What changed in this filing

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Item 1. Financial Statements

2020-06-09 compared with 2020-03-09 · 220 added, 109 removed, 389 unchanged (46% of the section changed)

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Operating lease right-of-use asset

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES AND EQUITY

Current liabilities:

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

For the Six Months Ended

Operating costs and expenses:

Inventor royalties, contingent legal fees, litigation and licensing

expenses related to patent assertion

Amortization of patents

Research and development expenses (including non-cash share-based

compensation expenses of $855,655 and $2,228,845, respectively)

General and administrative expenses (including non-cash share-based

compensation expenses of $1,275,765 and $1,842,769, respectively)

Impairment in carrying amount of patent asset (Note 1)

Total operating costs and expenses

Loss from operations

Interest income

Loss before income taxes

Provision for income taxes

Net loss attributable to noncontrolling interest

Net loss attributable to common shareholders

Net loss per common share attributable to common shareholders:

Basic and diluted

Weighted average common shares outstanding:

Basic and diluted

The accompanying notes are an integral part of these condensed consolidated financial statements.

ANIXA BIOSCIENCES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

For the Three Months Ended

Operating costs and expenses:

Inventor royalties, contingent legal fees, litigation and licensing

expenses related to patent assertion

Amortization of patents

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compensation expenses of $651,954 and $666,384 respectively)

Impairment in carrying amount of patent asset

Total operating costs and expenses

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CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY

FOR THE THREE MONTHS ENDED JANUARY 31, 2020 (UNAUDITED)

FOR THE SIX MONTHS ENDED APRIL 30, 2020 (UNAUDITED )

Shareholders

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Common stock issued upon exercise of stock

Common stock issued pursuant to employee

stock purchase plan

Common stock issued in at-the-market offering,

net of offering expenses of $158,296

Balance, April 30, 2020

(187,049,899)

The accompanying notes are an integral part of these condensed consolidated financial statements.

ANIXA BIOSCIENCES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY

FOR THE THREE MONTHS ENDED APRIL 30, 2020 (UNAUDITED )

Shareholders

Balance, January 31, 2020

(184,409,806)

Stock option compensation to employees and

Stock options and warrants issued to consultants

Common stock issued upon exercise of stock

Common stock issued pursuant to employee

stock purchase plan

Common stock issued in at-the-market offering,

net of offering expenses of $57,324

Balance, April 30, 2020

(187,049,899)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY

FOR THE THREE MONTHS ENDED JANUARY 31, 2019 (UNAUDITED)

FOR THE SIX MONTHS ENDED APRIL 30, 2019 (UNAUDITED )

Shareholders

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Common stock issued upon exercise of stock

Restricted stock award compensation to employee

pursuant to stock incentive plan

Restricted stock award compensation to

employee pursuant to stock incentive plan

Common stock issued pursuant to employee

stock purchase plan

Common stock issued in at-the-market offering,

net of offering expenses of $152,911

Balance, April 30, 2019

(177,589,742)

The accompanying notes are an integral part of these condensed consolidated financial statements.

ANIXA BIOSCIENCES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY

FOR THE THREE MONTHS ENDED APRIL 30, 2019 (UNAUDITED )

Shareholders

Balance, January 31, 2019

(175,052,050)

Stock option compensation to employees and

Stock options and warrants issued to consultants

Common stock issued upon exercise of stock

Restricted stock award compensation to

employee pursuant to stock incentive plan

Common stock issued pursuant to employee

stock purchase plan

Common stock issued in at-the-market offering,

net of offering expenses of $85,750

Balance, April 30, 2019

(177,589,742)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the three months ended

For the six months ended

Cash flows from operating activities:

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Depreciation of property and equipment

Amortization of operating lease right-to-use asset, net of lease payments

Amortization of operating lease right-of-use asset, net of lease payments

Amortization of patents

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Purchase of property and equipment

Net cash (used in) provided by investing activities

Net cash used in investing activities

Cash flows from financing activities:

Net proceeds from sale of common stock in at-the-market offering

Proceeds from sale of common stock pursuant to employee stock purchase

Proceeds from exercise of stock options

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Supplemental disclosure of non-cash investing and financing activities:

Operating lease right-to-use asset

Operating lease right-of-use asset

Operating lease liability

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and its consolidated subsidiaries.

Our primary operations involve research and development of cancer therapeutics and diagnostics.

Our cancer therapeutics programs consist of development of a vaccine against triple negative breast cancer (TNBC) and development of chimeric endocrine receptor T-cell (CER-T) technology, a novel form of CAR-T technology, initially focused on treating ovarian cancer.

