
Other expenses
|
|
|
1,843
|
|
|
|
2,993
|
|
|
|
(1,150
|
)
|
|
|
(62
|
)
|
Total research & development expense
|
|
$
|
4,859
|
|
|
$
|
6,707
|
|
|
$
|
(1,848
|
)
|
|
|
(38
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense included in research and development expense
|
|
$
|
91
|
|
|
$
|
323
|
|
|
$
|
(232
|
)
|
|
|
(255
|
)%
|
Hotspot/Off-the-Shelf
Therapies (ADXS-HOT)
Research
and development costs associated with our hotspot mutation-based therapies for the three months ended January 31, 2020 decreased
approximately $0.2 million to $0.6 million compared to the same period in 2019. The decrease is attributable to the startup costs
associated with the initiation of the Phase 1/2 clinical trial in the first quarter of fiscal 2019. We have completed enrollment
in Part A, in monotherapy, and the study is currently open for enrollment in combination with pembrolizumab at five sites across
the U.S. In February 2020, we announced the initial clinical data from the study which showed that ADXS-503 has been safe and
tolerable with potential signs of clinical activity in 4 of 7 evaluable patients achieving stable disease in the refractory setting.
In addition, the first patient evaluated in Part B who previously progressed on pembrolizumab showed stable disease with a 25%
reduction in a site lesion. We anticipate reporting additional information from this study as it becomes available throughout
2020.
Prostate
Cancer Therapy (ADXS-PSA)
Research
and development costs associated with our prostate cancer therapy for the three months ended January 31, 2020 decreased approximately
$0.2 million, or 53%, compared to the same period in 2019. The decrease is attributable to the wrapping up of the study. The Phase
1/2 study of our ADXS-PSA compound is in combination with KEYTRUDA® (pembrolizumab), Merck’s humanized monoclonal antibody.
During 2020, we presented updated data from this study which demonstrated an increase in the median overall survival, or mOS,
to 33.7 months for patients in the combination arm of this study and mOS of 16.4 for patients with visceral metasteses (n=11).
We are in discussions with potential partners on the next step for this therapy.
HPV-Associated
Cancers
The
majority of the HPV-associated research and development costs include clinical trial and other related costs associated with our
axalimogene filolisbac, or AXAL, programs in cervical and head and neck cancers. HPV-associated costs for the three months ended
January 31, 2020 increased approximately $0.6 million, or 30%, compared to the same period in 2019. The increase resulted from
the partial hold by the FDA on our AIM2CERV study during the first quarter of 2019, which resulted in limited clinical activity
as we worked to respond to the FDA’s questions surrounding their CMC requests. No new patients were enrolled during that
time. In April 2019, we announced the clinical hold was lifted and in June 2019, we announced that we were closing the AIM2CERV
study. We anticipate that our costs surrounding HPV-associated studies will continue to decline as we wrap up the remaining clinical
and regulatory obligations of the program. We currently do not anticipate funding any new AXAL studies.
Personalized
Neoantigen-Directed Therapies
Research
and development costs associated with personalized neoantigen-directed therapies for the three months ended January 31, 2020 decreased
approximately $0.9 million, or 245%, compared to the same period in 2019. In October 2019, we announced that we have enrolled
our last patient in the ADXS-NEO program in monotherapy and will not continue into Part B of this study. As a result, the costs
incurred for ADXS-NEO during the three months ended January 31, 2020 consisted of wind down costs associated with terminating
the study. We anticipate that we will incur wind down costs for this study until late 2020 and plan to publish the results of
this program in a future medical journal.
Other
Expenses
Other
expenses include salary and benefit costs, stock-based compensation expense, professional fees, laboratory costs and other internal
and external costs associated with our research & development activities. Other expenses for the three months ended January
31, 2020 decreased approximately $1.2 million, or 62%, compared to the same period in 2019. The decrease was primarily attributable
to a decrease in salary related expenses, including stock compensation, and travel expenses resulting from cost control measures
put in place beginning in June 2018. In addition, there were decreases in laboratory and manufacturing costs, as we are focused
on the clinical development of our HOT program and less on early research programs. Additionally, we announced in October 2019
that we are winding down ADXS-NEO and therefore no longer incurring costs to manufacture ADXS-NEO.
General
and Administrative Expenses
General
and administrative expenses primarily include salary and benefit costs and stock-based compensation expense for employees included
in our finance and administrative departments. Also included in general and administrative expenses are outside legal, professional
services and facilities costs. General and administrative expenses for the three months ended January 31, 2020 and January 31,
2019 were as follows (in thousands):
|
|
Three Months Ended
January 31,
|
|
|
Increase
(Decrease)
|
|
|
|
2020
|
|
|
2019
|
|
|
$
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expense
|
|
$
|
3,030
|
|
|
$
|
2,666
|
|
|
$
|
364
|
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense included in general and administrative expense
|
|
$
|
151
|
|
|
$
|
299
|
|
|
$
|
(147
|
)
|
|
|
(97
|
)%
|
General
and administrative expenses for the three months ended January 31, 2020 increased approximately $0.4 million, or 12%, compared
to the same period in 2019. The increase is attributable to higher legal fees, employee bonus accruals and business development
costs. The aforementioned was partially offset by a decrease in stock-based compensation due to forfeitures of award and limitations
of the granting of new awards due to the limited amount of available shares under the 2015 Incentive Plan, in addition to an insurance
refund from a worker’s compensation audit.
