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Commitments and Contingencies
 9 Months Ended
Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 6 Commitments and Contingencies

 

Leases

 

The Company leases office space under an operating lease with an initial term of 12 months or less. Under the terms of the office lease, the Company is required to pay its proportionate share of operating costs.

 

During the three and nine months ended June 30, 2024 and 2023, operating lease costs were as follows (in thousands): 

            
   Three months ended June 30,  Nine months ended June 30,
   2024  2023  2024  2023
Operating lease costs  $31   $25   $92   $85 

 

Employee 401(k) Benefit Plan

 

The Company has a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code. The plan covers all United States based employees. United States based employees eligible to participate in the plan may contribute up to the current statutory limits under the Internal Revenue Service regulations. The 401(k) plan permits the Company to make additional matching contributions on behalf of contributing employees.

 

During the three and nine months ended June 30, 2024 and 2023, the Company made matching contributions under the 401(k) plan as follows (in thousands):

 

            
   Three months ended June 30,  Nine months ended June 30,
   2024  2023  2024  2023
Contributions to 401(k) plan  $56   $76   $223   $176 

 

Litigation

 

The Company is subject to claims and legal proceedings that arise in the ordinary course of business. Such matters are inherently uncertain, and there can be no guarantee that the outcome of any such matter will be decided favorably to the Company or that the resolution of any such matter will not have a material adverse effect upon the Company’s consolidated financial statements. The Company does not believe that any of such pending claims and legal proceedings will have a material adverse effect on its consolidated financial statements.

 

On March 13, 2024, a shareholder class action complaint was filed in the United States District Court for the Southern District of New York. The complaint is captioned Blum v. Anavex Life Sciences, Corp. et al., case number 1:24-cv-01910, and names the Company and Christopher Missling as Defendants. The complaint alleges violations of the Securities and Exchange Act of 1934 resulting from disclosures and statements made about certain clinical trials for ANAVEX®2-73. On July 12, 2024, the lead plaintiff filed an amended complaint. The Company believes the complaint is without merit. The Company is vigorously pursuing its defenses and a potential dismissal of all claims asserted in the lawsuit.

 

On May 8, 2024, another purported shareholder of the Company filed a similar lawsuit against the same defendants that raised similar allegations and in addition, raised allegations related to disclosures and statements made about the AVATAR trial. The shareholder sought to consolidate the cases and be appointed lead plaintiff of the consolidated action. The court denied the consolidation motion and lead plaintiff motion on June 13, 2024. The Company plans to vigorously defend the lawsuit.

 

On May 13, 2024, a purported shareholder filed a derivative lawsuit on behalf of the Company against the board of directors. The complaint asserts various common law claims (including breach of fiduciary duty) and violation of Section 14(a) regarding the same allegations at issue in the two purported class action lawsuits related to disclosures and statements made about certain clinical trials. The Company is named as a Nominal Defendant. The defendants plan to vigorously defend the lawsuit.

 

Share Purchase Warrants

 

A summary of the status of the Company’s outstanding share purchase warrants is presented below:

 

           
   Number of Warrants  Weighted Average Exercise Price
($)
Balance, September 30, 2022         
          
Balance, September 30, 2022 and 2023    160,000    3.72 
Expired    (150,000)   3.17 
Balance, June 30, 2024    10,000    12.00 

 

At June 30, 2024, the Company had share purchase warrants outstanding as follows:

 

      
Number  Exercise Price  Expiry Date
 10,000   $12.00    April 21, 2026

 

Stock–based Compensation Plan

 

2015 Stock Option Plan

 

On September 18, 2015, the Company’s Board approved a 2015 Omnibus Incentive Plan (the “2015 Plan”), which provided for the grant of stock options and restricted stock awards to directors, officers, employees and consultants of the Company.

 

The maximum number of our common shares reserved for issue under the plan was 6,050,553 shares, subject to adjustment in the event of a change of the Company’s capitalization.

 

2019 Stock Option Plan

 

On January 15, 2019, the Board approved the 2019 Omnibus Incentive Plan (the “2019 Plan”), which provides for the grant of stock options and restricted stock awards to directors, officers, employees, consultants and advisors of the Company.

 

The maximum number of our common shares reserved for issue under the plan was 6,000,000 shares, subject to adjustment in the event of a change of the Company’s capitalization.

 

During the year ended September 30, 2022, 406,453 options previously available under the 2019 Plan and the 2015 Plan became available under the 2022 Plan (as defined below).

 

2022 Stock Option Plan

 

On March 25, 2022, the Board approved the 2022 Omnibus Incentive Plan (the “2022 Plan”). The 2022 Plan was approved by stockholders on May 24, 2022. Under the terms of the 2022 Plan, 10,000,000 additional shares of Common Stock will be available for issuance under the plan, in addition to the shares available under the 2019 Plan and the 2015 Plan. Any awards outstanding under a previous stock option plan will remain subject to and be paid under such plan, and any shares subject to outstanding awards under a previous plan that subsequently cease to be subject to such awards (other than by reason of settlement of the awards in shares) will automatically become available for issuance under the 2022 Plan.

 

The 2022 Plan provides that it may be administered by the Board, or the Board may delegate such responsibility to a committee. The exercise price will be determined by the Board at the time of grant shall be at least equal to the fair market value on such date. If the grantee is a 10% stockholder on the grant date, then the exercise price shall not be less than 110% of fair market value of the Company’s shares of common stock on the grant date. Stock options may be granted under the 2022 Plan for an exercise period of up to ten years from the date of grant of the option or such lesser periods as may be determined by the Board, subject to earlier termination in accordance with the terms of the 2022 Plan. At June 30, 2024, 5,300,000 options had been issued under the 2022 Plan and 5,319,702 options were available for issue under the 2022 Plan.

 

The following summarizes information about stock option activity during the year ended September 30, 2023 and nine months ended June 30, 2024:

 

                     
   Number of Options  Weighted Average Exercise Price
($)		  Weighted Average Grant Date Fair Value
($)		  Aggregate intrinsic value
($)
Outstanding, September 30, 2022    13,169,616    6.61    4.96    62,267,309 
Granted    1,959,000    9.30    6.60    — 
Exercised    (759,753)   2.34    0.95    4,629,026 
Forfeited    (257,083)   12.00    6.74    — 
Outstanding, September 30, 2023    14,111,780    7.12    5.27    22,290,069 
Granted    1,815,500    5.48    3.96    — 
Exercised    (273,360)   2.53    1.11    601,407 
Forfeited    (473,666)   11.78    8.17    — 
Outstanding, June 30, 2024    15,180,254    6.86         7,471,069 
Exercisable, June 30, 2024    9,826,089    5.50         7,452,002 

 

The following summarizes information about stock options at June 30, 2024 by a range of exercise prices:

 

                               
Range of exercises prices  Number of   Weighted average remaining   Weighted   Number of   Weighted
From  To  outstanding options  contractual life (in years)  average exercise price  vested options  average exercise price
$0.92   $3.00    3,015,700    4.04   $2.39    3,015,700   $2.39 
$3.01   $5.00    2,232,500    4.17   $3.41    2,035,416   $3.29 
$5.01   $9.00    6,660,554    6.32   $6.57    3,469,639   $6.20 
$9.01   $13.00    1,806,500    7.57   $10.46    729,917   $11.05 
$13.01   $25.00    1,465,000    6.70   $18.18    575,417   $18.41 
           15,180,254    5.73   $6.86    9,826,089   $5.50 

 

The weighted average grant date fair value of options vested at June 30, 2024 was $4.34 (September 30, 2023: $3.94). At June 30, 2024, the weighted average contractual life of options outstanding was 5.7 years (September 30, 2023: 6.0 years) and for options exercisable was 4.2 years (September 30, 2023: 4.75 years).

 

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted market price of the Company’s stock for the options that were in-the-money at June 30, 2024.

 

During the three and nine months ended June 30, 2024, the Company recognized stock-based compensation expense of $2.5 million and $7.4 million, respectively (2023: $3.9 million and $13.2 million, respectively) in connection with the issuance and vesting of stock options and warrants in exchange for services. These amounts have been included in general and administrative expenses and research and development expenses on the Company’s condensed consolidated interim statement of operations as follows (in thousands):

 

                    
   Three months ended June 30,  Nine months ended June 30,
   2024  2023  2024  2023
General and administrative  $997   $1,451   $2,901   $4,451 
Research and development   1,491    2,415    4,524    8,732 
Total stock-based compensation  $2,488   $3,866   $7,425   $13,183 

 

An amount of approximately $10.6 million in stock-based compensation is expected to be recorded over the remaining term of such options through fiscal 2026.

 

The fair value of each option award granted during the three and nine months ended June 30, 2024 and 2023 is estimated on the date of grant using the Black Scholes option pricing model based on the following weighted average assumptions:

 

          
   2024  2023
Risk-free interest rate   4.29%   3.69%
Expected life of options (years)   5.77    5.63 
Annualized volatility   84.82%   85.16%
Dividend rate   0.00%   0.00%

 

The fair value of stock compensation charges recognized during the three and nine months ended June 30, 2024 and 2023 was determined with reference to the quoted market price of the Company’s shares on the grant date.