Our primary operations involve developing a number of programs addressing cancer and infectious disease.

Our therapeutics programs consist of development of a vaccine against triple negative breast cancer (TNBC), development of chimeric endocrine receptor T-cell technology, a novel form of CAR-T technology, initially focused on treating ovarian cancer, and discovery and ultimately development of anti-viral drug candidates for the treatment of COVID-19 focused on inhibiting certain viral protein function.

Our cancer diagnostics program consists of development of the artificial intelligence (AI) driven Cchek liquid biopsy platform for early cancer detection.

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Studies have shown that vaccinating against this protein prevents breast cancer in mice.

We are working with researchers at Cleveland Clinic to advance this vaccine toward human clinical testing, and we are in the process of testing the clinical grade materials and upon completion we will be prepared to file an Investigational New Drug (IND) application with the U.S.

We are working with researchers at Cleveland Clinic to advance this vaccine toward human clinical testing, and we are in the process of manufacturing the vaccine and upon completion we will be prepared to file an Investigational New Drug (IND) application with the U.S.

Food and Drug Administration (FDA).

We anticipate filing the IND mid-year of 2020.

While we anticipate filing the IND during the third calendar quarter of 2020, we may experience delays in the vaccine manufacturing and characterization process due to the global coronavirus pandemic.

We do not currently anticipate any potential delays to significantly alter our expected timeline.

The IND application, after review and approval by the FDA, will enable us to begin testing our vaccine in human subjects.

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(Certainty), is developing immuno-therapy drugs against cancer.

Certainty holds an exclusive worldwide, royalty-bearing license to use certain intellectual property owned or controlled by The Wistar Institute (Wistar) relating to Wistars CER-T technology.

Certainty holds an exclusive worldwide, royalty-bearing license to use certain intellectual property owned or controlled by The Wistar Institute (Wistar) relating to Wistars CAR-T technology.

We have initially focused on the development of a treatment for ovarian cancer, but we may also pursue applications of the technology for the development of treatments for additional solid tumors.

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Lee Moffitt Cancer Center and Research Institute, Inc.

(Moffitt), is advancing toward human clinical testing its CER-T technology for treating ovarian cancer.

(Moffitt), is advancing toward human clinical testing its CAR-T technology for treating ovarian cancer.

Clinical grade materials are currently being manufactured and upon completion will undergo extensive testing.

Once the materials have been successfully tested, we will be prepared to submit an IND application with the FDA.

We anticipate filing the IND by the end of 2020.

While we anticipate filing the IND by the end of 2020, we may experience delays in completing the manufacturing and testing of clinical materials due to the global coronavirus pandemic.

We do not currently anticipate any potential delays to significantly alter our expected timeline.

The IND application, after review and approval by the FDA, will enable us to begin testing our therapy in ovarian cancer patients.

In April 2020, in collaboration with OntoChem GmbH (OntoChem), we have commenced a project to discover and ultimately develop anti-viral drug candidates for COVID-19.

Through this collaboration, we are utilizing advanced computational methods, machine learning, and molecular modeling techniques to perform in silico screening of over 1.2 billion compounds in chemical libraries (including publicly available compounds and OntoChems proprietary libraries) to evaluate if any of these compounds could disrupt one of two key enzymes of SARS-CoV-2, the virus that causes the disease COVID-19.

While the screening process is ongoing and we anticipate discovering several drug candidates, we have identified a lead molecule as well as three similar analog compounds.

Our in silico molecular modeling indicates that any of these four compounds might disrupt the interaction of the virus endoribonuclease with a host human protein that is necessary for the virus to replicate upon infection.

Disrupting this protein-protein interaction is expected to dramatically reduce or eliminate the virus ability to cause disease.

The biological testing of these compounds will initially determine how well they bind to the endoribonuclease, and then how well this translates into reducing viral replication in human host cells.

We anticipate completing the in vitro biological assays within the next two to three months.

If the biological activity of any of these compounds is verified, they will be tested in animal studies to further evaluate their candidacy as COVID-19 therapeutics.

Our subsidiary, Anixa Diagnostics Corporation (Anixa Diagnostics), is developing Cchek, an AI driven platform of non-invasive blood tests for the early detection of cancer which is based on the bodys immune response to the presence of a malignancy.

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In February 2019 we formed a strategic alliance with ResearchDx, a CLIA certified, CAP Accredited laboratory, to prepare the Cchek Prostate Cancer Confirmation (Cchek PCC) test for launch as a laboratory developed test.

In December 2019, upon completion of independent validation by ResearchDx, we announced the commercial launch of Cchek PCC.

