ANAVEX LIFE SCIENCES CORP. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Forward-Looking Statements This Quarterly Report on Form 10-Q includes forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our anticipated future clinical and regulatory milestone events, future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “expect” “should,” “forecast,” “could,” “suggest,” “plan” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Such forward-looking statements include, without limitation, statements regarding: ● volatility in our stock and in the markets in general; ● our ability to successfully conduct clinical and preclinical trials for our product candidates; ● our ability to raise additional capital on favorable terms and the impact of such activities on our stockholders and stock price; ● the impact of the COVID-19 outbreak and its effect on us; ● our ability to generate any revenue or to continue as a going concern; ● our ability to execute our research and development plan on time and on budget; ● our products ability to demonstrate efficacy or an acceptable safety profile of our product candidates; ● our ability to obtain the support of qualified scientific collaborators; ● our ability, whether alone or with commercial partners, to successfully commercialize any of our product candidates that may be approved for sale; ● our ability to identify and obtain additional product candidates; ● our reliance on third parties in non-clinical and clinical studies; ● our ability to defend against product liability claims; ● our ability to safeguard against security breaches; ● our ability to obtain and maintain sufficient intellectual property protection for our product candidates; ● our ability to comply with our intellectual property licensing agreements; ● our ability to defend against claims of intellectual property infringement; ● our ability to comply with the maintenance requirements of the government patent agencies; ● our ability to protect our intellectual property rights throughout the world; ● competition; ● the anticipated start dates, durations and completion dates of our ongoing and future clinical studies; ● the anticipated designs of our future clinical studies; ● the impact of fast track designation on receipt of actual FDA approval; ● our anticipated future regulatory submissions and our ability to receive regulatory approvals to develop and market our product candidates, including any orphan drug or fast track designations; and ● our anticipated future cash position. We have based these forward-looking statements largely on our current expectations and projections about future events, including the responses we expect from the U.S. Food and Drug Administration, (“FDA”), and other regulatory authorities and financial trends that we believe may affect our financial condition, results of operations, business strategy, preclinical and clinical trials, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions including without limitation the risks described in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on November 24, 2021. These risks are not exhaustive. Other sections of this Quarterly Report on Form 10-Q include additional factors which could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable laws including the securities laws of the United States, we assume no obligation to update or supplement forward-looking statements. 19 As used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” and “Anavex” mean Anavex Life Sciences Corp., unless the context clearly requires otherwise. Our Current Business Anavex Life Sciences Corp. is a clinical stage biopharmaceutical company engaged in the development of differentiated therapeutics by applying precision medicine to central nervous system (“CNS”) diseases with high unmet need. We analyze genomic data from clinical studies to identify biomarkers, which we use to select patients that will receive the therapeutic benefit for the treatment of neurodegenerative and neurodevelopmental diseases. Our lead compound, ANAVEX ® 2-73, is being developed to treat Alzheimer’s disease, Parkinson’s disease and potentially other central nervous system diseases, including rare diseases, such as Rett syndrome, a rare severe neurological monogenic disorder caused by mutations in the X-linked gene, methyl-CpG-binding protein 2 (“MECP2”). We currently have two core programs and two seed programs. Our core programs are at various stages of clinical and preclinical development, in neurodegenerative and neurodevelopmental diseases. The following table summarizes key information about our programs: * = Orphan Drug Designation by the FDA; Dashed lines indicate planned clinical studies Anavex has a portfolio of compounds varying in sigma-1 receptor (S1R) binding activities. The SIGMAR1 gene encodes the S1R protein, which is an intracellular chaperone protein with important roles in cellular communication. S1R is also involved in transcriptional regulation at the nuclear envelope and restores homeostasis and stimulates recovery of cell function when activated. In order to validate the ability of our compounds to activate quantitatively the S1R, we performed, in collaboration with Stanford University, a quantitative Positron Emission Tomography (PET) imaging scan in mice, which demonstrated a dose-dependent ANAVEX ® 2-73 target engagement or receptor occupancy (RO) with S1R in the brain. 20 Source: Reyes S et al., Sci Rep. 2021 Aug 25; 11(1):17150 Cellular Homeostasis Many diseases are possibly directly caused by chronic homeostatic imbalances or cellular stress of brain cells. In pediatric diseases like Rett syndrome or infantile spasms, the chronic cellular stress is possibly caused by the presence of a constant genetic mutation. In neurodegenerative diseases, such as Alzheimer’s and Parkinson’s diseases, chronic cellular stress is possibly caused by age-correlated buildup of cellular insult and hence chronic cellular stress. Specifically, defects in homeostasis of protein or ribonucleic acid (“RNA”) lead to the death of neurons and dysfunction of the nervous system. The spreading of protein aggregates resulting in a proteinopathy, a characteristic finding in Alzheimer’s and Parkinson’s diseases that results from disorders of protein synthesis, trafficking, folding, processing or degradation in cells. The clearance of macromolecules in the brain is particularly susceptible to imbalances that result in aggregation and degeneration in nerve cells. For example, Alzheimer’s disease pathology is characterized by the presence of amyloid plaques, neurofibrillary tangles, which are aggregates of hyperphosphorylated Tau protein that are a marker of other diseases known as tauopathies as well as inflammation of microglia. With the SIGMAR1 activation through SIGMAR1 agonists like ANAVEX ® 2-73, our approach is to restore cellular balance, i.e. homeostasis. Therapies that correct defects in cellular homeostasis might have the potential to halt or delay neurodevelopmental and neurodegenerative disease progression. ANAVEX ® 2-73-specific Biomarkers A full genomic analysis of Alzheimer’s disease (AD) patients treated with ANAVEX ® 2-73 resulted in the identification of actionable genetic variants. A significant impact of the genomic biomarkers SIGMAR1, the direct target of ANAVEX ® 2-73 and COMT, a gene involved in memory function, on the drug response level was identified, leading to an early ANAVEX ® 2-73-specific biomarker hypothesis. It is expected that excluding patients with SIGMAR1 identified biomarker variant (approximately 10%-20% of the population) in prospective studies would identify approximately 80%-90% patients that would display clinically significant improved functional and cognitive scores. The consistency between the identified DNA and RNA data related to ANAVEX ® 2-73, which are considered independent of AD pathology, as well as multiple endpoints and time-points, provides support for precision medicine clinical development of ANAVEX ® 2-73 by using genetic biomarkers identified within the study population itself to target patients who are most likely to respond to ANAVEX ® 2-73 treatment in AD as well as indications like Parkinson’s disease dementia (PDD) or Rett syndrome (RTT) in which ANAVEX ® 2-73 is currently studied. 21 Clinical Studies Overview Alzheimer’s Disease In November 2016, we completed a Phase 2a clinical trial, consisting of PART A and PART B, which lasted a total of 57 weeks, for ANAVEX ® 2-73 in mild-to-moderate Alzheimer’s patients. This open-label randomized trial met both primary and secondary endpoints and was designed to assess the safety and exploratory efficacy of ANAVEX ® 2-73 in 32 patients. ANAVEX ® 2-73 targets sigma-1 and muscarinic receptors, which have been shown in preclinical studies to reduce stress levels in the brain believed to restore cellular homeostasis and to reverse the pathological hallmarks observed in Alzheimer’s disease. In October 2017, we presented positive pharmacokinetic (PK) and pharmacodynamic (PD) data from the Phase 2a study, which established a concentration-effect relationship between ANAVEX ® 2-73 and study measurements. These measures obtained from all patients who participated in the entire 57 weeks include exploratory cognitive and functional scores as well as biomarker signals of brain activity. Additionally, the study appears to show that ANAVEX ® 2-73 activity is enhanced by its active metabolite (ANAVEX19-144), which also targets the sigma-1 receptor and has a half-life approximately twice as long as the parent molecule. Two consecutive trial extensions for the Phase 2a trial have allowed participants who completed the 52-week PART B of the study to continue taking ANAVEX ® 2-73, providing an opportunity to gather extended safety data for a cumulative time period of five years. In August 2020, patients completing these Phase 2a trial extensions were granted continued access to treatment with ANAVEX ® 2-73 through the Australian Government Department of Health – Therapeutic Goods Administration (TGA) compassionate use Special Access Scheme. A larger Phase 2b/3 double-blind, placebo-controlled study of ANAVEX ® 2-73 in Alzheimer’s disease commenced in August 2018. The Phase 2b/3 study enrolled 509 patients for 48 weeks, randomized 1:1:1 to two different ANAVEX ® 2-73 doses or placebo. The trial commenced in Australia; and during fiscal 2020 additional regions were added in the United Kingdom, The Netherlands, Germany and Canada. The ANAVEX ® 2-73 Phase 2b/3 study design incorporates genomic precision medicine biomarkers identified in the ANAVEX ® 2-73 Phase 2a study. Primary and secondary endpoints will assess safety and both cognitive and functional efficacy, measured through Alzheimer’s Disease Assessment Scale – Cognition (ADAS-Cog), ADCS-ADL and Clinical Dementia Rating – Sum of Boxes for cognition and function (CDR-SB). The study completed enrollment in June 2021, exceeding the 450 patient enrollment target at 52 sites across North America, Europe and Australia. In October 2019, we initiated a long-term open label extension study of ANAVEX ® 2-73, entitled the ATTENTION-AD study, for patients who have completed the 48-week Phase 2b/3 placebo-controlled trial referenced above. This study is expected to last two years and will give patients the opportunity to continue their treatment. Upon request by patients, caretakers and investigators, this extension study was extended by one further year. Rett Syndrome In February 2016, we presented positive preclinical data for ANAVEX ® 2-73 in Rett syndrome, a rare neurodevelopmental disease. The study was funded by the International Rett Syndrome Foundation (“Rettsyndrome.org”). In January 2017, we were awarded a financial grant from Rettsyndrome.org of a minimum of $0.6 million to cover some of the costs of a multicenter Phase 2 clinical trial of ANAVEX ® 2-73 for the treatment of Rett syndrome. This award was received in quarterly instalments which commenced during fiscal 2018. 22 In March 2019, we commenced the first Phase 2 clinical trial in a planned Rett syndrome program of ANAVEX ® 2-73 for the treatment of Rett syndrome. The studies will be conducted in a range of patient age demographics and geographic regions, utilizing a convenient oral liquid once-daily formulation of ANAVEX ® 2-73. The first Phase 2 study, (ANAVEX®2-73-RS-001), which took place in the United States, was completed in December 2020. This trial was a randomized double-blind, placebo-controlled safety, tolerability, pharmacokinetic and efficacy study of oral liquid ANAVEX ® 2-73 formulation in 25 adult female patients with Rett syndrome over a 7-week treatment period including ANAVEX ® 2-73-specific genomic precision medicine biomarkers. The primary endpoint of the trial was safety. The dosing of 5 mg ANAVEX ® 2-73 was well-tolerated and demonstrated dose-proportional PK (pharmacokinetics). All secondary efficacy endpoints of the trial showed statistically significant and clinically meaningful response in the Rett Syndrome Behaviour Questionnaire (RSBQ AUC) Total scores, when compared to placebo, in the ITT cohort (all participants, p = 0.011). 66.7% of ANAVEX ® 2-73 treated subjects showed a statistically significant improvement in RSBQ response as compared to 10% of the subjects on placebo in the ITT cohort (all participants, p = 0.011). ANAVEX ® 2-73 treatment resulted in a sustained improvement in Clinical Global Impression Improvement (CGI-I) scores throughout the 7-week study, when compared to placebo in the ITT cohort (all participants, p = 0.014). Consistent with previous ANAVEX ® 2-73 clinical trials, patients carrying the common form of the SIGMAR1 gene treated with ANAVEX ® 2-73 experienced stronger improvements in the prespecified efficacy endpoints. The second, international study of ANAVEX ® 2-73 for the treatment of Rett syndrome, called the AVATAR study, commenced in June 2019. This study took place in Australia and the United Kingdom using a higher dose than the U.S. based Phase 2 study for Rett syndrome. The study was a Phase 3 randomized, double-blind, placebo-controlled trial to evaluate the safety and efficacy of ANAVEX ® 2-73 in 33 patients over a 7-week treatment period including ANAVEX ® 2-73 specific precision medicine biomarkers. Following the successful completion of the U.S. Phase 2 Rett syndrome study (ANAVEX®2-73-RS-001), and the knowledge gained from it, the endpoints for the AVATAR study (ANAVEX®2-73-RS-002) were appropriately updated according to ICH guidelines and were approved by the U.K. Medicines and Healthcare products Regulatory Agency (MHRA) and in Australia by the Human Research Ethics Committees (HREC), where the AVATAR study was conducted. Subsequently the AVATAR study was updated from a Phase 2 to a Phase 3 study. The data of the AVATAR study was released in February 2022. The study met all primary and secondary efficacy and safety endpoints, with consistent improvements in primary efficacy endpoint, RSBQ AUC (p = 0.037) response, and secondary efficacy endpoints, ADAMS (p = 0.010) and CGI-I (p = 0.037) response. Efficacy endpoints demonstrated statistically significant and clinically meaningful reductions in Rett syndrome symptoms. Convenient once daily oral liquid doses of up to 30mg of ANAVEX ® 2-73 were also well tolerated with good medication compliance. All patients who participated in the study are eligible to receive ANAVEX ® 2-73 under a voluntary open label extension protocol, which is currently ongoing. In July 2020, we commenced the third study of ANAVEX ® 2-73 for the treatment of Rett syndrome, called the EXCELLENCE study. This Phase 2/3 study in pediatric patients with Rett syndrome will evaluate the safety and efficacy of ANAVEX ® 2-73 in approximately 84 pediatric patients, aged 5 to 18, over a 12-week treatment period incorporating ANAVEX ® 2-73 specific precision medicine biomarkers. All patients who participate in the study will be eligible to receive ANAVEX ® 2-73 under a voluntary open label extension protocol. Parkinson’s Disease In September 2016, we presented positive preclinical data for ANAVEX ® 2-73 in an animal model of Parkinson’s disease, which demonstrated significant improvements on behavioral, histopathological, and neuroinflammatory endpoints. The study was funded by the Michael J. Fox Foundation. Additional data announced in October 2017 indicates that ANAVEX ® 2-73 induces robust neurorestoration in experimental Parkinsonism. The encouraging results we have gathered in this model, coupled with the favorable profile of this compound in the Alzheimer’s disease trial, support the notion that ANAVEX ® 2-73 is a promising clinical candidate drug for Parkinson’s disease dementia. 23 In October 2020, we completed a double-blind, randomized, placebo-controlled proof-of-concept Phase 2 trial with ANAVEX ® 2-73 in Parkinson’s Disease Dementia (PDD), to study the effect of the compound on both the cognitive and motor impairment of Parkinson’s disease. The Phase 2 study enrolled approximately 132 patients for 14 weeks, randomized 1:1:1 to two different ANAVEX ® 2-73 doses, 30mg and 50mg, or placebo. The ANAVEX ® 2-73 Phase 2 PDD study design incorporated genomic precision medicine biomarkers identified in the ANAVEX ® 2-73 Phase 2a Alzheimer’s disease study. Within this study ANAVEX ® 2-73 was safe and well tolerated in oral doses up to 50mg once daily. The results show clinically meaningful, dose-dependent, and statistically significant improvements in the Cognitive Drug Research (CDR) computerized assessment system analysis. Treatment with ANAVEX ® 2-73 also resulted in clinically meaningful improvements as measured by the global composite score of Parkinson’s disease symptom severity, MDS-UPDRS Total score on top of standard of care including dopaminergic therapy, levodopa and other anti-PD medications after 14 weeks of treatment, suggesting ANAVEX ® 2-73’s potential global capability of slowing and reversing symptoms that progress in Parkinson’s disease. The study confirmed the precision medicine approach of targeting SIGMAR1 as a genetic biomarker in response to ANAVEX ® 2-73. In January 2021, we announced we were awarded a research grant of $1.0 million from The Michael J. Fox Foundation for Parkinson’s Research (MJFF) to develop ANAVEX ® 2-73 for the treatment of Parkinson’s disease. The award will explore utilization of PET imaging biomarkers to enable measurement of target engagement and pathway activation of the sigma-1 receptor (SIGMAR1) with clinically relevant doses in people with Parkinson’s disease. Frontotemporal Dementia In July 2020, we commenced the First-in-Human Phase 1 clinical trial of ANAVEX ® 3-71. ANAVEX ® 3-71 was previously granted orphan drug designation for the treatment of Frontotemporal Dementia (FTD) by the FDA. ANAVEX ® 3-71 is an orally administered small molecule targeting sigma-1 and M1 muscarinic receptors that is designed to be beneficial for neurodegenerative diseases. In preclinical studies, ANAVEX ® 3-71 demonstrated disease-modifying activity against the major hallmarks of Alzheimer’s disease in transgenic (3xTg-AD) mice, including cognitive deficits, amyloid and tau pathologies, as well as beneficial effects on mitochondrial dysfunction and neuroinflammation. The Phase 1 clinical trial was a prospective double-blind, randomized, placebo-controlled study. A total of 36 healthy male and female subjects were included. Single escalating doses of ANAVEX ® 3-71 were administered in order to evaluate the safety, tolerability, and pharmacokinetics (PK) of ANAVEX ® 3-71 and the effects of food and gender on its PK in healthy volunteers. The study met its primary and secondary endpoints of safety, with no serious adverse events (SAEs) or dose-limiting toxicities observed. ANAVEX ® 3-71 was well tolerated in all cohorts receiving ANAVEX ® 3-71 in single doses ranging from 5 mg to 200 mg daily with no SAEs and no significant lab abnormalities in any subject. In the study, ANAVEX ® 3-71 exhibited linear pharmacokinetics. Its pharmacokinetics was also dose proportional for doses up to 160 mg. Gender had no effect on the PK of the drug and food had no effect on the bioavailability of ANAVEX ® 3-71. The study also met the secondary objective of characterizing the effect of ANAVEX ® 3-71 on electrocardiogram (ECG) parameters. There were no clinically significant ECG parameters throughout the study. Participant QTcF measures were normal across all dose groups with no difference between ANAVEX®3-71 and placebo. Based on these results, and ANAVEX ® 3-71 pre-clinical profile, the Company intends to advance ANAVEX ® 3-71 into a biomarker-driven clinical development dementia program for the treatment of FTD, schizophrenias and Alzheimer’s disease, evaluating longitudinal effect of treatment with ANAVEX ® 3-71. We believe the results of these studies could serve as the basis for advancing into respective registration studies in the U.S. 24 Our Pipeline Our research and development pipeline includes ANAVEX ® 2-73 currently in three different clinical study indications, and several other compounds in different stages of clinical and pre-clinical study. Our proprietary SIGMACEPTOR™ Discovery Platform produced small molecule drug candidates with unique modes of action, based on our understanding of sigma receptors. Sigma receptors may be targets for therapeutics to combat many human diseases, both of neurodegenerative nature, including Alzheimer’s disease, as well as of neurodevelopmental nature, like Rett syndrome. When bound by the appropriate ligands, sigma receptors influence the functioning of multiple biochemical signals that are involved in the pathogenesis (origin or development) of disease. Multiple viruses including SARS-CoV-2 (COVID-19) induce cellular stress by intrinsic mitochondrial apoptosis and other related cellular processes, in order to ensure survival and replication. Hence, it is possible that S1R could play a role in modulating the cellular response to viral infection and ameliorate pathogenesis. Compounds that have been subjects of our research include the following: ANAVEX ® 2-73 (blarcamesine) ANAVEX ® 2-73 may offer a disease-modifying approach in neurodegenerative and neurodevelopmental diseases by activation of sigma-1 receptors. In Rett syndrome, administration of ANAVEX ® 2-73 resulted in both significant and dose related improvements in an array of behavioral paradigms in the MECP2 HET Rett syndrome disease model. In addition, in a further experiment sponsored by Rettsyndrome.org, ANAVEX ® 2-73 was evaluated in automatic visual response and respiration tests in 7-month old mice, an age at which advanced pathology is evident. Vehicle-treated MECP2 mice demonstrated fewer automatic visual responses than wild-type mice. Treatment with ANAVEX ® 2-73 for four weeks significantly increased the automatic visual response in the MECP2 Rett syndrome disease mouse. Additionally, chronic oral dosing daily for 6.5 weeks of ANAVEX ® 2-73 starting at ~5.5 weeks of age was conducted in the MECP2 HET Rett syndrome disease mouse model assessed the different aspects of muscular coordination, balance, motor learning and muscular strengths, some of the core deficits observed in Rett syndrome. Administration of ANAVEX ® 2-73 resulted in both significant and dose related improvements in an array of these behavioral paradigms in the MECP2 HET Rett syndrome disease model. In May 2016 and June 2016, the FDA granted Orphan Drug Designation to ANAVEX ® 2-73 for the treatment of Rett syndrome and infantile spasms, respectively. In November 2019, the FDA granted to ANAVEX ® 2-73 the Rare Pediatric Disease (RPD) designation for the treatment of Rett syndrome. The RPD designation provides priority review by the FDA to encourage the development of treatments for rare pediatric diseases. Further, in February 2020, the FDA granted Fast Track designation for the ANAVEX ® 2-73 clinical development program for the treatment of Rett syndrome. The FDA Fast Track program is designed to facilitate and expedite the development and review of new drugs to address unmet medical needs in the treatment of serious and life-threatening conditions. For Parkinson’s disease, data demonstrates significant improvements and restoration of function in a disease modifying animal model of Parkinson’s disease. Significant improvements were seen on all measures tested: behavioral, histopathological, and neuroinflammatory endpoints. In October 2020, we completed a double-blind, randomized, placebo-controlled proof-of-concept Phase 2 trial with ANAVEX ® 2-73 in Parkinson’s Disease Dementia (PDD), to study the effect of the compound on both the cognitive and motor impairment of Parkinson’s disease. The Phase 2 study enrolled approximately 132 patients for 14 weeks, randomized 1:1:1 to two different ANAVEX ® 2-73 doses, 30mg and 50mg, or placebo. The ANAVEX ® 2-73 Phase 2 PDD study design incorporated genomic precision medicine biomarkers identified in the ANAVEX ® 2-73 Phase 2a Alzheimer’s disease study. The study found that ANAVEX ® 2-73 was safe and well tolerated in oral doses up to 50mg once daily. The results show clinically meaningful, dose-dependent, and statistically significant improvements in the Cognitive Drug Research (CDR) computerized assessment system analysis. We anticipate conducting further clinical trials of ANAVEX ® 2-73 in Parkinson’s disease dementia after submitting the results of the study to the FDA to obtain regulatory guidance. 25 In Alzheimer’s disease (AD) animal models, ANAVEX ® 2-73 has shown pharmacological, histological and behavioral evidence as a potential neuroprotective, anti-amnesic, anti-convulsive and anti-depressive therapeutic agent, due to its potent affinity to sigma-1 receptors and moderate affinities to M1-4 type muscarinic receptors. In addition, ANAVEX ® 2-73 has shown a potential dual mechanism which may impact amyloid, tau pathology and inflammation. In a transgenic AD animal model Tg2576, ANAVEX ® 2-73 induced a statistically significant neuroprotective effect against the development of oxidative stress in the mouse brain, as well as significantly increased the expression of functional and synaptic plasticity markers that is apparently amyloid-beta independent. It also statistically alleviated the learning and memory deficits developed over time in the animals, regardless of sex, both in terms of spatial working memory and long-term spatial reference memory. Based on the results of pre-clinical testing, we initiated and completed a Phase 1 single ascending dose (SAD) clinical trial of ANAVEX ® 2-73. In this Phase 1 SAD trial, the maximum tolerated single dose was defined per protocol as 55-60 mg. This dose is above the equivalent dose shown to have positive effects in mouse models of AD. There were no significant changes in laboratory or electrocardiogram (ECG) parameters. ANAVEX ® 2-73 was well tolerated below the 55-60 mg dose with only mild adverse events in some subjects. Observed adverse events at doses above the maximum tolerated single dose included headache and dizziness, which were moderate in severity and reversible. These side effects are often seen with drugs that target CNS conditions, including AD. In December 2014, a Phase 2a clinical trial was initiated for ANAVEX ® 2-73, for the treatment of Alzheimer’s disease. The open-label randomized trial was designed to assess the safety and exploratory efficacy of ANAVEX ® 2-73 in 32 patients with mild-to-moderate Alzheimer’s disease. ANAVEX ® 2-73 is an orally available drug candidate that restores cellular homeostasis by targeting sigma-1 and muscarinic receptors. Preclinical studies demonstrated its potential to halt and/or reverse the course of Alzheimer’s. The Phase 2a study met both primary and secondary objectives of the study. In July 2018, we presented the results of a genomic DNA and RNA evaluation of the participants in the Phase 2a study. More than 33,000 genes were analyzed using unbiased, data driven, machine learning, artificial intelligence (AI) system for analyzing DNA & RNA data in patients exposed to ANAVEX ® 2-73. The analysis identified genetic variants that impacted response to ANAVEX ® 2-73, among them variants related to the Sigma-1 receptor (SIGMAR1), the target for ANAVEX ® 2-73. Results showed that study participants with the common SIGMAR1 wild type gene variant, which is about 80 percent of the population worldwide, demonstrated improved cognitive (MMSE) and the functional (ADCS-ADL) scores. The results from this evaluation have been used to establish a precision medicine approach in subsequent clinical trials, since these signatures can now be applied to neurological indications tested in clinical studies with ANAVEX ® 2-73 including Alzheimer’s disease, Parkinson’s disease dementia and Rett syndrome. ANAVEX ® 2-73 data presented met prerequisite information in order to progress into a Phase 2b/3 placebo-controlled study. On July 2, 2018, the Human Research Ethics Committee in Australia approved the initiation of our Phase 2b/3, double-blind, randomized, placebo-controlled 48-week safety and efficacy trial of ANAVEX ® 2-73 for the treatment of early Alzheimer’s disease. Clinical trial sites in Canada, the United Kingdom, the Netherlands and Germany were also added. This Phase 2b/3 study design incorporates inclusion of genomic precision medicine biomarkers identified in the ANAVEX ® 2-73 Phase 2a study. The Phase 2b/3 study, which commenced in October 2018, randomized 1:1:1 to either two different ANAVEX ® 2-73 doses or placebo, completed enrollment in June 2021. Preclinical data also validates ANAVEX ® 2-73 as a prospective platform drug for other neurodegenerative diseases beyond Alzheimer’s disease, Parkinson’s disease or Rett syndrome, more specifically, epilepsy, infantile spasms, Fragile X syndrome, Angelman syndrome, multiple sclerosis and, more recently, tuberous sclerosis complex (TSC). ANAVEX ® 2-73 demonstrated significant improvements in all of these indications in the respective preclinical animal models. In a study sponsored by the Foundation for Angelman Syndrome, ANAVEX ® 2-73 was assessed in a mouse model for the development of audiogenic seizures. The results indicated that ANAVEX ® 2-73 administration significantly reduced audiogenic-induced seizures. In a study sponsored by FRAXA Research Foundation regarding Fragile X syndrome, data demonstrated that ANAVEX ® 2-73 restored hippocampal brain-derived neurotrophic factor (BDNF) expression to normal levels. BDNF under-expression has been observed in many neurodevelopmental and neurodegenerative pathologies. BDNF signaling promotes maturation of both excitatory and inhibitory synapses. ANAVEX ® 2-73 normalization of BDNF expression could be a contributing factor for the positive data observed in both neurodevelopmental and neurodegenerative disorders like Angelman and Fragile X syndromes. 26 Preclinical data presented also indicates that ANAVEX ® 2-73 demonstrates protective effects of mitochondrial enzyme complexes during pathological conditions, which, if impaired, are believed to play a role in the pathogenesis of neurodegenerative and neurodevelopmental diseases. Preclinical data on ANAVEX ® 2-73 related to multiple sclerosis indicates that ANAVEX ® 2-73 may promote remyelination in multiple sclerosis disease. Further, data also demonstrates that ANAVEX ® 2-73 provides protection for oligodendrocytes (“OL’s”) and oligodendrocyte precursor cells (“OPC’s”), as well as central nervous system neurons in addition to helping repair by increasing OPC proliferation and maturation in tissue culture. In March 2018, we presented preclinical data of ANAVEX ® 2-73 in a genetic mouse model of tuberous sclerosis complex (“TSC”). TSC is a rare genetic disorder characterized by the growth of numerous benign tumors in many parts of the body with a high incidence of seizures. The preclinical data demonstrates that treatment with ANAVEX ® 2-73 significantly increases survival and reduces seizures. ANAVEX ® 3-71 ANAVEX ® 3-71 is a clinical drug candidate with a novel mechanism of action via sigma-1 receptor activation and M1 muscarinic allosteric modulation, which has been shown to enhance neuroprotection and cognition in Alzheimer’s disease models. ANAVEX ® 3-71 is a CNS-penetrable potential disease modifying treatment for cognitive impairments. It is highly effective in very small doses against the major Alzheimer’s hallmarks in transgenic (3xTg-AD) mice, including cognitive deficits, amyloid and tau pathologies, and also has beneficial effects on inflammation and mitochondrial dysfunctions. ANAVEX ® 3-71 indicates extensive therapeutic advantages in Alzheimer’s and other protein-aggregation-related diseases given its ability to enhance neuroprotection and cognition via sigma-1 receptor activation and M1 muscarinic allosteric modulation. A preclinical study examined the response of ANAVEX ® 3-71 in aged transgenic animal models and showed a significant reduction in the rate of cognitive deficit, amyloid beta pathology and inflammation with the administration of ANAVEX 3-71. In April 2016, the FDA granted Orphan Drug Designation to ANAVEX ® 3-71 for the treatment of Frontotemporal dementia (FTD). During pathological conditions ANAVEX ® 3-71 demonstrated the formation of new synapses between neurons (synaptogenesis) without causing an abnormal increase in the number of astrocytes. In neurodegenerative diseases such as Alzheimer’s and Parkinson’s disease, synaptogenesis is believed to be impaired. Additional preclinical data presented also indicates that in addition to reducing oxidative stress, ANAVEX ® 3-71 demonstrates protective effects of mitochondrial enzyme complexes during pathological conditions, which, if impaired, are believed to play a role in the pathogenesis of neurodegenerative and neurodevelopmental diseases. In July 2020, we commenced the first Phase 1 clinical trial of ANAVEX ® 3-71. The study took place in Australia and was a double-blind, randomized, placebo-controlled, Phase 1 trial to evaluate safety and tolerability, and pharmacokinetics (PK) of oral escalating doses of ANAVEX ® 3-71 including effects of food and gender in healthy volunteers The study met its primary and secondary endpoints of safety, respectively with no serious adverse events (SAEs) or dose-limiting toxicities observed, as more fully described above under Clinical Studies Overview – Frontotemporal Dementia . Based on these results, and ANAVEX ® 3-71 pre-clinical profile, the Company intends to advance ANAVEX ® 3-71 into a biomarker-driven clinical development dementia program for the treatment of FTD, schizophrenias and Alzheimer’s disease, evaluating longitudinal effect of treatment with ANAVEX ® 3-71. Anavex believes the results of these studies, could serve as the basis for advancing into respective registration studies in the U.S. 27 ANAVEX ® 1-41 ANAVEX ® 1-41 is a sigma-1 agonist. Pre-clinical tests revealed significant neuroprotective benefits (i.e., protects nerve cells from degeneration or death) through the modulation of endoplasmic reticulum, mitochondrial and oxidative stress, which damages and impairs cell viability. In addition, in animal models, ANAVEX ® 1-41 prevented the expression of caspase-3, an enzyme that plays a key role in apoptosis (programmed cell death) and loss of cells in the hippocampus, the part of the brain that regulates learning, emotion and memory. These activities involve both muscarinic and sigma-1 receptor systems through a novel mechanism of action. Preclinical data presented also indicates that ANAVEX ® 1-41 demonstrates protective effects of mitochondrial enzyme complexes during pathological conditions, which, if impaired, are believed to play a role in the pathogenesis of neurodegenerative and neurodevelopmental diseases. ANAVEX ® 1066 ANAVEX ® 1066, a mixed sigma-1/sigma-2 ligand is designed for the potential treatment of neuropathic and visceral pain. ANAVEX ® 1066 was tested in two preclinical models of neuropathic and visceral pain that have been extensively validated in rats. In the chronic constriction injury model of neuropathic pain, a single oral administration of ANAVEX ® 1066 dose-dependently restored the nociceptive threshold in the affected paw to normal levels while leaving the contralateral healthy paw unchanged. Efficacy was rapid and remained significant for two hours. In a model of visceral pain, chronic colonic hypersensitivity was induced by injection of an inflammatory agent directly into the colon and a single oral administration of ANAVEX ® 1066 returned the nociceptive threshold to control levels in a dose-dependent manner. Companion studies in rats demonstrated the lack of any effects on normal gastrointestinal transit with ANAVEX ® 1066 and a favorable safety profile in a battery of behavioral measures. ANAVEX ® 1037 ANAVEX ® 1037 is designed for the treatment of prostate and pancreatic cancer. It is a low molecular weight, synthetic compound exhibiting high affinity for sigma-1 receptors at nanomolar levels and moderate affinity for sigma-2 receptors and sodium channels at micromolar levels. In advanced pre-clinical studies, this compound revealed antitumor potential. It has also been shown to selectively kill human cancer cells without affecting normal/healthy cells and also to significantly suppress tumor growth in immune-deficient mice models. Scientific publications highlight the possibility that these ligands may stop tumor growth and induce selective cell death in various tumor cell lines. Sigma receptors are highly expressed in different tumor cell types. Binding by appropriate sigma-1 and/or sigma-2 ligands can induce selective apoptosis. In addition, through tumor cell membrane reorganization and interactions with ion channels, our drug candidates may play an important role in inhibiting the processes of metastasis (spreading of cancer cells from the original site to other parts of the body), angiogenesis (the formation of new blood vessels) and tumor cell proliferation. Our compounds are in the pre-clinical and clinical testing stages of development, and there is no guarantee that the activity demonstrated in pre-clinical models will be shown in human testing. We continue to identify and initiate discussions with potential strategic and commercial partners to most effectively advance our programs and realize maximum shareholder value. Further, we may acquire or develop new intellectual property and assign, license, or otherwise transfer our intellectual property to further our goals. Our Target Indications We have developed compounds with potential application to two broad categories and several specific indications. including: 28 Central Nervous System Diseases ● Alzheimer’s disease – In 2021, an estimated 5.7 million Americans were suffering from Alzheimer’s disease. The Alzheimer’s Association ® estimates that by 2050, this number will rise to nearly 14 million Americans. Medications on the market today treat only the symptoms of Alzheimer’s disease and do not have the ability to stop its onset or its progression. There is an urgent and unmet need for both a disease modifying cure for Alzheimer’s disease as well as for better symptomatic treatments. ● Parkinson’s disease – Parkinson’s disease is a progressive disease of the nervous system marked by tremors, muscular rigidity, and slow, imprecise movement. It is associated with degeneration of the basal ganglia of the brain and a deficiency of the neurotransmitter dopamine. Parkinson’s disease afflicts more than 10 million people worldwide, typically middle-aged and elderly people. The Parkinson’s disease market is expected to expand to $11.5 billion by 2029, according to business intelligence provider GBI Research. ● Rett syndrome – Rett syndrome is a rare X-linked genetic neurological and developmental disorder that affects the way the brain develops, including protein transcription, which is altered and as a result lead to severe disruptions in neuronal homeostasis. It is considered a rare, progressive neurodevelopmental disorder and is caused by a single mutation in the MECP2 gene. Because males have a different chromosome combination from females, boys who have the genetic MECP2 mutation are affected in devastating ways. Most of them die before birth or in early infancy. For females who survive infancy, Rett syndrome leads to severe impairments, affecting nearly every aspect of the child’s life; severe mental retardation, their ability to speak, walk and eat, sleeping problems, seizures and even the ability to breathe easily. Rett syndrome affects approximately 1 in every 10,000-15,000 females. ● Depression – Depression is a major cause of morbidity worldwide according to the World Health Organization. Pharmaceutical treatment for depression is dominated by blockbuster brands, with the leading nine brands historically accounting for approximately 75% of total sales. However, the dominance of the leading brands is waning, largely due to the effects of patent expiration and generic competition. ● Epilepsy – Epilepsy is a common chronic neurological disorder characterized by recurrent unprovoked seizures. These seizures are transient signs and/or symptoms of abnormal, excessive or synchronous neuronal activity in the brain. According to the Centers for Disease Control and Prevention, in 2015 epilepsy affected 3.4 million Americans. Today, epilepsy is often controlled, but not cured, with medication that is categorized as older traditional anti-epileptic drugs and second generation anti-epileptic drugs. Because epilepsy afflicts sufferers in different ways, there is a need for drugs used in combination with both traditional anti-epileptic drugs and second generation anti-epileptic drugs. ● Neuropathic Pain – We define neuralgia, or neuropathic pain, as pain that is not related to activation of pain receptor cells in any part of the body. Neuralgia is more difficult to treat than some other types of pain because it does not respond well to normal pain medications. Special medications have become more specific to neuralgia and typically fall under the category of membrane stabilizing drugs or antidepressants. Cancer ● Malignant Melanoma – Predominantly a skin cancer, malignant melanoma can also occur in melanocytes found in the bowel and the eye. Malignant melanoma accounts for 75% of all deaths associated with skin cancer. The treatment includes surgical removal of the tumor, adjuvant treatment, chemo and immunotherapy, or radiation therapy. According to iHealthcareAnalyst, Inc. the worldwide malignant melanoma market is expected to grow to $6.4 billion by 2027. ● Prostate Cancer – Specific to men, prostate cancer is a form of cancer that develops in the prostate, a gland in the male reproductive system. The cancer cells may metastasize from the prostate to other parts of the body, particularly the bones and lymph nodes. Drug therapeutics for prostate cancer are expected to increase to nearly $13.5 billion in 2024 according to Datamonitor Healthcare. ● Pancreatic Cancer – Pancreatic cancer is a malignant neoplasm of the pancreas. In the United States, approximately 55,000 new cases of pancreatic cancer will be diagnosed this year and approximately 44,000 patients will die as a result of their cancer, according to the American Cancer Society. Sales predictions by FutureWise forecast that the market for the global pharmaceutical treatment of pancreatic cancer will increase to $4.7 billion by 2027. 29 Patents, Trademarks and Intellectual Property We hold ownership or exclusive rights to fifteen U.S. patents, sixteen U.S. patent applications, and various PCT or ex-U.S. patent applications relating to our drug candidates, methods associated therewith, and to our research programs. We own one issued U.S. patent entitled “ANAVEX ® 2-73 and certain anticholinesterase inhibitors composition and method for neuroprotection” claims a composition of matter of ANAVEX ® 2-73 directed to a novel and synergistic neuroprotective compound combined with donepezil and other cholinesterase inhibitors. This patent is expected to expire in June 2034, absent any patent term extension for regulatory delays. We own three issued U.S. patents each with claims directed to crystalline forms of ANAVEX ® 2-73. The first of these three patents claims crystalline forms of ANAVEX ® 2-73, dosage forms and compositions containing crystalline ANAVEX ® 2-73, and methods of treatment for Alzheimer’s disease using them. This patent is expected to expire in July 2036, absent any patent term extension for regulatory delays. The second of these three patents claims pharmaceutical compositions containing a crystalline form of ANAVEX ® 2-73, and methods of treatment for Alzheimer’s disease using the compositions. This patent is expected to expire in June 2037, absent any patent term extension for regulatory delays. The third of these three patents claims pharmaceutical compositions containing a crystalline form of ANAVEX ® 2-73, and methods of treatment for Alzheimer’s disease using the compositions. This patent is expected to expire in June 2037, absent any patent term extension for regulatory delays. We also own two issued U.S. patents for seizure treatment. The first of these two patents claims methods and dosage forms for treating seizures, the dosage forms containing a low-dose anti-epilepsy drug combined with either: (i) ANAVEX ® 2-73 and its active metabolite ANAVEX ® 19-144; or (ii) ANAVEX ® 19-144. The second of these two patents further claims a combination seizure treatment involving administration of an anti-epilepsy drug combined with (i) ANAVEX ® 19-144, or (ii) ANAVEX 19-144 ® and ANAVEX 2-73 ® . Both patents are expected to expire in October 2035, absent any patent term extension for regulatory delays. We also own two issued U.S. patents with claims directed to treating neurodevelopmental disorders. These patents claim methods for treating a neurodevelopmental disorder or multiple sclerosis by administering ANAVEX ® 2-73, ANAVEX ® 19-144, and/or ANAVEX ® 1-41 (another sigma receptor ligand similar to ANAVEX ® 2-73), or compositions thereof. Both patents are expected to expire in January 2037, absent any patent term extension for regulatory delays. In addition, we own one issued U.S. Patent with claims directed to methods of treating melanoma with a compound related to ANAVEX ® 2-73. This patent is expected to expire in February 2030, absent any patent term extension for regulatory delays. We also own an issued U.S. patent that claims crystalline forms of ANAVEX ® 19-144, dosage forms and compositions containing the crystalline forms of ANAVEX ® 19-144, and methods of treatment for Alzheimer’s disease. This patent is expected to expire in July 2036, absent any patent term extension for regulatory delays. Further, we own one issued U.S. Patent with claims directed to methods of treating cardiac dysfunction with ANAVEX ® 2-73 . This patent is expected to expire in July 2038, absent any patent term extension for regulatory delays. We also own two issued U.S. patents related to ANAVEX ® 1066. The first of these two patents claims methods for treating or preventing pain using (+) ANAVEX ® 1066 isomer. The second patent claims methods for treating or preventing pain using (-) ANAVEX ® 1066 isomer. Both patents are expected to expire in November 2036, absent any patent term extension for regulatory delays. For ANAVEX ® 2-73, ANAVEX ® 19-144, ANAVEX ® 1-41, and ANAVEX ® 1066, we also have granted or pending applications in Australia, Canada, China, Europe, Japan, and Hong Kong, which are expected to expire after 2035. With regard to ANAVEX ® 3-71, we own exclusive rights to two issued U.S. patents with claims respectively directed to the ANAVEX ® 3-71 compound and methods of treating various diseases including Alzheimer’s with the same. These patents are expected to expire in April 2030, and January 2030, respectively, absent any patent term extension for regulatory delays. We also own exclusive rights to related patents or applications that are granted or pending in Australia, Canada, China, Europe, Japan, Korea, New Zealand, Russia, and South Africa, which are expected to expire in January 2030. 30 We also own other patent applications directed to enantiomers, crystals, formulations, uses, and patient selection methods that may provide additional protection for one or more of our product candidates. We regard patents and other intellectual property rights as corporate assets. Accordingly, we attempt to optimize the value of intellectual property in developing our business strategy including the selective development, protection, and exploitation of our intellectual property rights. In addition to filings made with intellectual property authorities, we protect our intellectual property and confidential information by means of carefully considered processes of communication and the sharing of information, and by the use of confidentiality and non-disclosure agreements and provisions for the same in contractor’s agreements. While no agreement offers absolute protection, such agreements provide some form of recourse in the event of disclosure, or anticipated disclosure. Our intellectual property position, like that of many biomedical companies, is uncertain and involves complex legal and technical questions for which important legal principles are unresolved. For more information regarding challenges to our existing or future patents, see “Risk Factors” “ in Part I, Item 1A of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on November 24, 2021. Financial Highlights We are in the development stage and have not earned any revenues since our inception in 2004. We do not anticipate earning any revenues until we can establish an alliance with other companies to develop, co-develop, license, acquire or market our products. Our operating costs consist primarily of research and development activities including the cost of clinical studies and clinical supplies as well as clinical drug manufacturing and formulation. Research and development expenses also include personnel related costs such as salaries and wages, and third-party contract research organization (CRO) expenses in support of these clinical studies. Personnel costs include salaries and wages, benefits, and non-cash stock-based compensation charges associated with options and other equity awards granted to employees and consultants who are directly engaged in support of our research and development activities. General and administrative expenses consist of personnel costs, expenses for outside professional services and expenses associated with operating as a public company. Personnel costs consist of salaries and wages, benefits and stock-based compensation for general and administrative personnel. Outside professional services and public company expenses include expenses related to compliance and reporting, additional insurance expenses, audit and SOX compliance, expenses associated with patent research, applications and filings, investor and shareholder relations activities and other administrative expenses and professional services. Three months ended December 31, 2021 compared to three months ended December 31, 2020 During the three months ended December 31, 2021, we completed our second randomized placebo-controlled clinical trial of ANAVEX ® 2-73 for the treatment of Rett syndrome , the AVATAR Phase 3 study, and reported positive top-line results from this study in February 2022, as described above under Clinical Studies Overview – Rett Syndrome . We continued to advance enrollment of our EXCELLENCE international Phase 2/3 pediatric Rett syndrome clinical trial through the activation of additional clinical sites in new regions across Canada.. We also completed the first in human Phase 1 clinical trial of ANAVEX ® 3-71 with focus on the treatment of Frontotemporal Dementia (FTD) and positive topline results were announced in January 2022, as described above under Clinical Studies Overview – Frontotemporal Dementia. Operating Expenses Total operating expenses for the first quarter of fiscal 2022 were $11.7 million, compared to $9.4 million for the comparable first quarter of fiscal 2021. General and administrative expenses were $3.1 million for the three months ended December 31, 2021, as compared to $1.5 million for the first quarter of fiscal 2021. The increase is primarily related to an increase in non-cash stock option compensation charges of $1.3 million period over period in connection with the vesting of milestone-based options. 31 Our research and development expenses for the first quarter of fiscal 2022 were $8.7 million, as compared to $7.9 million for the first quarter of fiscal 2021. The increase is primarily related to an increase in non-cash stock option compensation charges of $1.7 million period over period in connection with the vesting of milestone-based options. We will continue to see an increase in our research and development expenditures as we advance our ANAVEX ® 2-73 clinical studies, including extension studies to allow us to continue to gather longer term data, continuing to advance our other pipeline compounds such as ANAVEX ® 3-71, and as we continue to add additional staff to manage and support these clinical studies. Other income (net) The net amount of other income for the first quarter of fiscal 2022 was $0.9 million as compared to $1.6 million for the comparable first quarter of fiscal 2021. The decrease in other income is attributable to a decrease in Australian research and development incentive income in connection with the decrease in eligible clinical activities in Australia over the comparable period such as the completion of the ANAVEX ® 3-71 Phase 1 clinical study. Foreign exchange gains during the period are primarily related to the fluctuations in the Australian dollar against the US dollar and its related impact on incentive and tax receivables during the period. Net loss Net loss for the first quarter of fiscal 2022 was $10.9 million, or $0.14 per share, as compared to $7.9 million, or $0.12 per share in the comparative first quarter of fiscal 2021. Liquidity and Capital Resources Working Capital December 31, 2021 September 30, 2021 Current Assets $ 156,896,368 $ 161,616,490 Current Liabilities 10,528,662 10,798,386 Working Capital $ 146,367,706 $ 150,818,104 At December 31, 2021, we held $151.1 million in cash and cash equivalents, a decrease of $1.0 million from September 30, 2021. Cash expenditures for the quarter of approximately $7.0 million were offset by a net reduction of incentive and tax receivables of $3.8 million, resulting in a net cash used in operating activities of $3.5 million for the quarter. We received cash from financing activities of $2.5 million primarily from the issuance of shares of common stock under the Sales Agreement (as defined below). We intend to continue to use our capital resources to advance our clinical trials for ANAVEX ® 2-73 and ANAVEX ® 3-71, and to perform work necessary to prepare for future development of our pipeline compounds. Cash Flows Three months ended December 31, 2021 2020 Net cash flows used in operating activities $ (3,500,955 ) $ (7,871,378 ) Net cash flows from financing activities 2,539,565 25,979,959 (Decrease) increase in cash and cash equivalents $ (961,390 ) $ 18,108,581 32 Cash flow used in operating activities Net cash used in operating activities for the first quarter of fiscal 2022 was $3.5 million, compared to $7.9 million during the comparable period of fiscal 2021. The principal reason for this decrease in net cash used in operating activities in the current period is due to the receipt of research and development incentive tax refunds during the period, as compared to no such receipts during the comparable period. Cash flow provided by financing activities Cash provided by financing activities for the three months ended December 31, 2021 was $2.5 million, primarily attributable to cash received from the issuance of common shares at various market prices under the Sales Agreement. Cash provided by financing activities for the three months ended December 31, 2020 was $26.0 million, attributable to cash received from the issuance of common shares at various market prices under the 2019 Purchase Agreement and the Sales Agreement. Other Financing Controlled Equity Offering Sales Agreement On May 1, 2020, we entered into an Amended and Restated Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. and SVB Leerink LLC (the “Sales Agents”), pursuant to which we may offer and sell shares of common stock registered under an effective registration statement from time to time through the Sales Agents (the “At-the-Market Offering”). Upon delivery of a placement notice based on our instructions and subject to the terms and conditions of the Sales Agreement, the Sales Agents may sell shares of common stock by methods deemed to be an “at the market offering”, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, or by any other method permitted by law, including negotiated transactions, subject to our prior written consent. We are not obligated to make any sales of shares under the Sales Agreement. We or the Sales Agents may suspend or terminate the At-the-Market Offering upon notice to the other party, subject to certain conditions. The Sales Agents will act as agents on a commercially reasonable efforts basis consistent with their normal trading and sales practices and applicable state and federal law, rules and regulations and the rules of Nasdaq. We have agreed to pay the Sales Agents commissions for their services of 3.0% of the gross proceeds from the sale of the shares pursuant to the Sales Agreement. We have also agreed to provide the Sales Agents with customary indemnification and contribution rights. During the three months ended December 31, 2021, 99,588 shares were sold pursuant to the At-the-Market Offering for gross proceeds of $2.3 million (net proceeds of $2.2 million after deducting commissions and offering expenses). Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders. CRITICAL ACCOUNTING POLICIES We prepare our interim condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and make estimates and assumptions that affect our reported amounts of assets, liabilities, revenue and expenses, and the related disclosures of contingent liabilities. We base our estimates on historical experience and other assumptions that we believe are reasonable in the circumstances. Actual results may differ from these estimates. 33 There have been no significant changes in the critical accounting policies and estimates described in our Annual Report on Form 10-K for the year ended September 30, 2021 as filed with the SEC on November 24, 2021. RECENT ACCOUNTING PRONOUNCEMENTS Please refer to Note 2 “Recent Accounting Pronouncements” in notes to our Interim Condensed Consolidated Financial Statements included in this Form 10-Q. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS. Not applicable