What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-02-07 compared with 2023-08-08 · 310 added, 288 removed, 725 unchanged (45% of the section changed)

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Such forward-looking statements include, without limitation, statements regarding:

volatility in our stock price and in the

markets in general;

our ability to successfully conduct preclinical

studies and clinical 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 candidates’ ability

to demonstrate efficacy or an acceptable safety profile;

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

studies and clinical trials;

our ability to defend against product liability

our ability to safeguard against security

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;

the anticipated start dates, durations

and completion dates of our ongoing and future clinical trials;

the anticipated designs of our future clinical

our ability to attract and retain qualified

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;

our anticipated future cash position and

ability to obtain funding for our operations.

volatility in our stock price and in the markets in general;

our ability to successfully conduct preclinical studies and clinical 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;

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 candidates’ ability to demonstrate efficacy or an acceptable safety profile;

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 studies and clinical trials;

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;

the anticipated start dates, durations and completion dates of our ongoing and future clinical trials;

the anticipated designs of our future clinical trials;

our ability to attract and retain qualified employees;

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;

our anticipated future cash position and ability to obtain funding for our operations.

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.

Drug Administration, (“FDA”), and other regulatory authorities and financial trends that we believe may affect our

financial condition, results of operations, business strategy, preclinical studies and clinical trials, and financial needs.

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 28, 2022.

largely on our current expectations and projections about future events, including the responses we expect from regulatory authorities

and financial trends that we believe may affect our financial condition, results of operations, business strategy, preclinical

studies 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 27, 2023.

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.

sections of this Quarterly Report on Form 10-Q include additional factors which could adversely impact our business and financial

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.

As used in this Quarterly Report on Form 10-Q,

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Our lead product candidate, 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”).

(blarcamesine), 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

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* = Orphan Drug Designation by the FDA

Dashed lines indicate planned clinical trials to-date

Anavex has a portfolio of compounds varying

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to activate quantitatively the SIGMAR1, 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 with SIGMAR1 in the brain.

Reyes S et al.,

Tomography (PET) imaging scan in mice, which demonstrated a dose-dependent ANAVEX ® 2-73 (blarcamesine) target engagement

or receptor occupancy with SIGMAR1 in the brain.

Reyes S et al., Sci Rep.

Cellular Homeostasis

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With the SIGMAR1 activation through SIGMAR1

agonists like ANAVEX ® 2-73, our approach is to restore cellular balance (i.e.

agonists like ANAVEX ® 2-73 (blarcamesine), 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

that correct defects in cellular homeostasis might have the potential to halt or delay neurodevelopmental and neurodegenerative

disease progression.

ANAVEX ® 2-73 (blarcamesine) specific

As part of some of our clinical trials, we

have incorporated a genomic analysis to better understand potential populations for whom our clinical programs might benefit.

our clinical trials, a full genomic analysis of Alzheimer’s disease patients treated with ANAVEX ® 2-73 has

helped us identify 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.

We believe 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 Alzheimer’s disease pathology, as well as multiple endpoints and time-points, provides

support for the potential precision medicine clinical development of ANAVEX ® 2-73 by using genetic biomarkers identified

within the trial population itself to target patients who are most likely to respond to ANAVEX ® 2-73 treatment.

may in the future utilize such an approach in Alzheimer’s disease as well as indications like Parkinson’s disease dementia

or Rett syndrome in which ANAVEX ® 2-73 is currently being studied.

our clinical trials, a full genomic analysis of Alzheimer’s disease patients treated with ANAVEX ® 2-73 (blarcamesine)

has helped us identify actionable genetic variants.

A significant impact of the genomic biomarkers SIGMAR1, the direct target of

ANAVEX ® 2-73 (blarcamesine) and COMT, a gene involved in memory function, on the drug response level was identified,

leading to an early ANAVEX ® 2-73 (blarcamesine) specific biomarker hypothesis.

We believe 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 (blarcamesine), which are considered independent of Alzheimer’s

disease pathology, as well as multiple endpoints and time-points, provides support for the potential precision medicine clinical

development of ANAVEX ® 2-73 (blarcamesine) by using genetic biomarkers identified within the trial population itself

to either confirm the mechanism of action of ANAVEX ® 2-73 (blarcamesine) or target patients who are most likely to

respond to ANAVEX ® 2-73 (blarcamesine) treatment.

We may in the future utilize such an approach in Alzheimer’s

disease as well as indications like Parkinson’s disease dementia or Rett syndrome in which ANAVEX ® 2-73 (blarcamesine)

is currently being studied.