We are currently conducting a number of activities to support the marketing of Cchek PCC, including the development of marketing materials, education of key opinion leaders in urology and development of a reimbursement path for the test.

Over the next several quarters, we expect the development of our breast cancer vaccine, Certaintys CER-T technology and Anixa Diagnostics Cchek to be the primary focus of the Company.

In December 2019, upon completion of independent analytical validation by ResearchDx, we announced the commercial launch of Cchek PCC.

We are currently conducting a number of activities to support the marketing of Cchek PCC, including the completion of a clinical validation study, development of marketing materials, education of key opinion leaders in urology and development of a reimbursement path for the test.

These activities, including the clinical validation study, have been delayed for a number of reasons, including the global coronavirus pandemic.

Over the next several quarters, we expect the development of our breast cancer vaccine, Certaintys CAR-T technology, our COVID-19 therapeutic discovery program and Anixa Diagnostics Cchek to be the primary focus of the Company.

As part of our legacy operations, the Company remains engaged in limited patent licensing activities in the area of encrypted audio/video conference calling.

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Funding and Managements Plans

Based on currently available information as of March 9, 2020, we believe that our existing cash, cash equivalents, short-term investments and expected cash flows will be sufficient to fund our activities for the next twelve months.

Based on currently available information as of June 9, 2020, we believe that our existing cash, cash equivalents, short-term investments and expected cash flows will be sufficient to fund our activities for the next twelve months.

We have implemented a business model that conserves funds by collaborating with third parties to develop our technologies.

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If current cash on hand, cash equivalents, short-term investments and cash that may be generated from our business operations are insufficient to continue to operate our business, or if we elect to invest in or acquire a company or companies or new technology or technologies that are synergistic with or complementary to our technologies, we may be required to obtain more working capital.

During the three months ended January 31, 2020, we raised approximately $1,752,000, net of expenses, through the sale of 490,655 shares of common stock in our at-the-market equity offerings.

We raised approximately $427,000, net of expenses, through the sale of 112,238 shares of common stock in an at-the market equity offering which expired in November 2019 and approximately $1,325,000, net of expenses, through the sale of 378,417 shares of common stock in an at-the-market equity offering under which we may issue up to $50 million of common stock.

During the six months ended April 30, 2020, we raised an aggregate of approximately $3,034,000, net of expenses, through the sale of 1,094,063 shares of common stock in our at-the-market equity offerings.

This included approximately $427,000, net of expenses, through the sale of 112,238 shares of common stock in an at-the market equity offering which expired in November 2019 and approximately $2,607,000, net of expenses, through the sale of 981,825 shares of common stock in an at-the-market equity offering under which we may issue up to $50 million of common stock.

Under our current at-the-market equity program which is currently effective and may remain available for us to use in the future, we may sell an additional approximately $47,248,000 of common stock.

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The accompanying October 31, 2019 condensed consolidated balance sheet data was derived from the audited financial statements but does not include all disclosures required by US GAAP.

The condensed consolidated financial statements include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair statement of our financial position as of January 31, 2020, and results of operations and cash flows for the interim periods represented.

The results of operations for the three months ended January 31, 2020 are not necessarily indicative of the results to be expected for the entire year.

The condensed consolidated financial statements include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair statement of our financial position as of April 30, 2020, and results of operations and cash flows for the interim periods represented.

The results of operations for the six months ended April 30, 2020 are not necessarily indicative of the results to be expected for the entire year.

Noncontrolling Interest

Noncontrolling interest represents Wistars equity ownership in Certainty and is presented as a component of equity.

The following table sets forth the changes in noncontrolling interest for the three months ended January 31, 2020:

The following table sets forth the changes in noncontrolling interest for the six months ended April 30, 2020:

Balance, October 31, 2019

Net loss attributable to noncontrolling interest

Balance January 31, 2020

Balance, April 30, 2020

Revenue Recognition

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Research and Development Expenses

Research and development expenses, consisting primarily of employee compensation, payments to third parties for research and development activities and other direct costs associated with developing a platform for non-invasive blood tests for early detection of cancer, developing immuno-therapy drugs against cancer and development of our breast cancer vaccine, are expensed in the consolidated financial statements in the year incurred.

Research and development expenses, consisting primarily of employee compensation, payments to third parties for research and development activities and other direct costs associated with developing a platform for non-invasive blood tests for early detection of cancer, developing immuno-therapy drugs against cancer, development of our breast cancer vaccine and development of anti-viral drugs candidates for COVID-19, are expensed in the consolidated financial statements in the period incurred.

