Part I [Business](index=5&type=section&id=ITEM%201.%20BUSINESS) Anavex Life Sciences Corp. is a clinical-stage biopharmaceutical company developing therapeutics for CNS diseases using a precision medicine approach [Overview and Strategy](index=5&type=section&id=Overview%20and%20Strategy) The company develops CNS therapeutics through precision medicine, identifying biomarkers for patient selection, with ANAVEX2-73 targeting sigma-1 receptor to restore cellular homeostasis - Anavex is a clinical-stage biopharmaceutical company using precision medicine for CNS diseases with high unmet needs[12](index=12&type=chunk) - The lead compound, ANAVEX2-73, is being developed for Alzheimer's, Parkinson's, and Rett syndrome[13](index=13&type=chunk) - The company's approach focuses on activating the SIGMAR1 gene to restore cellular homeostasis, which is disrupted in many neurodegenerative diseases[14](index=14&type=chunk)[15](index=15&type=chunk) - Genomic analysis of patients treated with ANAVEX2-73 identified SIGMAR1 and COMT as key biomarkers, suggesting that selecting patients based on these genetic variants could improve clinical outcomes[16](index=16&type=chunk) [Clinical Studies Overview](index=7&type=section&id=Clinical%20Studies%20Overview) Anavex is conducting multiple clinical trials for ANAVEX2-73, including a Phase 2b/3 study for Alzheimer's, three Phase 2 studies for Rett syndrome, and a Phase 2 trial for Parkinson's Disease Dementia - A Phase 2b/3 double-blind, placebo-controlled study of ANAVEX2-73 in approximately **450 Alzheimer's patients** commenced in August 2018[20](index=20&type=chunk) - Three Phase 2 clinical trials for ANAVEX2-73 in Rett syndrome were initiated in 2019: a US-based study, the AVATAR study in Australia, and the EXCELLENCE study for pediatric patients in Australia[23](index=23&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) - A Phase 2 double-blind, randomized, placebo-controlled trial with ANAVEX2-73 in **120 Parkinson's Disease Dementia (PDD) patients** was initiated in October 2018[29](index=29&type=chunk) [Our Pipeline](index=9&type=section&id=Our%20Pipeline) The company's SIGMACEPTOR™ Discovery Platform yields a pipeline including lead candidate ANAVEX2-73 for neurodegenerative and neurodevelopmental diseases, and preclinical candidates like ANAVEX3-71 for Alzheimer's and FTD - ANAVEX2-73 has received FDA Orphan Drug Designation for Rett syndrome and infantile spasms, and Rare Pediatric Disease (RPD) designation for Rett syndrome[36](index=36&type=chunk) - ANAVEX3-71, a preclinical candidate, has shown potential in Alzheimer's models by enhancing neuroprotection and cognition and has received FDA Orphan Drug Designation for Frontotemporal dementia (FTD)[53](index=53&type=chunk)[54](index=54&type=chunk) - ANAVEX1-41 is a preclinical sigma-1 agonist showing neuroprotective benefits[56](index=56&type=chunk) - ANAVEX1066 is a preclinical candidate for neuropathic and visceral pain[59](index=59&type=chunk) - ANAVEX1037 is a preclinical candidate for prostate and pancreatic cancer, showing antitumor potential by selectively killing cancer cells[61](index=61&type=chunk) [Patents, Trademarks and Intellectual Property](index=15&type=section&id=Patents%2C%20Trademarks%20and%20Intellectual%20Property) Anavex holds a portfolio of eight U.S. patents and numerous applications covering its drug candidates, with key ANAVEX2-73 patents expiring in the 2030s, forming a core corporate asset - The company holds or has exclusive rights to **eight U.S. patents**, eight U.S. patent applications, and various international patent applications[75](index=75&type=chunk) - Key U.S. patents for ANAVEX2-73 cover its composition with donepezil (exp. **2034**), crystalline forms (exp. **2036-2037**), and methods for treating seizures (exp. **2035**)[76](index=76&type=chunk) - The company holds exclusive rights to **two issued U.S. patents** for ANAVEX3-71, covering the compound and its use in treating diseases like Alzheimer's, expected to expire in **2030**[78](index=78&type=chunk) [Risk Factors](index=18&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces significant risks including financial losses, dependence on external financing, internal control weaknesses, drug development uncertainty, intense competition, and intellectual property challenges [Risks Related to our Company](index=18&type=section&id=Risks%20Related%20to%20our%20Company) The company has a history of losses, an accumulated deficit exceeding $133 million, no revenue, and depends on external financing, compounded by a material weakness in internal controls over financial reporting - The company has an accumulated deficit of over **$133 million** since inception through September 30, 2019, has generated no revenue, and expects negative cash flows for the foreseeable future[98](index=98&type=chunk) - The company is an early-stage entity with all potential drug compounds in early clinical development, facing risks of unforeseen capital requirements and failure in clinical trials[99](index=99&type=chunk)[100](index=100&type=chunk) - A material weakness was identified in internal control over financial reporting regarding the accounting for the Australian R&D incentive program, where income was previously recognized upon cash receipt instead of when qualifying expenditures were incurred[103](index=103&type=chunk) [Risks Related to our Business](index=19&type=section&id=Risks%20Related%20to%20our%20Business) The company's business faces substantial risks from extensive R&D and regulatory approval processes, potential clinical trial failures, reliance on third-party manufacturers and CROs, intense competition, and product liability claims - Drug candidates require extensive R&D and regulatory approvals, and there is a high risk of failure in clinical trials due to ineffectiveness or harmful side effects[105](index=105&type=chunk) - Substantial additional funding is required for R&D, and the inability to secure it could halt or cease operations[106](index=106&type=chunk)[107](index=107&type=chunk) - The company relies on third parties like contract research organizations (CROs) and manufacturers, and their failure to perform could cause significant delays[126](index=126&type=chunk)[127](index=127&type=chunk) - The company faces significant competition from large pharmaceutical companies with greater resources and experience[124](index=124&type=chunk) [Risks Related to our Common Stock](index=24&type=section&id=Risks%20Related%20to%20our%20Common%20Stock) The company's common stock is subject to price volatility and potential dilution from future equity issuances, including agreements with Lincoln Park Capital and Cantor Fitzgerald for up to $50 million each - The common stock price is volatile, which could affect the ability to raise capital and may result in dilution for investors if funds are raised at lower prices[135](index=135&type=chunk)[136](index=136&type=chunk) - The sale of up to **$50 million** of common stock to Lincoln Park Capital may cause significant dilution and could cause the stock price to fall[142](index=142&type=chunk)[143](index=143&type=chunk) - The "at-the-market" offering agreement with Cantor Fitzgerald & Co. for up to **$50 million** of common stock may also result in