What changed in this filing

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Item 1A. Risk Factors

2021-11-24 compared with 2020-12-28 · 851 added, 741 removed, 17 unchanged (99% of the section changed)

addition to other information in this Annual Report on Form 10-K, the following risk factors should be carefully considered in

evaluating our business because such factors may have a significant impact on our business, operating results, liquidity and financial

As a result of the risk factors set forth below, actual results could differ materially from those projected in any

forward-looking statements.

Additional risks and uncertainties not presently known to us, or that we currently consider to be

immaterial, may also impact our business, operating results, liquidity and financial condition.

If any such risks occur, our business,

operating results, liquidity and financial condition could be materially affected in an adverse manner.

Under such circumstances,

the trading price of our securities could decline, and you may lose all or part of your investment.

Related to our Company

have had a history of losses and no revenue, which raises a risk regarding our ability to continue as a going concern in the future.

inception through September 30, 2020, we have accumulated a deficit of approximately $160 million.

We can offer no assurance that

we will ever operate profitably or that we will generate positive cash flow in the future.

To date, we have not generated any

revenues from our operations.

Our history of losses and no revenues creates a greater risk of our continued ability to continue

as a going concern in the future.

As a result, our management 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.

We will need to raise additional

funds, and such funds may not be available on commercially acceptable terms, if at all.

If we are unable to raise funds on acceptable

terms, we may not be able to execute our business plan, take advantage of future opportunities, or respond to competitive pressures

or unanticipated requirements.

In addition to other information in

this Annual Report on Form 10-K, the following risk factors should be carefully considered in evaluating our business because such

factors may have a significant impact on our business, operating results, liquidity and financial condition.

As a result of the

risk factors set forth below, actual results could differ materially from those projected in any forward-looking statements.

risks and uncertainties not presently known to us, or that we currently consider to be immaterial, may also impact our business,

operating results, liquidity and financial condition.

If any such risks occur, our business, operating results, liquidity and financial

condition could be materially affected in an adverse manner.

Under such circumstances, the trading price of our securities could

decline, and you may lose all or part of your investment.

Risks Related to our Company

We have had a history of losses

and no revenue, which raises a risk regarding our ability to continue as a going concern in the future.

Since inception through September 30,

2021, we have accumulated a deficit of approximately $200 million.

We can offer no assurance that we will ever operate profitably

or that we will generate positive cash flow in the future.

To date, we have not generated any revenues from our operations.

history of losses and no revenues creates a greater risk of our continued ability to continue as a going concern in the future.

As a result, our management 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.

We will need to raise additional funds, and such funds may not be

available on commercially acceptable terms, if at all.

If we are unable to raise funds on acceptable terms, we may not be able

to execute our business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated requirements.

This may seriously harm our business, financial condition and results of operations.

are an early stage pharmaceutical research and development company and may never be able to successfully develop marketable products

or generate any revenue.

We have a very limited relevant operating history upon which an evaluation of our performance and prospects

There is no assurance that our future operations will result in profits.

If we cannot generate sufficient revenues,

we may suspend or cease operations.

are an early stage company and have not generated any revenues to date and have no operating history.

All of our potential drug

compounds are in the concept stage or early clinical development stage.

Moreover, we cannot be certain that our research and development

efforts will be successful or, if successful, that our potential drug compounds will ever be approved for sales to pharmaceutical

companies or generate commercial revenues.

We have no relevant operating history upon which an evaluation of our performance and

prospects can be made.

We are subject to all of the business risks associated with a new enterprise, including, but not limited

to, risks of unforeseen capital requirements, failure of potential drug compounds either in non-clinical testing or in clinical

trials, failure to establish business relationships and competitive disadvantages against larger and more established companies.

If we fail to become profitable, we may suspend or cease operations.

will need additional funding and may be unable to raise additional capital when needed, which would force us to delay, reduce

or eliminate our research and development activities.

will need to raise additional funding and the current economic conditions may have a negative impact on our ability to raise additional

needed capital on terms that are favorable to our Company or at all.

We may not be able to generate significant revenues for several

years, if at all.

Until we can generate significant revenues, if ever, we expect to satisfy our future cash needs through equity

or debt financing.

We cannot be certain that additional funding will be available on acceptable terms, or at all.

funds are not available, we may be required to delay, reduce the scope of, or eliminate one or more of our research and development

Related to our Business

if we are able to develop our potential drug compounds, we may not be able to receive regulatory approval, or if approved, we

may not be able to generate significant revenues or successfully commercialize our products, which will adversely affect our financial

results and financial condition and we will have to delay or terminate some or all of our research and development plans which

may force us to cease operations.

of our potential drug compounds will require extensive additional research and development, including non-clinical testing and

clinical trials, as well as regulatory approvals, before we can market them.

In particular, human therapeutic products are subject

to rigorous non-clinical and clinical testing and other approval procedures of the FDA and similar regulatory authorities in other

Various federal statutes and regulations also govern or influence testing, manufacturing, safety, labeling, storage,

and record-keeping related to such products and their marketing.

We cannot predict if or when any of the potential drug compounds

we intend to develop will be approved for marketing.

There are many reasons that we may fail in our efforts to develop our potential

drug compounds.

We are an early stage pharmaceutical

research and development company and may never be able to successfully develop marketable products or generate any revenue.

have a very limited relevant operating history upon which an evaluation of our performance and prospects can be made.

no assurance that our future operations will result in profits.

If we cannot generate sufficient revenues, we may suspend or cease

We are an early stage company and have

not generated any revenues to date and have no operating history.

All of our potential drug compounds are in the concept stage

or early clinical development stage.

Moreover, we cannot be certain that our research and development efforts will be successful

or, if successful, that our potential drug compounds will ever be approved for sales to pharmaceutical companies or generate commercial

We have no relevant operating history upon which an evaluation of our performance and prospects can be made.

We are subject

to all of the business risks associated with a new enterprise, including, but not limited to, risks of unforeseen capital requirements,

failure of potential drug compounds either in non-clinical testing or in clinical trials, failure to establish business relationships

and competitive disadvantages against larger and more established companies.

If we fail to become profitable, we may suspend or

cease operations.

We will need additional funding

and may be unable to raise additional capital when needed, which would force us to delay, reduce or eliminate our research and

development activities.

We will need to raise additional funding

and the current economic conditions may have a negative impact on our ability to raise additional needed capital on terms that

are favorable to our Company or at all.

We may not be able to generate significant revenues for several years, if at all.

we can generate significant revenues, if ever, we expect to satisfy our future cash needs through equity or debt financing.

cannot be certain that additional funding will be available on acceptable terms, or at all.

If adequate funds are not available,

we may be required to delay, reduce the scope of, or eliminate one or more of our research and development activities.

Risks Related to our Business

Even if we are able to develop

our potential drug compounds, we may not be able to receive regulatory approval, or if approved, we may not be able to generate

significant revenues or successfully commercialize our products, which will adversely affect our financial results and financial

condition and we will have to delay or terminate some or all of our research and development plans which may force us to cease

All of our potential drug compounds

will require extensive additional research and development, including non-clinical testing and clinical trials, as well as regulatory

approvals, before we can market them.

In particular, human therapeutic products are subject to rigorous non-clinical and clinical

testing and other approval procedures of the FDA and similar regulatory authorities in other countries.

Various federal statutes

and regulations also govern or influence testing, manufacturing, safety, labeling, storage, and record-keeping related to such

products and their marketing.

We cannot predict if or when any of the potential drug compounds we intend to develop will be approved

for marketing.

There are many reasons that we may fail in our efforts to develop our potential drug compounds.

These include:

possibility that non-clinical testing or clinical trials may show that our potential drug compounds are ineffective and/or cause

harmful side effects;

may not authorize us to commence or continue a clinical trial or may impose a clinical hold or may limit the conduct of a clinical

trial through the imposition of a partial clinical hold;

number of patients required for clinical trials for our drug candidates may be larger than we anticipate, enrollment in these

clinical trials may be slower than we anticipate, participants may drop out of these clinical trials at a higher rate than we

anticipate or the duration of these clinical trials may be longer than we anticipate;

third-party contractors, including investigators, may fail to meet their contractual obligations to us in a timely manner, or

at all, or may fail to comply with regulatory requirements;

potential drug compounds may prove to be too expensive to manufacture or administer to patients;

potential drug compounds may fail to receive necessary regulatory approvals from the United States Food and Drug Administration

or foreign regulatory authorities in a timely manner, or at all;

if our potential drug compounds are approved, we may not be able to produce them in commercial quantities or at reasonable costs;

if our potential drug compounds are approved, they may not achieve commercial acceptance;

or governmental authorities may apply restrictions to any of our potential drug compounds, which could adversely affect their

commercial success;

proprietary rights of other parties may prevent us or our potential collaborative partners from marketing our potential drug compounds.

we fail to develop our potential drug compounds, our financial results and financial condition will be adversely affected, we

will have to delay or terminate some or all of our research and development plans and may be forced to cease operations.

research and development plans will require substantial additional future funding which could impact our operations and financial

Without the required additional funds, we will likely cease operations.

will take several years before we can develop potentially marketable products, if at all.

Our research and development plans will

require substantial additional capital, arising from costs to:

research, non-clinical testing and human studies;

pilot scale and commercial scale manufacturing processes and facilities;

and develop quality control, regulatory, marketing, sales, finance and administrative capabilities to support these programs.

future operating and capital needs will depend on many factors, including:

pace of scientific progress in our research and development programs and the magnitude of these programs;

scope and results of pre-clinical testing and human studies;

time and costs involved in obtaining regulatory approvals;

time and costs involved in preparing, filing, prosecuting, securing, maintaining and enforcing patents;

technological and market developments;

ability to establish additional collaborations;

in our existing collaborations;

cost of manufacturing scale-up;

effectiveness of our commercialization activities.

base our outlook regarding the need for funds on many uncertain variables.

Such uncertainties include the success of our research

initiatives, regulatory approvals, the timing of events outside our direct control such as negotiations with potential strategic

partners and other factors.

Any of these uncertain events can significantly change our cash requirements as they determine such

one-time events as the receipt or payment of major milestones and other payments.

funds will be required to support our operations and if we are unable to obtain them on favorable terms, we may be required to

cease or reduce further research and development of our drug product programs, sell some or all our intellectual property, merge

with another entity or cease operations.

have received fast track designation for one of our compounds and may seek such designation or breakthrough therapy and priority

review for other compounds in the future.

Fast track designation or breakthrough therapy designation may not actually lead to

a faster FDA review and approval process.

some of our compounds, including ANAVEX ® 2-73, we hope to benefit from FDA’s fast track and priority review

In February 2020, the FDA granted Fast Track designation for the ANAVEX ® 2-73 clinical development program

for the treatment of Rett syndrome.

However, the fast-track designation may be withdrawn by FDA if FDA believes that the designation

is no longer supported by data emerging in the clinical trial process.

