UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission file number 001-37492

ANIXA BIOSCIENCES, INC.

(Exact name of registrant as specified in its charter)

Delaware		11-2622630
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

3150 Almaden Expressway, Suite 250

San Jose, CA

95118

(Address of principal executive offices)

(Zip Code)

(408) 708-9808

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading symbol		Name of exchange on which registered
Common Stock, par value $.01 per share		ANIX		NASDAQ Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒

No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒

No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐				Accelerated filer ☐
Non-accelerated filer ☒		Smaller reporting company ☒		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐

No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

On September 9, 2022 the registrant had outstanding 30,661,692 shares of Common Stock, par value $.01 per share, which is the registrant’s only class of common stock.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements.

	Condensed Consolidated Balance Sheets as of July 31, 2022 (Unaudited) and October 31, 2021	1

	Condensed Consolidated Statements of Operations (Unaudited) for the three and nine months ended July 31, 2022 and 2021	2

	Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) for the three months ended July 31, 2022 and 2021	3

	Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) for the nine months ended July 31, 2022 and 2021	4

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended July 31, 2022 and 2021	5

	Notes to Condensed Consolidated Financial Statements (Unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	24

Item 4.	Controls and Procedures.	24

PART II. OTHER INFORMATION		25

Item 1.	Legal Proceedings.	25

Item 1A.	Risk Factors.	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	25

Item 3.	Defaults Upon Senior Securities.	25

Item 4.	Mine Safety Disclosures.	25

Item 5.	Other Information.	25

Item 6.	Exhibits.	25

SIGNATURES		26

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	July 31, 2022			October 31, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	24,254		$	29,128
Short-term investments		7,410			6,599
Prepaid expenses and other current assets		676			276
Total current assets		32,340			36,003

Operating lease right-of-use asset		223			254
Total assets	$	32,563		$	36,257

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	227		$	136
Accrued expenses		1,198			1,095
Operating lease liability		44			39
Total current liabilities		1,469			1,270

Operating lease liability, non-current		187			220
Total liabilities		1,656			1,490

Commitments and contingencies (Note 9)		-

Equity:
Shareholders’ equity:
Preferred stock, par value $100 per share; 19,860 shares authorized; no shares issued or outstanding		-			-
Series A convertible preferred stock, par value $100 per share; 140 shares authorized; no shares issued or outstanding		-			-
Preferred stock
Common stock, par value $.01 per share; 100,000,000 shares authorized; 30,653,418 and 30,050,894 shares issued and outstanding as of July 31, 2022 and October 31, 2021, respectively		307			301
Additional paid-in capital		246,303			239,927
Accumulated deficit		(214,909	)		(204,790	)
Total shareholders’ equity		31,701			35,438
Noncontrolling interest (Note 1)		(794	)		(671	)
Total equity		30,907			34,767

Total liabilities and equity	$	32,563		$	36,257

The accompanying notes are an integral part of these condensed consolidated financial statements.

ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share data)


	For the three months ended						For the nine months ended
	July 31,						July 31,
	2022			2021			2022			2021

Revenue	$	-		$	-		$	-		$	513

Operating costs and expenses:
Inventor royalties, contingent legal fees, litigation and licensing expenses		-			-			-			385
Research and development expenses (including non-cash share-based compensation expenses of $771, $1,688, $3,014 and $2,425, respectively)		1,445			2,167			5,018			4,017
General and administrative expenses (including non-cash share-based compensation expenses of $667, $1,500, $2,460 and $2,800, respectively)		1,352			2,221			5,248			5,170
Total operating costs and expenses		2,797			4,388			10,266			9,572

Loss from operations		(2,797	)		(4,388	)		(10,266	)		(9,059	)

Interest income		22			-			24			2

Net loss		(2,775	)		(4,388	)		(10,242	)		(9,057	)

Less: Net loss attributable to noncontrolling interest		(29	)		(54	)		(123	)		(116	)

Net loss attributable to common shareholders	$	(2,746	)	$	(4,334	)	$	(10,119	)	$	(8,941	)

Net loss per common share attributable to common shareholders:
Basic and diluted	$	(0.09	)	$	(0.14	)	$	(0.33	)	$	(0.32	)

Weighted average common shares outstanding:
Basic and diluted		30,451			30,455			30,244			28,090

The accompanying notes are an integral part of these condensed consolidated financial statements.

ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

(in thousands, except share data)

FOR THE THREE MONTHS ENDED JULY 31, 2022


	Common Stock				Additional					Total			Non-
	Shares		Par Value		Paid-in Capital		Accumulated Deficit			Shareholders’ Equity			controlling Interest			Total Equity

Balance, April 30, 2022		30,154,708	$	302	$	244,032	$	(212,163	)	$	32,171		$	(765	)	$	31,406
Stock option compensation to employees and directors		-		-		1,329		-			1,329			-			1,329
Stock options issued to consultants		-		-		109		-			109			-			109
Common stock issued upon exercise of stock options		496,048		5		825		-			830			-			830
Common stock issued to consultants		2,662		-		8		-			8			-			8
Net loss		-		-		-		(2,746	)		(2,746	)		(29	)		(2,775	)
Balance, July 31, 2022		30,653,418	$	307	$	246,303	$	(214,909	)	$	31,701		$	(794	)	$	30,907

FOR THE THREE MONTHS ENDED JULY 31, 2021

	Shares			Par Value			Capital		Deficit			Equity			Interest			Equity
	Common Stock						Additional					Total			Non-
	Shares			Par Value			Paid-in Capital		Accumulated Deficit			Shareholders’ Equity			controlling Interest			Total Equity

Balance, April 30, 2021		31,449,905		$	315		$	233,742	$	(196,443	)	$	37,614		$	(559	)	$	37,055
Stock option compensation to employees and directors		-			-			3,048		-			3,048			-			3,048
Expired restricted stock award to employee		(1,500,000	)		(15	)		15		-			-			-			-
Stock options issued to consultants		-			-			139		-			139			-			139
Net loss		-			-			-		(4,334	)		(4,334	)		(54	)		(4,388	)
Balance, July 31, 2021		29,949,905		$	300		$	236,944	$	(200,777	)	$	36,467		$	(613	)	$	35,854

The accompanying notes are an integral part of these condensed consolidated financial statements.

ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

(in thousands, except share data)

FOR THE NINE MONTHS ENDED JULY 31, 2022

	Shares		Par Value		Capital		Deficit			Equity			Interest			Equity
	Common Stock				Additional					Total			Non-
	Shares		Par Value		Paid-in Capital		Accumulated Deficit			Shareholders’ Equity			controlling Interest			Total Equity

Balance, October 31, 2021		30,050,894	$	301	$	239,927	$	(204,790	)	$	35,438		$	(671	)	$	34,767
Stock option compensation to employees and directors		-		-		4,928		-			4,928			-			4,928
Stock options and warrants issued to consultants		-		-		546		-			546			-			546
Common stock issued upon exercise of stock options and warrants		577,473		6		824		-			830			-			830
Common stock issued to consultants		22,662		-		72		-			72			-			72
Common stock issued pursuant to employee stock purchase plan		2,389		-		6		-			6			-			6
Net loss		-		-		-		(10,119	)		(10,119	)		(123	)		(10,242	)
Balance, July 31, 2022		30,653,418	$	307	$	246,303	$	(214,909	)	$	31,701		$	(794	)	$	30,907

FOR THE NINE MONTHS ENDED JULY 31, 2021

	Shares			Par Value			Capital		Deficit			Equity			Interest			Equity
	Common Stock						Additional					Total			Non-
	Shares			Par Value			Paid-in Capital		Accumulated Deficit			Shareholders Equity			controlling Interest			Total Equity