Clinical Trials Overview

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performed by outside consultancy companies.

In October 2019, we initiated a long-term open

label extension study of ANAVEX ® 2-73, entitled the ATTENTION-AD trial, for patients who have completed the 48-week

In September 2023, we provided additional data

demonstrating that the clinical effect was complemented by two independent biomarkers.

A significant reduction in pathological

amyloid beta levels in plasma, as well as a significant slowing in the rate of pathological brain atrophy on Magnetic Resonance

Imaging (MRI) scans.

Validated biomarkers of amyloid beta pathology, plasma Aβ42/40 ratio increased significantly (P = 0.048),

demonstrating strong anti-amyloid effects of ANAVEX ® 2-73 in Alzheimer’s disease patients, while MRI revealed

significant reduction in brain volume loss, including whole brain (P = 0.0005), comparing treatment to placebo.

Furthermore, all pre-specified clinical endpoints

were further analyzed using a mixed model for repeated measures (MMRM).

Under the multiplicity control rule, a trial is successful

in meeting the co-primary endpoints if the significance of each endpoint is P < 0.05, or if the significance of only one co-primary

endpoint is P < 0.025.

If only one primary endpoint is significant at an α level of 0.025, then the secondary endpoint

will be evaluated at the same level of 0.025.

The trial was successful, since the differences in the least-squares mean (LSM) change

from baseline to 48 weeks between the ANAVEX ® 2-73 and placebo groups were −1.783 [95% CI, −3.314 to

(P = 0.0226) for ADAS-Cog13, and −0.456 [95% CI, −0.831 to −0.080];

(P = 0.0175) for CDR-SB in

patients with early Alzheimer’s disease.

In the respective safety population, common

treatment-emergent adverse events included dizziness, which was transient and mostly mild to moderate in severity, and occurred

in 120 participants (35.8%) during titration and in 76 participants (25.2%) during maintenance with ANAVEX®2-73 and 10 (6.0%)

during titration and 9 (5.6%) during maintenance with placebo.

A subsequent long-term open label extension

study of ANAVEX ® 2-73, entitled the ATTENTION-AD trial was initiated for patients who have completed the 48-week

Phase 2b/3 placebo-controlled trial referenced above.

This trial extension for an additional two years, which is currently ongoing,

gives patients the opportunity to continue their treatment.

This trial extension for an additional 96 weeks is currently ongoing, and

provides an opportunity to evaluate longer term safety and efficacy of ANAVEX ® 2-73 in persons with Alzheimer’s

Rett Syndrome

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The clinical trial met all primary and secondary efficacy and safety endpoints, with consistent improvements

in primary efficacy endpoint, RSBQ response (p = 0.037), and secondary efficacy endpoints, ADAMS (p = 0.010) and CGI-I (p = 0.037)

Efficacy endpoints demonstrated statistically significant and clinically meaningful reductions in Rett syndrome symptoms.

Convenient once daily oral liquid doses of up to 30 mg of ANAVEX ® 2-73 were also well tolerated with good medication

All patients who participated in the trial were eligible to receive ANAVEX ® 2-73 under a voluntary open

label extension protocol.

In July 2020, we commenced the third trial

of ANAVEX ® 2-73 for the treatment of Rett syndrome, called the EXCELLENCE trial.

This Phase 2/3 trial in pediatric

patients with Rett syndrome includes trial sites in Australia, the United Kingdom and Canada, and 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.

This trial completed enrollment in February 2023, exceeding

the original enrollment target.

In June 2023, this trial completed dosing of all participants, and topline results are expected

in the second half of 2023.

All patients who participate in the trial will be eligible to receive ANAVEX ® 2-73 under

a voluntary open label extension protocol, which is currently ongoing.

in primary efficacy endpoint, RSBQ response (p = 0.037), and secondary efficacy endpoints, Anxiety, Depression, and Mood Scale

(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 30 mg of ANAVEX ® 2-73 were

also well tolerated with good medication compliance.

All patients who participated in the trial were eligible to receive ANAVEX ® 2-73

under a voluntary open label extension protocol and subsequent Compassionate Use Program.

The very first trial of ANAVEX ® 2-73

in pediatric Rett syndrome patients, the EXCELLENCE trial, completed enrollment in February 2023.

This randomized, double-blind,

placebo-controlled Phase 2/3 trial in pediatric patients with Rett syndrome included trial sites in Canada, Australia, and the

United Kingdom.