FDA policies, a compound is eligible for priority review, or review within a six-month time frame from the time a complete NDA

is accepted for filing, if the compound provides a significant improvement compared to marketed drugs in the treatment, diagnosis

or prevention of a disease.

A fast-track designated compound would ordinarily meet the FDA’s criteria for priority review.

track or breakthrough therapy designation for our compounds may not actually lead to a faster review process, and a delay in the

review process or in the approval of our compounds will delay revenue from their potential sales and will increase the capital

necessary to fund these compound development programs.

have received orphan drug designation for several of our compounds, but we may be unable to maintain any benefits associated with

orphan drug designation, including market exclusivity.

the Orphan Drug Act, FDA may grant orphan designation to a drug intended to treat a rare disease or condition or for which there

is no reasonable expectation that the cost of developing and making available in the United States a drug for a disease or condition

will be recovered from sales in the United States for that drug.

If a product that has orphan drug designation subsequently receives

the first FDA approval for the indication for which it has such designation, the product is entitled to orphan product exclusivity,

which means that the FDA may not approve any other applications, including a full NDA, to market the same drug or biologic for

the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product

with orphan drug exclusivity.

have received orphan drug designation for several of our compounds, but exclusive marketing rights in the United States may be

limited if we seek FDA marketing approval for an indication broader than the orphan designated indication.

Additionally, any compound

with orphan drug designation may lose such designation if the FDA later determines that the request for designation was materially

defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the

rare disease or condition.

In addition, others may obtain orphan drug exclusivity for products addressing the same diseases or

conditions as products we are developing, thus limiting our ability to compete in the markets addressing such diseases or conditions

for a significant period of time.

we fail to demonstrate efficacy in our non-clinical studies and clinical trials our future business prospects, financial condition

and operating results will be materially adversely affected.

success of our research and development efforts will be greatly dependent upon our ability to demonstrate potential drug compound

efficacy in non-clinical studies, as well as in clinical trials.

Non-clinical studies involve testing potential drug compounds

in appropriate non-human disease models to demonstrate efficacy and safety.

Regulatory agencies evaluate these data carefully

before they will approve clinical testing in humans.

If certain non-clinical data reveals potential safety issues or the results

are inconsistent with an expectation of the potential drug compound’s efficacy in humans, the regulatory agencies may require

additional more rigorous testing before allowing human clinical trials.

This additional testing will increase program expenses

and extend timelines.

We may decide to suspend further testing on our potential drug compounds if, in the judgment of our management

and advisors, the non-clinical test results do not support further development.

success in non-clinical testing and early clinical trials does not ensure that later clinical trials will be successful, and we

cannot be sure that the results of later clinical trials will replicate the results of prior clinical trials and non-clinical

The clinical trial process may fail to demonstrate that our potential drug compounds are safe for humans and effective

for indicated uses.

This failure would cause us to abandon a drug candidate and may delay development of other potential drug

Any delay in, or termination of, our non-clinical testing or clinical trials will delay the filing of an IND and NDA

with the Food and Drug Administration or the equivalent applications with pharmaceutical regulatory authorities outside the United

States and, ultimately, our ability to commercialize our potential drug compounds and generate product revenues.

we expect that our early clinical trials will involve small patient populations.

Because of the small sample size, the results

of these early clinical trials may not be indicative of future results.

Also, the IND process may be extremely costly and may

substantially delay the development of our potential drug compounds.

Moreover, positive results of non-clinical tests will not

necessarily indicate positive results in subsequent clinical trials.

successful non-clinical testing, potential drug compounds will need to be tested in a clinical development program to provide

data on safety and efficacy prior to becoming eligible for product approval and licensure by regulatory agencies.

From the first

human trial through to regulatory approval can take many years and 10-12 years is not unusual for certain compounds.

any of our future clinical development potential drug compounds become the subject of problems, our ability to sustain our development

programs will become critically compromised.

For example, efficacy or safety concerns may arise, whether or not justified, that

could lead to the suspension or termination of our clinical programs.

the possibility that non-clinical testing or clinical trials may show

that our potential drug compounds are ineffective and/or cause harmful side effects;

regulators may not authorize us to commence or continue a clinical

trial or may impose a clinical hold or may limit the conduct of a clinical trial through the imposition of a partial clinical

the number of patients required for clinical trials for our drug candidates

may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, participants may drop

out of these clinical trials at a higher rate than we anticipate or the duration of these clinical trials may be longer than we

our third-party contractors, including investigators, may fail to meet

their contractual obligations to us in a timely manner, or at all, or may fail to comply with regulatory requirements;

our potential drug compounds may prove to be too expensive to manufacture

or administer to patients;

our potential drug compounds may fail to receive necessary regulatory

approvals from the United States Food and Drug Administration or foreign regulatory authorities in a timely manner, or at all;

even if our potential drug compounds are approved, we may not be able

to produce them in commercial quantities or at reasonable costs;

even if our potential drug compounds are approved, they may not achieve

commercial acceptance;

regulatory or governmental authorities may apply restrictions to any

of our potential drug compounds, which could adversely affect their commercial success;

the proprietary rights of other parties may prevent us or our potential

collaborative partners from marketing our potential drug compounds.

If we fail to develop our potential

drug compounds, our financial results and financial condition will be adversely affected, we will have to delay or terminate some

or all of our research and development plans and may be forced to cease operations.

Our research and development plans

will require substantial additional future funding which could impact our operations and financial condition.

Without the required

additional funds, we will likely cease operations.

It will take several years before we

can develop potentially marketable products, if at all.

Our research and development plans will require substantial additional

capital, arising from costs to:

conduct research, non-clinical testing and human studies;

establish pilot scale and commercial scale manufacturing processes

and facilities;

establish and develop quality control, regulatory, marketing, sales,

finance and administrative capabilities to support these programs.

Our future operating and capital needs

will depend on many factors, including:

the pace of scientific progress in our research and development programs and the magnitude of these programs;

the scope and results of pre-clinical testing and human studies;

the time and costs involved in obtaining regulatory approvals;

the time and costs involved in preparing, filing, prosecuting, securing, maintaining and enforcing patents;

competing technological and market developments;

our ability to establish additional collaborations;

changes in our existing collaborations;

the cost of manufacturing scale-up;

the effectiveness of our commercialization activities.

We base our outlook regarding the need

for funds on many uncertain variables.

Such uncertainties include the success of our research initiatives, regulatory approvals,

the timing of events outside our direct control such as negotiations with potential strategic partners and other factors.

these uncertain events can significantly change our cash requirements as they determine such one-time events as the receipt or

payment of major milestones and other payments.

Additional funds will be required to

support our operations and if we are unable to obtain them on favorable terms, we may be required to cease or reduce further research

and development of our drug product programs, sell some or all our intellectual property, merge with another entity or cease operations.

We have received fast track designation

for one of our compounds and may seek such designation or breakthrough therapy and priority review for other compounds in the future.

Fast track designation or breakthrough therapy designation may not actually lead to a faster FDA review and approval process.

For some of our compounds, including

ANAVEX ® 2-73, we hope to benefit from the FDA’s fast track and priority review programs.

In February 2020,

the FDA granted Fast Track designation for the ANAVEX ® 2-73 clinical development program for the treatment of Rett

However, the fast-track designation may be withdrawn by the FDA if the FDA believes that the designation is no longer

supported by data emerging in the clinical trial process.

Under FDA policies, a compound is eligible

for priority review, or review within a six-month time frame from the time a complete NDA is accepted for filing, if the compound

provides a significant improvement compared to marketed drugs in the treatment, diagnosis or prevention of a disease.

designated compound would ordinarily meet the FDA’s criteria for priority review.

or breakthrough therapy designation for our compounds may not actually lead to a faster review process, and a delay in the review

process or in the approval of our compounds will delay revenue from their potential sales and will increase the capital necessary

to fund these compound development programs.

We have received orphan drug designation for several

of our compounds, but we may be unable to maintain any benefits associated with orphan drug designation, including market exclusivity.

Under the Orphan Drug Act, the FDA may

grant orphan designation to a drug intended to treat a rare disease or condition or for which there is no reasonable expectation

that the cost of developing and making available in the United States a drug for a disease or condition will be recovered from

sales in the United States for that drug.

If a product that has orphan drug designation subsequently receives the first FDA approval

for the indication for which it has such designation, the product is entitled to orphan product exclusivity, which means that the

FDA may not approve any other applications, including a full NDA, to market the same drug or biologic for the same indication for

seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity.

We have received

orphan drug designation for several of our compounds, but exclusive marketing rights in the United States may be limited if we

seek FDA marketing approval for an indication broader than the orphan designated indication.

Additionally, any compound with orphan

drug designation may lose such designation if the FDA later determines that the request for designation was materially defective

or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease

or condition.

In addition, others may obtain orphan drug exclusivity for products addressing the same diseases or conditions as

products we are developing, thus limiting our ability to compete in the markets addressing such diseases or conditions for a significant

period of time.

If we fail to demonstrate efficacy

in our non-clinical studies and clinical trials our future business prospects, financial condition and operating results will be

materially adversely affected.

The success of our research and development

efforts will be greatly dependent upon our ability to demonstrate potential drug compound efficacy in non-clinical studies, as

well as in clinical trials.

Non-clinical studies involve testing potential drug compounds in appropriate non-human disease models

to demonstrate efficacy and safety.

Regulatory agencies evaluate these data carefully before they will approve clinical testing

If certain non-clinical data reveals potential safety issues or the results are inconsistent with an expectation of

the potential drug compound’s efficacy in humans, the regulatory agencies may require additional more rigorous testing before

allowing human clinical trials.

This additional testing will increase program expenses and extend timelines.

We may decide to suspend

further testing on our potential drug compounds if, in the judgment of our management and advisors, the non-clinical test results

do not support further development.

Moreover, success in non-clinical testing

and early clinical trials does not ensure that later clinical trials will be successful, and we cannot be sure that the results

of later clinical trials will replicate the results of prior clinical trials and non-clinical testing.

The clinical trial process

may fail to demonstrate that our potential drug compounds are safe for humans and effective for indicated uses.

This failure would

cause us to abandon a drug candidate and may delay development of other potential drug compounds.

Any delay in, or termination

of, our non-clinical testing or clinical trials will delay the filing of an IND and NDA with the FDA or the equivalent applications

with pharmaceutical regulatory authorities outside the United States and, ultimately, our ability to commercialize our potential

drug compounds and generate product revenues.

In addition, we expect that our early clinical trials will involve small patient

Because of the small sample size, the results of these early clinical trials may not be indicative of future results.

Also, the IND process may be extremely costly and may substantially delay the development of our potential drug compounds.

positive results of non-clinical tests will not necessarily indicate positive results in subsequent clinical trials.

Following successful non-clinical testing,

potential drug compounds will need to be tested in a clinical development program to provide data on safety and efficacy prior

to becoming eligible for product approval and licensure by regulatory agencies.

From the first human trial through to regulatory

approval can take many years and 10-12 years is not unusual for certain compounds.

If any of our future clinical development

potential drug compounds become the subject of problems, our ability to sustain our development programs will become critically

For example, efficacy or safety concerns may arise, whether or not justified, that could lead to the suspension or

termination of our clinical programs.

Examples of problems that could arise include, among others:

or safety concerns with the potential drug compounds, even if not justified;

manufacturing

difficulties or concerns;

proceedings subjecting the potential drug compounds to potential recall;

affecting doctor prescription or patient use of the potential drug compounds;

from competitive products;

of more effective treatments.

clinical phase is designed to test attributes of the drug and problems that might result in the termination of the entire clinical

plan can be revealed at any time throughout the overall clinical program.

The failure to demonstrate efficacy in our clinical

trials would have a material adverse effect on our future business prospects, financial condition and operating results.

we do not obtain the support of qualified scientific collaborators, our revenue, growth and profitability will likely be limited,

which would have a material adverse effect on our business.

will need to establish relationships with leading scientists and research institutions.

We believe that such relationships are

pivotal to establishing products using our technologies as a standard of care for various indications.

Additionally, although

in discussion, there is no assurance that our current research partners will continue to work with us or that we will be able

to attract additional research partners.

If we are not able to establish scientific relationships to assist in our research and

development, we may not be able to successfully develop our potential drug compounds.

If this happens, our business will be adversely

may not be able to develop, market or generate sales of our products to the extent anticipated.

Our business may fail and investors

could lose all their investment in our Company.

that we are successful in developing our potential drug compounds and receiving regulatory clearances to market our products,

our ability to successfully penetrate the market and generate sales of those products may be limited by a number of factors, including

the following:

our competitors receive regulatory approvals for and begin marketing similar products in the United States, the European Union,

Japan and other territories before we do, greater awareness of their products as compared to ours will cause our competitive position

from our competitors or the academic community indicating that current products or new products are more effective or offer compelling

other benefits than our future products could impede our market penetration or decrease our future market share;

pricing and reimbursement environment for our future products, as well as pricing and reimbursement decisions by our competitors

and by payers, may have an effect on our revenues.

this happens, our business will be adversely affected.

of our potential drug compounds may reach the commercial market for a number of reasons and our business may fail.

research and development of pharmaceutical products is high risk.

efficacy or safety concerns with the potential drug compounds, even if not justified;

manufacturing difficulties or concerns;

regulatory proceedings subjecting the potential drug compounds to potential recall;

publicity affecting doctor prescription or patient use of the potential drug compounds;

pressure from competitive products;

introduction of more effective treatments.

Each clinical phase is designed to test

attributes of the drug and problems that might result in the termination of the entire clinical plan can be revealed at any time

throughout the overall clinical program.

The failure to demonstrate efficacy in our clinical trials would have a material adverse

effect on our future business prospects, financial condition and operating results.

If we do not obtain the support

of qualified scientific collaborators, our revenue, growth and profitability will likely be limited, which would have a material

adverse effect on our business.

We will need to establish relationships

with leading scientists and research institutions.

We believe that such relationships are pivotal to establishing products using

our technologies as a standard of care for various indications.

Additionally, although in discussion, there is no assurance that

our current research partners will continue to work with us or that we will be able to attract additional research partners.

we are not able to establish scientific relationships to assist in our research and development, we may not be able to successfully

develop our potential drug compounds.

If this happens, our business will be adversely affected.

We may not be able to develop,

market or generate sales of our products to the extent anticipated.

Our business may fail and investors could lose all their investment

in our Company.

Assuming that we are successful in developing

our potential drug compounds and receiving regulatory clearances to market our products, our ability to successfully penetrate

the market and generate sales of those products may be limited by a number of factors, including the following:

If our competitors receive regulatory approvals for and begin marketing

similar products in the United States, the European Union, Japan and other territories before we do, greater awareness of their

products as compared to ours will cause our competitive position to suffer;

Information from our competitors or the academic community indicating

that current products or new products are more effective or offer compelling other benefits than our future products could impede

our market penetration or decrease our future market share;

The pricing and reimbursement environment for our future products,

as well as pricing and reimbursement decisions by our competitors and by payers, may have an effect on our revenues.

If this happens, our business will be

adversely affected.

None of our potential drug compounds

may reach the commercial market for a number of reasons and our business may fail.

Successful research and development

of pharmaceutical products is high risk.

Most products and development candidates fail to reach the market.

Our success depends on the discovery of new drug compounds that we can commercialize.

It is possible that our products may never

reach the market for a number of reasons.

They may be found ineffective or may cause harmful side-effects during non-clinical

testing or clinical trials or fail to receive necessary regulatory approvals.

We may find that certain products cannot be manufactured

at a commercial scale and, therefore, they may not be economical to produce.

Our potential products could also fail to achieve

market acceptance or be precluded from commercialization by proprietary rights of third parties.

Our patents, patent applications,

trademarks and other intellectual property may be challenged, and this may delay or prohibit us from effectively commercializing

our products.

Furthermore, we do not expect our potential drug compounds to be commercially available for a number of years, if

If none of our potential drug compounds reach the commercial market, our business will likely fail and investors will

lose all of their investment in our Company.

Our success depends

on the discovery of new drug compounds that we can commercialize.

It is possible that our products may never reach the market for

a number of reasons.

They may be found ineffective or may cause harmful side-effects during non-clinical testing or clinical trials

or fail to receive necessary regulatory approvals.

We may find that certain products cannot be manufactured at a commercial scale

and, therefore, they may not be economical to produce.

Our potential products could also fail to achieve market acceptance or be

precluded from commercialization by proprietary rights of third parties.

Our patents, patent applications, trademarks and other

intellectual property may be challenged, and this may delay or prohibit us from effectively commercializing our products.

we do not expect our potential drug compounds to be commercially available for a number of years, if at all.

If none of our potential

drug compounds reach the commercial market, our business will likely fail and investors will lose all of their investment in our

If this happens, our business will be adversely affected.

our competitors succeed in developing products and technologies faster or that are more effective or with a better profile than

our own, or if scientific developments change our understanding of the potential scope and utility of our potential products,

then our technologies and future products may be rendered undesirable or obsolete.

face significant competition from industry participants that are pursuing technologies in similar disease states to those that

we are pursuing and are developing pharmaceutical products that are competitive with our products.

Nearly all of our industry

competitors have greater capital resources, larger overall research and development staffs and facilities, and a longer history

in drug discovery and development, obtaining regulatory approval and pharmaceutical product manufacturing and marketing than we

With these additional resources, our competitors may be able to respond to the rapid and significant technological changes

in the biotechnology and pharmaceutical industries faster than we can.

Our future success will depend in large part on our ability

to maintain a competitive position with respect to these technologies.

Rapid technological development, as well as new scientific

developments, may result in our products becoming obsolete before we can recover any of the expenses incurred to develop them.

For example, changes in our understanding of the appropriate population of patients who should be treated with a targeted therapy

like we are developing may limit the drug’s market potential if it is subsequently demonstrated that only certain subsets

of patients should be treated with the targeted therapy.

reliance on third parties, such as university laboratories, contract manufacturing organizations and contract or clinical research

organizations, may result in delays in completing, or a failure to complete, non-clinical testing or clinical trials if they fail

to perform under our agreements with them.

the course of product development, we may engage university laboratories, other biotechnology companies or contract or clinical

manufacturing organizations to manufacture drug material for us to be used in non-clinical and clinical testing and contract research

organizations to conduct and manage non-clinical and clinical studies.

If we engage these organizations to help us with our non-clinical

and clinical programs, many important aspects of this process have been and will be out of our direct control.

If any of these

organizations we may engage in the future fail to perform their obligations under our agreements with them or fail to perform

non-clinical testing and/or clinical trials in a satisfactory manner, we may face delays in completing our clinical trials, as

well as commercialization of any of our potential drug compounds.

Furthermore, any loss or delay in obtaining contracts with such

entities may also delay the completion of our clinical trials, regulatory filings and the potential market approval of our potential

drug compounds.

we fail to compete successfully with respect to partnering, licensing, mergers, acquisitions, joint venture and other collaboration

opportunities, we may be limited in our ability to research and develop our potential drug compounds.

competitors compete with us to attract established biotechnology and pharmaceutical companies or organizations for partnering,

licensing, mergers, acquisitions, joint ventures or other collaborations.

Collaborations include contracting with academic research

institutions for the performance of specific scientific testing.

If our competitors successfully enter into partnering arrangements

or license agreements with academic research institutions, we will then be precluded from pursuing those specific opportunities.

Since each of these opportunities is unique, we may not be able to find a substitute.

Other companies have already begun many

drug development programs, which may target diseases that we are also targeting, and have already entered into partnering and

licensing arrangements with academic research institutions, reducing the pool of available opportunities.

and public and private research institutions also compete with us.

While these organizations primarily have educational or basic

research objectives, they may develop proprietary technology and acquire patent applications and patents that we may need for

the development of our potential drug compounds.

In some instances, we will attempt to license this proprietary technology, if

These licenses may not be available to us on acceptable terms, if at all.

If we are unable to compete successfully

with respect to acquisitions, joint venture and other collaboration opportunities, we may be limited in our ability to develop

new products.

use of any of our products in clinical trials may expose us to liability claims, which may cost us significant amounts of money

to defend against or pay out, causing our business to suffer.

nature of our business exposes us to potential liability risks inherent in the testing, manufacturing and marketing of our products.

We currently have one drug compound in clinical trials, however, when any of our products enter clinical trials or become marketed

products, they could potentially harm people or allegedly harm people possibly subjecting us to costly and damaging product liability

Some of the patients who participate in clinical trials are already ill when they enter a trial or may intentionally or

unintentionally fail to meet the exclusion criteria.

The waivers we obtain may not be enforceable and may not protect us from

liability or the costs of product liability litigation.

Although we intend to obtain product liability insurance, which we believe

is adequate, we are subject to the risk that our insurance will not be sufficient to cover claims.

The insurance costs along with

the defense or payment of liabilities above the amount of coverage could cost us significant amounts of money and management distraction

from other elements of the business, causing our business to suffer.

we are unable to safeguard against security breaches with respect to our information systems, our business may be adversely affected.

the course of our business, we gather, transmit and retain confidential information through our information systems.

we endeavor to protect confidential information through the implementation of security technologies, processes and procedures,

it is possible that an individual or group could defeat security measures and access sensitive information about our business

and employees.

Any misappropriation, loss or other unauthorized disclosure of confidential information gathered, stored or used

by us could have a material impact on the operation of our business, including damaging our reputation with our employees, third

parties and investors.

We could also incur significant costs implementing additional security measures and organizational changes,

implementing additional protection technologies, training employees or engaging consultants.