Changes
in Fair Values
For
the three months ended January 31, 2020, we recorded non-cash expense from changes in the fair value of the warrant liability
of approximately $37. The increase in the fair value of liability warrants resulting from an increase in our share price from
$0.32 at October 31, 2019 to $0.86 at January 31, 2020.
For
the three months ended January 31, 2019, we recorded non-cash income from changes in the fair value of the warrant liability of
approximately $2.4 million. The decrease in the fair value of liability warrants resulting from a decrease in our share price
from $0.56 at October 31, 2018 to $0.38 at January 31, 2019.
Liquidity
and Capital Resources
Similar
to other development stage biotechnology companies, our products that are being developed have not generated significant revenue.
As a result, we have suffered recurring losses and we require significant cash resources to execute our business plans. These
losses are expected to continue for an extended period of time. Historically, our major sources of cash have comprised proceeds
from various public and private offerings of our common stock, debt financings, clinical collaborations, option and warrant exercises,
NOL tax sales, income earned on investments and grants, and interest income. From October 2013 through January 2020, we raised
approximately $302.7 million in gross proceeds ($10.5 million in in the first quarter of fiscal year 2020) from various public
and private offerings of its common stock. We have sustained losses from operations in each fiscal year since our inception, and
we expect losses to continue for the indefinite future. As of January 31, 2020 and October 31, 2019, we had an accumulated deficit
of approximately $392.1 million and $384.3 million, respectively, and stockholders’ equity of approximately $41.5 million
and $39.5 million, respectively.
As
of January 31, 2020, we had approximately $34.2 million in cash and cash equivalents. The actual amount of cash that we will need
to operate is subject to many factors. We have based this estimate on assumptions that may prove to be wrong, and we could use
available capital resources sooner than currently expected. We have reduced our operating expenses to $38.9 million for the fiscal
year ended October 31, 2019 as compared to $76.4 million during the fiscal year ended October 31, 2018. Furthermore, we expect
operating expenses to be approximately $29 million for fiscal year 2020, which includes approximately $6 million in non-recurring
costs related to programs that are winding down. Based on this and raising $10.5 million in capital in January 2020, we expect
to have sufficient capital to fund our obligations as they become due in the ordinary course of business until at least August
2021.
Cash
Flows
Operating
Activities
Net
cash used in operating activities was approximately $7.7 million for the three months ended January 31, 2020 compared to net cash
used in operating activities of approximately $11.9 million for the three months ended January 31, 2019. Net cash used in operating
activities includes spending associated with our clinical trial programs and general and administrative activities. In the third
quarter of fiscal 2018, we began instituting measures to control costs for non-essential items in areas that didn’t support
our strategic direction, and as a result, we have continued to reduce operating expenditures significantly.
Investing
Activities
Net
cash used in investing activities was approximately $0.2 million for the three months ended January 31, 2020 compared to net cash
used in investing activities of approximately $0.6 million for the three months ended January 31, 2019. The reduction is a result
of the abandonment of certain non-strategic intellectual property.
Financing
Activities
Net
cash provided by financing activities was approximately $9.7 million for the three months ended January 31, 2020 as compared to
approximately $14,000 for the three months ended January 31, 2019. The increase was a result of a public offering of 10,000,000
shares of our common stock in January 2020, which resulted in net proceeds of approximately $9.7 million.
Off-Balance
Sheet Arrangements
As
of January 31, 2020, our total future minimum lease payments under noncancelable operating leases was $8.0 million.
Critical
Accounting Estimates
The
preparation of financial statements in accordance with GAAP accepted in the U.S. requires management to make estimates and assumptions
that affect the reported amounts and related disclosures in the financial statements. Management considers an accounting estimate
to be critical if:
|
●
|
it
requires assumptions to be made that were uncertain at the time the estimate was made, and
|
|
|
|
|
●
|
changes
in the estimate of difference estimates that could have been selected could have material impact in our results of operations
or financial condition.
|
While
we base our estimates and judgments on our experience and on various other factors that we believe to be reasonable under the
circumstances, actual results could differ from those estimates and the differences could be material. The most significant estimates
impact the following transactions or account balances: stock compensation, warrant liability valuation and impairment of intangibles.
See
Note 2 to our condensed financial statements that discusses significant accounting policies.
New
Accounting Standards
See
Note 2 to our condensed financial statements that discusses new accounting pronouncements.