92 pediatric patients with Rett syndrome between the ages of 5 through 17 years were treated daily with up to 30

mg ANAVEX ® 2-73.

Participants were randomized 2:1 (ANAVEX ® 2-73:placebo) for 12 weeks, followed by

a week 16 safety visit and topline results from this trial were announced in early January 2024.

After 12 weeks, the study showed improvement

on the key co-primary endpoint RSBQ, which is a detailed 45-item questionnaire for assessing multiple Rett syndrome characteristics

by the patients’ caregivers.

The other co-primary endpoint, the CGI-I, which represents a less granular assessment by the

site investigators using a seven-point scoring (one=“very much improved” to seven=“very much worse”), was

In an ad-hoc analysis, using the predefined

mixed-effect model for repeated measure (MMRM) method, after 12 weeks of treatment, ANAVEX ® 2-73-treated patients

improved LS Mean (SE) -12.93 (2.150) points on their RSBQ total score compared to LS Mean (SE) -8.32 (2.537) points in placebo-treated

The LS Mean difference (SE) of -4.61 (2.439) points between treated and placebo groups did not reach statistical significance

ANAVEX ® 2-73-treated patients demonstrated a rapid onset of action with improvements at 4 weeks

after treatment with a RSBQ total score LS Mean (SE) -10.32 (2.086) points in the drug-treated group compared to a LS Mean (SE)

-5.67 (2.413) points in placebo-treated patients.

The LS Mean difference of -4.65 (2.233) points between treated and placebo groups

was statistically significant (n=77;

The key secondary endpoint, the ADAMS, trended

In the same analysis, scores for all RSBQ and ADAMS subscales improved over the course of the study.

Collectively, the

RSBQ and ADAMS demonstrated improvements in multiple areas, impacting positively in particular repetitive movements, nighttime

disruptive behaviors and social avoidance.

A preliminary review of the safety results

indicates there were no new safety signals in the EXCELLENCE study, reinforcing the favorable and manageable safety profile observed

with ANAVEX ® 2-73 to date.

All patients who participated in the trial

were eligible to receive ANAVEX ® 2-73 under a voluntary open label extension protocol.

A high enrollment rate in the OLE of over 91%

and the high level of requests for the Compassionate Use Program (93%) provide solid numerical evidence for the reported positive

Real World Evidence (RWE) from patients with Rett syndrome under Compassionate Use Authorization.

Families whose children were

previously on drug or placebo in the placebo-controlled trial commented favorably on the improvement of their child’s daily

life due to ANAVEX ® 2-73 treatment in the Compassionate Use Program.

Parkinson’s Disease

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In March 2023, we reported the preliminary

ANAVEX2-73-PDD-EP-001 OLE trial data, which demonstrated longitudinal beneficial effects of ANAVEX ® 2-73 on the prespecified

ANAVEX2-73-PDD-EP-001 OLE trial data, which demonstrated longitudinal beneficial effects of ANAVEX ® 2-73 on the pre-specified

primary and secondary objectives.

Preliminary analysis reveals that ANAVEX ® 2-73 (blarcamesine) was found to be generally

safe and well tolerated;

Preliminary analysis reveals that ANAVEX ® 2-73 was found to be generally safe and

well tolerated;

and safety findings in this trial were consistent with the known safety profile of ANAVEX ® 2-73.

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of target engagement and pathway activation of the SIGMAR1 with clinically relevant doses including in people with Parkinson’s

Frontotemporal Dementia

Schizophrenia, Frontotemporal Dementia and

Alzheimer’s disease

In July 2020, we commenced the First-in-Human

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between ANAVEX ® 3-71 and placebo.

2023 a peer-reviewed publication in the journal Neurobiology of Aging, titled “Early treatment with an M1 and sigma-1 receptor

agonist prevents cognitive decline in a transgenic rat model displaying Alzheimer-like amyloid pathology”, featured the orally

available small molecule ANAVEX ® 3-71 (AF710B).

The preclinical study described the potential disease-modifying properties

of ANAVEX ® 3-71 on Alzheimer’s disease pathology as a possible drug candidate for a potential once daily oral

preventive strategy for Alzheimer’s disease.

