Item 2. Management’s Discussion and Analysis
Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
This Quarterly Report on Form 10-Q includes
forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report on Form
10-Q, including statements regarding our anticipated future clinical and regulatory milestone events, future financial position,
business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,”
“may,” “estimate,” “continue,” “anticipate,” “intend,” “expect”
“should,” “forecast,” “could,” “suggest,” “plan” and similar expressions,
as they relate to us, are intended to identify forward-looking statements. Such forward-looking statements include, without limitation,
statements regarding:
●
volatility in our stock and
in the markets in general;
●
our ability to successfully
conduct clinical and preclinical trials for our product candidates;
●
our ability to raise additional
capital on favorable terms and the impact of such activities on our stockholders and stock price;
●
the impact of the COVID-19
outbreak and its effect on us;
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our ability to generate any
revenue or to continue as a going concern;
●
our ability to execute our
research and development plan on time and on budget;
●
our products ability to demonstrate
efficacy or an acceptable safety profile of our product candidates;
●
our ability to obtain the support
of qualified scientific collaborators;
●
our ability, whether alone
or with commercial partners, to successfully commercialize any of our product candidates that may be approved for sale;
●
our ability to identify and
obtain additional product candidates;
●
our reliance on third parties
in non-clinical and clinical studies;
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our ability to defend against
product liability claims;
●
our ability to safeguard against
security breaches;
●
our ability to obtain and maintain
sufficient intellectual property protection for our product candidates;
●
our ability to comply with
our intellectual property licensing agreements;
●
our ability to defend against
claims of intellectual property infringement;
●
our ability to comply with
the maintenance requirements of the government patent agencies;
●
our ability to protect our
intellectual property rights throughout the world;
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competition;
●
the anticipated start dates,
durations and completion dates of our ongoing and future clinical studies;
●
the anticipated designs of
our future clinical studies;
●
the impact of fast track designation
on receipt of actual FDA approval;
●
our anticipated future regulatory
submissions and our ability to receive regulatory approvals to develop and market our product candidates, including any orphan drug or
fast track designations; and
●
our anticipated future cash
position.
We have based these forward-looking statements
largely on our current expectations and projections about future events, including the responses we expect from the U.S. Food and
Drug Administration, (“FDA”), and other regulatory authorities and financial trends that we believe may affect our
financial condition, results of operations, business strategy, preclinical and clinical trials, and financial needs. These forward-looking
statements are subject to a number of risks, uncertainties and assumptions including without limitation the risks described in
“Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K filed with the Securities and Exchange Commission
on December 28, 2020. These risks are not exhaustive. Other sections of this Quarterly Report on Form 10-Q include additional factors
which could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing
environment. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor
can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any forward-looking statements. You should not rely upon forward-looking
statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking
statements will be achieved or occur and actual results could differ materially from those projected in the forward-looking statements.
Except as required by applicable laws including the securities laws of the United States, we assume no obligation to update or
supplement forward-looking statements.
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As used in this Quarterly Report on Form 10-Q,
the terms “we,” “us,” “our,” and “Anavex” mean Anavex Life Sciences Corp., unless
the context clearly requires otherwise.
Our Current Business
Anavex Life Sciences Corp. 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. We analyze genomic data from clinical studies to identify biomarkers,
which we use to select patients that will receive the therapeutic benefit for the treatment of neurodegenerative and neurodevelopmental
diseases.
Our 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”).
We currently have two core programs and two
seed programs. Our core programs are at various stages of clinical and preclinical development, in neurodegenerative and neurodevelopmental
diseases.
The following table summarizes key information about our programs:
Anavex has a portfolio of compounds varying
in sigma-1 receptor (S1R) binding activities. The SIGMAR1 gene encodes the S1R protein, which is an intracellular chaperone protein
with important roles in cellular communication. S1R is also involved in transcriptional regulation at the nuclear envelope and
restores homeostasis and stimulates recovery of cell function when activated. In order to validate the ability of our compounds
to activate quantitatively the S1R, we performed, in collaboration with Stanford University, a quantitative Positron Emission Tomography
(PET) imaging scan in mice, which demonstrated a dose-dependent ANAVEX ® 2-73 target engagement or receptor occupancy
(RO) with S1R in the brain.
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Cellular Homeostasis
Many diseases are possibly directly caused
by chronic homeostatic imbalances or cellular stress of brain cells. In pediatric diseases like Rett syndrome or infantile spasms,
the chronic cellular stress is possibly caused by the presence of a constant genetic mutation. In neurodegenerative diseases, such
as Alzheimer’s and Parkinson’s diseases, chronic cellular stress is possibly caused by age-correlated buildup of cellular
insult and hence chronic cellular stress. Specifically, defects in homeostasis of protein or ribonucleic acid (“RNA”)
lead to the death of neurons and dysfunction of the nervous system. The spreading of protein aggregates resulting in a proteinopathy,
a characteristic finding in Alzheimer’s and Parkinson’s diseases that results from disorders of protein synthesis,
trafficking, folding, processing or degradation in cells. The clearance of macromolecules in the brain is particularly susceptible
to imbalances that result in aggregation and degeneration in nerve cells. For example, Alzheimer’s disease pathology is characterized
by the presence of amyloid plaques, neurofibrillary tangles, which are aggregates of hyperphosphorylated Tau protein that are a
marker of other diseases known as tauopathies as well as inflammation of microglia. With the SIGMAR1 activation through SIGMAR1
agonists like ANAVEX ® 2-73, our approach is to restore cellular balance, i.e. homeostasis. Therapies that correct
defects in cellular homeostasis might have the potential to halt or delay neurodevelopmental and neurodegenerative disease progression.
ANAVEX ® 2-73-specific Biomarkers
A full genomic analysis of Alzheimer’s
disease (AD) patients treated with ANAVEX ® 2-73 resulted in the identification of actionable genetic variants. A
significant impact of the genomic biomarkers SIGMAR1, the direct target of ANAVEX ® 2-73 and COMT, a gene involved
in memory function, on the drug response level was identified, leading to an early ANAVEX ® 2-73-specific biomarker
hypothesis. It is expected that excluding patients with these two identified biomarker variants (approximately 10%-20% of
the population) in prospective studies would identify approximately 80%-90% patients that would display clinically significant
improved functional and cognitive scores.