Balance, October 31, 2020		24,248,695		$	242		$	200,355	$	(191,836	)	$	8,761		$	(497	)	$	8,264
Stock option compensation to employees and directors		-			-			4,804		-			4,804			-			4,804
Expired restricted stock award to employee		(1,500,000	)		(15	)		15		-			-						-
Stock options and warrants issued to consultants		-			-			421		-			421			-			421
Common stock issued upon exercise of stock options		107,451			1			292		-			293			-			293
Common stock issued pursuant to employee stock purchase plan		1,634			-			3		-			3			-			3
Common stock issued in a public offering, net of offering expenses of $2,208		4,285,715			43			20,249		-			20,292			-			20,292
Common stock issued in at-the-market offering, net of offering expenses of $341		2,806,410			29			10,805		-			10,834			-			10,834
Net loss		-			-			-		(8,941	)		(8,941	)		(116	)		(9,057	)
Balance, July, 2021		29,949,905		$	300		$	236,944	$	(200,777	)	$	36,467		$	(613	)	$	35,854

The accompanying notes are an integral part of these condensed consolidated financial statements.

ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)


	For the nine months ended July 31,
	2022			2021
Cash flows from operating activities:
Reconciliation of net loss to net cash used in operating activities:
Net loss	$	(10,242	)	$	(9,057	)
Stock option compensation to employees and directors		4,928			4,804
Stock options and warrants issued to consultants		546			421
Common stock issued to consultants		72			-
Gain on sale of equipment		-			(5	)
Amortization of operating lease right-of-use asset		31			44
Change in operating assets and liabilities:
Prepaid expenses and other current assets		(400	)		(119	)
Accounts payable		91			(25	)
Accrued expenses		103			89
Operating lease liability		(28	)		(45	)
Net cash used in operating activities		(4,899	)		(3,893	)

Cash flows from investing activities:
Disbursements to acquire short-term investments		(11,159	)		(10,399	)
Proceeds from maturities of short-term investments		10,348			3,640
Proceeds from sale of equipment		-			35
Net cash used in investing activities		(811	)		(6,724	)

Cash flows from financing activities:
Gross proceeds from sale of common stock in a public offering		-			22,500
Expenses of the public offering		-			(2,208	)
Gross proceeds from sale of common stock in an at-the-market offering		-			11,175
Expenses of the at-the-market offering		-			(341	)
Proceeds from sale of common stock pursuant to employee stock purchase plan		6			3
Proceeds from exercise of stock options		830			293
Net cash provided by financing activities		836			31,422

Net (decrease) increase in cash and cash equivalents		(4,874	)		20,805
Cash and cash equivalents at beginning of period		29,128			6,417
Cash and cash equivalents at end of period	$	24,254		$	27,222

The accompanying notes are an integral part of these condensed consolidated financial statements.

ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. BUSINESS AND FUNDING

Description of Business

As used herein, “we,” “us,” “our,” the “Company” or “Anixa” means Anixa Biosciences, Inc. and its consolidated subsidiaries. Our primary operations involve developing therapies and vaccines that are focused on critical unmet needs in oncology and infectious disease. Our therapeutics programs include (i) the development of a chimeric endocrine receptor T-cell therapy, a novel form of chimeric antigen receptor T-cell (“CAR-T”) technology, initially focused on treating ovarian cancer, which is being developed by our subsidiary, Certainty Therapeutics, Inc. (“Certainty”), and (ii) the discovery and ultimately development of anti-viral drug candidates for the treatment of COVID-19 focused on inhibiting certain protein functions of the virus. Our vaccine programs include (i) the development of a preventative vaccine against triple negative breast cancer (“TNBC”), the most lethal form of breast cancer, as well other forms of breast cancer and (ii) a preventative vaccine against ovarian cancer.

Our subsidiary, Certainty, is developing immuno-therapy drugs against cancer. Certainty holds an exclusive worldwide, royalty-bearing license to use certain intellectual property owned or controlled by The Wistar Institute (“Wistar”), the nation’s first independent biomedical research institute and a leading National Cancer Institute designated cancer research center, relating to Wistar’s chimeric endocrine receptor targeted therapy technology. We have initially focused on the development of a treatment for ovarian cancer, but we also may pursue applications of the technology for the development of treatments for additional solid tumors. The license agreement requires Certainty to make certain cash and equity payments to Wistar upon achievement of specific development milestones. With respect to Certainty’s equity obligations to Wistar, Certainty issued to Wistar shares of its common stock equal to five percent (5%) of the common stock of Certainty.

Certainty, in collaboration with the H. Lee Moffitt Cancer Center and Research Institute, Inc. (“Moffitt”), is advancing toward human clinical testing of the CAR-T technology licensed by Certainty from Wistar aimed initially at treating ovarian cancer. We received authorization from the U.S. Food and Drug Administration (“FDA”) in August 2021, to commence enrollment and treatment of patients in a Phase 1 clinical trial. We began patient recruitment for the trial in March 2022, and in August 2022, we treated the first patient in the trial. The treatment appears to have been well-tolerated by the patient, and we continue to monitor her condition. The process of recruiting additional patients is ongoing. This study is a dose-escalation trial with two arms based on injection method—intraperitoneal or intravenous—to determine the maximum tolerated dose in patients with recurrent epithelial ovarian cancer and to assess persistence, expansion and efficacy of the modified T-cells. The study is being conducted at Moffitt and will consist of 24 to 48 patients who have received at least two prior lines of chemotherapy. The study is estimated to be completed in two to four years depending on multiple factors including when maximum tolerated dose is reached and the rate of patient recruitment.

In April 2020, we entered into a collaboration with OntoChem GmbH (“OntoChem”) to discover and ultimately develop anti-viral drug candidates against COVID-19. Through this collaboration, we utilized advanced computational methods, machine learning, and molecular modeling techniques to perform in silico screening of over 1.2 billion compounds in chemical libraries (including publicly available compounds and OntoChem’s proprietary libraries) to evaluate if any of these compounds could disrupt one of two key enzymes of SARS-CoV-2, the virus that causes the disease COVID-19.

The screening process resulted in the identification of multiple compounds that could potentially disrupt critical enzymes of the virus, including the virus’ main protease, M^pro. Several of these compounds were synthesized and tested in in vitro biological assays. Upon completion of these biological assays, we identified two of the most promising compounds and tested them in animal models. In these animal studies, the two compounds were compared to Remdesivir, which at the time the assays were performed was the only anti-viral drug authorized by the FDA for COVID-19. The data showed that administration of the drugs to infected hamsters did not cause any noticeable adverse effects, and monitoring of weight and general animal behavior demonstrated comparable efficacy between each of our compounds and Remdesivir. Based on this promising data in the animal study, we directed our team to proceed to the next stage of drug development and we selected one of the compounds around which our team is performing combinatorial synthetic medicinal chemistry to evaluate whether potency can be increased and pharmacokinetics optimized.

In May 2021, after completion of the aforementioned animal studies, OntoChem assigned its rights and obligations related to this collaboration to MolGenie GmbH (“MolGenie”), a company spun-out from OntoChem focused on drug discovery and development. As a result of the MolGenie spin-out, there was no change in the personnel working on our project, and the assignment caused no interruptions to the program’s development.

While use of preventative vaccines is widespread throughout much of the developed world, we believe that there is and will continue to be a need for effective treatments for COVID-19. We believe that there are a number of factors that have limited the effectiveness, both in the near and long term, of the vaccines currently in use, including, but not limited to, vaccine persistence, viral escape and perceptions of long-term safety resulting in vaccine resistance. Furthermore, there are currently two new anti-viral treatments, Pfizer’s Paxlovid, which is a combination therapy consisting of the protease-inhibitor nirmatrelvir and the antiretroviral ritonavir and Merck’s polymerase-inhibitor molnupiravir, that have recently been authorized for emergency use in the U.S. These treatments use oral formulations, while all other currently authorized or approved treatments require intravenous administration. As the main component of Pfizer’s treatment is a protease-inhibitor targeting M^pro, it is most similar to our compounds, and we therefore conducted a head-to-head analysis via a Fluorescence Resonance Energy Transfer (FRET) assay that tested the ability of the compounds to inhibit the function of M^pro. The results of this head-to-head in vitro analysis suggest that our compounds may be five times more effective at inhibiting M^prothan Pfizer’s nirmatrelvir.

We hold an exclusive worldwide, royalty-bearing license to use certain intellectual property owned or controlled by The Cleveland Clinic Foundation (“Cleveland Clinic”) relating to certain breast cancer vaccine technology developed at Cleveland Clinic. Utilizing this technology, we are working in collaboration with Cleveland Clinic to develop a method to vaccinate women against contracting breast cancer, focused specifically on TNBC. The focus of this vaccine is a specific protein, α-lactalbumin, that is only expressed during lactation in a healthy mother’s mammary tissue. This protein disappears when the mother is no longer lactating, but reappears in many forms of breast cancer, especially TNBC. Studies have shown that vaccinating against this protein prevents breast cancer in mice.

Following the FDA’s authorization to proceed with clinical trials in December 2020, in October 2021, we commenced dosing patients in a Phase 1 clinical trial of our breast cancer vaccine. Funded by a U.S. Department of Defense grant, this study is a multiple-ascending dose Phase 1 trial to determine the maximum tolerated dose of the vaccine in patients with early-stage, triple-negative breast cancer as well as monitor immune response. The study is being conducted at Cleveland Clinic and will consist of 18 to 24 patients who have completed treatment for early-stage, triple-negative breast cancer within the past three years and are currently tumor-free but at high risk for recurrence. During the course of the study, participants will receive three vaccinations, each two weeks apart, and will be closely monitored for side effects and immune response. The study is roughly one-fourth of the way complete and is estimated to be completed by the end of calendar year 2022. Initial indications suggest that an immune response is being observed.

In November 2020, we executed a license agreement with Cleveland Clinic pursuant to which the Company was granted an exclusive worldwide, royalty-bearing license to use certain intellectual property owned or controlled by Cleveland Clinic relating to certain ovarian cancer vaccine technology. This technology pertains to among other things, the use of vaccines for the treatment or prevention of ovarian cancers which express the anti-Mullerian hormone receptor 2 protein containing an extracellular domain (“AMHR2-ED”). In healthy tissue, this protein regulates growth and development of egg-containing follicles in the ovary. While expression of AMHR2-ED naturally and markedly declines after menopause, this protein is expressed at high levels in the ovaries of postmenopausal women with ovarian cancer. Researchers at Cleveland Clinic believe that a vaccine targeting AMHR2-ED could prevent the occurrence of ovarian cancer. We entered into a joint development agreement with Cleveland Clinic to advance this vaccine toward human clinical testing.

In May 2021, Cleveland Clinic was granted an award for our ovarian cancer vaccine technology by the National Cancer Institute’s (“NCI”) PREVENT program. The NCI is a part of the National Institutes of Health. The PREVENT program is a peer-reviewed agent development program designed to support preclinical development of innovative interventions and biomarkers for cancer prevention and interception towards clinical trials. The scientific and financial resources of the PREVENT program will be used for our ovarian cancer vaccine technology to perform virtually all pre-clinical research and development, manufacturing and IND-enabling studies. This work will be performed at NCI facilities, by NCI scientific staff and with NCI financial resources and will require no material financial expenditures by the Company, nor the transfer of any rights to the Company’s assets.

Over the next several quarters, we expect the development of our breast and ovarian cancer vaccines, our COVID-19 therapeutic discovery program and Certainty’s CAR-T technology to be the primary focus of the Company. As part of our legacy operations, the Company remains engaged in limited patent licensing activities regarding its liquid biopsy platform and in the area of encrypted audio/video conference calling. We do not expect these activities to be a significant part of the Company’s ongoing operations nor do we expect these activities to require material financial resources or attention of senior management.

Over the past several years, our revenue was derived from technology licensing and the sale of patented technologies, including revenue from the settlement of litigation. We have not generated any revenue to date from our therapeutics or vaccine programs. In addition, while we pursue our therapeutics and vaccine programs, we may also make investments in and form new companies to develop additional emerging technologies. We do not expect to begin generating revenue with respect to any of our current therapy or vaccine programs in the near term. Our strategy is to achieve a profitable outcome by eventually licensing our technologies to large pharmaceutical companies that have the resources and infrastructure in place to manufacture, market and sell our technologies as therapeutics or vaccines. The eventual licensing of any of our technologies may take several years, if it is to occur at all, and may depend on positive results from human clinical trials.

SEC Form 10-Q filed by Anixa Biosciences Inc.