2024, in another peer-reviewed publication in the journal Clinical Pharmacology in Drug Development , entitled, ‘ Population-Based

Characterization of the Pharmacokinetics and Food Effect of ANAVEX3-71, a Novel Sigma-1 Receptor and Allosteric M1 Muscarinic Receptor

Agonist in Development for Treatment of Frontotemporal Dementia, Schizophrenia, and Alzheimer Disease’ , reported the

Population-based characterization of the PK and food effect of ANAVEX ® 3-71 as part of the single ascending dose

study in healthy participants with the primary objective of assessing dose proportionality of ANAVEX ® 3-71, and to

characterize the effect of food on the PK of ANAVEX ® 3-71.

The results from this PK evaluation demonstrated that

ANAVEX ® 3-71, at single ascending doses of 5 to 200 mg, is linear, dose proportional, and time invariant.

no effect on the PK of ANAVEX ® 3-71.

This data also expands the safety objectives met in this first-in-human study

of ANAVEX ® 3-71, further supporting its drug development program.

on these results, and ANAVEX ® 3-71’s pre-clinical profile, we intend to advance ANAVEX ® 3-71

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evaluating longitudinal effect of treatment with ANAVEX ® 3-71.

We believe the results of these clinical trials and

preclinical study could serve as a basis for advancing into respective registration trials in the U.S.

study with ANAVEX®3-71 is the U.S.

FDA cleared placebo-controlled Phase 2 ANAVEX®3-71-SZ-001 study, will consist of two

parts to explore multiple ascending doses in individuals with schizophrenia followed by a 28-day treatment period in a larger

The study will utilize standard clinical outcome measures for schizophrenia including the Positive and Negative Symptoms

Scale (PANSS) and novel electrophysiological biomarkers identified by the ERP Biomarker Qualification Consortium for use in schizophrenia

clinical trials.

Our research and development pipeline includes

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genomic precision medicine biomarkers identified in the ANAVEX ® 2-73 Phase 2a trial.

The trial completed and, in December 2022,

the Company presented positive topline results from the Phase 2b/3 clinical trial.

ANAVEX ® 2-73 met the co-primary

endpoints ADAS-Cog and ADCS-ADL and key secondary endpoint CDR-SB as further described above under Clinical Trials Overview

– Alzheimer’s Disease.

We believe preclinical data from our studies

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secondary endpoints of safety, respectively, with no serious adverse events (SAEs) or dose-limiting toxicities observed, as

more fully described above under Clinical Trials Overview – Frontotemporal Dementia .

more fully described above under Clinical Trials Overview – Schizophrenia, Frontotemporal Dementia and Alzheimer’s

on these results, and ANAVEX ® 3-71 pre-clinical profile, the Company intends to advance ANAVEX ® 3-71

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Central Nervous System Diseases

Alzheimer’s disease – In 2023, an estimated 6.7 million Americans aged 65 and older are suffering from Alzheimer’s disease.

Alzheimer’s disease – In 2023, an estimated 6.7 million Americans aged 65 and older suffered from Alzheimer’s disease.

The Alzheimer’s Association ® estimates that the annual number of new cases of Alzheimer’s and other dementias is projected to double by 2050.

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Rett syndrome affects approximately 1 in every 10,000-15,000 females.

Schizophrenia - Schizophrenia is a persistent and often disabling mental illness impacting how a person thinks, feels, and behaves, and affects nearly 24 million people worldwide, including 2.8 million people in the U.S., according to the World Health Organization.

It is characterized by three symptom domains:

positive symptoms (hallucinations and delusions), negative symptoms (difficulty enjoying life and withdrawal from others), and cognitive impairment (deficits in memory, concentration, and decision-making).

In part due to limitations with current treatments, people living with schizophrenia often struggle to maintain employment, live independently, and manage relationships.

While current treatments can be effective in managing select symptoms, approximately 30% of people do not respond to therapy, with an additional 50% experiencing only a partial improvement in symptoms or unacceptable side effects, according to the World Health Organization.

· Fragile X – Fragile X syndrome (FXS) is the most prevalent genetic form of intellectual disability

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Patents, Trademarks and Intellectual

We hold ownership or exclusive rights to twenty

patents, twenty-one U.S.

We hold ownership or exclusive rights to twenty-four

patents, twenty-three U.S.

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

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This patent is expected to expire in October 2036, absent any patent term extension for regulatory

We also own two issued U.S.

We also own three 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:

The first of these three 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

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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,

The second of these three 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 three issued U.S.

patents with claims directed to treating neurodevelopmental

These patents claim methods for treating a neurodevelopmental disorder, multiple sclerosis, or their related biochemical

and functional abnormalities 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.