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The consistency between the identified DNA
and RNA data related to ANAVEX ® 2-73, which are considered independent of AD pathology, as well as multiple endpoints
and time-points, provides support for precision medicine clinical development of ANAVEX ® 2-73 by using genetic biomarkers
identified within the study population itself to target patients who are most likely to respond to ANAVEX ® 2-73 treatment
in AD as well as indications like Parkinson’s disease dementia (PDD) or Rett syndrome (RTT) in which ANAVEX ® 2-73
is currently studied.
Clinical Studies Overview
Alzheimer’s Disease
In November 2016, we completed a Phase 2a clinical
trial, consisting of PART A and PART B, which lasted a total of 57 weeks, for ANAVEX ® 2-73 in mild-to-moderate Alzheimer’s
patients. This open-label randomized trial met both primary and secondary endpoints and was designed to assess the safety and exploratory
efficacy of ANAVEX ® 2-73 in 32 patients. ANAVEX ® 2-73 targets sigma-1 and muscarinic receptors, which
have been shown in preclinical studies to reduce stress levels in the brain believed to restore cellular homeostasis and to reverse
the pathological hallmarks observed in Alzheimer’s disease. The Phase 2a trial demonstrated positive pharmacokinetic (PK)
and pharmacodynamic (PD) data, which established a concentration-effect relationship between ANAVEX ® 2-73 and study
measurements. These measures obtained from all patients who participated in the entire 57 weeks include exploratory cognitive and
functional scores as well as biomarker signals of brain activity. Additionally, the study appears to show that ANAVEX ® 2-73
activity is enhanced by its active metabolite (ANAVEX19-144), which also targets the sigma-1 receptor and has a half-life approximately
twice as long as the parent molecule.
Two consecutive trial extensions for the Phase
2a trial have allowed participants who completed the 52-week PART B of the study to continue taking ANAVEX ® 2-73,
providing an opportunity to gather extended safety data for a cumulative time period of five years. In August 2020, patients completing
these Phase 2a trial extensions were granted continued access to treatment with ANAVEX ® 2-73 through the Australian
Government Department of Health – Therapeutic Goods Administration (TGA) compassionate use Special Access Scheme.
A larger Phase 2b/3 double-blind, placebo-controlled
450-patient study of ANAVEX ® 2-73 in Alzheimer’s disease commenced in August 2018. The Phase 2b/3 study is
a 48-week study, with participants randomized 1:1:1 to two different ANAVEX ® 2-73 doses or placebo. The trial commenced
in Australia; and additional regions were added in the United Kingdom, The Netherlands, Germany and Canada. The ANAVEX ® 2-73
Phase 2b/3 study design incorporates genomic precision medicine biomarkers identified in the ANAVEX ® 2-73 Phase 2a
study. Primary and secondary endpoints will assess safety and both cognitive and functional efficacy, measured through Alzheimer’s
Disease Assessment Scale – Cognition (ADAS-Cog), ADCS-ADL and Clinical Dementia Rating – Sum of Boxes for cognition
and function (CDR-SB). The study completed enrollment in June 2021, exceeding the enrollment beyond 450 patients at 52 sites across
North America, Europe and Australia.
In October 2019, we initiated a long-term open
label extension study of ANAVEX ® 2-73, entitled the ATTENTION-AD study, for patients who have completed the 48-week
Phase 2b/3 placebo-controlled trial referenced above. This study is expected to last two years and will give patients the opportunity
to continue their treatment.
Rett Syndrome
In February 2016, we presented positive preclinical
data for ANAVEX ® 2-73 in Rett syndrome, a rare neurodevelopmental disease. The study was funded by the International
Rett Syndrome Foundation (“Rettsyndrome.org”). In January 2017, we were awarded a financial grant from Rettsyndrome.org
of a minimum of $0.6 million to cover some of the costs of a multicenter Phase 2 clinical trial of ANAVEX ® 2-73 for
the treatment of Rett syndrome. This award was received in quarterly instalments which commenced during fiscal 2018.
In March 2019, we commenced the first Phase
2 clinical trial in a planned Rett syndrome program of ANAVEX ® 2-73 for the treatment of Rett syndrome. The studies
are being conducted in a range of patient age demographics and geographic regions, utilizing a convenient oral liquid once-daily
formulation of ANAVEX ® 2-73.
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The first Phase 2 study, which took place in
the United States, was completed in December 2020. This trial was a randomized double-blind, placebo-controlled safety, tolerability,
pharmacokinetic and efficacy study of oral liquid ANAVEX ® 2-73 formulation in 25 adult female patients with Rett
syndrome over a 7-week treatment period including ANAVEX ® 2-73-specific genomic precision medicine biomarkers. The
primary endpoint of the trial was safety. The dosing of 5 mg ANAVEX ® 2-73 was well-tolerated and demonstrated dose-proportional
PK (pharmacokinetics). All secondary efficacy endpoints of the trial showed statistically significant and clinically meaningful,
drug exposure-dependent response in the Rett Syndrome Behaviour Questionnaire (RSBQ) Total scores, when compared to placebo, in
the ITT cohort (all participants, p = 0.048). 66.7% of ANAVEX ® 2-73 treated subjects showed a statistically significant
improvement in drug exposure-dependent RSBQ response as compared to 10% of the subjects on placebo in the ITT cohort (all participants,
p = 0.011). ANAVEX ® 2-73 treatment resulted in a sustained improvement in Clinical Global Impression Improvement
(CGI-I) scores throughout the 7-week study, when compared to placebo in the ITT cohort (all participants, p = 0.014). 86.7% of
ANAVEX ® 2-73 treated subjects showed a statistically significant CGI-I response, defined as sustained improvement
to treatment, as compared to 40% of the subjects on placebo in the ITT cohort (all participants, p = 0.014). Consistent with previous
ANAVEX ® 2-73 clinical trials, patients carrying the common form of the SIGMAR1 gene treated with ANAVEX ® 2-73
experienced stronger improvements in the prespecified efficacy endpoints.
The second Phase 2 study of ANAVEX ® 2-73
for the treatment of Rett syndrome, called the AVATAR study, commenced in June 2019. This study is taking place in Australia and
the United Kingdom using a higher dose than the U.S. based Phase 2 study for Rett syndrome. The study will evaluate the safety
and efficacy of ANAVEX ® 2-73 in approximately 33 patients over a 7-week treatment period including ANAVEX ® 2-73
specific precision medicine biomarkers. All patients who participate in the study will be eligible to receive ANAVEX ® 2-73
under a voluntary open label extension protocol.
In July 2020, we commenced the third study
of ANAVEX ® 2-73 for the treatment of Rett syndrome, called the EXCELLENCE study. This Phase 2/3 study in pediatric
patients with Rett syndrome will evaluate the safety and efficacy of ANAVEX ® 2-73 in at least 69 pediatric patients,
aged 5 to 18, over a 12-week treatment period incorporating ANAVEX ® 2-73 specific precision medicine biomarkers.
All patients who participate in the study will be eligible to receive ANAVEX ® 2-73 under a voluntary open label extension
protocol.
Parkinson’s Disease
In September 2016, we presented positive preclinical
data for ANAVEX ® 2-73 in an animal model of Parkinson’s disease, which demonstrated significant improvements
on behavioral, histopathological, and neuroinflammatory endpoints. The study was funded by the Michael J. Fox Foundation. Additional
data announced in October 2017 indicates that ANAVEX ® 2-73 induces robust neurorestoration in experimental Parkinsonism.
The encouraging results we have gathered in this model, coupled with the favorable profile of this compound in the Alzheimer’s
disease trial, support the notion that ANAVEX ® 2-73 is a promising clinical candidate drug for Parkinson’s
disease dementia.
In October 2020, we completed a double-blind,
randomized, placebo-controlled proof-of-concept Phase 2 trial with ANAVEX ® 2-73 in Parkinson’s Disease Dementia
(PDD), to study the effect of the compound on both the cognitive and motor impairment of Parkinson’s disease. The Phase 2
study enrolled approximately 132 patients for 14 weeks, randomized 1:1:1 to two different ANAVEX ® 2-73 doses, 30mg
and 50mg, or placebo. The ANAVEX ® 2-73 Phase 2 PDD study design incorporated genomic precision medicine biomarkers
identified in the ANAVEX ® 2-73 Phase 2a Alzheimer’s disease study.
Within this study ANAVEX ® 2-73
was safe and well tolerated in oral doses up to 50mg once daily. The results show clinically meaningful, dose-dependent, and statistically
significant improvements in the Cognitive Drug Research (CDR) computerized assessment system analysis. The study confirmed the
precision medicine approach of targeting SIGMAR1 as a genetic biomarker in response to ANAVEX ® 2-73.
In August 2020, we announced a financial commitment
by Shake It Up Australia Foundation for Parkinson’s Research to fund up to 50% of the costs of an Australian clinical study
to develop ANAVEX ® 2-73 for the disease modifying treatment of Parkinson’s disease. The financial commitment
would be made through private placement purchases of our common stock at 200% of the fair market value on the purchase date and
will be contingent upon the completion of certain clinical trial milestones relating to the proposed clinical trial. The proposed
clinical trial will use a convenient, once-daily oral ANAVEX ® 2-73 formulation to confirm the potential disease modifying
features of ANAVEX ® 2-73 in an animal model of Parkinson’s disease. Safety and efficacy will be investigated
in an appropriately powered placebo-controlled clinical study of Parkinson’s disease patients over at least 48-weeks including
ANAVEX ® 2-73-specific precision medicine biomarkers.
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In January 2021, we announced we were awarded
a research grant of $1.0 million from The Michael J. Fox Foundation
for Parkinson’s Research (MJFF) to develop ANAVEX ® 2-73 for the treatment of Parkinson’s
disease. The award will explore utilization of PET imaging biomarkers to enable measurement of target engagement and pathway activation
of the sigma-1 receptor (SIGMAR1) with clinically relevant doses in people with Parkinson’s disease.
Frontotemporal Dementia
In July 2020, we commenced the First-in-Human
Phase 1 clinical trial of ANAVEX ® 3-71, which was previously granted orphan drug designation for the treatment of
Frontotemporal Dementia (FTD) by the FDA. ANAVEX ® 3-71 is an orally administered small molecule targeting sigma-1
and M1 muscarinic receptors that is designed to be beneficial for neurodegenerative diseases. In preclinical studies, ANAVEX ® 3-71
demonstrated disease-modifying activity against the major hallmarks of Alzheimer’s disease in transgenic (3xTg-AD) mice,
including cognitive deficits, amyloid and tau pathologies, as well as beneficial effects on mitochondrial dysfunction and neuroinflammation.
The Phase
1 clinical trial will be a prospective double-blind, randomized, placebo-controlled study. A total of at least 36 healthy male
and female subjects will be included. Single escalating doses of ANAVEX ® 3-71 will be administered in order to evaluate
the safety, tolerability, and pharmacokinetics (PK) of ANAVEX ® 3-71 and the effects of food and gender on its PK
in healthy volunteers. This study is expected to be followed by longer duration dosing including patients with FTD or other dementia
indications with unmet medical need, incorporating exploratory efficacy and disease biomarker measures .
Our Pipeline
Our research and development pipeline includes
ANAVEX ® 2-73 currently in three different clinical study indications, and several other compounds in different stages
of clinical and pre-clinical study.
Our proprietary SIGMACEPTOR™ Discovery
Platform produced small molecule drug candidates with unique modes of action, based on our understanding of sigma receptors. Sigma
receptors may be targets for therapeutics to combat many human diseases, both of neurodegenerative nature, including Alzheimer’s
disease, as well as of neurodevelopmental nature, like Rett syndrome. When bound by the appropriate ligands, sigma receptors influence
the functioning of multiple biochemical signals that are involved in the pathogenesis (origin or development) of disease. Multiple
viruses including SARS-CoV-2 (COVID-19) induce cellular stress by intrinsic mitochondrial apoptosis and other related cellular
processes, in order to ensure survival and replication. Hence, it is possible that S1R could play a role in modulating the cellular
response to viral infection and ameliorate pathogenesis.
Compounds that have been subjects of our research
include the following:
ANAVEX ® 2-73 (blarcamesine)
ANAVEX ® 2-73 may offer a disease-modifying
approach in neurodegenerative and neurodevelopmental diseases by activation of sigma-1 receptors.
In Rett syndrome, administration of ANAVEX ® 2-73
resulted in both significant and dose related improvements in an array of behavioral paradigms in the MECP2 HET Rett syndrome disease
model. In addition, in a further experiment sponsored by Rettsyndrome.org, ANAVEX ® 2-73 was evaluated in automatic
visual response and respiration tests in 7-month old mice, an age at which advanced pathology is evident. Vehicle-treated MECP2
mice demonstrated fewer automatic visual responses than wild-type mice. Treatment with ANAVEX ® 2-73 for four weeks
significantly increased the automatic visual response in the MECP2 Rett syndrome disease mouse. Additionally, chronic oral dosing
daily for 6.5 weeks of ANAVEX ® 2-73 starting at ~5.5 weeks of age was conducted in the MECP2 HET Rett syndrome disease
mouse model assessed the different aspects of muscular coordination, balance, motor learning and muscular strengths, some of the
core deficits observed in Rett syndrome. Administration of ANAVEX ® 2-73 resulted in both significant and dose related
improvements in an array of these behavioral paradigms in the MECP2 HET Rett syndrome disease model.
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In March 2019, we commenced the first Phase
2 clinical trial in a planned Rett syndrome program of ANAVEX ® 2-73 for the treatment of Rett syndrome. This study,
which took place in the United States, was completed in December 2020, however two other clinical trials in Rett syndrome, the
AVATAR study and the EXCELLENCE study, are still underway. The studies are being conducted in a range of patient age demographics
and geographic regions, as more fully described above under Clinical Studies Overview – Rett Syndrome .
In May 2016 and June 2016, the FDA granted
Orphan Drug Designation to ANAVEX ® 2-73 for the treatment of Rett syndrome and infantile spasms, respectively. In
November 2019, the FDA granted to ANAVEX ® 2-73 the Rare Pediatric Disease (RPD) designation for the treatment of
Rett syndrome. The RPD designation provides priority review by the FDA to encourage the development of treatments for rare pediatric
diseases.
Further, in February 2020, the FDA granted
Fast Track designation for the ANAVEX ® 2-73 clinical development program for the treatment of Rett syndrome. The
FDA Fast Track program is designed to facilitate and expedite the development and review of new drugs to address unmet medical
needs in the treatment of serious and life-threatening conditions.
For Parkinson’s disease, data demonstrates
significant improvements and restoration of function in a disease modifying animal model of Parkinson’s disease. Significant
improvements were seen on all measures tested: behavioral, histopathological, and neuroinflammatory endpoints. In October 2020,
we completed a double-blind, randomized, placebo-controlled proof-of-concept Phase 2 trial with ANAVEX ® 2-73 in Parkinson’s
Disease Dementia (PDD), to study the effect of the compound on both the cognitive and motor impairment of Parkinson’s disease.
The Phase 2 study enrolled approximately 132 patients for 14 weeks, randomized 1:1:1 to two different ANAVEX ® 2-73
doses, 30mg and 50mg, or placebo. The ANAVEX ® 2-73 Phase 2 PDD study design incorporated genomic precision medicine
biomarkers identified in the ANAVEX ® 2-73 Phase 2a Alzheimer’s disease study.
The study found that ANAVEX ® 2-73
was safe and well tolerated in oral doses up to 50mg once daily. The results show clinically meaningful, dose-dependent, and statistically
significant improvements in the Cognitive Drug Research (CDR) computerized assessment system analysis. We anticipate conducting
further clinical trials of ANAVEX ® 2-73 in Parkinson’s disease dementia after submitting the results of the
study to the FDA to obtain regulatory guidance.
In Alzheimer’s disease (AD) animal models,
ANAVEX ® 2-73 has shown pharmacological, histological and behavioral evidence as a potential neuroprotective, anti-amnesic,
anti-convulsive and anti-depressive therapeutic agent, due to its potent affinity to sigma-1 receptors and moderate affinities
to M1-4 type muscarinic receptors. In addition, ANAVEX ® 2-73 has shown a potential dual mechanism which may impact
amyloid, tau pathology and inflammation. In a transgenic AD animal model Tg2576, ANAVEX ® 2-73 induced a statistically
significant neuroprotective effect against the development of oxidative stress in the mouse brain, as well as significantly increased
the expression of functional and synaptic plasticity markers that is apparently amyloid-beta independent. It also statistically
alleviated the learning and memory deficits developed over time in the animals, regardless of sex, both in terms of spatial working
memory and long-term spatial reference memory.
Based on the results of pre-clinical testing,
we initiated and completed a Phase 1 single ascending dose (SAD) clinical trial of ANAVEX ® 2-73. In this Phase 1
SAD trial, the maximum tolerated single dose was defined per protocol as 55-60 mg. This dose is above the equivalent dose shown
to have positive effects in mouse models of AD. There were no significant changes in laboratory or electrocardiogram (ECG) parameters.
ANAVEX ® 2-73 was well tolerated below the 55-60 mg dose with only mild adverse events in some subjects. Observed
adverse events at doses above the maximum tolerated single dose included headache and dizziness, which were moderate in severity
and reversible. These side effects are often seen with drugs that target CNS conditions, including AD.
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In December 2014, a Phase 2a clinical trial
was initiated for ANAVEX ® 2-73, for the treatment of Alzheimer’s disease. The open-label randomized trial was
designed to assess the safety and exploratory efficacy of ANAVEX ® 2-73 in 32 patients with mild-to-moderate Alzheimer’s
disease. ANAVEX ® 2-73 is an orally available drug candidate that restores cellular homeostasis by targeting sigma-1
and muscarinic receptors. Preclinical studies demonstrated its potential to halt and/or reverse the course of Alzheimer’s.
The Phase 2a study met both primary and secondary objectives of the study.
In July 2018, we presented
the results of a genomic DNA and RNA evaluation of the participants in the Phase 2a study. More than 33,000 genes were analyzed
using unbiased, data driven, machine learning, artificial intelligence (AI) system for analyzing DNA & RNA data in patients
exposed to ANAVEX ® 2-73. The analysis identified genetic variants that impacted response to ANAVEX ® 2-73,
among them variants related to the Sigma-1 receptor (SIGMAR1), the target for ANAVEX ® 2-73. Results showed that study
participants with the common SIGMAR1 wild type gene variant, which is about 80 percent of the population worldwide, demonstrated
improved cognitive (MMSE) and the functional (ADCS-ADL) scores. The results from this evaluation have been used to establish a
precision medicine approach in subsequent clinical trials, since these signatures can now be applied to neurological indications
tested in clinical studies with ANAVEX ® 2-73 including Alzheimer’s disease, Parkinson’s disease dementia
and Rett syndrome.
ANAVEX ® 2-73
data presented met prerequisite information in order to progress into a Phase 2b/3 placebo-controlled study. On July 2, 2018, the
Human Research Ethics Committee in Australia approved the initiation of our Phase 2b/3, double-blind, randomized, placebo-controlled
48-week safety and efficacy trial of ANAVEX ® 2-73 for the treatment of early Alzheimer’s disease. Clinical
trial sites in Canada, the United Kingdom, the Netherlands and Germany were also added. This Phase 2b/3 study design incorporates
inclusion of genomic precision medicine biomarkers identified in the ANAVEX ® 2-73 Phase 2a study. The Phase 2b/3
study, which has completed enrollment, randomized 1:1:1 to either two different ANAVEX ® 2-73 doses or placebo, commenced
in October 2018.
Preclinical data also validates ANAVEX ® 2-73
as a prospective platform drug for other neurodegenerative diseases beyond Alzheimer’s disease, Parkinson’s disease
or Rett syndrome, more specifically, epilepsy, infantile spasms, Fragile X syndrome, Angelman syndrome, multiple sclerosis and,
more recently, tuberous sclerosis complex (TSC). ANAVEX ® 2-73 demonstrated significant improvements in all of these
indications in the respective preclinical animal models.
In a study sponsored by the Foundation for
Angelman Syndrome, ANAVEX ® 2-73 was assessed in a mouse model for the development of audiogenic seizures. The results
indicated that ANAVEX ® 2-73 administration significantly reduced audiogenic-induced seizures. In a study sponsored
by FRAXA Research Foundation regarding Fragile X syndrome, data demonstrated that ANAVEX ® 2-73 restored hippocampal
brain-derived neurotrophic factor (BDNF) expression to normal levels. BDNF under-expression has been observed in many neurodevelopmental
and neurodegenerative pathologies. BDNF signaling promotes maturation of both excitatory and inhibitory synapses. ANAVEX ® 2-73
normalization of BDNF expression could be a contributing factor for the positive data observed in both neurodevelopmental and neurodegenerative
disorders like Angelman and Fragile X syndromes.
Preclinical data presented also indicates that
ANAVEX ® 2-73 demonstrates protective effects of mitochondrial enzyme complexes during pathological conditions, which,
if impaired, are believed to play a role in the pathogenesis of neurodegenerative and neurodevelopmental diseases.
Preclinical data on ANAVEX ® 2-73
related to multiple sclerosis indicates that ANAVEX ® 2-73 may promote remyelination in multiple sclerosis disease.
Further, data also demonstrates that ANAVEX ® 2-73 provides protection for oligodendrocytes (“OL’s”)
and oligodendrocyte precursor cells (“OPC’s”), as well as central nervous system neurons in addition to helping
repair by increasing OPC proliferation and maturation in tissue culture.
In March 2018, we presented preclinical data
of ANAVEX ® 2-73 in a genetic mouse model of tuberous sclerosis complex (“TSC”). TSC is a rare genetic
disorder characterized by the growth of numerous benign tumors in many parts of the body with a high incidence of seizures. The
new preclinical data demonstrates that treatment with ANAVEX ® 2-73 significantly increases survival and reduces seizures.
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ANAVEX ® 3-71
ANAVEX ® 3-71 is a clinical drug
candidate with a novel mechanism of action via sigma-1 receptor activation and M1 muscarinic allosteric modulation, which has been
shown to enhance neuroprotection and cognition in Alzheimer’s disease models. ANAVEX ® 3-71 is a CNS-penetrable
potential disease modifying treatment for cognitive impairments. It is highly effective in very small doses against the major Alzheimer’s
hallmarks in transgenic (3xTg-AD) mice, including cognitive deficits, amyloid and tau pathologies, and also has beneficial effects
on inflammation and mitochondrial dysfunctions. ANAVEX ® 3-71 indicates extensive therapeutic advantages in Alzheimer’s
and other protein-aggregation-related diseases given its ability to enhance neuroprotection and cognition via sigma-1 receptor
activation and M1 muscarinic allosteric modulation.
A preclinical study examined the response of
ANAVEX ® 3-71 in aged transgenic animal models and showed a significant reduction in the rate of cognitive deficit,
amyloid beta pathology and inflammation with the administration of ANAVEX 3-71. In April 2016, the FDA granted Orphan Drug Designation
to ANAVEX ® 3-71 for the treatment of Frontotemporal dementia (FTD).
During pathological conditions ANAVEX ® 3-71
demonstrated the formation of new synapses between neurons (synaptogenesis) without causing an abnormal increase in the number
of astrocytes. In neurodegenerative diseases such as Alzheimer’s and Parkinson’s disease, synaptogenesis is believed
to be impaired. Additional preclinical data presented also indicates that in addition to reducing oxidative stress, ANAVEX ® 3-71
demonstrates protective effects of mitochondrial enzyme complexes during pathological conditions, which, if impaired, are believed
to play a role in the pathogenesis of neurodegenerative and neurodevelopmental diseases.
In July 2020, we commenced the first Phase
1 clinical trial of ANAVEX ® 3-71, with focus on the treatment of Frontotemporal Dementia (FTD) and other
dementia indications with unmet medical need . The study is more fully described above under Clinical Studies Overview
– Frontotemporal Dementia .
ANAVEX ® 1-41
ANAVEX ® 1-41 is a sigma-1 receptor
agonist. Pre-clinical tests revealed significant neuroprotective benefits (i.e., protects nerve cells from degeneration or death)
through the modulation of endoplasmic reticulum, mitochondrial and oxidative stress, which damages and impairs cell viability.
In addition, in animal models, ANAVEX ® 1-41 prevented the expression of caspase-3, an enzyme that plays a key role
in apoptosis (programmed cell death) and loss of cells in the hippocampus, the part of the brain that regulates learning, emotion
and memory. These activities involve both muscarinic and sigma-1 receptor systems through a novel mechanism of action.
Preclinical data presented also indicates that
ANAVEX ® 1-41 demonstrates protective effects of mitochondrial enzyme complexes during pathological conditions, which,
if impaired, are believed to play a role in the pathogenesis of neurodegenerative and neurodevelopmental diseases.
ANAVEX ® 1066
ANAVEX ® 1066, a mixed sigma-1/sigma-2
ligand is designed for the potential treatment of neuropathic and visceral pain. ANAVEX ® 1066 was tested in two preclinical
models of neuropathic and visceral pain that have been extensively validated in rats. In the chronic constriction injury model
of neuropathic pain, a single oral administration of ANAVEX ® 1066 dose-dependently restored the nociceptive threshold
in the affected paw to normal levels while leaving the contralateral healthy paw unchanged. Efficacy was rapid and remained significant
for two hours. In a model of visceral pain, chronic colonic hypersensitivity was induced by injection of an inflammatory agent
directly into the colon and a single oral administration of ANAVEX ® 1066 returned the nociceptive threshold to control
levels in a dose-dependent manner. Companion studies in rats demonstrated the lack of any effects on normal gastrointestinal transit
with ANAVEX ® 1066 and a favorable safety profile in a battery of behavioral measures.
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ANAVEX ® 1037
ANAVEX ® 1037 is designed for
the treatment of prostate and pancreatic cancer. It is a low molecular weight, synthetic compound exhibiting high affinity for
sigma-1 receptors at nanomolar levels and moderate affinity for sigma-2 receptors and sodium channels at micromolar levels. In
advanced pre-clinical studies, this compound revealed antitumor potential. It has also been shown to selectively kill human cancer
cells without affecting normal/healthy cells and also to significantly suppress tumor growth in immune-deficient mice models. Scientific
publications highlight the possibility that these ligands may stop tumor growth and induce selective cell death in various tumor
cell lines. Sigma receptors are highly expressed in different tumor cell types. Binding by appropriate sigma-1 and/or sigma-2 ligands
can induce selective apoptosis. In addition, through tumor cell membrane reorganization and interactions with ion channels, our
drug candidates may play an important role in inhibiting the processes of metastasis (spreading of cancer cells from the original
site to other parts of the body), angiogenesis (the formation of new blood vessels) and tumor cell proliferation.
Our compounds are in the clinical and pre-clinical
testing stages of development, and there is no guarantee that the activity demonstrated in pre-clinical models will be shown in
human testing.
We continue to identify and initiate discussions
with potential strategic and commercial partners to most effectively advance our programs and realize maximum shareholder value.
Further, we may acquire or develop new intellectual property and assign, license, or otherwise transfer our intellectual property
to further our goals.
Our Target Indications
We have developed compounds with potential
application to two broad categories and several specific indications. including:
Central Nervous System Diseases
● Alzheimer’s
disease – In 2020, an estimated 5.8 million Americans were suffering from Alzheimer’s
disease. The Alzheimer’s Association ® estimates that by 2050, this number
will rise to nearly 14 million Americans. Medications on the market today treat only the
symptoms of Alzheimer’s disease and do not have the ability to stop its onset or its
progression. There is an urgent and unmet need for both a disease modifying cure for Alzheimer’s
disease as well as for better symptomatic treatments.
● Parkinson’s
disease – Parkinson’s disease is a progressive disease of the nervous system
marked by tremors, muscular rigidity, and slow, imprecise movement. It is associated with
degeneration of the basal ganglia of the brain and a deficiency of the neurotransmitter dopamine.
Parkinson’s disease afflicts more than 10 million people worldwide, typically middle-aged
and elderly people. The Parkinson’s disease market is expected to expand to $11.5 billion
by 2029, according to business intelligence provider GBI Research.
● Rett
syndrome – Rett syndrome is a rare X-linked genetic neurological and developmental
disorder that affects the way the brain develops, including protein transcription, which
is altered and as a result leads to severe disruptions in neuronal homeostasis. It is considered
a rare, progressive neurodevelopmental disorder and is caused by a single mutation in the
MECP2 gene. Because males have a different chromosome combination from females, boys who
have the genetic MECP2 mutation are affected in devastating ways. Most of them die before
birth or in early infancy. For females who survive infancy, Rett syndrome leads to severe
impairments, affecting nearly every aspect of the child’s life; severe mental retardation,
their ability to speak, walk and eat, sleeping problems, seizures and even the ability to
breathe easily. Rett syndrome affects approximately 1 in every 10,000-15,000 females.
● Depression
– Depression is a major cause of morbidity worldwide according to the World Health
Organization. Pharmaceutical treatment for depression is dominated by blockbuster brands,
with the leading nine brands historically accounting for approximately 75% of total sales.
However, the dominance of the leading brands is waning, largely due to the effects of patent
expiration and generic competition.
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● Epilepsy
– Epilepsy is a common chronic neurological disorder characterized by recurrent unprovoked
seizures. These seizures are transient signs and/or symptoms of abnormal, excessive or synchronous
neuronal activity in the brain. According to the Centers for Disease Control and Prevention,
in 2015 epilepsy affected 3.4 million Americans. Today, epilepsy is often controlled, but
not cured, with medication that is categorized as older traditional anti-epileptic drugs
and second generation anti-epileptic drugs. Because epilepsy afflicts sufferers in different
ways, there is a need for drugs used in combination with both traditional anti-epileptic
drugs and second generation anti-epileptic drugs.
●
Neuropathic Pain –
We define neuralgia, or neuropathic pain, as pain that is not related to activation of pain receptor cells in any part of the body.
Neuralgia is more difficult to treat than some other types of pain because it does not respond well to normal pain medications. Special
medications have become more specific to neuralgia and typically fall under the category of membrane stabilizing drugs or antidepressants.
Cancer
● Malignant
Melanoma – Predominantly a skin cancer, malignant melanoma can also occur in melanocytes
found in the bowel and the eye. Malignant melanoma accounts for 75% of all deaths associated
with skin cancer. The treatment includes surgical removal of the tumor, adjuvant treatment,
chemo and immunotherapy, or radiation therapy. According to IMS Health the worldwide malignant
melanoma market is expected to grow to $4.4 billion by 2022.
● Prostate
Cancer – Specific to men, prostate cancer is a form of cancer that develops in the
prostate, a gland in the male reproductive system. The cancer cells may metastasize from
the prostate to other parts of the body, particularly the bones and lymph nodes. Drug therapeutics
for prostate cancer are expected to increase to nearly $13.5 billion in 2024 according to
Datamonitor Healthcare.
● Pancreatic
Cancer – Pancreatic cancer is a malignant neoplasm of the pancreas. In the United States,
approximately 55,000 new cases of pancreatic cancer will be diagnosed this year and approximately
44,000 patients will die as a result of their cancer, according to the American Cancer Society.
Sales predictions by GBI Research forecast that the market for the pharmaceutical treatment
of pancreatic cancer in the United States and five largest European countries willincrease
to $2.9 billion by 2021.
Patents, Trademarks and Intellectual
Property
We hold ownership or exclusive rights to thirteen
U.S. patents, seventeen U.S. patent applications, and various PCT or ex-U.S. patent applications relating to our drug candidates,
methods associated therewith, and to our research programs.
We own one issued U.S. patent entitled “ANAVEX ® 2-73
and certain anticholinesterase inhibitors composition and method for neuroprotection” claims a composition of matter of ANAVEX ® 2-73
directed to a novel and synergistic neuroprotective compound combined with donepezil and other cholinesterase inhibitors. This
patent is expected to expire in June 2034, absent any patent term extension for regulatory delays. We own two issued U.S. patents
each with claims directed to crystalline forms of ANAVEX ® 2-73. The first of these two patents claims crystalline
forms of ANAVEX ® 2-73, dosage forms and compositions containing crystalline ANAVEX ® 2-73, and methods
of treatment for Alzheimer’s disease using them. This patent is expected to expire in July 2036, absent any patent term extension
for regulatory delays. The second of these two patents claims pharmaceutical compositions containing a crystalline form of ANAVEX ® 2-73,
and methods of treatment for Alzheimer’s disease using the compositions. This patent is expected to expire in June 2037,
absent any patent term extension for regulatory delays. We also own two issued U.S. patents on seizure treatment. The first of
these two patents claims methods and dosage forms for treating seizures, the dosage forms containing a low-dose anti-epilepsy drug
combined with either: (i) ANAVEX ® 2-73 and its active metabolite ANAVEX ® 19-144; or (ii) ANAVEX ® 19-144.
The second of these two patents further claims the seizure treatment being co-timely or coordinated administration of anti-epilepsy
drugs and (i) ANAVEX ® 19-144 or (ii) ANAVEX 19-144 ® with ANAVEX 2-73 ® . Both patents
are expected to expire in October 2035, absent any patent term extension for regulatory delays. We also own two issued U.S. patents
with claims directed to treating neurodevelopmental disorders. These patents claim methods for treating a neurodevelopmental disorder
or multiple sclerosis by administering ANAVEX ® 2-73, ANAVEX ® 19-144, and/or ANAVEX ® 1-41
(another sigma receptor ligand similar to ANAVEX ® 2-73), or compositions thereof. Both patents are expected to expire
in January 2037, absent any patent term extension for regulatory delays. In addition, we own one issued U.S. Patent with claims
directed to methods of treating melanoma with a compound related to ANAVEX ® 2-73. This patent is expected to expire
in February 2030, absent any patent term extension for regulatory delays. We also own an issued U.S. patent that claims crystalline
forms of ANAVEX ® 19-144, dosage forms and compositions containing the crystalline forms of ANAVEX ® 19-144,
and methods of treatment for Alzheimer’s disease. This patent is expected to expire in July 2036, absent any patent term
extension for regulatory delays.
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We also own two issued U.S. patents related
to ANAVEX ® 1066. The first of these two patents claims methods for treating or preventing pain using (+) ANAVEX ® 1066
isomer. The second patent claims methods for treating or preventing pain using (-) ANAVEX ® 1066 isomer Both patents
are expected to expire in November 2036, absent any patent term extension for regulatory delays.
For ANAVEX ® 2-73, ANAVEX ® 19-144,
ANAVEX ® 1-41, and ANAVEX ® 1066, we also have granted or pending applications in Australia, Canada,
China, Europe, Japan, and Hong Kong, and are expected to expire after 2035.
With regard to ANAVEX ® 3-71,
we own exclusive rights to two issued U.S. patents with claims respectively directed to the ANAVEX ® 3-71 compound
and methods of treating various diseases including Alzheimer’s with the same. These patents are expected to expire in April
2030, and January 2030, respectively, absent any patent term extension for regulatory delays. We also own exclusive rights to related
patents or applications that are granted or pending in Australia, Canada, China, Europe, Japan, Korea, New Zealand, Russia, and
South Africa, and are expected to expire in January 2030.
We also own other patent applications directed
to enantiomers, crystals, formulations, uses, and patient selection methods that may provide additional protection for one or more
of our product candidates.
We regard patents and other intellectual property
rights as corporate assets. Accordingly, we attempt to optimize the value of intellectual property in developing our business strategy
including the selective development, protection, and exploitation of our intellectual property rights. In addition to filings made
with intellectual property authorities, we protect our intellectual property and confidential information by means of carefully
considered processes of communication and the sharing of information, and by the use of confidentiality and non-disclosure agreements
and provisions for the same in contractor’s agreements. While no agreement offers absolute protection, such agreements provide
some form of recourse in the event of disclosure, or anticipated disclosure.
Our intellectual property position, like that
of many biomedical companies, is uncertain and involves complex legal and technical questions for which important legal principles
are unresolved. For more information regarding challenges to our existing or future patents, see “Risk Factors” “
in Part I, Item 1A of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 28, 2020.
Financial Highlights
At June 30, 2021, our cash position had increased
to $157.6 million, from $29.2 million at our fiscal year end of September 30, 2020.
Operating expenses for the third quarter of
fiscal 2021 were $11.4 million, compared to $8.1 million for the comparable quarter in fiscal 2020. The operating expenses include an
aggregate of $2.3 million, as compared to $1.3 million in the third quarter of fiscal 2020, in non-cash charges related to the issuance
and vesting of stock options. Our research and development expenses for the third quarter of fiscal 2021 were $9.0 million, compared
to $6.7 million in the comparable period in fiscal 2020. The increase is attributable to the continued advancement of our ongoing clinical
trials.
Net loss for the third quarter of fiscal 2021
was $10.2 million, or $0.14 per share, as compared to $6.5 million, or $0.11 per share in the comparative quarter of fiscal 2020.
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Results of Operations
Revenue
We
are in the development stage and have not earned any revenues since our inception and we do not anticipate earning any revenues
until we can establish an alliance with other companies to develop, co-develop, license, acquire or market our products.
Three
and nine months ended June 30, 2021 compared to three and nine months ended June 30, 2020.
Operating Expenses
Total operating
expenses for the third quarter of fiscal 2021 were $11.4 million, compared to $8.1 million for the comparable quarter of fiscal
2020. Total operating expenses for the nine-month period ended June 30, 2021 were $29.8 million
compared to $23.6 million for the same period in fiscal 2020. This represents an increase of $3.3 million for the three-month period
and $6.2 million for the nine-month period.
Research and development
expenses for the third quarter of fiscal 2021 were $9.0 million, compared to $6.7 million for the third quarter of fiscal 2020
and $23.6 million for the nine-month period ended June 30, 2021, as compared to $19.1 million for the applicable prior year period.
This increase in both the current quarter and the year-to-date period is attributable to the continued advancement of our ongoing
clinical trials, most notably, the expansion of our Phase 2b/3 Alzheimer’s disease trial internationally, and the
continued enrollment and advancement of the international Rett syndrome program.
General and administrative expenses increased
to $2.4 million for the three months ended June 30, 2021, as compared to $1.4 million for the third quarter of fiscal 2020. Similarly,
general and administrative expenses increased to $6.1 million for the nine-month period ended June 30, 2021, as compared to $4.5
million for the applicable prior year period. The increase in general and administrative expenses was primarily related to an increase
in our staff, corporate activities and transactions, and an increase in non-cash stock option compensation charges.
Other income
The net amount of other income was $1.3 million
for the three-month period ended June 30, 2021 as compared to $1.6 million for the three-month period ended June 30, 2020 and $3.7
million for the nine-month period as compared to $3.3 million for the comparable nine-month period in fiscal 2020. The Company
experienced an increase in Australian research and development incentive income for the nine-month period, in connection with the
increase in eligible clinical activities in Australia over the comparable year to date period, however in the current quarter the
Company incurred foreign exchange losses which were related to the fluctuations in the Australian dollar against the US dollar
and its related impact on incentive and tax receivables.
Liquidity and Capital Resources
Working Capital
June 30, 2021
September 30, 2020
Current Assets
$ 166,419,501
$ 34,542,197
Current Liabilities
9,273,772
7,305,628
Working Capital
$ 157,145,729
$ 27,236,569
At June 30, 2021, we had $157.6 million in cash and cash equivalents, an increase of $128.3 million from September 30, 2020. During
the nine-month period ended June 30, 2021, we received cash of $151.0 million, net of issuance costs, primarily from the issuance
of shares of common stock under the 2019 Purchase Agreement, through the Sales Agreement, as well as a registered direct offering,
each as more fully described elsewhere in this Quarterly Report.
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Cash Flows
Nine months ended June 30,
2021
2020
Net cash flows used in operating activities
$ (22,709,166 )
$ (15,032,274 )
Net cash flows from financing activities
151,020,193
20,465,789
Increase in cash and cash equivalents
$ 128,311,027
$ 5,433,515
Cash flow used in operating activities
Net cash used in operating activities for the
first nine months of fiscal 2021 was $22.7 million, compared to $15.0 million during the comparable
period of fiscal 2020. The principal reason for this increase in net cash used from operating activities in the current period is due
to an increase in research and development expenses and an increase in research and development incentive income receivable, as compared
to the comparable period.
Cash flow provided by financing activities
Cash provided by financing activities for the
first nine months in fiscal 2021 was $151.0 million, net of financing costs, primarily attributable
to cash received from the issuance of common shares at various market prices under the 2019 Purchase Agreement, the Sales Agreement and
a direct registered offering we completed for net proceeds of $46.9 million, after deducting expenses associated with the offering.
Cash provided by financing activities for the
first nine months in fiscal 2020 was $20.5 million, attributable to cash received from the issuance
of common shares at various market prices under the 2019 Purchase Agreement .
Other Financing
Purchase Agreement
On June 7, 2019, we
entered into a Purchase Agreement (the “2019 Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln
Park”), as amended on July 1, 2020, pursuant to which Lincoln Park committed to purchase up to $50.0 million of our common
stock. Concurrently with the execution of the 2019 Purchase Agreement in 2019, we issued 324,383 shares of our common stock to
Lincoln Park as a fee for its commitment to purchase shares of our common stock under the 2019 Purchase Agreement and became obligated
to issue up to 162,191 shares pro rata, when and if Lincoln Park purchased, at our discretion, the $50.0 million aggregate commitment.
During the nine months ended June 30, 2021,
the Company issued to Lincoln Park an aggregate of 4,086,209 shares of common stock under the 2019 Purchase Agreement, including
4,007,996 shares of common stock for an aggregate purchase price of $24.1 million and 78,213 commitment shares. As of
June 30, 2021, no shares of our common stock remain available for purchase by Lincoln Park under the 2019 Purchase Agreement.
Controlled Equity Offering Sales Agreement
On May
1, 2020, we entered into an Amended and Restated Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald
& Co. and SVB Leerink LLC (the “Sales Agents”), pursuant to which we may offer and sell shares of common stock
registered under an effective registration statement from time to time through the Sales Agents (the “At-the-Market Offering”).
Upon delivery of a placement notice based on
our instructions and subject to the terms and conditions of the Sales Agreement, the Sales Agents may sell shares of common stock
by methods deemed to be an “at the market 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 our prior written consent. We are not obligated to make any sales of shares under the Sales Agreement.
We or the Sales Agents may suspend or terminate the At-the-Market Offering upon notice to the other party, subject to certain conditions.
The Sales Agents will act as agents 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.
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We have agreed to pay the Sales Agents commissions
for their services of 3.0% of the gross proceeds from the sale of the shares pursuant to the Sales Agreement. We have 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 At-the-Market Offering for gross proceeds of $79.1 million (net proceeds of $76.7 million
after deducting commissions and offering expenses).
Registered Direct Offering
On June 24, 2021, the Company completed a registered
direct offering off of the Company’s shelf registration statement on Form S-3 filed with the SEC on July 3, 2019. The Company
issued 2,380,953 common shares at $21.00 per share for gross proceeds of $50.0 million (net proceeds of $46.9 million after deducting
offering fees and expenses).
Off-Balance
Sheet Arrangements
We
have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources
that are material to our stockholders.
CRITICAL ACCOUNTING POLICIES
We prepare our interim condensed
consolidated financial statements in accordance with accounting principles generally accepted in the United States of America,
and make estimates and assumptions that affect our reported amounts of assets, liabilities, revenue and expenses, and the related
disclosures of contingent liabilities. We base our estimates on historical experience and other assumptions that we believe are
reasonable in the circumstances. Actual results may differ from these estimates.
There have been no significant
changes in the critical accounting policies and estimates described in our Annual Report on Form 10-K for the year ended September
30, 2020 as filed with the SEC on December 28, 2020.
RECENT ACCOUNTING PRONOUNCEMENTS
Please refer to Note 2 “Recent
Accounting Pronouncements” in notes to our Interim Condensed Consolidated Financial Statements included in this Form 10-Q.
Item 3. Quantitative
and Qualitative Disclosures about Market Risks.
Not applicable
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