ANAVEX LIFE SCIENCES CORP. 10-Q

Item 1. FINANCIAL STATEMENTS ANAVEX LIFE SCIENCES CORP. INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2021 and September 30, 2020 June 30, September 30, 2021 2020 (Unaudited) Assets Current Cash and cash equivalents $ 157,560,045 $ 29,249,018 Incentive and tax receivables 8,601,258 4,849,340 Prepaid expenses and deposits 258,198 443,839 Total Assets $ 166,419,501 $ 34,542,197 Liabilities and Stockholders’ Equity Current Liabilities Accounts payable $ 4,176,707 $ 3,989,054 Accrued liabilities 4,653,234 3,316,574 Deferred grant income 443,831 — Total Liabilities 9,273,772 7,305,628 Commitments and Contingencies - Note 5 Capital stock Authorized: 10,000,000 preferred stock, par value $ 0.001 per share 200,000,000 100,000,000 common stock, par value $ 0.001 per share Issued and outstanding: 75,149,833 common shares (September 30, 2020 - 62,045,198 ) 75,151 62,047 Additional paid-in capital 342,938,236 186,851,752 Accumulated deficit ( 185,867,658 ) ( 159,677,230 ) Total Stockholders’ Equity 157,145,729 27,236,569 Total Liabilities and Stockholders’ Equity $ 166,419,501 $ 34,542,197 See Accompanying Notes to Condensed Consolidated Interim Financial Statements 1 ANAVEX LIFE SCIENCES CORP. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the three and nine months ended June 30, 2021 and 2020 (Unaudited) Three months ended June 30, Nine months ended June 30, 2021 2020 2021 2020 Operating expenses General and administrative $ 2,434,127 $ 1,381,477 $ 6,138,528 $ 4,453,654 Research and development 8,964,528 6,725,002 23,610,888 19,126,717 Total operating expenses ( 11,398,655 ) ( 8,106,479 ) ( 29,749,416 ) ( 23,580,371 ) Other income (expenses) Grant income 43,280 — 54,100 149,888 Research and development incentive income 1,363,661 1,319,913 3,593,856 2,980,456 Interest income, net 11,453 56,096 19,110 172,996 Foreign exchange gain (loss), net ( 160,880 ) 248,665 17,191 ( 24,182 ) Total other income, net 1,257,514 1,624,674 3,684,257 3,279,158 Net loss before provision for income taxes ( 10,141,141 ) ( 6,481,805 ) ( 26,065,159 ) ( 20,301,213 ) Income tax expense, current ( 39,000 ) ( 4,817 ) ( 125,269 ) ( 14,031 ) Net loss and comprehensive loss $ ( 10,180,141 ) $ ( 6,486,622 ) $ ( 26,190,428 ) $ ( 20,315,244 ) Net Loss per share Basic and diluted $ ( 0.14 ) $ ( 0.11 ) $ ( 0.39 ) $ ( 0.35 ) Weighted average number of shares outstanding Basic and diluted 70,589,561 59,105,399 67,810,774 57,401,387 See Accompanying Notes to Condensed Consolidated Interim Financial Statements 2 ANAVEX LIFE SCIENCES CORP. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the nine months ended June 30, 2021 and 2020 (Unaudited) 2021 2020 Cash Flows used in Operating Activities Net loss $ ( 26,190,428 ) $ ( 20,315,244 ) Adjustments to reconcile net loss to net cash used in operations: Stock-based compensation 5,079,395 4,216,306 Changes in non-cash working capital balances related to operations: Incentive and tax receivables ( 3,751,918 ) ( 905,227 ) Prepaid expenses and deposits 185,641 62,367 Accounts payable 187,653 456,872 Accrued liabilities 1,336,660 1,452,652 Deferred grant income 443,831 — Net cash used in operating activities ( 22,709,166 ) ( 15,032,274 ) Cash Flows provided by Financing Activities Issuance of common shares 153,218,758 20,490,297 Share issue costs ( 5,533,473 ) ( 24,508 ) Proceeds from exercise of warrants 1,466,500 — Proceeds from exercise of stock options 1,868,408 — Net cash provided by financing activities 151,020,193 20,465,789 Increase in cash and cash equivalents during the period 128,311,027 5,433,515 Cash and cash equivalents, beginning of period 29,249,018 22,185,630 Cash and cash equivalents, end of period $ 157,560,045 $ 27,619,145 See Accompanying Notes to Condensed Consolidated Interim Financial Statements 3 ANAVEX LIFE SCIENCES CORP. INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY For the three months ended June 30, 2021 and 2020 (Unaudited) Common Stock Additional Paid-in Accumulated Shares Par Value Capital Deficit Total Balance, April 1, 2021 70,030,620 $ 70,032 $ 251,427,781 $ ( 175,687,517 ) $ 75,810,296 Shares issued under Sales Agreement, net of share issue costs 2,082,263 2,082 39,979,399 — 39,981,481 Shares issued pursuant to registered direct offering, net of share issue costs 2,380,953 2,381 46,901,681 — 46,904,062 Shares issued upon exercise of stock options 305,997 306 869,300 — 869,606 Shares issued pusuant to exercise of warrants 350,000 350 1,466,150 — 1,466,500 Share based compensation — — 2,293,925 — 2,293,925 Net loss — — — ( 10,180,141 ) ( 10,180,141 ) Balance, June 30, 2021 75,149,833 $ 75,151 $ 342,938,236 $ ( 185,867,658 ) $ 157,145,729 Balance, April 1, 2020 58,664,946 $ 58,666 $ 171,958,462 $ ( 147,225,382 ) $ 24,791,746 Shares issued under 2019 purchase agreement Purchase shares 1,400,000 1,400 5,123,405 — 5,124,805 Commitment shares 16,624 16 ( 16 ) — — Shares issued pursuant to cashless exercise of options 721 1 ( 1 ) — — Share based compensation — — 1,251,129 — 1,251,129 Net loss — — — ( 6,486,622 ) ( 6,486,622 ) Balance, June 30, 2020 60,082,291 $ 60,083 $ 178,332,979 $ ( 153,712,004 ) $ 24,681,058 See Accompanying Notes to Condensed Consolidated Interim Financial Statements 4 ANAVEX LIFE SCIENCES CORP. INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY For the nine months ended June 30, 2021 and 2020 (Unaudited) Common Stock Additional Paid-in Accumulated Shares Par Value Capital Deficit Total Balance, October 1, 2020 62,045,198 $ 62,047 $ 186,851,752 $ ( 159,677,230 ) $ 27,236,569 Shares issued under 2019 purchase agreement Purchase shares 4,007,996 4,008 24,107,190 — 24,111,198 Commitment shares 78,213 78 ( 78 ) — — Shares issued under Sales Agreement, net of share issue costs 5,634,576 5,634 76,664,391 — 76,670,025 Shares issued pursuant to registered direct offering, net of share issue costs 2,380,953 2,381 46,901,681 — 46,904,062 Shares issued upon exercise of stock options 652,897 653 1,867,755 — 1,868,408 Shares issued pusuant to exercise of warrants 350,000 350 1,466,150 — 1,466,500 Share based compensation — — 5,079,395 — 5,079,395 Net loss — — — ( 26,190,428 ) ( 26,190,428 ) Balance, June 30, 2021 75,149,833 $ 75,151 $ 342,938,236 $ ( 185,867,658 ) $ 157,145,729 Balance, October 1, 2019 52,650,521 $ 52,652 $ 153,633,807 $ ( 133,396,760 ) $ 20,289,699 Shares issued under 2019 Purchase Agreement — Purchase shares 7,364,584 7,365 20,482,932 — 20,490,297 Commitment shares 66,465 65 ( 65 ) — — Shares issued pursuant to cashless exercise of options 721 1 ( 1 ) — — Share based compensation — — 4,216,306 — 4,216,306 Net loss — — — ( 20,315,244 ) ( 20,315,244 ) Balance, June 30, 2020 60,082,291 $ 60,083 $ 178,332,979 $ ( 153,712,004 ) $ 24,681,058 See Accompanying Notes to Condensed Consolidated Interim Financial Statements 5 Anavex Life Sciences Corp. Notes to the Condensed Consolidated Interim Financial Statements June 30, 2021 (Unaudited) Note 1 Business Description and Basis of Presentation Business Anavex Life Sciences Corp. (“Anavex” or the “Company”) is a clinical stage biopharmaceutical company engaged in the development of differentiated therapeutics by applying precision medicine to central nervous system (“CNS”) diseases with high unmet need. Anavex analyzes genomic data from clinical studies to identify biomarkers, which are used to select patients that will receive the therapeutic benefit for the treatment of neurodegenerative and neurodevelopmental diseases. The Company’s lead compound ANAVEX ® 2-73 is being developed to treat Alzheimer’s disease, Parkinson’s disease and potentially other central nervous system diseases, including rare diseases, such as Rett syndrome, a rare severe neurological monogenic disorder caused by mutations in the X-linked gene, methyl-CpG-binding protein 2 (“MECP2”) . On May 25, 2021, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of the State of Nevada effecting an amendment to increase the number of authorized shares of the Company’s common stock, par value $ 0.001 per share, from 100,000,000 shares to 200,000,000 shares. The Certificate of Amendment was approved by the Company’s stockholders at an annual meeting of stockholders on May 25, 2021. Basis of Presentation These unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim reporting. Accordingly, certain information and note disclosures normally included in the annual financial statements in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the disclosures are adequate to make the information presented not misleading. These accompanying unaudited interim condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained herein. The consolidated balance sheet as of September 30, 2020 was derived from the audited annual financial statements but does not include all disclosures required by U.S. GAAP. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended September 30, 2020 filed with the SEC on December 28, 2020. The Company follows the same accounting policies in the preparation of interim reports. Operating results for the three and nine months ended June 30 , 2021 are not necessarily indicative of the results that may be expected for the year ending September 30, 2021. Liquidity All of the Company’s potential drug compounds are in the clinical development stage and the Company cannot be certain that its research and development efforts will be successful or, if successful, that its potential drug compounds will ever be approved for sales to pharmaceutical companies or generate commercial revenues. To date, we have not generated any revenues from our operations. The Company expects the business to continue to experience negative cash flows for the foreseeable future and cannot predict when, if ever, our business might become profitable. 6 Anavex Life Sciences Corp. Notes to the Condensed Consolidated Interim Financial Statements June 30, 2021 (Unaudited) Note 1 Business Description and Basis of Presentation – (Continued) Management believes that the current working capital position will be sufficient to meet the Company’s working capital requirements beyond the next 12 months after the date that these interim condensed consolidated financial statements are issued. The process of drug development can be costly, and the timing and outcomes of clinical trials is uncertain. The assumptions upon which the Company has based its estimates are routinely evaluated and may be subject to change. The actual amount of the Company’s expenditures will vary depending upon a number of factors including but not limited to the design, timing and duration of future clinical trials, the progress of the Company’s research and development programs and the level of financial resources available. The Company has the ability to adjust its operating plan spending levels based on the timing of future clinical trials. Other than our rights related to the Sales Agreement (as defined below in Note 4), there can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If the Company is not able to obtain the additional financing on a timely basis, if and when it is needed, it will be forced to delay or scale down some or all of its research and development activities. In December 2019, a novel strain of coronavirus, COVID-19, was reported to have surfaced in Wuhan, China. In March 2020, the World Health Organization declared COVID-19 to be a global pandemic as a result of the rapid spread of the virus beyond its point of origin. The global outbreak of COVID-19 continues to rapidly evolve as of the date these interim condensed consolidated financial statements are issued. As such, it is uncertain as to the full magnitude that the outbreak will have on the Company’s financial condition and future results of operations. Management is actively monitoring the global situation on its business, including on its clinical trials and operations and financial condition. The effects of COVID-19 did not have a material impact on the Company’s result of operations or financial condition for the period ended June 30, 2021. However, given the daily evolution of the COVID-19 situation, and the global responses to curb its spread, the Company is not able to estimate the effects COVID-19 may have on its future results of operations or financial condition. Use of Estimates The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to accounting for research and development costs, valuation and recoverability of deferred tax assets, incentive and tax receivables, asset impairment, stock-based compensation, and loss contingencies. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. 7 Anavex Life Sciences Corp. Notes to the Condensed Consolidated Interim Financial Statements June 30, 2021 (Unaudited) Note 1 Business Description and Basis of Presentation – (Continued) Principles of Consolidation These consolidated financial statements include the accounts of Anavex Life Sciences Corp. and its wholly-owned subsidiaries, Anavex Australia Pty Limited., a company incorporated under the laws of Australia, Anavex Germany GmbH, a company incorporated under the laws of Germany, and Anavex Canada Ltd., a company incorporated under the laws of the Province of Ontario, Canada. All inter-company transactions and balances have been eliminated. Fair Value Measurements The fair value hierarchy under GAAP is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and Level 3 - assets and liabilities whose significant value drivers are unobservable by little or no market activity and that are significant to the fair value of the assets or liabilities. The book value of cash and cash equivalents and accounts payable and accrued liabilities approximate their fair values due to the short-term maturity of those instruments. At June 30, 2021 and September 30, 2020, the Company did not have any Level 3 assets or liabilities. Basic and Diluted Loss per Share Basic income/(loss) per common share is computed by dividing net income/(loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income/(loss) per common share is computed by dividing net income/(loss) available to common stockholders by the sum of (1) the weighted-average number of common shares outstanding during the period, (2) the dilutive effect of the assumed exercise of options and warrants using the treasury stock method and (3) the dilutive effect of other potentially dilutive securities. For purposes of the diluted net loss per share calculation, options and warrants are potentially dilutive securities and are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive. As of June 30, 2021, loss per share excludes 11,059,202 (September 30, 2020 – 10,576,266 ) potentially dilutive common shares related to outstanding options and warrants, as their effect was anti-dilutive. 8 Anavex Life Sciences Corp. Notes to the Condensed Consolidated Interim Financial Statements June 30, 2021 (Unaudited) Note 2 Recent Accounting Pronouncements Recent Accounting Pronouncements Not Yet Adopted The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on its results of operations, financial position or cash flows. Note 3 Other Income Grant Income During the nine months ended June 30, 2021, the Company received $ 497,931 of a $995,862 research grant awarded by the Michael J. Fox Foundation for Parkinson’s Research. The grant will be used to fund a clinical trial in the Company’s lead compound, ANAVEX ® 2-73 for the treatment of Parkinson’s disease. The grant income is being deferred when received and amortized to other income as the related research and development expenditures are incurred. During the three and nine months ended June 30, 2021, the Company recognized $ 43,280 and $ 54,100 , respectively of this grant on its statements of operations within grant income. During the year ended September 30, 2017, the Company was awarded grant funding in the amount of $ 597,886 . The grant was received in equal quarterly installments over a period of two years ending during the year ended September 30, 2020, in exchange for a commitment to complete clinical testing for a therapeutic drug candidate for the treatment of Rett syndrome. The grant income was deferred when received and amortized to other income as the related research and development expenditures were incurred. During the three and nine months ended June 30, 2020, the Company recognized $nil and $ 149,888 , respectively of this grant on its statements of operations within grant income. Research and Development Incentive Income Research and development incentive income represents income earned by the Company’s Australian subsidiary, of the Australian research and development incentive credit, (the “ATO R&D Credit”). During the three and nine months ended June 30, 2021, the Company recorded research and development incentive income of $ 1,363,661 (AUD 1,770,444 ) and $ 3,593,856 (AUD 4,750,539 ) (2020: $ 1,319,913 (AUD 1,923,000 ) and $ 2,980,456 (AUD 4,471,000 )), respectively, in respect of the ATO R&D Credit for eligible research and development expenses incurred during the period. Note 4 Equity Offerings Registered Direct Offering On June 22, 2021, the Company and Deep Track Capital entered into a securities purchase agreement pursuant to which the Company sold to Deep Track Capital an aggregate of 2,380,953 shares of common stock at $ 21 per share in a registered direct offering, for gross proceeds of $ 50,000,013 . Net proceeds of the offering were $ 46,904,062 after deducting offering fees and expenses. 9 Anavex Life Sciences Corp. Notes to the Condensed Consolidated Interim Financial Statements June 30, 2021 (Unaudited) Note 4 Equity Offerings – (Continued) Sales Agreement The Company entered into a Controlled Equity Offering Sales Agreement on July 6, 2018, which was amended and restated on May 1, 2020 (the “Sales Agreement”) with Cantor Fitzgerald & Co. and SVB Leerink LLC (together the “Sales Agents”), pursuant to which the Company may offer and sell shares of common stock registered under an effective registration statement from time to time through the Sales Agents (the “Offering”). Upon delivery of a placement notice based on the Company’s instructions and subject to the terms and conditions of the Sales Agreement, the Sales Agents may sell the Shares by methods deemed to be an “at the market offering” offering, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, or by any other method permitted by law, including negotiated transactions, subject to the prior written consent of the Company. The Company is not obligated to make any sales of Shares under the Sales Agreement. The Company or Sales Agents may suspend or terminate the offering of Shares upon notice to the other party, subject to certain conditions. The Sales Agents will act as agent on a commercially reasonable efforts basis consistent with their normal trading and sales practices and applicable state and federal law, rules and regulations and the rules of Nasdaq. The Company has agreed to pay the Sales Agents commissions for their services of up to 3.0 % of the gross proceeds from the sale of the Shares pursuant to the Sales Agreement. The Company also agreed to provide the Sales Agents with customary indemnification and contribution rights. During the nine months ended June 30, 2021, 5,634,576 shares were sold pursuant to the Offering for gross proceeds of $ 79,107,547 (net proceeds of $ 76,670,025 after deducting offering expenses). 2019 Purchase Agreement On June 7, 2019, the Company entered into a $ 50,000,000 purchase agreement (the “2019 Purchase Agreement”) with Lincoln Park, as amended on July 1, 2020, pursuant to which the Company had the right to sell and issue to Lincoln Park, and Lincoln Park was obligated to purchase, up to $ 50,000,000 in value of its shares of common stock from time to time over a three-year period until July 1, 2022. In consideration for entering into the 2019 Purchase Agreement, the Company issued to Lincoln Park 324,383 shares of common stock as a commitment fee during the year ended September 30, 2019 and agreed to issue up to 162,191 shares pro rata, when and if, Lincoln Park purchased, at the Company’s discretion, the $50,000,000 aggregate commitment. During the nine months ended June 30, 2021, the Company issued to Lincoln Park an aggregate of 4,086,209 (2020 – 7,431,049 ) shares of common stock under the 2019 Purchase Agreement, including 4,007,996 (2020: 7,364,584 ) shares of common stock for an aggregate purchase price of $ 24,111,198 (2020: $ 20,490,297 ) and 78,213 (2020: 66,465 ) commitment shares. At June 30, 2021, no amount remained available under the 2019 Purchase Agreement (September 30, 2020: $ 24,111,198 ). 10 Anavex Life Sciences Corp. Notes to the Condensed Consolidated Interim Financial Statements June 30, 2021 (Unaudited) Note 5 Commitments and Contingencies a) Leases During the three and nine months ended June 30, 2021, the Company incurred office lease expense of $ 18,994 and $ 117,284 , respectively (2020: $ 58,554 and $ 169,469 , respectively). b) Litigation The Company is subject to claims and legal proceedings that arise in the ordinary course of business. Such matters are inherently uncertain, and there can be no guarantee that the outcome of any such matter will be decided favorably to the Company or that the resolution of any such matter will not have a material adverse effect upon the Company’s consolidated financial statements. The Company does not believe that any of such pending claims and legal proceedings will have a material adverse effect on its consolidated financial statements. c) Share Purchase Warrants A summary of the status of the Company’s outstanding share purchase warrants is presented below: Schedule of exercisable share purchase warrants outstanding Number of Shares Weighted Average Exercise Price ($) Balance, September 30, 2019 350,000 4.19 Granted 150,000 3.17 Balance, September 30, 2020 500,000 3.88 Granted 60,000 12.00 Exercised ( 350,000 ) 4.19 Balance, June 30, 2021 210,000 5.69 At June 30, 2021, the Company had share purchase warrants outstanding as follows: Schedule of share purchase warrants outstanding Number Exercise Price Expiry Date 150,000 $ 3.17 May 6, 2024 60,000 $ 12.00 April 21, 2026 210,000 11 Anavex Life Sciences Corp. Notes to the Condensed Consolidated Interim Financial Statements June 30, 2021 (Unaudited) Note 5 Commitments – (Continued) d) Stock–based Compensation Plan 2015 Stock Option Plan On September 18, 2015, the Company’s Board of Directors (the “Board”) approved a 2015 Omnibus Incentive Plan (the “2015 Plan”), which provided for the grant of stock options and restricted stock awards to directors, officers, employees and consultants of the Company. The maximum number of our common shares reserved for issue under the plan was 6,050,553 shares, subject to adjustment in the event of a change of the Company’s capitalization. At June 30, 2021, 146,371 (September 30, 2020: 146,371 ) options remain available for issue under the 2015 Plan. 2019 Stock Option Plan On January 15, 2019, the Board approved the 2019 Omnibus Incentive Plan (the “2019 Plan”), which provides for the grant of stock options and restricted stock awards to directors, officers, employees, consultants and advisors of the Company. Under the terms of the 2019 Plan, 6,000,000 additional shares of Common Stock are available for issuance under the 2019 Plan, in addition to the shares available under the 2015 Plan. Any awards outstanding under the 2015 Plan or the Company’s 2007 Stock Option Plan (the “2007 Plan”) will remain subject to and be paid under the 2015 Plan or the 2007 Plan, respectively, and any shares subject to outstanding awards under the 2015 Plan or the 2007 Plan that subsequently cease to be subject to such awards (other than by reason of settlement of the awards in shares) will automatically become available for issuance under the 2019 Plan. The 2019 Plan provides that it may be administered by the Board, or the Board may delegate such responsibility to a committee. The exercise price will be determined by the Board at the time of grant shall be at least equal to the fair market value on such date. If the grantee is a 10% stockholder on the grant date, then the exercise price shall not be less than 110% of fair market value of the Company’s shares of common stock on the grant date. Stock options may be granted under the 2019 Plan for an exercise period of up to ten years from the date of grant of the option or such lesser periods as may be determined by the Board, subject to earlier termination in accordance with the terms of the 2019 Plan. At June 30, 2021, 1,706,665 (September 30, 2020: 3,161,665 ) options remain available for issue under the 2019 Plan. 12 Anavex Life Sciences Corp. Notes to the Condensed Consolidated Interim Financial Statements June 30, 2021 (Unaudited) Note 5 Commitments – (Continued) d) Stock-based Compensation Plan – (Continued) A summary of the status of Company’s outstanding stock options is presented below: Schedule of outstanding stock purchase options Number of Shares Weighted Average Exercise Price ($) Weighted Average Grant Date Fair Value ($) Aggregate intrinsic value ($) Outstanding, September 30, 2019 8,462,933 3.58 4,115,032 Granted 1,695,000 2.96 2.27 Forfeited ( 68,332 ) 3.01 Exercised ( 13,335 ) 3.15 Outstanding, September 30, 2020 10,076,266 3.48 14,982,581 Granted 1,455,000 6.59 5.02 Forfeited ( 29,167 ) 1.44 Exercised ( 652,897 ) 2.86 Outstanding, June 30, 2021 10,849,202 3.94 205,309,996 Exercisable, June 30, 2021 7,930,452 3.64 152,413,269 The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted market price of the Company’s stock for the options that were in-the-money at June 30, 2021. During the three and nine months ended June 30, 2021, the Company recognized stock-based compensation expense of $ 2,293,925 and $ 5,079,395 , respectively (2020: $ 1,251,129 and $ 4,216,306 , respectively) in connection with the issuance and vesting of stock options and warrants in exchange for services. These amounts have been included in general and administrative expenses and research and development expenses on the Company’s statements of operations as follows: Schedule of general and administrative expenses and research and development expenses Three months ended June 30, Nine months ended June 30, 2021 2020 2021 2020 General and administrative $ 1,048,606 $ 575,451 $ 2,265,387 $ 1,863,869 Research and development $ 1,245,319 $ 675,678 $ 2,814,008 $ 2,352,437 Total share based compensation $ 2,293,925 $ 1,251,129 $ 5,079,395 $ 4,216,306 13 An amount of approximately $ 6,664,000 in stock-based compensation is expected to be recorded over the remaining term of such options through fiscal 2024. The fair value of each option award granted during the nine months ended June 30, 2021 and 2020 is estimated on the date of grant using the Black Scholes option pricing model based on the following weighted average assumptions: Schedule of weighted average assumptions for fair value of each option award 2021 2020 Risk-free interest rate 0.71 % 1.57 % Expected life of options (years) 5.66 5.53 Annualized volatility 95.87 % 97.80 % Dividend rate 0.00 % 0.00 % 14