The third of these three patents claims a dosage form for

seizure reduction, comprising (i) ANAVEX ® 19-144, (ii) ANAVEX ® 2-73, or (iii) a combination of ANAVEX ® 19-144

and ANAVEX ® 2-73;

and optionally further comprising a low-dose anti-epilepsy drug.

All three patents are expected

to expire in January 2037, absent any patent term extension for regulatory delays.

to expire in October 2035, absent any patent term extension for regulatory delays.

We also own four issued U.S.

patents with claims

directed to treating neurodevelopmental disorders.

These patents claim methods for treating a neurodevelopmental disorder, multiple

sclerosis, their related biochemical and functional abnormalities, or loss-of-function associated with a neurodevelopmental disorder,

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.

All four patents are expected to expire in January 2037,

absent any patent term extension for regulatory delays.

In addition, we own one issued U.S.

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.

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

Additionally, we own one issued U.S.

Patent with claims directed to methods of treating insomnia or anxiety with ANAVEX ® 2-73,

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

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.

is expected to expire in July 2038, absent any patent term extension for regulatory delays.

Additionally, we own two issued U.S.

Patent for the treatment of insomnia, anxiety, or agitation.

The first of the two patents claims methods of treating insomnia or

anxiety with ANAVEX ® 2-73, ANAVEX ® 19-144, and/or ANAVEX ® 1-41.

This patent is expected

to expire in September 2038.

The second of the two patents claims a dosage form comprising any of, or any combination of ANAVEX ® 2-73,

ANAVEX ® 19-144, and/or ANAVEX ® 1-41.

This patent is expected to expire in September 2038, absent any

patent term extension for regulatory delays.

This patent is expected to expire in July 2038, absent any patent

term extension for regulatory delays.

Further, we own one issued U.S.

Patent with claims directed to a method of treating

systolic hypertension using ANAVEX ® 2-73.

This patent is expected to expire in July 2039, absent any patent term

extension for regulatory delays.

Additionally, we own one issued U.S.

Patent with claims directed to pharmaceutical dosage forms

of (-) enantiomer of ANAVEX ® 2-73.

Patent with claims directed to a method of treating systolic

hypertension using ANAVEX ® 2-73.

This patent is expected to expire in July 2039, absent any patent term extension

for regulatory delays.

Additionally, we own one issued U.S.

Patent with claims directed to pharmaceutical dosage forms of (-) enantiomer

of ANAVEX ® 2-73.

This patent is expected to expire in July 2036, absent any patent term extension for regulatory

We also own two issued U.S.

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Financial Overview

The following discussion should be read

in conjunction with our condensed interim consolidated financial statements and related notes thereto contained elsewhere in this

Past operating results are not necessarily indicative of results that may occur in future periods.

The discussion contains

forward-looking statements, which involve a number of risks and uncertainties.

See “Forward Looking Statements” included

elsewhere in this report.

The following discussion should be read in conjunction with our condensed consolidated

interim financial statements and related notes thereto contained elsewhere in this report.

Past operating results are not necessarily

indicative of results that may occur in future periods.

The discussion contains forward-looking statements, which involve a number of

risks and uncertainties.

See “Forward Looking Statements” included elsewhere in this report.

We are in the development stage and have not

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and other administrative expenses and professional services.

Comparison of the three and nine months

ended June 30, 2023 and 2022

Comparison of the three months ended December

31, 2023 and 2022

Operating Expenses

Total operating expenses for the quarter ended

June 30, 2023 were $13.5 million, compared to $12.5 million for the comparable quarter ended June 30, 2022.

Total operating expenses

for the nine months ended June 30, 2023 were $43.1 million, compared to $35.7 million for the comparable nine-month period ended

June 30, 2022.

Our research and development expenses for the

three months ended June 30, 2023 were $10.3 million, as compared to $9.3 million for the three months ended June 30, 2022.

increase in research and development expenses is primarily related to (i) an increase in personnel costs of $0.6 million as a result

of the expansion of our team engaged in research and development activities and (ii) an increase of approximately $0.4 million

over the comparable period relating to the manufacture and associated Phase 1 activities for ANAVEX ® 3-71 tablets.

December 31, 2023 were $11.3 million, compared to $15.4 million for the comparable quarter ended December 31, 2022.