STOCK BASED COMPENSATION

The Company maintains equity incentive plans under which the Company may grant incentive stock options, non-qualified stock options, stock appreciation rights, stock awards, performance awards, or stock units to employees, directors and consultants.

The Company maintains stock equity incentive plans under which the Company grants incentive stock options, non-qualified stock options, stock appreciation rights, stock awards, performance awards, or stock units to employees, directors and consultants.

Stock Option Compensation Expense

The compensation cost for service-based stock options granted to employees and directors is measured at the grant date, based on the fair value of the award using the Black-Scholes pricing model, and is recognized as an expense on a straight-line basis over the requisite service period (the vesting period of the stock option) which is one to four years.

We recorded stock-based compensation expense related to service-based stock options granted to employees and directors of approximately $964,000 and $844,000 during the three months ended January 31, 2020 and 2019, respectively.

The compensation cost for service-based stock options granted to employees and directors is measured at the grant date, based on the fair value of the award using the Black-Scholes pricing model , and is expensed on a straight-line basis over the requisite service period (the vesting period of the stock option) which is one to four years.

We recorded stock-based compensation expense related to service-based stock options granted to employees and directors of approximately $2,019,000 and $1,649,000 during the six months ended April 30, 2020 and 2019, respectively , and approximately $1,055,000 and $805,000 during the three months ended April 30, 2020 and 2019, respectively.

For stock options granted to employees and directors that vest based on market conditions, such as the trading price of the Companys common stock exceeding certain price targets, we use a Monte Carlo Simulation in estimating the fair value at grant date and recognize compensation cost over the implied service period (median time to vest).

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In October 2018, the first tranche of 500,000 shares of market condition options became exercisable upon achieving an average closing price above $5.00 per share for twenty consecutive trading days.

We recorded stock-based compensation expense related to market condition stock options granted to employees and directors of approximately $376,000 during the three months ended January 31, 2019.

We did not have stock-based compensation expense related to market condition stock options during the three months ended January 31, 2020.

We recorded stock-based compensation expense related to market condition stock options granted to employees of approximately $-0- and $376,000 during the six months ended April 30, 2020 and 2019, respectively.

We did not have any market condition stock-based compensation expense during the three months ended April 30, 2020 and 2019.

On November 1, 2018 we adopted Accounting Standards Update 2018-07 (ASU 2018-07) for stock options granted to consultants.

Upon adoption of ASU 2018-07 we estimated the fair value of unvested service-based and performance-based stock options at the date of adoption, using the Black-Scholes pricing model.

Subsequent to adoption of ASU 2018-07, future grants to consultants will be measured at the grant date, based on the fair value of the award using the Black-Scholes pricing model, consistent with our policy for grants to employees and directors.

In prior periods we estimated the fair value of service-based and performance-based stock options granted to consultants at each reporting period using the Black-Scholes pricing model.

Subsequent to adoption of ASU 2018-07, future grants to consultants are measured at the grant date, based on the fair value of the award using the Black-Scholes pricing model, consistent with our policy for grants to employees and directors.

In prior periods, in accordance with US GAAP, we estimated the fair value of service-based and performance-based stock options granted to consultants at each reporting period using the Black-Scholes pricing model.

We recognize the fair value of stock options granted to consultants as consulting expense over the requisite or implied service period of the grant.

We recorded stock-based consulting expense related to stock options granted to consultants of approximately $57,000 and $25,000 during the three months ended January 31, 2020 and 2019, respectively.

We recorded stock-based consulting expense related to stock options granted to consultants of approximately $112,000 and $50,000 during the six months ended April 30, 2020 and 2019, respectively, and approximately $55,000 and $25,000 during the three months ended April 30, 2020 and 2019, respectively.

Stock Option Activity

During the three months ended January 31, 2020, we granted options to purchase 800,000 shares of common stock to employees and consultants with exercise prices ranging from $3.84 to $4.04 per share pursuant to the Anixa Biosciences, Inc.

During the six months ended April 30, 2020, we granted options to purchase 800,000 shares of common stock to employees and consultants, with exercise prices ranging from $3.84 to $4.04 per share, pursuant to the Anixa Biosciences, Inc.

2018 Share Incentive Plan (the 2018 Share Plan) .

We did not grant any options during the three months ended January 31, 2019.

During the three months ended January 31, 2020 and 2019, stock options to purchase 18,900 and 10,000 shares of common stock, respectively, were exercised with aggregate proceeds of approximately $28,000 and $23,000, respectively.

We did not grant any options during the six months ended April 30, 2019.

During the six months ended April 30, 2020 and 2019, stock options to purchase 43,900 and 30,000 shares of common stock, respectively, were exercised with aggregate proceeds of approximately $104,000 and $80,000, respectively.

