Anavex Life Sciences (AVXL) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements The company reported a net loss of $23.3 million for the six months ended March 31, 2025, with cash and cash equivalents at $115.8 million Condensed Consolidated Interim Balance Sheets The balance sheet shows a decrease in cash and total assets, while total liabilities increased as of March 31, 2025 Balance Sheet Summary (in thousands) | Balance Sheet Items | March 31, 2025 (Unaudited) | September 30, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $115,771 | $132,187 | | Total Assets | $117,139 | $135,567 | | Liabilities & Equity | | | | Total Liabilities | $17,381 | $15,304 | | Total Stockholders' Equity | $99,758 | $120,263 | | Total Liabilities and Stockholders' Equity | $117,139 | $135,567 | - Cash and cash equivalents decreased by $16.4 million from September 30, 2024, to March 31, 2025, primarily due to funding of operations[15] - Total liabilities increased by approximately $2.1 million, mainly driven by a rise in accrued liabilities from $4.8 million to $9.6 million[15] Condensed Consolidated Interim Statements of Operations and Comprehensive Loss The statement of operations details increased research and development expenses, leading to a wider net loss for the period Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $9,892 | $9,729 | $20,338 | $18,413 | | General and administrative | $2,621 | $2,895 | $5,767 | $5,590 | | Operating loss | ($12,513) | ($12,624) | ($26,105) | ($24,003) | | Net loss | ($11,196) | ($10,546) | ($23,307) | ($19,168) | | Net Loss per share (Basic & Diluted) | ($0.13) | ($0.13) | ($0.27) | ($0.23) | - Research and development expenses increased to $20.3 million for the six months ended March 31, 2025, up from $18.4 million in the prior year period, reflecting increased clinical trial activities[16] Condensed Consolidated Interim Statements of Cash Flows Cash flow analysis reveals a significant decrease in cash from financing activities, contributing to an overall cash reduction Cash Flow Summary (in thousands) | Cash Flow Activity | Six months ended March 31, 2025 | Six months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($17,976) | ($18,974) | | Net cash provided by financing activities | $1,560 | $7,336 | | Decrease in cash and cash equivalents | ($16,416) | ($11,638) | | Cash and cash equivalents, end of period | $115,771 | $139,386 | - Cash from financing activities significantly decreased to $1.6 million in the first six months of fiscal 2025, compared to $7.3 million in the same period of 2024. The 2025 proceeds were from stock option exercises, whereas 2024 included $7.2 million from the issuance of common shares[18] Notes to the Condensed Consolidated Interim Financial Statements Key notes provide context on the company's biopharmaceutical focus, liquidity, and ongoing legal proceedings - The company is a clinical-stage biopharmaceutical firm focused on developing therapeutics for CNS diseases like Alzheimer's, Parkinson's, and Rett syndrome using a precision medicine approach[21][22] - Management believes current working capital of $99.8 million is sufficient to meet requirements for more than 12 months, though future financing may be needed for ongoing R&D activities[28] - The company is subject to several shareholder class action and derivative lawsuits alleging violations of the Securities and Exchange Act of 1934 related to disclosures for ANAVEX2-73 clinical trials in Rett syndrome. The company believes the lawsuits are without merit and has not recorded any loss contingencies[62][64][65] - As of March 31, 2025, there was an unused amount of $110.8 million under the 2023 Purchase Agreement with Lincoln Park Capital, but a new registration statement is required to access these funds[53] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MD&A details the company's clinical-stage focus on CNS diseases, increased operating expenses, and a widened net loss, with sufficient capital for the next 12 months Clinical Program Overview This section outlines the progress of key clinical programs, including MAA submission for ANAVEX2-73 and trials for Rett syndrome and schizophrenia - ANAVEX2-73 (blarcamesine): The company submitted a Marketing Authorisation Application (MAA) to the European Medicines Agency (EMA) in November 2024 for the treatment of Alzheimer's disease, which was accepted for scientific review in December 2024[101] - Rett Syndrome Program: The EXCELLENCE Phase 2/3 trial in pediatric patients was completed, showing improvement on the key co-primary endpoint RSBQ but not meeting the other co-primary endpoint, CGI-I. The open-label extension was completed in June 2024 with a high enrollment rate[115][116][119] - ANAVEX3-71: A Phase 2 trial in schizophrenia (ANAVEX3-71-SZ-001) commenced in March 2024. Enrollment for Part B was completed in May 2025, with top-line data expected in the second half of 2025[136][138] - Parkinson's Disease Dementia: A Phase 2 proof-of-concept trial for ANAVEX2-73 was completed, demonstrating safety and statistically significant improvements in cognitive measures. The company plans further trials after regulatory consultation[104][105][108] Financial Overview The financial overview highlights increased R&D expenses, a widened net loss, and a decrease in working capital Comparison of Operating Expenses (in thousands) | Expense Category | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research & Development | $9,900 | $9,700 | $20,300 | $18,400 | | General & Administrative | $2,600 | $2,900 | $5,800 | $5,600 | | Total Operating Expenses | $12,500 | $12,600 | $26,100 | $24,000 | - The increase in R&D expenses for the six-month period was primarily due to a $3.7 million increase in costs for the ANAVEX3-71 schizophrenia trial and a $1.2 million increase for ANAVEX2-73 manufacturing activities[173] Net Loss Summary | Period | Net Loss (in millions) | Loss Per Share | | :--- | :--- | :--- | | Three Months Ended Mar 31, 2025 | $11.2 | $0.13 | | Three Months Ended Mar 31, 2024 | $10.5 | $0.13 | | Six Months Ended Mar 31, 2025 | $23.3 | $0.27 | | Six Months Ended Mar 31, 2024 | $19.2 | $0.23 | - As of March 31, 2025, the company had working capital of $99.8 million, a decrease of $20.5 million from September 30, 2024, mainly due to cash used in operations[178] Quantitative and Qualitative Disclosures About Market Risks This section is not required for smaller reporting companies, and therefore no information is provided - Disclosure is not required as the company qualifies as a smaller reporting company[195] Controls and Procedures Management, including the principal executive officer and principal financial officer, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025. There were no material changes to the company's internal control over financial reporting during the quarter - Based on an evaluation as of the end of the reporting period, the company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective[197] - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, these controls[198] PART II – OTHER INFORMATION Legal Proceedings The company is subject to a shareholder class action lawsuit and two derivative lawsuits. These legal actions allege violations of the Securities Exchange Act of 1934 and breach of fiduciary duty, primarily related to disclosures about clinical trials for ANAVEX2-73 in Rett syndrome. The company has filed motions to dismiss and believes the claims are without merit - A shareholder class action complaint was filed on March 13, 2024, in the Southern District of New York, alleging violations of the Securities and Exchange Act related to disclosures for ANAVEX2-73 Rett syndrome clinical trials[200] - Two derivative lawsuits were filed on May 13, 2024, and February 14, 2025, against the company, an officer, and board members, based on similar allegations as the class action. These proceedings have been stayed pending a decision on the motion to dismiss in the class action lawsuit[202][203] Risk Factors The company highlights new and updated risks related to its business. Key risks include the lengthy, complex, and unpredictable nature of the marketing approval process with regulatory bodies like the EMA and FDA. A failure to obtain approval in one jurisdiction could negatively impact approvals elsewhere. Additionally, changes in U.S. and international trade policies, such as tariffs, could adversely affect business operations and costs - The marketing approval process for pharmaceutical products is highly regulated and unpredictable. A finding that the Phase 2b/3 trial for ANAVEX2-73 is insufficient could lead to the withdrawal of the MAA submitted to the EMA[205] - Obtaining regulatory approval in one jurisdiction does not guarantee approval in others, and failure in one may negatively affect processes elsewhere, potentially reducing the total market potential[207][208] - Changes in U.S. and international trade policies, such as tariffs on pharmaceutical products and raw materials, could adversely impact the business, as demonstrated by increased costs already faced on imports from Canada[209] Unregistered Sales of Equity Securities and Use of Proceeds During the period covered by the report, the company did not sell any equity securities that were not registered under the Securities Act of 1933 and not previously reported on a Form 8-K - No unregistered sales of equity securities were made during the quarter that were not previously reported[210] Other Information No directors or Section 16 officers of the company reported the adoption, modification, or termination of a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the three-month period ended March 31, 2025 - No insider trading plans (Rule 10b5-1 or non-Rule 10b5-1) were adopted, modified, or terminated by directors or Section 16 officers during the quarter[213]