In addition, we could incur increased

litigation as a result of any potential cyber-security breach.

We are not aware that we have experienced any material misappropriation,

loss or other unauthorized disclosure of confidential or personally identifiable information as a result of a cyber-security breach

or other act, however, a cyber-security breach or other act and/or disruption to our information technology systems could have

a material adverse effect on our business, prospects, financial condition or results of operations.

if we receive regulatory approval for one or more compounds, we will be subject to continuing regulatory obligations and ongoing

regulatory review, which may result in significant additional expense.

Additionally, our compounds, if approved, could be subject

to labeling and other restrictions on marketing or withdrawal from the market, and we may be subject to penalties, if we fail

to comply with regulatory requirements or if we experience unanticipated problems with our compounds, when and if any of them

are approved.

potential approval of any our compounds, FDA may impose significant restrictions on a drug’s indicated uses or marketing

or require potentially costly and time-consuming post-approval studies, post-market surveillance or clinical trials to monitor

the safety and efficacy of the drug.

FDA may also require a Risk Evaluation and Mitigation Strategy (“REMS”) as a

condition of approval of one or more of our compounds, which could include requirements for a medication guide, physician communication

plans or additional elements to ensure safe use of the drug.

Additional REMS elements may include restricted distribution methods,

patient registries and other risk minimization tools.

addition, if FDA or a comparable foreign regulatory authority approves one or more of our compounds, the manufacturing processes,

labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export and recordkeeping

for the approved drug will be subject to additional and potentially extensive ongoing regulatory requirements.

These requirements

include submissions of safety and other post-marketing information and reports, establishment registration, as well as continued

compliance with cGMPs and GCP requirements for any clinical trials that we conduct post-approval.

Later discovery of previously

unknown problems with our products, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers

or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things:

• restrictions

on the marketing or manufacturing of our products, withdrawal of the product from the

market or voluntary or mandatory product recalls;

restitutions, disgorgement of profits or revenues, warning letters, untitled letters

or holds on clinical trials;

• restrictions

on product distribution or use, or requirements to conduct post-marketing studies or

clinical trials;

seizure or detention, or refusal to permit the import or export of our products;

• injunctions

or the imposition of civil or criminal penalties;

by the FDA to approve pending applications or supplements to approved applications filed

by us or suspension or revocation of approvals.

occurrence of any event or penalty described above may limit our ability to commercialize our compounds and generate revenue,

and could require us to expend significant time and resources in response or generate negative publicity.

any of our compounds are approved, our product labeling, advertising and promotion will also be subject to regulatory requirements

and ongoing regulatory review.

FDA strictly regulates the promotional claims that may be made about drug products.

In particular,

a drug may not be promoted for uses that are not approved by FDA as reflected in the drug’s approved labeling.

If we receive

marketing approval for a compound, physicians may nevertheless lawfully prescribe it to their patients in a manner that is inconsistent

with the approved label.

While FDA recently clarified that mere knowledge that a physician is prescribing a drug for off label

use is not sufficient to constitute unlawful off-label promotion, if we are found to have actively promoted such off label uses,

we may become subject to significant liability under the FDCA.

The federal government has levied large civil and criminal fines

against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion.

has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct

is changed or curtailed.

and other regulatory authorities’ policies are subject to change at any time, and additional government regulations may

be enacted that could prevent, limit or delay regulatory approval of our compounds.

If we are unable to timely adapt to changes

in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance

post-marketing, we may lose any marketing approval that we may have obtained, and we may not achieve or sustain profitability.

we cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative

or executive action, either in the United States or abroad.

It is difficult to predict how any such legislative, administrative

or executive actions will be implemented, and the extent to which they will impact the FDA’s ability to exercise its regulatory

If these legislative or executive actions impose constraints on FDA’s ability to engage in oversight and implementation

activities in the normal course, our business may be negatively impacted.

COVID-19 coronavirus could adversely impact our business, including our clinical trials, and financial condition.

December 2019, a novel strain of coronavirus, COVID-19, was reported to have surfaced in Wuhan, China.

Since then, the COVID-19

coronavirus has spread to multiple countries, including the United States, Australia and European and Asia-Pacific countries,

including countries in which we have planned or active clinical trial sites.

As the COVID-19 coronavirus continues to spread around

the globe, we may experience disruptions that could potentially impact our business and clinical trials.

addition, the spread of COVID-19 coronavirus has had and may continue to severely impact the trading price of shares of our common

stock and could further severely impact our ability to raise additional capital on a timely basis or at all.

global outbreak of the COVID-19 coronavirus continues to rapidly evolve.

The extent to which the COVID-19 coronavirus may impact

our future business operations, including our clinical trials, and financial condition will depend on future developments, which

are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration

of the outbreak, travel restrictions and social distancing in the United States and other countries, business closures or business

disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

Related to our Common Stock

decline in the price of our common stock could affect our ability to raise further working capital and adversely impact our operations

and would severely dilute existing or future investors if we were to raise funds at lower prices.

prolonged decline in the price of our common stock could result in a reduction in our ability to raise capital.

Because our operations

have been financed through the sale of equity securities, a decline in the price of our common stock could be especially detrimental

to our continued operations.

Any reduction in our ability to raise equity capital in the future would force us to reallocate funds

from other planned uses and would have a significant negative effect on our business plans and operations, including our ability

to develop new products and continue our current operations.

If our stock price declines, there can be no assurance that we can

raise additional capital or generate funds from operations sufficient to meet our obligations.

We believe the following factors

could cause the market price of our common stock to continue to fluctuate widely and could cause our common stock to trade at

a price below the price at which you purchase your shares of common stock:

or anticipated variations in our quarterly operating results;

announcements

of new services, products, acquisitions or strategic relationships by us or our competitors;

in accounting treatments or principles;

in earnings estimates by securities analysts and in analyst recommendations;

political, economic, regulatory and market conditions.

market price for our common stock may also be affected by our ability to meet or exceed expectations of analysts or investors.

Any failure to meet these expectations, even if minor, could materially adversely affect the market price of our common stock.

we issue additional shares of common stock in the future, it will result in the dilution of our existing stockholders and may

cause the share price of our common stock to fall.

articles of incorporation authorize the issuance of 10,000,000 shares of preferred stock and 100,000,000 shares of common stock.

Our board of directors has the authority to issue additional shares of preferred and common stock up to the authorized capital

stated in the articles of incorporation.

Our board of directors may choose to issue some or all such shares of common stock to

acquire one or more businesses or to provide additional financing in the future.

The issuance of any such shares of common stock

will result in a reduction of the book value or market price of the outstanding shares of our common stock.

If we do issue any

such additional shares of common stock, such issuance also will cause a reduction in the proportionate ownership and voting power

of all other stockholders.

Further, any such issuance may result in a change of control of our corporation.

In the event we do

issue or sell additional shares of common or preferred stock, it may result in shareholder dilution and may cause our share price

of our common stock may be volatile and sporadic, which could depress the market price of our common stock and make it difficult

for our stockholders to resell their shares.

is currently a limited market for our common stock and the volume of our common stock traded on any day may vary significantly

from one period to another.

Trading in our stock is often thin and characterized by wide fluctuations in trading prices, due to

many factors that may have little to do with our operations or business prospects.

The availability of buyers and sellers represented

by this volatility could lead to a market price for our common stock that is unrelated to operating performance.

There is no assurance

that a sufficient market will develop in the stock, in which case it could be difficult for our stockholders to resell their stock.

sale or issuance of our common stock to Lincoln Park may cause dilution and the sale of the shares of common stock acquired by

Lincoln Park, or the perception that such sales may occur, could cause the price of our common stock to fall.

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 million

of our common stock.

The purchase price for shares that we may sell to Lincoln Park under the 2019 Purchase Agreement will fluctuate

based on the price of our common stock.

Depending on market liquidity at the time, sales of such shares may cause the trading

price of our common stock to fall.

have the right to control the timing and amount of any sales of our shares to Lincoln Park in our sole discretion, subject to

certain limits on the amount of shares that can be sold on a given date.

Sales of shares of our common stock, if any, to Lincoln

Park will depend upon market conditions and other factors to be determined by us.

Therefore, Lincoln Park may ultimately purchase

all, some or none of the shares of our common stock that may be sold pursuant to the 2019 Purchase Agreement and, after it has

acquired shares, Lincoln Park may sell all, some or none of those shares.

Sales to Lincoln Park by us could result in substantial

dilution to the interests of other holders of our common stock.

Additionally, the sale of a substantial number of shares of our

common stock to Lincoln Park, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related

securities in the future at a time and at a price that we might otherwise wish to effect sales, which could have a materially

adverse effect on our business and operations.

may not be able to access sufficient funds under the 2019 Purchase Agreement or the Sales Agreement when needed.

ability to sell shares to Lincoln Park and obtain funds under the 2019 Purchase Agreement is limited by the terms and conditions

in the 2019 Purchase Agreement, including restrictions on the amounts we may sell to Lincoln Park at any one time, and a limitation

on our ability to sell shares to Lincoln Park to the extent that it would cause Lincoln Park to beneficially own more than 4.99%

of our outstanding shares of common stock.

Additionally, the sale of common shares to Lincoln Park may be limited to a number

of shares equal to 19.99% of the shares of common stock outstanding on the date of the amendment to the 2019 Purchase Agreement

unless we obtain shareholder approval or the average price of such sales exceeds the price of our common stock on the amendment

date of July 1, 2020 as determined under NASDAQ rules.

At September 30, 2020, approximately

$24.1 million in shares of our common stock remained available for purchase by Lincoln Park under the 2019 Purchase Agreement

addition, 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”) to offer shares of our common stock from time to time

through “at-the-market” offerings, pursuant to which we may offer and sell shares of our common stock for an aggregate

offering price of up to $50 million.

While we have offered 1,760,429 shares of common stock through the Sales Agents pursuant

to the Sales Agreement for gross proceeds of $7,499,900 through September 30, 2020 under the Sales Agreement, the Sales Agents

If our competitors succeed in

developing products and technologies faster or that are more effective or with a better profile than our own, or if scientific

developments change our understanding of the potential scope and utility of our potential products, then our technologies and future

products may be rendered undesirable or obsolete.

We face significant competition from

industry participants that are pursuing technologies in similar disease states to those that we are pursuing and are developing

pharmaceutical products that are competitive with our products.

Nearly all of our industry competitors have greater capital resources,

larger overall research and development staffs and facilities, and a longer history in drug discovery and development, obtaining

regulatory approval and pharmaceutical product manufacturing and marketing than we do.

With these additional resources, our competitors

may be able to respond to the rapid and significant technological changes in the biotechnology and pharmaceutical industries faster

Our future success will depend in large part on our ability to maintain a competitive position with respect to these

technologies.

Rapid technological development, as well as new scientific developments, may result in our products becoming obsolete

before we can recover any of the expenses incurred to develop them.

For example, changes in our understanding of the appropriate

population of patients who should be treated with a targeted therapy like we are developing may limit the drug’s market potential

if it is subsequently demonstrated that only certain subsets of patients should be treated with the targeted therapy.

Our reliance on third parties,

such as university laboratories, contract manufacturing organizations and contract or clinical research organizations, may result

in delays in completing, or a failure to complete, non-clinical testing or clinical trials if they fail to perform under our agreements

In the course of product development,

we may engage university laboratories, other biotechnology companies or contract or clinical manufacturing organizations to manufacture

drug material for us to be used in non-clinical and clinical testing and contract research organizations to conduct and manage

non-clinical and clinical studies.

If we engage these organizations to help us with our non-clinical and clinical programs, many

important aspects of this process have been and will be out of our direct control.

If any of these organizations we may engage

in the future fail to perform their obligations under our agreements with them or fail to perform non-clinical testing and/or clinical

trials in a satisfactory manner, we may face delays in completing our clinical trials, as well as commercialization of any of our

potential drug compounds.

Furthermore, any loss or delay in obtaining contracts with such entities may also delay the completion

of our clinical trials, regulatory filings and the potential market approval of our potential drug compounds.

If we fail to compete successfully

with respect to partnering, licensing, mergers, acquisitions, joint venture and other collaboration opportunities, we may be limited

in our ability to research and develop our potential drug compounds.

Our competitors compete with us to attract

established biotechnology and pharmaceutical companies or organizations for partnering, licensing, mergers, acquisitions, joint

ventures or other collaborations.

Collaborations include contracting with academic research institutions for the performance of

specific scientific testing.

If our competitors successfully enter into partnering arrangements or license agreements with academic

research institutions, we will then be precluded from pursuing those specific opportunities.

Since each of these opportunities

is unique, we may not be able to find a substitute.

Other companies have already begun many drug development programs, which may

target diseases that we are also targeting, and have already entered into partnering and licensing arrangements with academic research

institutions, reducing the pool of available opportunities.

Universities and public and private

research institutions also compete with us.

While these organizations primarily have educational or basic research objectives,

they may develop proprietary technology and acquire patent applications and patents that we may need for the development of our

potential drug compounds.

In some instances, we will attempt to license this proprietary technology, if available.

These licenses

may not be available to us on acceptable terms, if at all.

If we are unable to compete successfully with respect to acquisitions,

joint venture and other collaboration opportunities, we may be limited in our ability to develop new products.

The use of any of our products

in clinical trials may expose us to liability claims, which may cost us significant amounts of money to defend against or pay out,

causing our business to suffer.

The nature of our business exposes us

to potential liability risks inherent in the testing, manufacturing and marketing of our products.

We currently have one drug compound

in clinical trials, however, when any of our products enter clinical trials or become marketed products, they could potentially

harm people or allegedly harm people possibly subjecting us to costly and damaging product liability claims.

Some of the patients

who participate in clinical trials are already ill when they enter a trial or may intentionally or unintentionally fail to meet

the exclusion criteria.

The waivers we obtain may not be enforceable and may not protect us from liability or the costs of product

liability litigation.

Although we intend to obtain product liability insurance, which we believe is adequate, we are subject to

the risk that our insurance will not be sufficient to cover claims.

The insurance costs along with the defense or payment of liabilities

above the amount of coverage could cost us significant amounts of money and management distraction from other elements of the business,

causing our business to suffer.

If we are unable to safeguard

against security breaches with respect to our information systems, our business may be adversely affected.

In the course of our business, we gather,

transmit and retain confidential information through our information systems.

Although we endeavor to protect confidential information

through the implementation of security technologies, processes and procedures, it is possible that an individual or group could

defeat security measures and access sensitive information about our business and employees.

Any misappropriation, loss or other

unauthorized disclosure of confidential information gathered, stored or used by us could have a material impact on the operation

of our business, including damaging our reputation with our employees, third parties and investors.

We could also incur significant

costs implementing additional security measures and organizational changes, implementing additional protection technologies, training

employees or engaging consultants.

In addition, we could incur increased litigation as a result of any potential cyber-security

We are not aware that we have experienced any material misappropriation, loss or other unauthorized disclosure of confidential

or personally identifiable information as a result of a cyber-security breach or other act, however, a cyber-security breach or

other act and/or disruption to our information technology systems could have a material adverse effect on our business, prospects,

financial condition or results of operations.

Even if we receive regulatory approval for one or more

compounds, we will be subject to continuing regulatory obligations and ongoing regulatory review, which may result in significant

additional expense.

Additionally, our compounds, if approved, could be subject to labeling and other restrictions on marketing

or withdrawal from the market, and we may be subject to penalties, if we fail to comply with regulatory requirements or if we experience

unanticipated problems with our compounds, when and if any of them are approved.

Following potential approval of any

our compounds, the FDA may impose significant restrictions on a drug’s indicated uses or marketing or require potentially

costly and time-consuming post-approval studies, post-market surveillance or clinical trials to monitor the safety and efficacy

The FDA may also require a Risk Evaluation and Mitigation Strategy (“REMS”) as a condition of approval

of one or more of our compounds, which could include requirements for a medication guide, physician communication plans or additional

elements to ensure safe use of the drug.

Additional REMS elements may include restricted distribution methods, patient registries

and other risk minimization tools.

In addition, if the FDA or a comparable

foreign regulatory authority approves one or more of our compounds, the manufacturing processes, labeling, packaging, distribution,

adverse event reporting, storage, advertising, promotion, import, export and recordkeeping for the approved drug will be subject

to additional and potentially extensive ongoing regulatory requirements.

These requirements include submissions of safety and other

post-marketing information and reports, establishment registration, as well as continued compliance with cGMPs and GCP requirements

for any clinical trials that we conduct post-approval.

Later discovery of previously unknown problems with our products, including

adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure

to comply with regulatory requirements, may result in, among other things:

restrictions on the marketing or manufacturing

of our products, withdrawal of the product from the market or voluntary or mandatory product recalls;

fines, restitutions, disgorgement of profits

or revenues, warning letters, untitled letters or holds on clinical trials;

restrictions on product distribution or

use, or requirements to conduct post-marketing studies or clinical trials;

product seizure or detention, or refusal

to permit the import or export of our products;

injunctions or the imposition of civil

or criminal penalties;

refusal by the FDA to approve pending applications

or supplements to approved applications filed by us or suspension or revocation of approvals.

The occurrence of any event or penalty

described above may limit our ability to commercialize our compounds and generate revenue, and could require us to expend significant

time and resources in response or generate negative publicity.

If any of our compounds are approved,

our product labeling, advertising and promotion will also be subject to regulatory requirements and ongoing regulatory review.

The FDA strictly regulates the promotional claims that may be made about drug products.

In particular, a drug may not be promoted

for uses that are not approved by the FDA as reflected in the drug’s approved labeling.

If we receive marketing approval

for a compound, physicians may nevertheless lawfully prescribe it to their patients in a manner that is inconsistent with the approved

While the FDA recently clarified that mere knowledge that a physician is prescribing a drug for off label use is not sufficient

to constitute unlawful off-label promotion, if we are found to have actively promoted such off label uses, we may become subject

to significant liability under the FDCA.

The federal government has levied large civil and criminal fines against companies for

alleged improper promotion and has enjoined several companies from engaging in off-label promotion.

The FDA has also requested

that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed.

The FDA’s and other regulatory

authorities’ policies are subject to change at any time, and additional government regulations may be enacted that could

prevent, limit or delay regulatory approval of our compounds.

If we are unable to timely adapt to changes in existing requirements

or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance post-marketing, we may

lose any marketing approval that we may have obtained, and we may not achieve or sustain profitability.

Finally, we cannot predict the likelihood,

nature or extent of government regulation that may arise from future legislation or administrative or executive action, either

in the United States or abroad.

It is difficult to predict how any such legislative, administrative or executive actions will be

implemented, and the extent to which they will impact the FDA’s ability to exercise its regulatory authority.

If these legislative

or executive actions impose constraints on the FDA’s ability to engage in oversight and implementation activities in the

normal course, our business may be negatively impacted.

The COVID-19 coronavirus could

adversely impact our business, including our clinical trials, and financial condition.

In December 2019, a novel strain of

coronavirus, COVID-19, was reported to have surfaced in Wuhan, China.

Since then, the COVID-19 coronavirus has spread to multiple

countries, including the United States, Australia and European and Asia-Pacific countries, including countries in which we have

planned or active clinical trial sites.

As the COVID-19 coronavirus continues to spread around the globe, we may experience disruptions

that could potentially impact our business and clinical trials.

In addition, the spread of COVID-19

coronavirus has had and may continue to severely impact the trading price of shares of our common stock and could further severely

impact our ability to raise additional capital on a timely basis or at all.

The global outbreak of the COVID-19

coronavirus continues to rapidly evolve.

The extent to which the COVID-19 coronavirus may impact our future business operations,

including our clinical trials, and financial condition will depend on future developments, which are highly uncertain and cannot

be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions

and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness

of actions taken in the United States and other countries to contain and treat the disease.

Risks Related to our Common Stock

A decline in the price of our

common stock could affect our ability to raise further working capital and adversely impact our operations and would severely dilute

existing or future investors if we were to raise funds at lower prices.

A prolonged decline in the price of

our common stock could result in a reduction in our ability to raise capital.

Because our operations have been financed through

the sale of equity securities, a decline in the price of our common stock could be especially detrimental to our continued operations.

Any reduction in our ability to raise equity capital in the future would force us to reallocate funds from other planned uses and

would have a significant negative effect on our business plans and operations, including our ability to develop new products and

continue our current operations.

If our stock price declines, there can be no assurance that we can raise additional capital or

generate funds from operations sufficient to meet our obligations.

We believe the following factors could cause the market price

of our common stock to continue to fluctuate widely and could cause our common stock to trade at a price below the price at which

you purchase your shares of common stock:

actual or anticipated variations in our quarterly operating results;

announcements of new services, products, acquisitions or strategic

relationships by us or our competitors;

changes in accounting treatments or principles;

changes in earnings estimates by securities analysts and in analyst

recommendations;

general political, economic, regulatory and market conditions.

The market price for our common stock

may also be affected by our ability to meet or exceed expectations of analysts or investors.

Any failure to meet these expectations,

even if minor, could materially adversely affect the market price of our common stock.

If we issue additional shares

of common stock in the future, it will result in the dilution of our existing stockholders and may cause the share price of our

common stock to fall.

Recently, the stockholders of the Company

approved an amendment to our articles of incorporation, increasing the number of authorized shares of common stock to 200,000,000

We also have 10,000,000 shares of preferred stock authorized.

Our Board of Directors has the authority to issue additional

shares of preferred and common stock up to the authorized capital stated in the articles of incorporation.

Our Board of Directors

may choose to issue some or all such shares of common stock to acquire one or more businesses or to provide additional financing

in the future.

The issuance of any such shares of common stock will result in a reduction of the book value or market price of

the outstanding shares of our common stock.

If we do issue any such additional shares of common stock, such issuance also will

cause a reduction in the proportionate ownership and voting power of all other stockholders.

Further, any such issuance may result

in a change of control of our corporation.

In the event we do issue or sell additional shares of common or preferred stock, it

may result in shareholder dilution and may cause our share price to fall.

We may not be able to access sufficient

funds under the Sales Agreement when needed.

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 our common stock registered under an effective

registration statement from time to time through the Sales Agents (the “At-the-Market Offering”).

The Sales Agents

are only obligated to act as our agent in the sale of shares pursuant to the Sales Agreement on a commercially reasonable efforts

basis and subject to certain conditions set forth in the Sales Agreement.

we may not in the future, have access to the full amount available to us under the Purchase Agreement or the Sales Agreement.

In addition, any amounts we sell under the 2019 Purchase Agreement or the Sales Agreement may not satisfy all of our funding needs,

even if we are able and choose to sell and issue all of our common stock currently registered.

Related to our Intellectual Property

we are unable to obtain and maintain sufficient intellectual property protection for our product candidates, or if the scope of

the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize product

candidates similar or identical to ours, and our ability to successfully commercialize our product candidates that we may pursue

may be impaired.

success depends in large part on our ability to obtain and maintain protection of our intellectual property, particularly patents,

in the United States and other countries with respect to our product candidates and technology.

We seek to protect our proprietary

position by filing patent applications in the United States and abroad related to our product candidates or by in-licensing intellectual

patents related to ANAVEX ® 2-73 are directed to a dosage form comprising certain doses of ANAVEX ® 2-73

and donepezil, and the coverage is limited to the United States only.

Therefore, we may not in the future,

have access to the full amount available to us under the Sales Agreement.

Any amounts we sell under the Sales Agreement may not

satisfy all of our funding needs, even if we are able and choose to sell and issue all of our common stock currently registered.

Our stock price has been volatile and

may be volatile in the future.

Our stock price has been volatile at certain

times historically, and may be volatile in the future.

We may incur rapid and substantial increases or decreases in our stock price

in the foreseeable future that are do not coincide in timing with the disclosure of news or developments by us.

The stock market

in general, and the market for biotechnology and pharmaceutical companies in particular, has experienced extreme volatility that

has often been unrelated to the operating performance of particular companies.

The market price for our common stock may be influenced

by many factors, including the following:

announcements

of new data, clinical trial results or those of companies that are perceived to be similar to us;

announcements

related to any delays in any preclinical or clinical trials related to our products;

announcements

related to our products’ ability to demonstrate efficacy or an acceptable safety profile of our product candidates or similar

announcements by companies that are perceived to be similar to us;

ability to meet or exceed expectations of analysts or investors;

that the number of patients required for clinical trials for our drug candidates may be larger than we anticipate, enrollment

in these clinical trials may be slower than we anticipate, participants may drop out of these clinical trials at a higher rate

than we anticipate or the duration of these clinical trials may be longer than we anticipate;

taken by regulatory agencies with respect to our product candidates or the progress of our clinical studies, including with respect

to any fast track or orphan drug designations;

announcements

of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us, our strategic collaboration

partners or our competitors;

awarded to us or companies that are perceived to be similar to us from outside entities;

in our financial results or those of companies that are perceived to be similar to us;

volume of our common stock;

concerning our collaborations or partners;

impact of the COVID-19 outbreak and its effect on us;

perception of the biotechnology or pharmaceutical industries by the public, legislatures, regulators and the investment community;

or disputes concerning intellectual property rights;

lawsuits, including patent or stockholder litigation;

ability or inability to raise additional capital and the terms on which we raise it;

of our common stock by us or our stockholders;

in the market prices of stocks generally or of companies that are perceived to be similar to us;

economic, industry and market conditions.

In addition, companies trading in the stock

market in general, and The Nasdaq Capital Market in particular, have experienced extreme price and volume fluctuations that have

often been unrelated or disproportionate to the operating performance of these companies.

These broad market and industry factors

may seriously harm the market price of our common stock, regardless of our operating performance.

In the past, following periods

of volatility in the market, securities class-action litigation has often been instituted against companies.

Such litigation, if

instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could

materially and adversely affect our business, financial condition, results of operations and growth prospects.

There can be no

guarantee that our stock price will remain at current prices.

Our common stock may become the target

of a “short squeeze.”

In the past several months prior to the filing

of this Annual Report on Form 10-K, securities of certain companies have increasingly experienced significant and extreme volatility

in stock price due to short sellers of shares of common stock, known as a “short squeeze.” These short squeezes have

caused extreme volatility in those companies and in the market and have led to the price per share of those companies to trade

at a significantly inflated rate that is disconnected from the underlying value of the company.

Many investors who have purchased

shares in those companies at an inflated rate face the risk of losing a significant portion of their original investment as the

price per share has declined steadily as interest in those stocks have abated.

There can be no assurance that we will not, in the

future be, a target of a short squeeze, and you may lose a significant portion or all of your investment if you purchase our shares

at a rate that is significantly disconnected from our underlying value.

Risks Related to our Intellectual

If we are unable to obtain and

maintain sufficient intellectual property protection for our product candidates, or if the scope of the intellectual property protection

obtained is not sufficiently broad, our competitors could develop and commercialize product candidates similar or identical to

ours, and our ability to successfully commercialize our product candidates that we may pursue may be impaired.

Our success depends in large part on

our ability to obtain and maintain protection of our intellectual property, particularly patents, in the United States and other

countries with respect to our product candidates and technology.

We seek to protect our proprietary position by filing patent applications

in the United States and abroad related to our product candidates or by in-licensing intellectual property.

patents related

to ANAVEX ® 2-73 are directed to a dosage form comprising certain doses of ANAVEX ® 2-73 and donepezil,

and the coverage is limited to the United States only.

We may not be able to obtain patent protection for ANAVEX ® 2-73

as a single drug or in other jurisdictions.

we may be subject to a third-party preissuance submission of prior art to the United States Patent and Trademark Office, or the

USPTO, or become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings

challenging our patent rights or the patent rights of others.

An adverse determination in any such submission, proceeding or litigation

could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our product candidates and compete

directly with us, without payment to us, or result in our inability to manufacture or commercialize drugs without infringing on

third-party patent rights.

In addition, if the breadth or strength of protection provided by our patents and patent applications

is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license, develop or commercialize

current or future product candidates.

addition, the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our patents

may be challenged in the courts or patent offices in the United States and abroad.

Such challenges may result in loss of exclusivity

or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could

limit our ability to stop others from using or commercializing similar or identical product candidates, or limit the duration

of the patent protection of our product candidates.

Given the amount of time required for the development, testing and regulatory

review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are

commercialized.

As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing

drugs similar or identical to ours.

hold ownership or exclusive rights to nine issued U.S.

Moreover, we may be subject to a third-party

preissuance submission of prior art to the United States Patent and Trademark Office, or the USPTO, or become involved in opposition,

derivation, reexamination, inter partes review, post-grant review or interference proceedings challenging our patent rights or

the patent rights of others.

An adverse determination in any such submission, proceeding or litigation could reduce the scope of,

or invalidate, our patent rights, allow third parties to commercialize our product candidates and compete directly with us, without

payment to us, or result in our inability to manufacture or commercialize drugs without infringing on third-party patent rights.

In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, regardless

of the outcome, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product

In addition, the issuance of a patent

is not conclusive as to its inventorship, scope, validity or enforceability, and our patents may be challenged in the courts or

patent offices in the United States and abroad.

Such challenges may result in loss of exclusivity or freedom to operate or in patent

claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from

using or commercializing similar or identical product candidates, or limit the duration of the patent protection of our product

Given the amount of time required for the development, testing and regulatory review of new product candidates, patents

protecting such candidates might expire before or shortly after such candidates are commercialized.

As a result, our patent portfolio

may not provide us with sufficient rights to exclude others from commercializing drugs similar or identical to ours.

We hold ownership or exclusive rights

to nine issued U.S.

patent, ten U.S.

patent applications, and various PCT or ex-U.S.

applications relating to our drug candidates, methods associated therewith, and to our research programs.

Neither patents nor

patent applications ensure the protection of our intellectual property for a number of reasons, including the following:

may interfere with our patenting process in a variety of ways.

Competitors may claim that Anavex is not entitled to an issued

patent for a variety of legal reasons.

Competitors may also claim that we are infringing their patents and restrict our freedom

If a court or, in some circumstances, a board of a national patent authority, agrees, we would lose some or all

of our patent protection.

As a company, we have no meaningful experience with competitors interfering with our patents or

patent applications.

of the time, money and effort involved in obtaining and enforcing patents, our management may spend less time and resources

on developing potential drug compounds than they otherwise would, which could increase our operating expenses and delay product

of a patent may not provide significant practical protection.

If we receive a patent of narrow scope, then it may be possible

for competitors to design products that do not infringe our patent(s).

is seeking patent protection for a number of indications, combination products and drug regimens.

The lack of patent protection

in global markets for a specific end product or indication may inhibit our ability to advance our compounds and may make Anavex

less attractive to potential partners.

a patent lawsuit takes significant time and can be very expensive.

a court decides that an Anavex compound, its method of manufacture or use, infringes on the competitor’s patent, we

may have to pay substantial damages for infringement.

court may prohibit us from making, selling or licensing the potential drug compound unless the patent holder grants a license.

A patent holder is not required to grant a license.

If a license is available, we may have to pay substantial royalties or

grant cross licenses to our patents, and the license terms may be unacceptable.

our potential drug compounds so that they do not infringe on other patents may not be possible or could require substantial

funds and time.

is also unclear whether our trade secrets are adequately protected.

While we use reasonable efforts to protect our trade secrets,

our employees or consultants may unintentionally or willfully disclose our information to competitors.

Enforcing a claim that

someone illegally obtained and is using our trade secrets, like patent litigation, is expensive and time consuming, and the outcome

is unpredictable.

In addition, courts outside the United States are sometimes less willing to protect trade secrets.

Our competitors

may independently develop equivalent knowledge, methods and know-how.

may also support and collaborate in research conducted by government organizations, hospitals, universities or other educational

institutions.

These research partners may be unable or unwilling to grant us exclusive rights to technology or products derived

from these collaborations.

we do not obtain required intellectual property licenses or rights, we could encounter delays in our product development efforts

while we attempt to design around other patents or even be prohibited from developing, manufacturing or selling potential drug

compounds requiring these rights or licenses.

There is also a risk that legal disputes may arise as to the rights to technology

or potential drug compounds developed in collaboration with other parties, all with attendant risk, distraction, expense, and

lack of predictability.

we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties

or otherwise experience disruptions to our business relationships with our licensors, we could lose intellectual property rights

that are important to our business.

are party to an exclusive license agreement with Life Science Research Israel Ltd., with respect to certain in-licensed intellectual

property related to our ANAVEX®3-71 product candidate, and we may need to obtain additional licenses from others in the future.

Our license agreement with Life Science Research Israel Ltd.

imposes, and we expect that future license agreements will impose,

various development, diligence, commercialization, and other obligations on us.

In spite of our efforts, our licensors might conclude

that we have materially breached our obligations under such license agreements and might therefore terminate the license agreements,

thereby removing or limiting our ability to develop and commercialize products and technology covered by these license agreements.

If these in-licenses are terminated, or if the underlying patents fail to provide the intended exclusivity, competitors or other

third parties would have the freedom to seek regulatory approval of, and to market, products identical to ours and we may be required

to cease our development and commercialization of ANAVEX ® 3-71 or other product candidates covered by any such future

Any of the foregoing could have a material adverse effect on our competitive position, business, financial conditions,

results of operations, and prospects.

disputes may arise regarding intellectual property subject to a licensing agreement, including:

patent applications relating to our drug candidates,

methods associated therewith, and to our research programs.

Neither patents nor patent applications ensure the protection of our

intellectual property for a number of reasons, including the following:

Competitors may interfere

with our patenting process in a variety of ways.

Competitors may claim that Anavex is not entitled to an issued patent for a variety

of legal reasons.

Competitors may also claim that we are infringing their patents and restrict our freedom to operate.

or, in some circumstances, a board of a national patent authority, agrees, we would lose some or all of our patent protection.

As a company, we have no meaningful experience with competitors interfering with our patents or patent applications.

Because of the time,

money and effort involved in obtaining and enforcing patents, our management may spend less time and resources on developing potential

drug compounds than they otherwise would, which could increase our operating expenses and delay product programs.

Issuance of a patent

may not provide significant practical protection.

If we receive a patent of narrow scope, then it may be possible for competitors

to design products that do not infringe our patent(s).

Anavex is seeking patent

protection for a number of indications, combination products and drug regimens.

The lack of patent protection in global markets

for a specific end product or indication may inhibit our ability to advance our compounds and may make Anavex less attractive

to potential partners.

Defending a patent lawsuit

takes significant time and can be very expensive.

If a court decides that

an Anavex compound, its method of manufacture or use, infringes on the competitor’s patent, we may have to pay substantial

damages for infringement.

A court may prohibit

us from making, selling or licensing the potential drug compound unless the patent holder grants a license.

A patent holder is

not required to grant a license.

If a license is available, we may have to pay substantial royalties or grant cross licenses to

our patents, and the license terms may be unacceptable.

Redesigning our potential

drug compounds so that they do not infringe on other patents may not be possible or could require substantial funds and time.

It is also unclear whether our trade

secrets are adequately protected.

While we use reasonable efforts to protect our trade secrets, our employees or consultants may

unintentionally or willfully disclose our information to competitors.

Enforcing a claim that someone illegally obtained and is

using our trade secrets, like patent litigation, is expensive and time consuming, and the outcome is unpredictable.

courts outside the United States are sometimes less willing to protect trade secrets.

Our competitors may independently develop

equivalent knowledge, methods and know-how.

We may also support and collaborate

in research conducted by government organizations, hospitals, universities or other educational institutions.

These research partners

may be unable or unwilling to grant us exclusive rights to technology or products derived from these collaborations.

not obtain required intellectual property licenses or rights, we could encounter delays in our product development efforts while

we attempt to design around other patents or even be prohibited from developing, manufacturing or selling potential drug compounds

requiring these rights or licenses.

There is also a risk that legal disputes may arise as to the rights to technology or potential

drug compounds developed in collaboration with other parties, all with attendant risk, distraction, expense, and lack of predictability.

If we fail to comply with our

obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions

to our business relationships with our licensors, we could lose intellectual property rights that are important to our business.

We are party to an exclusive license

agreement with Life Science Research Israel Ltd., with respect to certain in-licensed intellectual property related to our ANAVEX ® 3-71

product candidate, and we may need to obtain additional licenses from others in the future.

Our license agreement with Life Science

Research Israel Ltd.

imposes, and we expect that future license agreements will impose, various development, diligence, commercialization,

and other obligations on us.

In spite of our efforts, our licensors might conclude that we have materially breached our obligations

under such license agreements and might therefore terminate the license agreements, thereby removing or limiting our ability to

develop and commercialize products and technology covered by these license agreements.

If these in-licenses are terminated, or

if the underlying patents fail to provide the intended exclusivity, competitors or other third parties would have the freedom to

seek regulatory approval of, and to market, products identical to ours and we may be required to cease our development and commercialization

of ANAVEX ® 3-71 or other product candidates covered by any such future licenses.

Any of the foregoing

could have a material adverse effect on our competitive position, business, financial conditions, results of operations, and prospects.

Moreover, disputes may arise regarding

intellectual property subject to a licensing agreement, including:

scope of rights granted under the license agreement and other interpretation-related issues;

extent to which our product candidates, technology and processes infringe on intellectual property of the licensor that is

not subject to the licensing agreement;

extent to which our product candidates, technology and processes infringe on intellectual property of the licensor that is not

subject to the licensing agreement;

sublicensing of patent and other rights under our collaborative development relationships;

diligence obligations under the license agreement and what activities satisfy those diligence obligations;

inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by

our licensors and us and our partners;

priority of invention of patented technology.

addition, the agreements under which we currently license intellectual property or technology from third parties are complex,

and certain provisions in such agreements may be susceptible to multiple interpretations.

The resolution of any contract interpretation

disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or

technology, or increase what we believe to be our financial or other obligations under the relevant agreement, either of which

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

disputes over intellectual property that we have licensed prevent or impair our ability to maintain our licensing arrangements

on commercially acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates,

which could have a material adverse effect on our business, financial conditions, results of operations, and prospects.

we do not obtain required intellectual property licenses or rights, we could encounter delays in our product development efforts

while we attempt to design around other patents or even be prohibited from developing, manufacturing or selling potential drug

compounds requiring these rights or licenses.

There is also a risk that legal disputes may arise as to the rights to technology

or potential drug compounds developed in collaboration with other parties, all with attendant risk, distraction, expense, and

lack of predictability.

claims of intellectual property infringement may prevent or delay our development and commercialization efforts.

success will also depend in part on our ability to commercialize our compounds without infringing the proprietary rights of others.

We have not conducted extensive freedom of use patent searches and no assurance can be given that patents do not exist or could

be issued which would have an adverse effect on our ability to market our technology or maintain our competitive position with

respect to our technology.

If our compounds or other subject matter are claimed under other United States patents or other international

patents or are otherwise protected by third party proprietary rights, we may be subject to infringement actions.

In such event,

we may challenge the validity of such patents or other proprietary rights or we may be required to obtain licenses from such companies

in order to develop, manufacture or market our technology.

There can be no assurances that we would be successful in a challenge

or be able to obtain such licenses or that such licenses, if available, could be obtained on commercially reasonable terms.

the failure to succeed in a challenge, develop a commercially viable alternative or obtain needed licenses could be materially

Adverse consequences include delays in marketing some or all of our potential drug compounds based on our drug technology

or the inability to proceed with the development, manufacture or sale of potential drug compounds requiring such licenses.

we defend ourselves against charges of patent infringement or to protect our proprietary rights against third parties, substantial

costs will be incurred regardless of whether we are successful.

Such proceedings are typically protracted with no certainty of

An adverse outcome could subject us to significant liabilities to third parties and force us to curtail or cease the

research and development of our technology.

making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further

develop and commercialize ANAVEX ® 2-73 or our other product candidates.

Defense of these claims, regardless of their

merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business.

In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages

and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses

from third parties, which may be impossible or require substantial time and monetary expenditure.

Additionally, parties making

claims against us may be able to sustain the costs of complex patent litigation more effectively than we can because they have

substantially greater resources.

Furthermore, because of the substantial amount of discovery required in connection with intellectual

property litigation or administrative proceedings, there is a risk that some of our confidential information could be compromised

by disclosure.

In addition, any uncertainties resulting from the initiation and continuation of any litigation could have material

adverse effect on our ability to raise additional funds or otherwise have a material adverse effect on our business, results of

operations, financial condition and prospects.

we are unable to protect the confidentiality of our trade secrets, the value of our technology could be materially adversely affected

and our business would be harmed.

we use reasonable efforts to protect our trade secrets, our employees or consultants may unintentionally or willfully disclose

our information to competitors.

Enforcing a claim that someone illegally obtained and is using our trade secrets, like patent

litigation, is expensive and time consuming, and the outcome is unpredictable.

In addition, courts outside the United States are

sometimes less willing to protect trade secrets.

inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our

licensors and us and our partners;

the priority of invention of patented technology.

In addition, the agreements under which

we currently license intellectual property or technology from third parties are complex, and certain provisions in such agreements

may be susceptible to multiple interpretations.

The resolution of any contract interpretation disagreement that may arise could

narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or increase what we believe

to be our financial or other obligations under the relevant agreement, either of which could have a material adverse effect on

our business, financial condition, results of operations, and prospects.

Moreover, if disputes over intellectual property that

we have licensed prevent or impair our ability to maintain our licensing arrangements on commercially acceptable terms, we may

be unable to successfully develop and commercialize the affected product candidates, which could have a material adverse effect

on our business, financial conditions, results of operations, and prospects.

If we do not obtain required intellectual

property licenses or rights, we could encounter delays in our product development efforts while we attempt to design around other

patents or even be prohibited from developing, manufacturing or selling potential drug compounds requiring these rights or licenses.

There is also a risk that legal disputes may arise as to the rights to technology or potential drug compounds developed in collaboration

with other parties, all with attendant risk, distraction, expense, and lack of predictability.

Third-party claims of intellectual

property infringement may prevent or delay our development and commercialization efforts.

Our success will also depend in part

on our ability to commercialize our compounds without infringing the proprietary rights of others.

We have not conducted extensive

freedom of use patent searches and no assurance can be given that patents do not exist or could be issued which would have an adverse

effect on our ability to market our technology or maintain our competitive position with respect to our technology.

If our compounds

or other subject matter are claimed under other United States patents or other international patents or are otherwise protected

by third party proprietary rights, we may be subject to infringement actions.

In such event, we may challenge the validity of such

patents or other proprietary rights or we may be required to obtain licenses from such companies in order to develop, manufacture

or market our technology.

There can be no assurances that we would be successful in a challenge or be able to obtain such licenses

or that such licenses, if available, could be obtained on commercially reasonable terms.

Furthermore, the failure to succeed in

a challenge, develop a commercially viable alternative or obtain needed licenses could be materially adverse.

Adverse consequences

include delays in marketing some or all of our potential drug compounds based on our drug technology or the inability to proceed

with the development, manufacture or sale of potential drug compounds requiring such licenses.

If we defend ourselves against charges

of patent infringement or to protect our proprietary rights against third parties, substantial costs will be incurred regardless

of whether we are successful.

Such proceedings are typically protracted with no certainty of success.

An adverse outcome could

subject us to significant liabilities to third parties and force us to curtail or cease the research and development of our technology.

Parties making claims against us may

obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize ANAVEX ® 2-73

or our other product candidates.

Defense of these claims, regardless of their merit, would involve substantial litigation expense

and would be a substantial diversion of employee resources from our business.

In the event of a successful claim of infringement

against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement,

pay royalties, redesign our infringing products or obtain one or more licenses from third parties, which may be impossible or require

substantial time and monetary expenditure.

Additionally, parties making claims against us may be able to sustain the costs of complex

patent litigation more effectively than we can because they have substantially greater resources.

Furthermore, because of the substantial

amount of discovery required in connection with intellectual property litigation or administrative proceedings, there is a risk

that some of our confidential information could be compromised by disclosure.

In addition, any uncertainties resulting from the

initiation and continuation of any litigation could have material adverse effect on our ability to raise additional funds or otherwise

have a material adverse effect on our business, results of operations, financial condition and prospects.

If we are unable to protect the

confidentiality of our trade secrets, the value of our technology could be materially adversely affected and our business would

While we use reasonable efforts to protect

our trade secrets, our employees or consultants may unintentionally or willfully disclose our information to competitors.

a claim that someone illegally obtained and is using our trade secrets, like patent litigation, is expensive and time consuming,

and the outcome is unpredictable.

In addition, courts outside the United States are sometimes less willing to protect trade secrets.

Our competitors may independently develop equivalent knowledge, methods and know-how.

seek to protect our confidential proprietary information, in part, by confidentiality agreements and invention assignment agreements

with our employees, consultants, scientific advisors, contractors and collaborators.

These agreements are designed to protect

our proprietary information.

However, we cannot be certain that such agreements have been entered into with all relevant parties,

and we cannot be certain that our trade secrets and other confidential proprietary information will not be disclosed or that competitors

will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques.

For example, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets,

and we may not be able to obtain adequate remedies for such breaches.

We also seek to preserve the integrity and confidentiality

of our confidential proprietary information by maintaining physical security of our premises and physical and electronic security

of our information technology systems, but it is possible that these security measures could be breached.

If any of our confidential

proprietary information were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent

such competitor from using that technology or information to compete with us, which could harm our competitive position.

we are not currently involved in any litigation, we may become involved in lawsuits to protect or enforce our patents or other

intellectual property, which could be expensive, time consuming and unsuccessful.

may infringe our patents or other intellectual property.

Although we are not currently involved in any litigation, if we were

to initiate legal proceedings against a third party to enforce a patent covering ANAVEX ® 2-73 or our other product

candidates, the defendant could counterclaim that the patent covering our product candidate is invalid and/or unenforceable.

patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace.

for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty,

obviousness, written description or non-enablement.

Grounds for an unenforceability assertion could be an allegation that someone

connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during

The outcome following legal assertions of invalidity and unenforceability is unpredictable.

or derivation proceedings provoked by third parties or brought by us or declared by the USPTO may be necessary to determine the

priority of inventions with respect to our patents or patent applications.

An unfavorable outcome could require us to cease using

the related technology or to attempt to license rights to it from the prevailing party.

Our business could be harmed if the prevailing

party does not offer us a license on commercially reasonable terms or at all, or if a non-exclusive license is offered and our

competitors gain access to the same technology.

Our defense of litigation or interference or derivation proceedings may fail and,

even if successful, may result in substantial costs and distract our management and other employees.

In addition, the uncertainties

associated with litigation could have a material adverse effect on our ability to raise the funds necessary to continue our clinical

trials, continue our research programs, license necessary technology from third parties, or enter into development partnerships

that would help us bring ANAVEX ® 2-73 or our other product candidates to market.

may be subject to claims challenging the inventorship of our patents and other intellectual property.

or our licensors may be subject to claims that former employees, collaborators or other third parties have an interest in our

owned or in-licensed patents, trade secrets, or other intellectual property as an inventor or co-inventor.

For example, we or

our licensors may have inventorship disputes arise from conflicting obligations of employees, consultants or others who are involved

in developing our product candidates.

Litigation may be necessary to defend against these and other claims challenging inventorship

or our or our licensors’ ownership of our owned or in-licensed patents, trade secrets or other intellectual property.

we or our licensors fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual

property rights, such as exclusive ownership of, or right to use, intellectual property that is important to our product candidates.

Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction

to management and other employees.

Any of the foregoing could have a material adverse effect on our business, financial condition,

results of operations and prospects.

and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other

requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance

with these requirements.

maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to

be paid to the USPTO and various governmental patent agencies outside of the United States in several stages over the lifetime

of the patents and/or applications.

We have systems in place to remind us to pay these fees, and we employ an outside firm and

rely on our outside counsel to pay these fees due to non-U.S.

We seek to protect our confidential

proprietary information, in part, by confidentiality agreements and invention assignment agreements with our employees, consultants,

scientific advisors, contractors and collaborators.

These agreements are designed to protect our proprietary information.

we cannot be certain that such agreements have been entered into with all relevant parties, and we cannot be certain that our trade

secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access

to our trade secrets or independently develop substantially equivalent information and techniques.

For example, any of these parties

may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain

adequate remedies for such breaches.

We also seek to preserve the integrity and confidentiality of our confidential proprietary

information by maintaining physical security of our premises and physical and electronic security of our information technology

systems, but it is possible that these security measures could be breached.

If any of our confidential proprietary information

were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such competitor from

using that technology or information to compete with us, which could harm our competitive position.

Although we are not currently

involved in any litigation, we may become involved in lawsuits to protect or enforce our patents or other intellectual property,

which could be expensive, time consuming and unsuccessful.

Competitors may infringe our patents

or other intellectual property.

Although we are not currently involved in any litigation, if we were to initiate legal proceedings

against a third party to enforce a patent covering ANAVEX ® 2-73 or our other product candidates, the defendant could

counterclaim that the patent covering our product candidate is invalid and/or unenforceable.

In patent litigation in the United

States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace.

Grounds for a validity challenge could

be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, written description

or non-enablement.

Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of

the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution.

The outcome following

legal assertions of invalidity and unenforceability is unpredictable.

Interference or derivation proceedings

provoked by third parties or brought by us or declared by the USPTO may be necessary to determine the priority of inventions with

respect to our patents or patent applications.

An unfavorable outcome could require us to cease using the related technology or

to attempt to license rights to it from the prevailing party.

Our business could be harmed if the prevailing party does not offer

us a license on commercially reasonable terms or at all, or if a non-exclusive license is offered and our competitors gain access

to the same technology.

Our defense of litigation or interference or derivation proceedings may fail and, even if successful, may

result in substantial costs and distract our management and other employees.

In addition, the uncertainties associated with litigation

could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our

research programs, license necessary technology from third parties, or enter into development partnerships that would help us bring

ANAVEX ® 2-73 or our other product candidates to market.

We may be subject to claims challenging

the inventorship of our patents and other intellectual property.

We or our licensors may be subject to

claims that former employees, collaborators or other third parties have an interest in our owned or in-licensed patents, trade

secrets, or other intellectual property as an inventor or co-inventor.

For example, we or our licensors may have inventorship disputes

arise from conflicting obligations of employees, consultants or others who are involved in developing our product candidates.

may be necessary to defend against these and other claims challenging inventorship or our or our licensors’ ownership of

our owned or in-licensed patents, trade secrets or other intellectual property.

If we or our licensors fail in defending any such

claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership

of, or right to use, intellectual property that is important to our product candidates.

Even if we are successful in defending

against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects.

Obtaining and maintaining our

patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed

by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees, renewal fees,

annuity fees and various other governmental fees on patents and/or applications will be due to be paid to the USPTO and various

governmental patent agencies outside of the United States in several stages over the lifetime of the patents and/or applications.

We have systems in place to remind us to pay these fees, and we employ an outside firm and rely on our outside counsel to pay these

fees due to non-U.S.

patent agencies.

The USPTO and various non-U.S.

governmental patent

agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent

application process.

We employ reputable law firms and other professionals to help us comply, and in many cases, an inadvertent

lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules.

However, there are situations

in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete

loss of patent rights in the relevant jurisdiction.

In such an event, our competitors might be able to enter the market and this

circumstance would have a material adverse effect on our business.

may not be able to protect our intellectual property rights throughout the world.

prosecuting and defending patents on our product candidates in all countries throughout the world would be prohibitively expensive,

and our intellectual property rights in some countries outside the United States can be less extensive than those in the United

In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal

and state laws in the United States.

Consequently, we may not be able to prevent third parties from practicing our inventions

in all countries outside the United States, or from selling or importing products made using our inventions in and into the United

States or other jurisdictions.

Competitors may use our technologies in jurisdictions where we have not obtained patent protection

to develop their own products and may also export infringing products to territories where we have patent protection, but enforcement

is not as strong as that in the United States.

These products may compete with our products and our patents or other intellectual

property rights may not be effective or sufficient to prevent them from competing.

UNRESOLVED STAFF COMMENTS

governmental patent agencies require compliance with a number

of procedural, documentary, fee payment and other similar provisions during the patent application process.

We employ reputable

law firms and other professionals to help us comply, and in many cases, an inadvertent lapse can be cured by payment of a late

fee or by other means in accordance with the applicable rules.

However, there are situations in which non-compliance can result

in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant

jurisdiction.

In such an event, our competitors might be able to enter the market and this circumstance would have a material adverse

effect on our business.

We may not be able to protect

our intellectual property rights throughout the world.

Filing, prosecuting and defending patents

on our product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property

rights in some countries outside the United States can be less extensive than those in the United States.

In addition, the laws

of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United

Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United

States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions.

may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and may also

export infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United

These products may compete with our products and our patents or other intellectual property rights may not be effective

or sufficient to prevent them from competing.

The risk factors disclosed in this Annual

Report on Form 10-K could materially and adversely affect our business, financial condition and results of operations.

described herein are not the only risks we face.

Our operations could also be affected by additional factors that are not presently

known to us or by factors that we currently consider immaterial to our business.

STAFF COMMENTS

We do not own any real property.

maintain a corporate head office at 51 West 52nd Street, 7 th Floor, New York, NY, USA.

Our lease costs for this office

are approximately $4,500 per month.

We believe our offices are suitable and adequate to operate our business currently, as they

provide us with sufficient space to conduct our operations.

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-K

Item 1A. Risk Factors