Stock Option Plans

As of January 31, 2020, we have three stock option plans:

During the six months ended April 30, 2020, we had three stock option plans:

the Anixa Biosciences, Inc.

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The 2018 Share Plan was approved by our shareholders on March 29, 2018.

During the three months ended January 31, 2020, the remaining outstanding options granted under the 2003 Share Plan expired.

During the six months ended April 30, 2020, the remaining outstanding options granted under the 2003 Share Plan expired.

In accordance with the provisions of the 2003 Share Plan, the plan terminated with respect to the ability to grant future options on April 21, 2013.

Information regarding the 2003 Share Plan for the three months ended January 31, 2020 is as follows:

Information regarding the 2003 Share Plan for the six months ended April 30, 2020 is as follows:

Average Exercise

Price Per Share

Intrinsic Value

Options outstanding at October 31, 2019

Options outstanding and exercisable at

January 31, 2020

Information regarding the 2003 Share Plan for the three months ended January 31, 2019 is as follows:

April 30, 2020

Information regarding the 2003 Share Plan for the six months ended April 30, 2019 is as follows:

Average Exercise

Price Per Share

Intrinsic Value

Options outstanding at October 31, 2018

Options outstanding and exercisable at

January 31, 2019

The following table summarizes information about stock options outstanding and exercisable under the 2003 Share Plan as of January 31, 2019:

April 30, 2019

The following table summarizes information about stock options outstanding and exercisable under the 2003 Share Plan as of April 30, 2019:

Weighted Average

Contractual Life

Exercise Price

Exercise Prices

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The 2010 Share Plan provides for the grant of nonqualified stock options, stock appreciation rights, stock awards, performance awards and stock units to employees, directors and consultants.

As of January 31, 2020, the 2010 Share Plan had 800,000 shares available for future grants.

Information regarding the 2010 Share Plan for the three months ended January 31, 2020 is as follows:

As of April 30, 2020, the 2010 Share Plan had 800,000 shares available for future grants.

Information regarding the 2010 Share Plan for the six months ended April 30, 2020 is as follows:

Average Exercise

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Options Outstanding at October 31, 2019

Options Outstanding at January 31, 2020

Options Exercisable at January 31, 2020

The following table summarizes information about stock options outstanding and exercisable under the 2010 Share Plan as of January 31, 2020:

Options Outstanding at April 30, 2020

Options Exercisable at April 30, 2020

The following table summarizes information about stock options outstanding and exercisable under the 2010 Share Plan as of April 30, 2020:

Options Outstanding

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$3.46 - $5.75

Information regarding the 2010 Share Plan for the three months ended January31, 2019 is as follows:

Information regarding the 2010 Share Plan for the six months ended April 30, 2019 is as follows:

Average Exercise

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Options outstanding at October 31, 2018

Options Outstanding at January 31, 2019

Options Exercisable at January 31, 2019

The following table summarizes information about stock options outstanding and exercisable under the 2010 Share Plan as of January 31, 2019:

Options outstanding at April 30, 2019

Options exercisable at April 30, 2019

The following table summarizes information about stock options outstanding and exercisable under the 2010 Share Plan as of April 30, 2019:

Options Outstanding

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The 2018 Share Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, stock awards, performance awards and stock units to employees, directors and consultants.

As of January 31, 2020, the 2018 Share Plan had 2,000,000 shares available for future grants.

Information regarding options outstanding under the 2018 Share Plan for the three months ended January 31, 2020 is as follows:

As of April 30, 2020, the 2018 Share Plan had 2,000,000 shares available for future grants.

Information regarding the 2018 Share Plan for the six months ended April 30, 2020 is as follows:

Average Exercise

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Options Outstanding at October 31, 2019

Options Outstanding at January 31, 2020

Options Exercisable at January 31, 2020

The following table summarizes information about stock options outstanding under the 2018 Share Plan as of January 31, 2020:

Options Outstanding at April 30, 2020

Options Exercisable at April 30, 2020

The following table summarizes information about stock options outstanding and exercisable under the 2018 Share Plan as of April 30, 2020:

Options Outstanding

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$ 3.84 - $4.61

Information regarding options outstanding under the 2018 Share Plan for the three months ended January 31, 2019 is as follows:

Information regarding the 2018 Share Plan for the six months ended April 30, 2019 is as follows:

Average Exercise

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Options outstanding at October 31, 2018

Options Outstanding at January 31, 2019

Options Exercisable at January 31, 2019

The following table summarizes information about stock options outstanding under the 2018 Share Plan as of January 31, 2019:

Options outstanding at April 30, 2019

Options exercisable at April 30, 2019

The following table summarizes information about stock options outstanding and exercisable under the 2018 Share Plan as of April 30, 2019:

Options Outstanding

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Outside of Share Plans

In addition to options granted under the 2003 Share Plan, the 2010 Share Plan and the 2018 Share Plan, the Board of Directors approved the grant of stock options to purchase shares of common stock to employees and directors.