Our research and development expenses for the

nine months ended June 30, 2023 were $33.7 million, as compared to $26.5 million for the nine months ended June 30, 2022.

in research and development expenses is primarily related to (i) an increase in personnel costs of $1.8 million and an increase

in stock-based compensation expense of $1.1 million as a result of the expansion of our team engaged in research and development

(ii) an increase of approximately $2.9 million over the comparable period, relating to the manufacturing activities

for both our ANAVEX ® 2-73 and ANAVEX ® 3-71 programs;

(iii) an increase of approximately $0.4 million

in costs associated with new trial start up activities and (iv) an increase of approximately $1.6 million for our Rett syndrome

program, primarily associated with expanded enrollment in our EXCELLENCE trial.

These increases were offset by a decrease in license

fees of $0.5 million over the comparable period, paid in connection with the completion of the Phase 1 clinical trial for ANAVEX ® 3-71.

three months ended December 31, 2023 were $8.7 million, as compared to $12.1 million for the three months ended December 31, 2022.

The decrease in research and development expenses is primarily related to the following;

(i) a decrease in stock-based compensation expense of $2.2 million as a result of the vesting of previously

awards options and the extended timeline of milestone based vesting awards;

(ii) a decrease of approximately $0.8 million in expenditures over the comparable

period relating to our Rett syndrome program as a result of the completion of the EXCELLENCE trial and the respective open label extension

of the AVATAR

(iii) a decrease of approximately $1.2 million in expenditures over the comparable period relating to

our Alzheimer’s program as a result of the completion of the Phase 2b/3 clinical trial in the comparable period.

The following table summarizes our research

and development expenses for the three and nine months ended June 30, 2023 and 2022 (in thousands):

Three months ended

Nine months ended

and development expenses for the three months ended December 31, 2023 and 2022 (in thousands):

Cost of external service providers

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Total research and development costs

During the three and nine months ended June

During the three months ended December 31,

2023 and 2022, external service providers cost by product candidate was as follows (in thousands):

Three months ended

Nine months ended

ANAVEX ® 2-73

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General and administrative expenses were $2.6

million for the three months ended June 30, 2023, as compared to $3.2 million for the same quarter of fiscal 2022.

administrative expenses were consistent between both periods.

General and administrative expenses were $9.4

million for the nine months ended June 30, 2023, as compared to $9.2 million for the same nine-month period of fiscal 2022, an

increase of $0.2 million mostly relating to an increase in professional and IP related costs.

During the first nine months of fiscal 2023,

we utilized cash and cash equivalents of $21.9 million to fund our operations, compared to $20.2 million during the same period

of fiscal 2022.

Our cash position was $154.8 million at June 30, 2023 compared to $149.2 million at our fiscal year ended September

We expect to continue an increase in our research

and development expenditures as we advance our ANAVEX ® 2-73 clinical trials, including planned advancement of ANAVEX ® 2-73

for Parkinson’s disease program, planned initiation of a Fragile X clinical program, ongoing extension trials of our current

clinical programs, continued advancement of our other pipeline compounds such as ANAVEX ® 3-71, and as we continue

to add additional staffing to manage and support these clinical initiatives.

million for the three months ended December 31, 2023, as compared to $3.3 million for the same quarter of fiscal 2022.

reason for the decrease in general and administrative expenses was a reduction in stock-based compensation charges of $0.8 million

as a result of the vesting of previously awards stock options and the extended timeline of milestone based vesting awards.

We expect to see our research and development

expenditures increase from current levels as we advance our clinical programs, including ongoing extension trials of our Alzheimer’s

and Rett syndrome programs, planned initiation of an ANAVEX ® 3-71 trial in Schizophrenia, planned advancement of

ANAVEX ® 2-73 for Parkinson’s disease, planned initiation of an ANAVEX ® 2-73 for Fragile X clinical

trial, and as we continue to add additional staffing to manage and support these clinical initiatives.

Other income (net)

The net amount of other income for the three

months ended June 30, 2023 was $2.3 million as compared to $0.2 million for the comparable three months ended June 30, 2022.

increase in other income for the quarter is primarily related to an increase in return on excess cash invested in cash equivalents

and a reduction in foreign exchange fluctuation losses due to the stabilization of the Australian dollar against the US dollar.

The net amount of other income for the nine

months ended June 30, 2023 was $5.8 million as compared to $2.2 million for the comparable nine months ended June 30, 2022.

increase in other income for the nine-month period is primarily related to an increase in return on excess cash invested in cash

equivalents, partially offset by a financing charge of $1.0 million in connection with the 2023 Purchase Agreement.

Net loss for the three months ended June 30,

2023, was $11.3 million, or $0.14 per share, as compared to $12.4 million, or $0.16 per share in the comparative quarter of fiscal

The decrease in net loss for the quarter is primarily related to an increase in other income as discussed above.