shareholder dilution and a decrease in share price[147](index=147&type=chunk) [Risks Related to our Intellectual Property](index=26&type=section&id=Risks%20Related%20to%20our%20Intellectual%20Property) The company's success depends on its ability to obtain, maintain, and defend intellectual property, facing risks of patent invalidation, infringement claims, and costly global protection challenges - The company's ability to commercialize products may be impaired if it cannot obtain and maintain sufficient intellectual property protection[148](index=148&type=chunk) - Patents may be challenged, narrowed, or invalidated, and competitors could design around them. Defending patents is expensive and time-consuming[151](index=151&type=chunk)[153](index=153&type=chunk) - The company could face third-party claims of IP infringement, which could lead to substantial damages, litigation expenses, and halt development efforts[162](index=162&type=chunk)[164](index=164&type=chunk) - Failure to comply with obligations in licensing agreements, such as the one with Life Science Research Israel Ltd. for ANAVEX3-71, could lead to termination of the license[157](index=157&type=chunk)[158](index=158&type=chunk) - Protecting intellectual property rights globally is prohibitively expensive, and laws in some foreign countries offer less protection than in the U.S[176](index=176&type=chunk) [Properties](index=31&type=section&id=ITEM%202.%20PROPERTIES) The company leases its main office in New York, NY, for approximately $16,000 per month, deeming the space suitable for current operations - The company leases its main office in New York, NY, with monthly lease costs of approximately **$16,000**[178](index=178&type=chunk) [Legal Proceedings](index=31&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company reports no material pending legal proceedings beyond routine litigation incidental to its business - There are no material pending legal proceedings involving the company, its subsidiaries, directors, or major stockholders[179](index=179&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=31&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock trades on NASDAQ under "AVXL", with 56.1 million shares outstanding as of December 2019, and it retains earnings for development, not paying dividends - Common stock is quoted on NASDAQ under the symbol **"AVXL"**[180](index=180&type=chunk) - As of December 12, 2019, there were **56,123,076 shares** of common stock issued and outstanding[180](index=180&type=chunk) - The company has not paid and does not intend to pay cash dividends, retaining earnings for operations[182](index=182&type=chunk) Equity Compensation Plan Information as of September 30, 2019 | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuances under equity compensation plans (c) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 12,050,553 | $4.02 | 4,934,704 | [Management's Discussion and Analysis of Financial Condition and Results of Operation](index=33&type=section&id=ITEM%207%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATION) In fiscal 2019, operating expenses increased to $29.1 million, driven by a $9.0 million rise in R&D for clinical trials, resulting in a net loss of $26.3 million, with cash maintained by stock issuances [Results of Operations](index=34&type=section&id=Results%20of%20Operations) For fiscal 2019, total operating expenses increased to $29.1 million, primarily due to a $9.0 million rise in R&D costs for ANAVEX2-73 clinical trials, leading to a net loss of $26.3 million Comparison of Operating Expenses (Fiscal Years 2019 vs. 2018) | Expense Category | FY 2019 (in millions) | FY 2018 (in millions) | Change (in millions) | | :--- | :--- | :--- | :--- | | Research & Development | $22.3 | $13.3 | +$9.0 | | General & Administrative | $6.8 | $6.0 | +$0.8 | | **Total Operating Expenses** | **$29.1** | **$19.3** | **+$9.8** | Net Loss (Fiscal Years 2019 vs. 2018) | Metric | FY 2019 | FY 2018 | | :--- | :--- | :--- | | Net Loss | $26.3 million | $17.3 million | | Net Loss per Share | $0.54 | $0.39 | - The increase in R&D expenses was primarily due to costs associated with the Phase 2b/3 Alzheimer's trial (**$6.2 million**), Phase 2 Parkinson's trial (**$3.3 million**), and Phase 2 Rett syndrome studies (**$3.0 million**)[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2019, the company had $20.3 million in working capital and $22.2 million in cash, with increased operating cash use offset by $17.8 million from stock issuances Working Capital (as of Sept 30) | | 2019 | 2018 | | :--- | :--- | :--- | | Current Assets | $25,329,373 | $26,052,793 | | Current Liabilities | $5,039,674 | $3,884,626 | | **Working Capital** | **$20,289,699** | **$22,168,167** | Cash Flow Summary (Fiscal Years) | Cash Flows | 2019 | 2018 | | :--- | :--- | :--- | | Cash used in operating activities | $(18,527,117) | $(12,582,406) | | Cash provided by financing activities | $17,782,109 | $8,072,787 | - Financing activities in FY2019 included issuing **6.7 million shares** to Lincoln Park for gross proceeds of **$17.8 million**[208](index=208&type=chunk) - As of September 30, 2019, approximately **$45.3 million** remained available for purchase by Lincoln Park under the 2019 Purchase Agreement[212](index=212&type=chunk) [Financial Statements and Supplementary Data](index=39&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents audited consolidated financial statements for 2019 and 2018, with the auditor issuing an unqualified opinion on financials but an adverse opinion on internal controls due to a material weakness in R&D incentive accounting Consolidated Balance Sheet Data (as of Sept 30) | | 2019 | 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $22,185,630 | $22,930,638 | | Total Assets | $25,329,373 | $26,206,322 | | Total Liabilities | $5,039,674 | $3,884,626 | | Total Stockholders' Equity | $20,289,699 | $22,321,696 | Consolidated Statement of Operations Data (for year ended Sept 30) | | 2019 | 2018 | | :--- | :--- | :--- | | Total operating expenses | $(29,106,948) | $(19,333,591) | | Net loss | $(26,294,979) | $(17,252,736) | | Net Loss per share | $(0.54) | $(0.39) | - The independent auditor, BDO USA, LLP, issued an **adverse opinion** on the company's internal control over financial reporting as of September 30, 2019[237](index=237&type=chunk) - A material weakness was identified regarding the accounting for the Australian research and development incentive program[242](index=242&type=chunk) - Prior period financial statements were adjusted to correct the timing of recognition of R&D incentive income, resulting in a decrease to the accumulated deficit at October 1, 2017, by **$1,629,513**[258](index=258&type=chunk)[260](index=260&type=chunk) [Controls and Procedures](index=63&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls were ineffective as of September 30, 2019, due to a material weakness in accounting for the Australian R&D incentive program, with remediation efforts underway - Disclosure controls and procedures were concluded to be **ineffective** as of September 30, 2019[343](index=343&type=chunk) - A material weakness was identified in the internal control over financial reporting for the accounting of the Australian R&D incentive income[344](index=344&type=chunk) - The error involved recognizing the incentive income when cash was received, instead of accruing it in the period the qualifying R&D expenditures were incurred[344](index=344&type=chunk) - Remediation efforts include evaluating policies and procedures to ensure the program's accounting is assessed and reconciled on a quarterly basis[348](index=348&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=65&type=section&id=ITEM%2010%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) This section outlines the company's Board of Directors and executive officers, including Christopher Missling as CEO and Sandra Boenisch as CFO, and details the Audit, Nominating, and Compensation Committees - The company's leadership includes Christopher Missling, PhD (President, CEO, Director) and Sandra Boenisch, CPA, CGA (Principal Financial Officer, Treasurer)[354](index=354&type=chunk) - The company has established an Audit Committee, a Nominating and Corporate Governance Committee, and a Compensation Committee[365](index=365&type=chunk)[368](index=368&type=chunk)[370](index=370&type=chunk) - The Board has determined that Claus van der Velden qualifies as an **"audit committee financial expert"**[365](index=365&type=chunk) [Executive Compensation](index=68&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) The executive compensation program aims to attract and retain talent through competitive pay, with CEO Christopher Missling's total compensation for fiscal 2019 at $3,380,039, largely comprising option awards Summary Compensation for Named Executive Officers (Fiscal Year 2019) | Name and Principal Position | Year | Salary ($) | Bonus ($) | Option Awards ($) | Other Compensation ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Christopher Missling, PhD (President, CEO) | 2019 | 512,500 | 50,000 | 2,806,339 | 11,200 | 3,380,039 | | Sandra Boenisch (Principal Financial Officer) | 2019 | 72,327 | 13,561 | 138,672 | - | 224,560 | - CEO Christopher Missling's employment agreement provides for an annual base salary of **$550,000** and eligibility for an annual cash bonus[384](index=384&type=chunk) - Employment agreements for named executive officers contain provisions for vesting of stock options upon a change of control[395](index=395&type=chunk)[396](index=396&type=chunk) [Security Ownership of Certain Beneficial Owners and Management](index=72&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS.) As of December 12, 2019, directors and executive officers collectively owned 11.9% of common stock, with CEO Christopher Missling holding 8.6%, and Park West Asset Management LLC as the only external beneficial owner above 5% Security Ownership as of December 12, 2019 | Name of Beneficial Owner | Amount of Beneficial Ownership | Percent of Class | | :--- | :--- | :--- | | Christopher Missling (CEO/Director) | 5,163,430 | **8.6%** | | Directors & Executive Officers as a group (7 persons) | 7,268,298 | **11.9%** | | Park West Asset Management LLC | 3,495,615 | **6.2%** | [Principal Accounting Fees and Services](index=74&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES) This section details the $229,763 in audit fees paid to BDO USA, LLP for fiscal 2019, all pre-approved by the Audit Committee, covering financial statement audits, reviews, and regulatory filings Fees Paid to Independent Registered Public Accounting Firm | Fee Category | 2019 | 2018 | | :--- | :--- | :--- | | Audit Fees | $229,763 | $224,181 | | Audit Related Fees | - | - | | Tax Fees | - | - | | All Other Fees | - | - | | **Total Fees** | **$229,763** | **$224,181** | - All services provided by the independent registered public accounting firm were pre-approved by the Audit Committee[415](index=415&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=75&type=section&id=ITEM%2015.%20EXHIBITS%2C%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists the exhibits filed with the Form 10-K, including corporate governance documents, material contracts, employment agreements, certifications, and XBRL data files - Exhibits filed include corporate governance documents, material contracts, certifications, and XBRL data[419](index=419&type=chunk)[420](index=420&type=chunk)

Anavex Life Sciences Corp. (NASDAQ:AVXL) Q3 2019 Earnings Conference Call August 7, 2019 4:30 PM ET Company Participants Clint Tomlinson – Investor Relations Christopher Missling – President and Chief Executive Officer Sandra Boenisch – Principal Financial Officer Conference Call Participants Yun Zhong – Janney Capital Edward Marks – H.C. Wainwright Clayton Berger – Dawson James Tom Bishop – BI Research Anna Vorobyeva – ROTH Capital Operator Welcome to the Anavex Life Sciences Fiscal 2019 Third Quarter Fina ...

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited interim condensed consolidated financial statements for the period ended June 30, 2019, including balance sheets, statements of operations, cash flows, and changes in stockholders' equity, along with accompanying notes, for a clinical-stage biopharmaceutical firm with no revenue to date [Interim Condensed Consolidated Balance Sheets](index=3&type=section&id=INTERIM%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2019, total assets decreased to **$22.0 million** from **$24.4 million** at September 30, 2018, primarily due to reduced cash and cash equivalents, while total liabilities slightly increased to **$4.3 million** and total stockholders' equity decreased from **$20.5 million** to **$17.6 million** Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Items | June 30, 2019 | September 30, 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $21,249,206 | $22,930,638 | | Total Assets | $21,968,271 | $24,376,136 | | Total Liabilities | $4,336,607 | $3,884,626 | | Total Stockholders' Equity | $17,631,664 | $20,491,510 | [Interim Condensed Consolidated Statements of Operations](index=5&type=section&id=INTERIM%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For the nine months ended June 30, 2019, the company reported a net loss of **$22.4 million**, nearly double the **$11.7 million** loss from the same period in 2018, driven by a significant rise in research and development expenses, widening the loss per share to **$0.47** from **$0.26** year-over-year Statement of Operations Summary (Unaudited) | Metric | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Nine Months Ended June 30, 2019 | Nine Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $5,758,446 | $2,997,634 | $17,549,442 | $8,936,969 | | Total operating expenses | ($7,147,175) | ($4,618,013) | ($22,760,729) | ($13,444,601) | | Net loss | ($7,074,261) | ($2,849,164) | ($22,415,568) | ($11,660,353) | | Loss per share (Basic and diluted) | ($0.14) | ($0.06) | ($0.47) | ($0.26) | [Interim Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=INTERIM%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the nine months ended June 30, 2019, net cash used in operating activities increased to **$16.0 million** from **$8.5 million** in the prior-year period due to higher clinical development costs, largely offset by **$14.3 million** in net cash provided by financing activities, resulting in a **$1.7 million** decrease in cash and cash equivalents Cash Flow Summary (Unaudited) | Cash Flow Item | Nine months ended June 30, 2019 | Nine months ended June 30, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | ($15,992,811) | ($8,529,234) | | Net cash provided by financing activities | $14,311,379 | $6,916,569 | | Decrease in cash and cash equivalents | ($1,681,432) | ($1,612,665) | | Cash and cash equivalents, end of period | $21,249,206 | $25,827,592 | [Notes to the Condensed Consolidated Interim Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) The notes provide detailed explanations of accounting policies and specific financial statement items, including the company's business focus on CNS diseases, its liquidity position, significant equity offering agreements for financing, and commitments related to stock-based compensation and litigation - The company is a clinical-stage biopharmaceutical company focused on developing therapeutics for Central Nervous System (CNS) diseases, with its lead compound ANAVEX®2-73 being developed for Alzheimer's, Parkinson's, and Rett syndrome[18](index=18&type=chunk) - The company has not generated any revenue and anticipates continued negative cash flows, however, management believes existing cash and financial commitments are sufficient to fund operations for more than two years[22](index=22&type=chunk)[23](index=23&type=chunk) - The company entered into a new **$50 million** purchase agreement with Lincoln Park in June 2019 and has a separate **$50 million** "at-the-market" offering agreement with Cantor Fitzgerald to secure future funding[39](index=39&type=chunk)[45](index=45&type=chunk) - In January 2019, the Board approved the 2019 Omnibus Incentive Plan, making **6.0 million** additional shares available for issuance as stock-based compensation[58](index=58&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS.) Management discusses the company's business, financial performance, and outlook, highlighting the progress of its clinical programs, particularly for its lead compound ANAVEX2-73, with a significant increase in R&D expenses noted as the primary driver for the increased net loss, and its liquidity strategy relying on equity financing agreements [Our Current Business and Pipeline](index=19&type=section&id=Our%20Current%20Business%20and%20Pipeline) Anavex is a clinical-stage biopharmaceutical company focused on CNS diseases, using its proprietary SIGMACEPTOR™ Discovery Platform, with its lead compound, ANAVEX2-73, in clinical development for Alzheimer's, Parkinson's, and Rett syndrome, and a pipeline including four other preclinical candidates - The company's core focus is on developing therapeutics for CNS diseases by applying precision medicine and analyzing genomic data to identify biomarkers[69](index=69&type=chunk) - The lead compound, ANAVEX2-73, is being developed for Alzheimer's disease, Parkinson's disease, and the rare disease Rett syndrome[70](index=70&type=chunk) - The company's pipeline includes ANAVEX2-73 and several preclinical compounds such as ANAVEX3-71, ANAVEX1-41, ANAVEX1066, and ANAVEX1037, targeting various neurodegenerative diseases, pain, and cancer[84](index=84&type=chunk)[109](index=109&type=chunk)[113](index=113&type=chunk) [Clinical Studies Overview](index=21&type=section&id=Clinical%20Studies%20Overview) The company is actively advancing its lead compound, ANAVEX2-73, through multiple clinical trials, including a Phase 2b/3 study for Alzheimer's disease initiated in October 2018, and Phase 2 trials for Rett syndrome (March and June 2019) and Parkinson's Disease Dementia (October 2018) - A Phase 2b/3 double-blind, placebo-controlled study of ANAVEX2-73 in approximately 450 Alzheimer's disease patients commenced in October 2018[78](index=78&type=chunk) - A Phase 2 clinical trial of ANAVEX2-73 for Rett syndrome commenced in the United States in March 2019, followed by a second Phase 2 study (AVATAR) in Australia in June 2019[80](index=80&type=chunk)[81](index=81&type=chunk) - A double-blind, randomized, placebo-controlled Phase 2 trial with ANAVEX2-73 in approximately 120 Parkinson's Disease Dementia (PDD) patients was initiated in October 2018[83](index=83&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Operating expenses for the nine months ended June 30, 2019, increased to **$22.8 million** from **$13.4 million** in the prior-year period, driven by an **$8.6 million** rise in R&D expenses to **$17.5 million** due to three new clinical studies, while other income declined to **$0.4 million** from **$1.8 million** due to a delay in Australian R&D incentive income Operating Expense Comparison | Expense Category | Nine Months Ended June 30, 2019 | Nine Months Ended June 30, 2018 | | :--- | :--- | :--- | | Research and development | $17.5 million | $8.9 million | | Total operating expenses | $22.8 million | $13.4 million | - The increase in R&D expenses was primarily due to the commencement of a Phase 2b/3 study for Alzheimer's, a Phase 2 study for Parkinson's Disease Dementia, and a Phase 2 program for Rett syndrome[140](index=140&type=chunk) - Other income for the nine-month period decreased to **$0.4 million** from **$1.8 million** year-over-year, mainly because the Australian research and development incentive income was received in the fourth quarter of fiscal 2019, compared to the third quarter in fiscal 2018[141](index=141&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2019, the company had **$21.2 million** in cash and cash equivalents and **$17.5 million** in working capital, with **$16.0 million** in cash used for operations primarily funded by **$14.3 million** from equity issuances, and future liquidity supported by a **$50 million** "at-the-market" offering facility and a new **$50 million** purchase agreement Working Capital | | June 30, 2019 | September 30, 2018 | | :--- | :--- | :--- | | Current Assets | $21,817,138 | $24,222,607 | | Current Liabilities | $4,336,607 | $3,884,626 | | Working Capital | $17,480,531 | $20,337,981 | - Cash used in operations increased to **$16.0 million** for the nine months ended June 30, 2019, compared to **$8.5 million** in the prior year period, due to increased clinical development activities[146](index=146&type=chunk)[147](index=147&type=chunk) - The company secured a new **$50 million** purchase agreement with Lincoln Park on June 7, 2019, to provide capital over a 36-month period, succeeding the fully utilized 2015 agreement[153](index=153&type=chunk)[156](index=156&type=chunk) [Quantitative and Qualitative Disclosures About Market Risks](index=32&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISKS.) This section is not applicable to the company for this reporting period - Not applicable[163](index=163&type=chunk) [Controls and Procedures](index=32&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES.) Based on an evaluation as of June 30, 2019, the company's management, including the principal executive and financial officers, concluded that its disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2019[164](index=164&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2019, that materially affected, or are reasonably likely to materially affect, internal controls[165](index=165&type=chunk) [PART II – OTHER INFORMATION](index=32&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=32&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS.) The company reports that it is not a party to any material pending legal proceedings, other than ordinary routine litigation incidental to its business - The company knows of no material pending legal proceedings to which it or its subsidiaries are a party[165](index=165&type=chunk) [Risk Factors](index=33&type=section&id=ITEM%201A.%20RISK%20FACTORS.) The company states that there have been no material changes to the significant risk factors affecting its business as described in its Annual Report on Form 10-K for the fiscal year ended September 30, 2018 - There have been no material changes in the significant risk factors from those disclosed in the Annual Report on Form 10-K for the fiscal year ended September 30, 2018[166](index=166&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECU RITIES%20AND%20USE%20OF%20PROCEEDS.) During the quarter, the company did not sell any equity securities that were not registered under the Securities Act of 1933 and not previously reported in a Form 8-K - No unregistered sales of equity securities occurred during the reporting period that were not previously reported[167](index=167&type=chunk) [Defaults Upon Senior Securities](index=33&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES.) The company reports no defaults upon senior securities - None[167](index=167&type=chunk) [Mine Safety Disclosures](index=33&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section is not applicable to the company - Not applicable[167](index=167&type=chunk) [Other Information](index=33&type=section&id=ITEM%205.%20OTHER%20INFORMATION.) The company reports no other information for this period - None[167](index=167&type=chunk) [Exhibits](index=34&type=section&id=ITEM%206.%20EXHIBITS.) This section lists the exhibits filed with the Form 10-Q, which include material contracts such as the Purchase Agreement with Lincoln Park Capital Fund, LLC, and certifications by the company's officers - Filed exhibits include the Purchase Agreement with Lincoln Park Capital Fund, LLC dated June 7, 2019, and certifications from the CEO and Principal Financial Officer[169](index=169&type=chunk) [Signatures](index=35&type=section&id=SIGNATURES)

Financial Data and Key Metrics - Cash used to fund operations in Q2 2019 was $4.3 million, with operating expenses at $8.1 million, up from $4.7 million in Q2 2018 [9] - R&D expenses for Q2 2019 were $6.1 million, compared to $3.2 million in Q2 2018, driven by clinical study advancements for ANAVEX2-73 [9] - Net loss for Q2 2019 was $8 million or $0.17 per share, compared to $4.8 million or $0.11 per share in Q2 2018 [10] - Cash resources as of March 31, 2019, were $19.5 million, sufficient to fund objectives for the next 18 months [10] Business Line Data and Key Metrics - Phase 2 ANAVEX2-73 Parkinson's disease dementia study achieved 70% of the total patient enrollment target [6] - Phase 2b/3 ANAVEX2-73 Alzheimer's disease study has enrolled over 20% of patients [6] - Phase 2 ANAVEX2-73 Rett Syndrome study in the U.S. has enrolled 40% of patients, with a Phase 2 AVATAR study in Australia approved and actively enrolling [7][8] Market Data and Key Metrics - The AVATAR study in Australia is supported by the Rett Syndrome Association of Australia, with the government providing a cashback payment of over 40% for every dollar spent [18] - The Australian dollar's favorable exchange rate provides cost advantages for conducting studies in Australia compared to the U.S. [18] Company Strategy and Industry Competition - The company is focused on executing current clinical studies for ANAVEX2-73, with a strategy to expand studies internationally if needed [16][18] - The sigma-1 receptor activation approach is highlighted as a unique strategy, differentiating from traditional amyloid beta-focused treatments in Alzheimer's disease [25][26] Management Commentary on Operating Environment and Future Outlook - Management is pleased with the pace of clinical study advancements and expects to provide further updates as progress continues [11] - The company believes its cash resources and government support will sustain operations and clinical trials for the next 18 months [10] Other Important Information - Non-cash charges for Q2 2019 totaled $1.9 million, compared to $1.2 million in Q2 2018 [10] - The AVATAR study in Australia is double-blind, randomized, and placebo-controlled, with safety and efficacy endpoints [8] Q&A Session Summary Question: Differences between U.S. and Australian Rett Syndrome studies - The U.S. study focuses on safety and PK with 15 patients, while the AVATAR study in Australia focuses on safety and efficacy with 30 patients [14] - The AVATAR study may not need to be repeated in the U.S. if results are positive, but international expansion is possible [16] Question: Cost and enrollment for the AVATAR study - The AVATAR study is expected to fully enroll in Australia, with potential for additional international sites to accelerate enrollment [18] - The Australian government provides a 40% cashback on study expenses, and the favorable exchange rate reduces costs [18] Question: Enrollment updates for ongoing trials - The company will publicly announce once complete enrollment is achieved for any ongoing trial [20] Question: Enrollment of sigma-1 receptor variant carriers - Both U.S. and AVATAR studies will enroll patients with genetic variances, with no need for balancing between arms [22][23] Question: Sigma-1 receptor approach in Alzheimer's disease - The sigma-1 receptor activation strategy addresses multiple pathological factors in Alzheimer's, beyond amyloid beta [25][26] Question: Cash usage discrepancy - The difference between net loss and cash used is attributed to accruals of accounts payable [29] Question: Age limits in Rett Syndrome trials - Both U.S. and AVATAR studies initially enroll patients aged 18 and older, with plans for separate studies in younger populations [30][32]

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited interim condensed consolidated financial statements, including the balance sheets, statements of operations, cash flows, and changes in stockholders' equity, along with detailed notes explaining the company's business, accounting policies, financing activities, commitments, and subsequent events [Interim Condensed Consolidated Balance Sheets](index=4&type=section&id=Interim%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheets show a decrease in total assets and stockholders' equity, and an increase in total liabilities from September 30, 2018, to March 31, 2019 | Metric | March 31, 2019 (Unaudited) | September 30, 2018 | | :-------------------------- | :------------------------- | :----------------- | | Cash and cash equivalents | $19,457,845 | $22,930,638 | | Total Current Assets | $20,549,780 | $24,323,740 | | Total Assets | $20,549,780 | $24,376,136 | | Accounts payable & accrued liabilities | $6,370,604 | $3,884,626 | | Total Liabilities | $6,370,604 | $3,884,626 | | Total Stockholders' Equity | $14,179,176 | $20,491,510 | [Interim Condensed Consolidated Statements of Operations](index=6&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Operations) The statements of operations indicate a significant increase in operating expenses, particularly research and development, leading to a higher net loss for both the three and six months ended March 31, 2019, compared to the prior year | Metric | Three months ended March 31, 2019 | Three months ended March 31, 2018 | Six months ended March 31, 2019 | Six months ended March 31, 2018 | | :-------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | General and administrative | $2,061,251 | $1,489,450 | $3,822,559 | $2,887,253 | | Research and development | $6,078,786 | $3,245,023 | $11,790,996 | $5,939,335 | | Total operating expenses | $(8,140,037) | $(4,734,473) | $(15,613,555) | $(8,826,588) | | Total other income, net | $180,191 | $10,310 | $329,013 | $52,665 | | Net loss | $(8,007,894) | $(4,752,024) | $(15,341,307) | $(8,811,189) | | Basic and diluted loss per share | $(0.17) | $(0.11) | $(0.33) | $(0.20) | [Interim Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flows show an increased use of cash in operating activities for the six months ended March 31, 2019, primarily due to higher clinical development costs, partially offset by cash provided from financing activities | Metric | Six months ended March 31, 2019 | Six months ended March 31, 2018 | | :---------------------------------------- | :------------------------------ | :------------------------------ | | Net loss | $(15,341,307) | $(8,811,189) | | Stock-based compensation | $3,960,139 | $2,347,681 | | Net cash used in operating activities | $(8,491,627) | $(6,441,100) | | Net cash provided by financing activities | $5,018,834 | $4,657,427 | | Decrease in cash and cash equivalents | $(3,472,793) | $(1,783,673) | | Cash and cash equivalents, end of period | $19,457,845 | $25,656,584 | [Interim Condensed Consolidated Statement of Changes in Stockholders' Equity](index=8&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity decreased from October 1, 2018, to March 31, 2019, primarily due to the net loss, despite additional paid-in capital from share issuances and stock-based compensation | Metric | March 31, 2019 | September 30, 2018 | | :----------------------------------- | :------------- | :----------------- | | Common Shares Outstanding | 48,173,241 | 45,933,472 | | Additional Paid-in Capital | $138,696,975 | $129,377,542 | | Accumulated Deficit | $(124,273,274) | $(108,931,967) | | Total Stockholders' Equity | $14,179,176 | $20,491,510 | - For the six months ended March 31, 2019, shares issued under purchase agreement contributed **$5,068,834** to additional paid-in capital, and share-based compensation added **$3,960,139**[13](index=13&type=chunk) [Notes to the Condensed Consolidated Interim Financial Statements](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) These notes provide essential context and details for the financial statements, covering the company's business, accounting policies, financial commitments, and significant events post-reporting period [Note 1 Business Description and Basis of Presentation](index=10&type=section&id=Note%201%20Business%20Description%20and%20Basis%20of%20Presentation) Anavex Life Sciences Corp. is a clinical-stage biopharmaceutical company focused on developing precision medicine for CNS diseases, with ANAVEX®2-73 as its lead compound. The company expects continued negative cash flows and will require additional capital to fund future operations - Anavex Life Sciences Corp. is a clinical stage biopharmaceutical company developing differentiated therapeutics for CNS diseases using precision medicine, with ANAVEX®2-73 as its lead compound for Alzheimer's, Parkinson's, and Rett syndrome[15](index=15&type=chunk) - The Company expects to experience negative cash flows for the foreseeable future and will need to raise additional capital to fund later stage clinical development programs[19](index=19&type=chunk)[22](index=22&type=chunk) - The company believes existing cash and financial commitments will meet cash commitments for at least the next eighteen months[21](index=21&type=chunk) [Note 2 Recent Accounting Pronouncements](index=13&type=section&id=Note%202%20Recent%20Accounting%20Pronouncements) The company adopted new revenue recognition and stock compensation standards with no material impact. It is currently evaluating the impact of new lease accounting and nonemployee share-based payment standards, effective October 1, 2019 - Adoption of ASU 2014-09 (Revenue Recognition) and ASU 2017-09 (Stock Compensation Scope) on October 1, 2018, did not have a material impact[30](index=30&type=chunk)[31](index=31&type=chunk) - The Company is evaluating the impact of ASU 2016-02 (Leases) and ASU 2018-07 (Nonemployee Share-based Payments), both effective October 1, 2019[32](index=32&type=chunk)[33](index=33&type=chunk) [Note 3 Other Income](index=14&type=section&id=Note%203%20Other%20Income) The company recognized grant income from a clinical study grant for Rett syndrome, which is amortized as related research and development expenditures are incurred | Grant Income | Three months ended March 31, 2019 | Six months ended March 31, 2019 | | :----------- | :-------------------------------- | :------------------------------ | | Recognized | $74,527 | $149,055 | [Note 4 Equity Offering Agreements](index=14&type=section&id=Note%204%20Equity%20Offering%20Agreements) The company has two key equity offering agreements: a Controlled Equity Offering Sales Agreement with Cantor Fitzgerald for up to $50 million (no shares sold yet) and a Purchase Agreement with Lincoln Park Capital Fund for up to $50 million, under which shares have been issued - Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co. allows for the sale of up to **$50,000,000** in common stock; no shares have been sold as of March 31, 2019[38](index=38&type=chunk)[40](index=40&type=chunk) - Purchase Agreement with Lincoln Park Capital Fund, LLC for up to **$50,000,000**, with **$7,836,072** remaining available as of March 31, 2019[42](index=42&type=chunk)[45](index=45&type=chunk) - During the three months ended March 31, 2019, the Company issued **2,239,223 shares** to Lincoln Park for an aggregate purchase price of **$5,361,534**[45](index=45&type=chunk) [Note 5 Commitments](index=16&type=section&id=Note%205%20Commitments) The company is subject to ordinary course litigation, has outstanding share purchase warrants, and operates a stock-based compensation plan, which resulted in significant non-cash expenses - No material adverse effect on consolidated financial statements is expected from pending claims and legal proceedings[48](index=48&type=chunk) | Share Purchase Warrants | Number of Shares | | :---------------------- | :--------------- | | Balance, March 31, 2019 | 370,000 | | Stock-based Compensation Expense | Three months ended March 31, 2019 | Six months ended March 31, 2019 | | :------------------------------- | :-------------------------------- | :------------------------------ | | General and administrative | $950,999 | $2,006,587 | | Research and development | $942,153 | $1,953,552 | | Total share based compensation | $1,893,152 | $3,960,139 | [Note 6 Subsequent Events](index=18&type=section&id=Note%206%20Subsequent%20Events) Subsequent to March 31, 2019, the company authorized preferred stock, approved a new omnibus incentive plan making 6 million additional shares available, and extended the CEO's employment agreement with revised compensation - Authorization of **10,000,000 shares** of preferred stock with a par value of **$0.001 per share**[59](index=59&type=chunk) - Approval of the 2019 Omnibus Incentive Plan, making **6,000,000 additional shares** of Common Stock available for issuance[60](index=60&type=chunk) - CEO's employment agreement extended through July 5, 2022, with an annual base salary of **$550,000**, a **20% target bonus**, and **750,000 stock options**[62](index=62&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=20&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial condition, results of operations, and future outlook, including details on its business, pipeline, target indications, intellectual property, and liquidity [Forward-Looking Statements](index=20&type=section&id=Forward-Looking%20Statements) This section contains cautionary statements regarding forward-looking information, outlining various risks and uncertainties that could cause actual results to differ materially from projections, particularly concerning clinical trials, regulatory approvals, and financial performance - Forward-looking statements are based on current expectations and projections, subject to risks including ability to generate revenue, conduct clinical trials, raise capital, demonstrate product efficacy, obtain regulatory approvals, and protect intellectual property[64](index=64&type=chunk)[65](index=65&type=chunk) [Our Current Business](index=21&type=section&id=Our%20Current%20Business) Anavex is a clinical-stage biopharmaceutical company focused on precision medicine for CNS diseases, with ANAVEX®2-73 as its lead compound. The company's approach involves activating the sigma-1 receptor (S1R) to restore cellular homeostasis - Anavex is a clinical stage biopharmaceutical company developing differentiated therapeutics for CNS diseases using precision medicine[68](index=68&type=chunk) - The lead compound, ANAVEX®2-73, is being developed for Alzheimer's disease, Parkinson's disease, and rare diseases like Rett syndrome[69](index=69&type=chunk) - The company's approach involves activating the sigma-1 receptor (S1R) to restore cellular balance (homeostasis) in brain cells, which is believed to halt or delay neurodevelopmental and neurodegenerative disease progression[71](index=71&type=chunk)[72](index=72&type=chunk) [Our Pipeline](index=24&type=section&id=Our%20Pipeline) Anavex's pipeline includes ANAVEX®2-73 in multiple clinical studies for Alzheimer's, Parkinson's, and Rett syndrome, along with other preclinical compounds (ANAVEX3-71, ANAVEX1-41, ANAVEX1066, ANAVEX1037) targeting various neurodegenerative, neurodevelopmental, pain, and cancer indications - ANAVEX®2-73 is in three clinical studies: Phase 2b/3 for Alzheimer's disease (commenced Oct 2018), Phase 2 for Parkinson's Disease Dementia (commenced Oct 2018), and Phase 2 for Rett syndrome (commenced March 2019)[77](index=77&type=chunk)[78](index=78&type=chunk)[81](index=81&type=chunk)[87](index=87&type=chunk)[89](index=89&type=chunk)[98](index=98&type=chunk) - ANAVEX®2-73 received Orphan Drug Designation for Rett syndrome (May 2016) and infantile spasms (June 2016)[88](index=88&type=chunk) - ANAVEX3-71 is a preclinical candidate with a novel mechanism for neuroprotection and cognition, granted Orphan Drug Designation for Frontotemporal dementia (April 2016)[105](index=105&type=chunk)[106](index=106&type=chunk) - Other preclinical compounds include ANAVEX1-41 (sigma-1 agonist for neuroprotection), ANAVEX1066 (mixed sigma-1/sigma-2 ligand for neuropathic and visceral pain), and ANAVEX1037 (sigma-1/sigma-2 ligand for prostate and pancreatic cancer)[108](index=108&type=chunk)[109](index=109&type=chunk)[111](index=111&type=chunk) [Our Target Indications](index=28&type=section&id=Our%20Target%20Indications) The company targets a range of Central Nervous System diseases, including Alzheimer's, Parkinson's, Rett syndrome, Depression, Epilepsy, and Neuropathic Pain, as well as various cancers such as Malignant Melanoma, Prostate Cancer, and Pancreatic Cancer, all representing significant unmet medical needs and large market opportunities - Target CNS diseases include Alzheimer's disease (**5.5 million Americans**, urgent unmet need), Parkinson's disease (**10+ million worldwide**, market projected to **$3.2 billion by 2021**), Rett syndrome (rare, severe neurodevelopmental disorder affecting **1 in 10,000-15,000 females**), Depression, Epilepsy (**3.4 million Americans**, market projected to **$4.5 billion by 2019**), and Neuropathic Pain[113](index=113&type=chunk)[114](index=114&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) - Target cancer indications include Malignant Melanoma (**75% of skin cancer deaths**, market projected to **$4.4 billion by 2022**), Prostate Cancer (market projected to **$13.5 billion in 2024**), and Pancreatic Cancer (market projected to **$2.9 billion by 2021**)[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) [Patents, Trademarks and Intellectual Property](index=29&type=section&id=Patents,%20Trademarks%20and%20Intellectual%20Property) Anavex maintains a portfolio of U.S. and international patents and applications for its drug candidates, including ANAVEX®2-73 and ANAVEX3-71, and employs confidentiality agreements to protect its intellectual property - Anavex holds ownership or exclusive rights to **four U.S. patents**, **nine U.S. patent applications**, and various PCT or ex-U.S. patent applications[122](index=122&type=chunk) - A U.S. patent for ANAVEX®2-73 (composition with anticholinesterase inhibitors) is expected to expire in **June 2034**[123](index=123&type=chunk) - Two U.S. patents for ANAVEX3-71 (compound and methods of treating diseases) are expected to expire in **April 2030** and **January 2030**, respectively[125](index=125&type=chunk) [Financial Highlights](index=30&type=section&id=Financial%20Highlights) For the second quarter of fiscal 2019, operating expenses increased significantly to $8.1 million, primarily due to increased research and development activities, resulting in a net loss of $8.0 million | Metric | Q2 FY2019 | Q2 FY2018 | | :--------------- | :----------- | :----------- | | Operating expenses | $8.1 million | $4.7 million | | Net loss | $8.0 million | $4.8 million | | Loss per share | $0.17 | $0.11 | - The increase in operating expenses is mainly due to a **$2.8 million increase** in research and development expenses, driven by the commencement of three clinical studies for ANAVEX®2-73[128](index=128&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) The company reported no revenue. Total operating expenses for the six months ended March 31, 2019, increased to $15.6 million, largely due to a $5.9 million rise in R&D expenses for new clinical trials. Other income also increased due to grant funding - No revenues have been earned since inception; none are anticipated until alliances are established for product development or marketing[130](index=130&type=chunk) | Operating Expenses | Q2 FY2019 | Q2 FY2018 | H1 FY2019 | H1 FY2018 | | :----------------- | :----------- | :----------- | :----------- | :----------- | | Total | $8.1 million | $4.7 million | $15.6 million | $8.8 million | | R&D | $6.1 million | $3.2 million | $11.8 million | $5.9 million | - R&D expenses increased primarily due to the commencement of three ANAVEX®2-73 clinical studies: Phase 2b/3 Alzheimer's, Phase 2 Parkinson's Disease Dementia, and Phase 2 Rett syndrome[133](index=133&type=chunk) | Other Income | Q2 FY2019 | Q2 FY2018 | H1 FY2019 | H1 FY2018 | | :----------- | :----------- | :----------- | :----------- | :----------- | | Net Amount | $0.18 million | $0.0 million | $0.3 million | $0.05 million | | Grant Income | N/A | N/A | $149,055 | N/A | [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) Working capital and cash and cash equivalents decreased due to increased cash used in operating activities for clinical development. The company relies on existing cash and future equity/debt financing, including existing agreements with Cantor Fitzgerald and Lincoln Park, to fund operations | Metric | March 31, 2019 | September 30, 2018 | | :-------------------------- | :------------- | :----------------- | | Working Capital | $14,179,176 | $20,439,114 | | Cash and cash equivalents | $19.5 million | $22.9 million | | Cash Flows (Six months ended) | 2019 | 2018 | | :---------------------------- | :------------ | :------------ | | Net cash used in operating activities | $(8,491,627) | $(6,441,100) | | Net cash from financing activities | $5,018,834 | $4,657,427 | | Decrease in cash and cash equivalents | $(3,472,793) | $(1,783,673) | - The company has a Controlled Equity Offering Sales Agreement for up to **$50,000,000** and a Purchase Agreement with Lincoln Park Capital Fund, LLC for up to **$50,000,000**, with **$7,836,072** remaining under the latter[140](index=140&type=chunk)[143](index=143&type=chunk)[145](index=145&type=chunk) - Additional financing will be required and there is no assurance it will be available on commercially reasonable terms[145](index=145&type=chunk) [Off-Balance Sheet Arrangements](index=33&type=section&id=Off-Balance%20Sheet%20Arrangements) The company has no material off-balance sheet arrangements that would significantly affect its financial condition or results of operations - The company has no material off-balance sheet arrangements[148](index=148&type=chunk) [Critical Accounting Policies](index=33&type=section&id=CRITICALACCOUNTING%20POLICIES) There have been no significant changes to the critical accounting policies and estimates previously described in the company's Annual Report on Form 10-K - No significant changes in critical accounting policies and estimates from the Annual Report on Form 10-K for the year ended September 30, 2018[150](index=150&type=chunk) [Recent Accounting Pronouncements](index=33&type=section&id=RECENT%20ACCOUNTING%20PRONOUNCEMENTS) This section refers to Note 2 of the financial statements for details on recently adopted and not yet adopted accounting pronouncements - Refer to Note 2 'Recent Accounting Pronouncements' for details[151](index=151&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS](index=33&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISKS) This item is not applicable to the company for the reporting period - This item is not applicable[151](index=151&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=33&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2019, and reported no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were effective as of March 31, 2019[152](index=152&type=chunk) - No material changes in internal control over financial reporting were identified during the quarter ended March 31, 2019[153](index=153&type=chunk) [PART II – OTHER INFORMATION](index=34&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [ITEM 1. LEGAL PROCEEDINGS](index=34&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not aware of any material pending legal proceedings beyond ordinary routine litigation incidental to its business, nor any adverse proceedings involving directors, officers, or major stockholders - No material pending legal proceedings, other than ordinary routine litigation incidental to the business[155](index=155&type=chunk) [ITEM 1A. RISK FACTORS](index=34&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section refers readers to the risk factors detailed in the company's Annual Report on Form 10-K, stating that no material changes have occurred since that filing - Refer to 'Item 1A – Risk Factors' in the Annual Report on Form 10-K for the fiscal year ended September 30, 2018; no material changes have occurred[156](index=156&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=34&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company did not engage in any unregistered sales of equity securities during the reporting period that were not previously disclosed - No unregistered sales of equity securities not previously reported in a Current Report on Form 8-K during the period[157](index=157&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=34&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The company reported no defaults upon senior securities - None[157](index=157&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=34&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Not applicable[157](index=157&type=chunk) [ITEM 5. OTHER INFORMATION](index=34&type=section&id=ITEM%205.%20OTHER%20INFORMATION) The company entered into a Second Amendment to the Employment Agreement with its CEO, extending the term through July 5, 2022, and adjusting compensation to an annual base salary of $550,000, a 20% target bonus, and 750,000 stock options - CEO's employment agreement extended through July 5, 2022[158](index=158&type=chunk) - CEO's compensation includes an annual base salary of **$550,000**, an annual cash target bonus of **20% of base salary**, and **750,000 stock options** vesting over three years[158](index=158&type=chunk) [ITEM 6. EXHIBITS](index=35&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, certifications, and material contracts such as the CEO's amended employment agreement - Exhibits include Articles of Incorporation, Rule 13a-14(a)/15(d)-14(a) Certifications, Section 1350 Certifications, and the Second Amendment to the CEO's Employment Agreement[160](index=160&type=chunk) [SIGNATURES](index=36&type=section&id=SIGNATURES) The report is duly signed by the Chief Executive Officer and the Principal Financial Officer, certifying its contents - The report was signed by Christopher Missling, PhD (Chief Executive Officer) and Sandra Boenisch, CPA, CGA (Principal Financial Officer) on May 8, 2019[162](index=162&type=chunk)

Anavex Life Sciences Corp. (NASDAQ:AVXL) Q1 2019 Earnings Conference Call February 7, 2019 4:30 PM ET Company Participants Scott Gordon - IR Christopher Missling - President & CEO Sandra Boenisch - Principal Financial Officer Conference Call Participants Jotin Marango - Roth Capital Ram Selvaraju - H.C. Wainwright Operator Good afternoon my name is Michelle, and I will be your conference call operator for today's call. Welcome to the Anavex Life Sciences Fiscal 2019 First Quarter Financial Results Conferenc ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: December 31, 2018 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____to _____ Commission File Number: 001-37606 ANAVEX LIFE SCIENCES CORP. (Exact name of registrant as specified in its charter) Nevada 98-0608404 (State or ...