Information regarding stock options outstanding that were not granted under the 2003 Share Plan, the 2010 Share Plan or the 2018 Share Plan for the three months ended January 31, 2020 is as follows:

In addition to options granted under the 2003 Share Plan, the 2010 Share Plan and the 2018 Share Plan, during the years ended October 31, 2012 and 2013, the Board of Directors approved the grant of stock options to certain employees and directors.

Information regarding stock options that were granted outside of Share Plans for the six months ended April 30, 2020 is as follows:

Average Exercise

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Options Outstanding and exercisable at

January 31, 2020

The following table summarizes information about stock options outstanding and exercisable that were not granted under the 2003 Share Plan, the 2010 Share Plan or the 2018 Plan as of January 31, 2020:

April 30, 2020

The following table summarizes information about stock options outstanding and exercisable that were granted outside of Share Plans as of April 30, 2020:

Weighted Average

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Exercise Prices

Information regarding stock options outstanding that were not granted under the 2003 Plan, 2010 Plan or the 2018 Plan for the three months ended January 31, 2019 is as follows:

Information regarding stock options that were granted outside of Share Plans for the six months ended April 30, 2019 is as follows:

Average Exercise

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Options outstanding and exercisable at

January 31, 2019

April 30, 2019

The following table summarizes information about stock options outstanding and exercisable that were granted outside of Share Plans as of April 30, 2019:

Weighted Average

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$ 2.58-$ 5.56

For stock awards granted to employees, directors and consultants that vest at date of grant we recognize expense based on the grant date market price of the underlying common stock.

We did not grant any stock awards during the three months ended January 31, 2020 or 2019.

For stock awards granted to employees, directors and consultants that vest upon grant we recognize expense at the date of grant based on the grant date market price of the underlying common stock.

We did not grant any stock awards that vested upon grant during the six months ended April 30, 2020 or 2019.

On May 8, 2018, a restricted stock award of 1,500,000 shares of common stock was granted under the 2018 Share Plan to our Chairman, President and Chief Executive Officer.

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For restricted stock awards vesting upon achievement of a price target of our common stock we use a Monte Carlo Simulation in estimating the fair value at grant date and recognize compensation cost over the implied service period (median time to vest).

During the three months ended January 31, 2020 and 2019 we recorded compensation expense related to the restricted stock award of approximately $ -0- and $1,484,000, respectively.

During the six-month and three-month periods ended April 30, 2019, we recorded compensation expense related to the restricted stock award of approximately $1,954,000 and $470,000, respectively.

We did not record any compensation expense related to the restricted stock award during the six-month period ended April 30, 2020.

Employee Stock Purchase Plan

The Company maintains the Anixa Biosciences, Inc.

Employee Stock Purchase Plan (the "ESPP") which permits eligible employees to purchase shares at not less than 85% of the market value of the Companys common stock on the offering date or the purchase date of the applicable offering period, whichever is lower.

The ESPP was adopted by our Board of Directors on August 13, 2018 and approved by our shareholders on September 27, 2018.

During the three months ended January 31, 2020 and 2019, no shares were purchased under the ESPP.

During the three months ended January 31, 2019 we issued a warrant, expiring on November 1, 2023, to purchase 25,000 shares of common stock at $4.04 per share, vesting over 12 months, to a consultant for investor relations services.

Employee Stock Purchase Plan which permits eligible employees to purchase shares at not less than 85% of the market value of the Companys common stock on the offering date or the purchase date of the applicable offering period, whichever is lower.

The plan was adopted by our Board of Directors on August 13, 2018 and approved by our shareholders on September 27, 2018.

During the six months ended April 30, 2020, employees purchased 9,618 shares with aggregate proceeds of approximately $15,000.

During the six months ended April 30, 2019, employees purchased 5,411 shares with aggregate proceeds of approximately $19,000.

During the six months ended April 30, 2019 we issued a warrant, expiring on November 1, 2023, to purchase 25,000 shares of common stock at $4.04 per share, vesting over 12 months, to a consultant for investor relations services.

On November 1, 2019 the warrant was exchanged for a stock option with the same terms as the warrant.