Net loss for the nine months ended June 30,

2023, was $37.4 million, or $0.47 per share, as compared to $33.7 million, or $0.44 per share in the comparative period of fiscal

The increase in net loss for the nine-month period is primarily related to increased research and development fees as discussed

months ended December 31, 2023 was $2.8 million as compared to $2.4 million for the comparable three months ended December 31,

The increase in other income for the quarter is primarily related to an increase in return on excess cash invested in cash

equivalents due to a marketwide increase in interest rates.

Net loss for the three months ended December

31, 2023, was $8.6 million, or $0.11 per share, as compared to $13.0 million, or $0.17 per share in the comparative quarter of

The decrease in net loss for the quarter is primarily related to a decrease in research and development expenditures

and an increase in other income, as discussed above.

Liquidity and Capital Resources

Working Capital

June 30, 2023

Working Capital (in thousands)

December 31, 2023

September 30, 2023

Current Assets

$ 157,809,863

$ 152,704,603

Current Liabilities

Working Capital

$ 146,754,596

$ 142,491,042

At June 30, 2023, we had current assets of

$157.8 million, an increase of $5.1 million from September 30, 2022.

The increase in current assets primarily relates to an increase

in cash and cash equivalents of $5.7 million mainly due to $26.7 million in net proceeds received from issuance of common shares

under the 2023 Purchase Agreement, described below, offset by cash used in operations of $21.9 million.

At June 30, 2023, we had current liabilities

of $11.1 million, an increase of $0.8 million from September 30, 2022.

A portion of this increase relates to an increase in deferred

grant income of $0.5 million relating to amounts received during the quarter for a research grant awarded by The Michael J.

Foundation for Parkinson’s Research.

At December 31, 2023, we had net current assets

of $135.6 million, a decrease of $6.3 million from September 30, 2023.

The decrease in net current assets primarily relates to

a decrease in cash and cash equivalents of $7.3 million due to cash utilized in operations, which were funded using cash and cash

equivalents on hand.

During the first three months of fiscal 2023,

we utilized cash and cash equivalents of $7.3 million to fund our operations, compared to $5.8 million during the same period of

Our cash position was $143.8 million at December 31, 2023 compared to $151.0 million at our fiscal year ended September

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.

and to perform the work necessary to prepare for future development of our pipeline compounds.

The following

table summarizes cash flows during the nine months ended June 30, 2023 and 2022:

table summarizes cash flows during the three months ended December 31, 2023 and 2022 (in thousands):

Net cash flows used in operating activities

$ (21,935,371 )

$ (20,193,929 )

Net cash flows from financing activities

Increase in cash and cash equivalents

Decrease in cash and cash equivalents

Cash flow used in operating activities

Net cash used in operating activities for the

nine months ended June 30, 2023 was $21.9 million, compared to $20.2 million during the comparable period ended June 30, 2022.

The principal reason for this increase in net cash used in operating activities in the current period is due to the increase in

net loss over the comparable quarter.

three months ended December 31, 2023 was $7.3 million, compared to $5.8 million during the comparable period ended December 31,

The principal reason for this increase in net cash used in operating activities in the current period is due to a net increase

in accounts payable and accrued liabilities in the comparable quarter.

Cash flow provided by financing activities

Cash provided by financing activities for the

nine months ended June 30, 2023 was $27.6 million, mainly attributable to the issuance of common shares under the 2023 Purchase

Agreement, described below, while cash provided by financing activities for the nine months

ended June 30, 2022 was $21.3 million, primarily attributable to the sale of common shares at various market prices under

the Sales Agreement, described below.

three months ended December 31, 2023 was $0.06 million, from the exercise of stock options during the period.

Cash provided

by financing activities for the three months ended December 31, 2022 was $0.3 million, also attributable to the exercise

of stock options during that period.

The Company did not sell any shares under the 2023 Purchase Agreement or Sales Agreement,

both described below, during either of the periods.

Other Financings

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Park”), pursuant to which the Company has the right to sell and issue to Lincoln Park, and Lincoln Park is obligated to purchase,

up to $150,000,000 in value of its shares of Common Stock from time to time over a three-year period until February 3, 2026.

up to $150.0 million in value of its shares of Common Stock from time to time over a three-year period until February 3, 2026.

On any business day and subject to certain

customary conditions, the Company may direct Lincoln Park to purchase up to 200,000 shares of Common Stock (such purchases, “Regular

Purchases ”).

The amount of a Regular Purchase may increase under certain circumstances based on the market price of the

Common Stock;

provided, however, that Lincoln Park ‘s committed obligation under any Regular Purchase shall not exceed $4,000,000.

The amount of a Regular Purchase may increase under certain circumstances based on the market price of the Common

provided, however, that Lincoln Park’s committed obligation under any Regular Purchase shall not exceed $4.0 million.

The purchase price of shares of Common Stock will be based on the then prevailing market prices of such shares at the time of sales

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Stock available as a Regular Purchase on a given day, it may direct Lincoln Park to purchase additional amounts as “accelerated

purchases” and “additional accelerated purchases” as set forth in the Purchase Agreement.

purchases” and “additional accelerated purchases,” each as set forth in the Purchase Agreement.

The Purchase Agreement limits the Company’s

sale of shares of Common Stock to Lincoln Park to 15,606,426 shares of Common Stock, representing 19.99% of the shares of the Common

Stock outstanding on the date of the Purchase Agreement unless (i) stockholder approval is obtained to issue more than such

amount or (ii) the average price of all applicable sales of Common Stock to Lincoln Park under the Purchase Agreement equals

or exceeds the lower of (A) the closing price of the Common Stock on the Nasdaq Capital Market immediately preceding the Execution

Date or (B) the average of the closing price of the Common Stock on the Nasdaq Capital Market for the five Business Days immediately

preceding the Execution Date.

Stock outstanding on the date of the Purchase Agreement unless (i) stockholder approval is obtained to issue more than such amount

or (ii) the average price of all applicable sales of Common Stock to Lincoln Park under the Purchase Agreement equals or exceeds

the lower of (A) the closing price of the Common Stock on the Nasdaq Capital Market immediately preceding the Execution Date or

(B) the average of the closing price of the Common Stock on the Nasdaq Capital Market for the five Business Days immediately preceding

the Execution Date.

The Purchase Agreement also prohibits the Company

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Purchase Agreement, the Company issued to Lincoln Park 75,000 shares of Common Stock as a commitment fee (the “initial commitment

shares”) during the nine months ended June 30, 2023 and agreed to issue up to 75,000 shares pro rata, when and if, Lincoln

Park purchased, at the Company’s discretion, the $150,000,000 aggregate commitment.

During the nine months ended June 30, 2023,

the Company issued to Lincoln Park an aggregate of 3,138,348 (2022:

0) shares of Common Stock under the 2023 Purchase Agreement,

including 3,125,000 (2022:

0) shares of Common Stock for aggregate proceeds of $26.7 million (2022:

$0) and 13,348 (2022:

0) commitment

As of June 30, 2023, an amount of $123.3

million in shares of our common stock remain available for purchase by Lincoln Park under the Purchase Agreement.

shares”) during the year ended September 30, 2023 and agreed to issue up to 75,000 shares pro rata (collectively with the

initial commitment shares, the “commitment shares”), when and if, Lincoln Park purchased, at the Company’s discretion,

the $150.0 million aggregate commitment.

During the three months ended December 31,

2023 and 2022, the Company did not issue any shares of Common Stock to Lincoln Park under the 2023 Purchase Agreement.

As of December 31, 2023, an amount of

$122.1 million in shares of our Common Stock remains available for purchase by Lincoln Park under the 2023 Purchase Agreement.

Controlled Equity Offering Sales Agreement

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We have also agreed to provide the Sales Agents with customary indemnification and contribution rights.

No shares were sold during the nine months

ended June 30, 2023 under the Sales Agreement.

During the nine months ended June 30, 2022,

1,623,566 shares were sold under the Sales Agreement for gross proceeds of $21.0 million (net proceeds of $20.3 million after deducting

commissions and offering expenses).

No shares were sold during the three months

ended December 31, 2023 and 2022 under the Sales Agreement.

The Company currently is unable to sell shares of common stock under

the Sales Agreement.

Off-Balance Sheet

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CRITICAL ACCOUNTING POLICIES

We prepare our condensed

interim 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.

We prepare our condensed consolidated interim 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

There have been no

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PRONOUNCEMENTS

Please refer to Note

2 “Recent Accounting Pronouncements” in notes to our Condensed Interim Consolidated Financial Statements included in

this Form 10-Q.

Please refer to Note 2 “Recent Accounting Pronouncements” in notes

to our Condensed Consolidated Interim Financial Statements included in this Form 10-Q.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis