10-Q 1 anvs-20210331x10q.htm 10-Q

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 MARCH 31, 2021

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

COMMISSION FILE NUMBER 001-39202

Annovis Bio, Inc.

(Exact name of registrant as specified in its charter)

Delaware		26-2540421
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1055 Westlakes Drive, Suite 300

Berwyn, PA 19312

(Address of registrant’s principal executive offices)

(610) 727-3913

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 Each Exchange on Which Registered
Common Stock, par value $0.0001 per share		ANVS		NYSE American

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, a 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.

The number of outstanding shares of the registrant’s common stock as of May 4, 2021 was: 6,947,269.

PART I – FINANCIAL INFORMATION		Page


Item 1.	Financial Statements	3

	Balance Sheets as of March 31, 2021 (Unaudited) and December 31, 2020	3

	Statements of Operations for the Three Months Ended March 31, 2021 and 2020 (Unaudited)	4

	Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the Three Months Ended March 31, 2021 and 2020 (Unaudited)	5

	Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020 (Unaudited)	6

	Notes to Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	20

Item 4.	Controls and Procedures	21


PART II – OTHER INFORMATION


Item 1.	Legal Proceedings	22

Item 1A.	Risk Factors	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 3.	Defaults Upon Senior Securities	22

Item 4.	Mine Safety Disclosures	22

Item 5.	Other Information	22

Item 6.	Exhibits	23

	Signatures	24


	March 31,		December 31,
	2021		2020
		(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	5,602,807	$	8,074,658
Prepaid expenses and other current assets		362,149		44,676
Total current assets		5,964,956		8,119,334
Total assets	$	5,964,956	$	8,119,334
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity
Current liabilities:
Accounts payable	$	824,565	$	341,856
Accrued expenses		772,116		236,524
Total current liabilities		1,596,681		578,380
Total liabilities		1,596,681		578,380
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock - $0.0001 par value, 2,000,000 shares authorized, and 0 shares issued and outstanding		—		—
Common stock - $0.0001 par value, 35,000,000 shares authorized, and 6,947,120 and 6,891,608 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively		695		689
Additional paid-in capital		21,806,328		21,779,340
Accumulated deficit		(17,438,748)		(14,239,075)
Total stockholders’ equity		4,368,275		7,540,954
Total liabilities and stockholders’ equity	$	5,964,956	$	8,119,334


	Three Months Ended
	March 31,
	2021		2020
Operating expenses:
Research and development	$	2,389,583	$	66,446
General and administrative		839,627		516,716
Total operating expenses		3,229,210		583,162
Operating loss		(3,229,210)		(583,162)
Other income (expense):
Change in fair value of derivative liability		—		(26,500)
Interest income (expense), net		197		10,634
Grant income		29,340		157,438
Total other income (expense)		29,537		141,572
Loss before income taxes		(3,199,673)		(441,590)
Income tax expense (benefit)		—		—
Net loss	$	(3,199,673)	$	(441,590)
Basic and diluted loss per common share	$	(0.46)	$	(0.10)
Weighted average number of common shares outstanding, basic and diluted		6,920,622		4,599,469


	Redeemable Convertible Preferred Stock						Stockholders’ Equity (Deficit)
														Total
										Additional				Stockholders’
	Series A			Series A-1			Common Stock			Paid-In		Accumulated		Equity
	Shares	Amount		Shares	Amount		Shares	Amount		Capital		Deficit		(Deficit)
Three Months Ended March 31, 2021
Balance, December 31, 2020	—	$	—	—	$	—	6,891,608	$	689	$	21,779,340	$	(14,239,075)	$	7,540,954
Exercise of stock options	—		—	—		—	3,868		1		3,016		—		3,017
Exercise of warrants	—		—	—		—	51,644		5		(5)		—		—
Share-based compensation expense	—		—	—		—	—		—		23,977		—		23,977
Net loss	—		—	—		—	—		—		—		(3,199,673)		(3,199,673)
Balance, March 31, 2021	—	$	—	—	$	—	6,947,120	$	695	$	21,806,328	$	(17,438,748)	$	4,368,275

Three Months Ended March 31, 2020
Balance, December 31, 2019	5,133,159	$	6,509,303	630,722	$	567,649	282,614	$	28	$	200,600	$	(8,777,028)	$	(8,576,400)
Conversion of redeemable convertible preferred stock to common stock upon completion of initial public offering	(5,133,159)		(6,509,303)	(630,722)		(567,649)	4,117,089		412		7,076,540		—		7,076,952
Conversion of convertible promissory notes, including embedded derivative, to common stock upon completion of initial public offering	—		—	—		—	118,470		12		672,512		—		672,524
Issuance of common stock in initial public offering, net of offering costs	—		—	—		—	2,300,000		230		11,955,565		—		11,955,795
Exercise of stock options	—		—	—		—	27,286		3		4,603		—		4,606
Net loss	—		—	—		—	—		—		—		(441,590)		(441,590)
Balance, March 31, 2020	—	$	—	—	$	—	6,845,459	$	685	$	19,909,820	$	(9,218,618)	$	10,691,887


	Three Months Ended March 31,
	2021		2020
Cash flows from operating activities:
Net loss	$	(3,199,673)	$	(441,590)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of deferred financing fees		—		129
Amortization of debt discount		—		396
Share-based compensation expense, including stock issued to consultants and advisors		23,977		—
Change in fair value of derivative liability		—		26,500
Changes in assets and liabilities:
Grant receivable		—		697,323
Prepaid expenses and other current assets		(317,473)		(272,390)
Accounts payable		482,709		(982,986)
Accrued expenses		535,592		2,213
Net cash used in operating activities		(2,474,868)		(970,405)
Cash flows from financing activities:
Proceeds from initial public offering of common stock, net of offering costs		—		12,084,406
Proceeds from exercise of stock options		3,017		4,606
Net cash provided by financing activities		3,017		12,089,012
Net (decrease) increase in cash		(2,471,851)		11,118,607
Cash and cash equivalents, beginning of period		8,074,658		1,858
Cash and cash equivalents, end of period	$	5,602,807	$	11,120,465
Supplemental disclosure of non-cash financing activities:
Deferred offering costs in accounts payable and accrued expenses	$	—	$	50,000
Conversion of redeemable convertible preferred stock to common stock	$	—	$	7,076,952
Conversion of convertible promissory notes, including embedded derivative, to common stock	$	—	$	672,524


			Fair Value Measurement at
			March 31, 2021
	Carrying Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	5,602,807	$	5,602,807	$	—	$	—


			Fair Value Measurement at
			December 31, 2020
	Carrying Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	8,074,658	$	8,074,658	$	—	$	—


Exhibit Number		Description of Exhibit

3.1		Amended and Restated Certificate of Incorporation of the Registrant. (Incorporated by reference to Exhibit 3.1 to Form 8-K filed February 6, 2020.)

3.2		Amended and Restated Bylaws of the Registrant. (Incorporated by reference to Exhibit 3.2 to Form 8-K filed February 6, 2020.)

10.1*#		Manufacturing Agreement, dated March 9, 2021, by and between the Registrant and Wilmington PharmaTech Company, LLC.

31.1*		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Labels Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

Signature	Title	Date

/s/ MARIA MACCECCHINI	President and Chief Executive Officer (principal	May 6, 2021
Maria Maccecchini	executive officer)

/s/ JEFFREY MCGROARTY	Chief Financial Officer (principal financial and	May 6, 2021
Jeffrey McGroarty	accounting officer)


	March 31,		December 31,
	2021		2020
Payroll and related benefits	$	392,885	$	16,493
Accrued professional and clinical fees		363,898		216,198
Accrued license payments		15,333		3,833
	$	772,116	$	236,524

SEC Form 10-Q filed by Annovis Bio, Inc.