We recorded consulting expense of approximately $ -0- and $21,000 during the three months ended January 31, 2020 and 2019, respectively, based on the fair value of the warrant recognized on a straight-line basis over the vesting period.

No warrants were issued during the three months ended January 31, 2020.

As of January 31, 2020, we had warrants outstanding to purchase 500,000 shares of common stock at $5.03 per share expiring on November 30, 2021.

During the six-month and three-month periods ended April 30, 2019, we recorded consulting expense of approximately $43,000 and $21,000, respectively, based on the fair value of the warrant recognized on a straight-line basis over the vesting period.

No warrants were issued during the six months ended April 30, 2020.

As of April 30, 2020, we also had warrants outstanding to purchase 500,000 shares of common stock at $5.03 per share expiring on November 30, 2021.

FAIR VALUE MEASUREMENTS

US GAAP defines fair value and establishes a framework for measuring fair value.

We have categorized our financial assets, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below.

We have categorized our financial assets and liabilities, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below.

If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

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These inputs reflect managements own assumptions about the assumptions a market participant would use in pricing the asset and liabilities.

The following table presents the hierarchy for our financial assets measured at fair value on a recurring basis as of January 31, 2020:

The following table presents the hierarchy for our financial assets measured at fair value on a recurring basis as of April 30, 2020:

Money market funds:

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Short-term investments

Operating lease right-of-use

Total financial assets

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Total financial assets

The following table presents the hierarchy for our financial liabilities measured at fair value on a recurring basis as of January 31, 2020:

The following table presents the hierarchy for our financial liabilities measured at fair value on a recurring basis as of April 30, 2020:

Operating lease liability

2 unchanged sentences

Cash and cash equivalents are stated at carrying value which approximates fair value.

See Note 8 for a description of the significant assumptions and manner of estimating fair value for our operating lease liability.

ACCRUED EXPENSES

1 unchanged sentence

Payroll and related expenses

Accrued royalty

Accrued royalty and contingent legal fees

Accrued collaborative research and license expenses

4 unchanged sentences

Diluted EPS for all periods presented is the same as Basic EPS, as the inclusion of the effect of common share equivalents then outstanding would be anti-dilutive.

For this reason, excluded from the calculation of Diluted EPS for the three months ended January 31, 2020 and 2019, were stock options to purchase 8,407,234 and 7,395,868 shares, respectively, and warrants to purchase 500,000 and 854,400 shares, respectively.

For this reason, excluded from the calculation of Diluted EPS for the six and three months ended April 30, 2020 and 2019, were stock options to purchase 8,382,234 and 7,280,668 shares, respectively, and warrants to purchase 500,000 and 854,400 shares, respectively.

EFFECT OF RECENTLY ADOPTED AND ISSUED PRONOUNCEMENTS

7 unchanged sentences

The adoption of this standard did not have a material impact on our condensed consolidated financial statements.

See Note 8 regarding disclosures related to our office lease.

See Note 8 regarding the accounting and disclosures related to our office lease.

We file Federal, New York and California state income tax returns.

Due to net operating losses, the statute of limitations for our income tax returns remains open to examination by taxing authorities since the fiscal year ended October 31, 1999.

Due to net operating losses, the statute of limitations for Federal and New York State income tax returns remains open to examination by taxing authorities since the fiscal year ended October 31, 1999.

We account for interest and penalties related to income tax matters, if any, in general and administrative expenses.

There are no unrecognized income tax benefits as of January 31 , 2020 and October 31, 2019.

There are no unrecognized income tax benefits as of April 30 , 2020 and October 31, 2019.

We recognize deferred tax assets and liabilities for the estimated future tax effects of events that have been recognized in our financial statements or tax returns.

8 unchanged sentences

As of August 1, 2018, we had subleased these facilities.

Rent expense for the three months ended January 31, 2020 and 2019, was approximately $16,000 and $18,000, respectively.

Rent expense was approximately $32,000 and $30,000, respectively, for the six months ended April 30, 2020 and 2019, and approximately $16,000 and $12,000, respectively, for the three months ended April 30, 2020 and 2019.

On November 1, 2019, the Company adopted ASC 842, which increases transparency and comparability by recognizing a lessees rights and obligations resulting from leases by recording them on the balance sheet as lease assets and lease liabilities.

8 unchanged sentences

For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments.

The remaining 20 month lease term as of January 31, 2020 for the Companys lease includes the noncancelable period of the lease.

The remaining 17 month lease term as of April 30, 2020 for the Companys lease includes the noncancelable period of the lease.

The lease does not contain a Company option to extend the lease or an option to extend the lease controlled by the lessor.

5 unchanged sentences

Operating lease right-

liability, current

Operating lease

liability, long-term

Operating lease

liability non-current

As of January 31, 2020, the annual minimum lease payments of our operating lease liabilities were as follows:

Right-of-use liability,

Operating lease liability

Right-of-use liability,

Operating lease liability,

As of April 30, 2020, the annual minimum lease payments of our operating lease liabilities were as follows:

For Years Ending October 31,

Operating Leases

2020 (excluding the three months ended January 31, 2020)

2020 (excluding the six months ended April 30, 2020)

Total future minimum payments, undiscounted

1 unchanged sentence

Present value of future minimum lease payments

COMMITMENTS AND CONTINGENCES

COMMITMENT AND CONTINGENCES

Litigation Matters

4 unchanged sentences

The management approach, as defined by ASC 280, is based on the way that the chief operating decision-maker organizes the segments within an enterprise for making operating decisions and assessing performance.

While our results of operations are primarily reviewed on a consolidated basis, the chief operating decision-maker manages the enterprise in three reportable segments, each with different operating and potential revenue generating characteristics:

(i) cancer diagnostics, (ii) cancer therapeutics and (iii) our legacy patent licensing activities.

The following represents selected financial information for our segments for the three months ended January 31, 2020 and 2019 and as of January 31, 2020 and October 31, 2019:

While our results of operations are primarily reviewed on a consolidated basis, the chief operating decision-maker manages the enterprise in five reportable segments, each with different operating and potential revenue generating characteristics:

(i) CAR-T Therapeutics, (ii) Cancer Vaccines, (iii) Anti-Viral Therapeutics, (iv) Cancer Diagnostics and (v) our legacy Patent Licensing activities.

The following represents selected financial information for our segments for the six and three months ended April 30, 2020 and 2019 and as of April 30, 2020 and October 31, 2019:

For the six Months Ended

CAR-T Therapeutics

Cancer Vaccines

Anti-Viral Therapeutics

Cancer Diagnostics

Patent Licensing

Total operating costs and expenses

Less non-cash share-based compensation

Operating costs and expenses excluding

non-cash share-based compensation

Operating costs and expenses excluding non-cash

share based compensation expense:

CAR-T Therapeutics

Cancer Vaccines

Anti-Viral Therapeutics

Cancer Diagnostics

Patent Licensing

For the Three Months Ended

CAR-T Therapeutics

Cancer Vaccines

Anti-Viral Therapeutics

Cancer Diagnostics

Cancer therapeutics

Patent Licensing

5 unchanged sentences

share based compensation expense:

CAR-T Therapeutics

Cancer Vaccines

Anti-Viral Therapeutics

Cancer Diagnostics

Cancer therapeutics

Patent Licensing

Total assets:

CAR-T Therapeutics

Cancer Vaccines

Anti-Viral Therapeutics

Cancer Diagnostics

Cancer therapeutics

Patent Licensing

Operating costs and expenses excluding non-cash share-based compensation is the measurement the chief operating decision-maker uses in managing the enterprise.

IMPACT OF CORONAVIRUS PANDEMIC

On March 10, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic.

The virus and actions taken to mitigate its spread have had and are expected to continue to have a broad adverse impact on the economies and financial markets of many countries, including the geographical areas in which the Company operates and conducts its business and which the Companys partners operate and conduct their business.

We are currently following the recommendations of local health authorities to minimize exposure risk for our team members and visitors.

However, the scale and scope of this pandemic is unknown and the duration of the business disruption and related financial impact cannot be reasonably estimated at this time.

While we have implemented specific business continuity plans to reduce the potential impact of COVID-19, there is no guarantee that our continuity plans will be successful.

We have already experienced certain disruptions to our business such as temporary closure of our offices and similar disruptions have occurred for our partners.

Specifically, the outbreak has caused shutdowns of the laboratories and other service providers that we rely on to develop our CAR-T and breast cancer vaccine programs, and those laboratories and service providers that have been operating or that have begun operating recently have been doing so with more limited capacity due to social distancing requirements.

As a result, our progress has been slowed and there is no assurance that we will be able to meet our previously announced timelines regarding the IND filings for our CAR-T therapy for ovarian cancer and for our breast cancer vaccine.

Moreover, our plan to sell and/or license our Cchek technology to a strategic partner has been impacted by the pandemic even more significantly as we have been unable to complete our clinical validation study for Cchek to have a more robust data package for potential partners.

The extent to which COVID-19 or any other health epidemic may impact our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others.

Accordingly, COVID-19 could have a material adverse effect on our business, results of operations, financial condition and prospects.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements