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 January 31, 2020

 

Commission file number 0-11254

 

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   X                   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   X                   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 [X]

Smaller reporting company [X]                     

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   X 

 

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

 

On March 9, 2020 the registrant had outstanding 21,007,077 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 January 31, 2020 (Unaudited) and October 31, 2019

1

Condensed Consolidated Statements of Operations (Unaudited) for the three months ended January 31, 2020 and 2019           

2

Condensed Consolidated Statement of Shareholders’ Equity (Unaudited) for the three months ended January 31, 2020

3

Condensed Consolidated Statement of Shareholders’ Equity (Unaudited) for the three months ended January 31, 2019

4

 

 

 

Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended January 31, 2020 and 2019

5

 

 

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

6

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations.

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

27

Item 4.

 Controls and Procedures.

27

PART II.  OTHER INFORMATION

Item 1.

Legal Proceedings.

28

Item 1A.

Risk Factors.

28

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

28

Item 3.

Defaults Upon Senior Securities.

28

Item 4.

Mine Safety Disclosures.

28

Item 5.

Other Information.

28

Item 6.

Exhibits.

28

SIGNATURES                      

29

 


Table of Contents

 

PART I.  FINANCIAL INFORMATION

 

 

Item 1.  Financial Statements.

 

ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

January 31,

2020

October 31,

2019

ASSETS

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

2,821,882

$

3,491,625

Short-term investments in certificates of deposit

 

2,870,000

 

 

2,350,000

Receivables

 

22,311

 

 

66,527

Prepaid expenses and other current assets

 

154,490

 

184,972

Total current assets

 

5,868,683

 

 

6,093,124

Property and equipment, net of accumulated depreciation of $110,013 and

   $95,015, respectively

 

201,361

 

 

200,569

Operating lease right-of-use asset

 

93,907

 

-

Total assets

$

6,163,951

 

$

6,293,693

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

Current liabilities:

Accounts payable

$

367,098

 

$

585,817

Accrued expenses

 

705,034

 

895,498

Operating lease liability

 

53,384

 

 

-

Total current liabilities

 

1,125,516 

 

 

1,481,315

Operating lease liability non-current

 

40,835

 

 

-

Total liabilities

 

1,166,351

 

 

1,481,315

 

 

 

 

 

 

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

-

-

Common stock, par value $.01 per share; 48,000,000 shares authorized;

    20,841,309 and 20,331,754 shares issued and outstanding, respectively

 

208,413

 

 

203,317

Additional paid-in capital

189,646,000

186,849,299

Accumulated deficit

 

(184,409,806)

 

 

(181,817,263)

Total shareholders’ equity

5,444,607

5,235,353

Noncontrolling interest (Note 1)

 

(447,007)

 

 

(422,975)

Total equity

 

4,997,600

 

4,812,378

Total liabilities and equity

$

6,163,951

 

$

6,293,693

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

 

1


Table of Contents

 

ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

For the Three Months Ended

January 31,

2020

2019

Revenue

$

-

 

$

-

Operating costs and expenses:

 

 

 

 

 

Amortization of patents

 

-

 

 

        251,250

Research and development expenses (including non-cash share-based
    compensation expenses of $397,523 and $1,573,779, respectively)

1,490,588

2,247,272

General and administrative expenses (including non-cash share-based
    compensation expenses of $623,811 and $1,176,385, respectively)

 

1,139,281

 

 

2,066,456

Impairment in carrying amount of patent asset

 

-

 

418,750

Total operating costs and expenses

 

2,629,869

 

 

4,983,728

Loss from operations

 

(2,629,869)

 

 

(4,983,728)

Interest income 

 

13,294

 

 

17,119

Loss before income taxes

 

(2,616,575)

 

 

(4,966,609)

Provision for income taxes

 

-

 

 

-

    

Net loss

 

(2,616,575)

 

 

(4,966,609)

                   

Less: Net loss attributable to noncontrolling interest

 

(24,032)

 

 

(84,768)

Net loss attributable to common shareholders

$

(2,592,543)

 

$

(4,881,841)

Net loss per common share attributable to common shareholders:

 

 

 

 

 

Basic and diluted

$

(0.13)

$

(0.25)

 

 

 

 

 

 

Weighted average common shares outstanding:

Basic and diluted

 

20,703,882

 

 

19,170,591

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


2


Table of Contents

 

ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED JANUARY 31, 2020 (UNAUDITED)

Additional

Paid-in

Capital

Total

Shareholders’

Equity

Non-

controlling

Interest

Common Stock

Accumulated

Deficit

Total

Equity

Shares

Par Value

Balance, October 31, 2019

20,331,754

 

$

203,317

 

$

186,849,299

 

$

(181,817,263)

 

$

5,235,353

 

$

(422,975)

 

$

4,812,378

Stock option compensation to employees and  

    directors

-

 

 

-

 

 

963,880

 

 

-

 

 

963,880

 

 

-

 

 

963,880

Stock options issued to consultants

-

 

 

-

 

 

57,454

 

 

-

 

 

57,454

 

 

-

 

 

57,454

Common stock issued upon exercise of stock

    options

18,900

 

 

189

 

 

28,291

 

 

-

 

 

28,480

 

 

-

 

 

28,480

Common stock issued in at-the-market offering,

    net of offering expenses of $100,972

490,655

 

 

4,907

 

 

1,747,076

 

 

-

 

 

1,751,983

 

 

-

 

 

1,751,983

Net loss

-

 

 

-

 

 

-

 

 

(2,592,543)

 

 

(2,592,543)

 

 

(24,032)

 

 

(2,616,575)

Balance, January 31, 2020

20,841,309

$

208,413

$

189,646,000

$

(184,409,806)

$

5,444,607

$

(447,007)

$

4,997,600

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

 

3


Table of Contents

 

ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED JANUARY 31, 2019 (UNAUDITED)

Additional

Paid-in

Capital

Total

Shareholders’

Equity

Non-

controlling

Interest

Common Stock

Accumulated

Deficit

Total

Equity

Shares

Par Value

Balance, October 31, 2018

18,908,632

 

$

189,086

 

$

175,415,931

 

$

(170,170,209)

 

$

5,434,808

 

$

(251,377)

 

$

5,183,431

Stock option compensation to employees and  

    directors

-

 

 

-

 

 

1,219,560

 

 

-

 

 

1,219,560

 

 

-

 

 

1,219,560

Stock options and warrants issued to consultants

-

 

 

-

 

 

46,219

 

 

-

 

 

46,219

 

 

-

 

 

46,219

Common stock issued upon exercise of stock

    options

10,000

 

 

100

 

 

22,600

 

 

-

 

 

22,700

 

 

-

 

 

22,700

Restricted stock award compensation to employee

    pursuant to stock incentive plan

-

 

 

-

 

 

1,484,385

 

 

-

 

 

1,484,385

 

 

-

 

 

1,484,385

Common stock issued in at-the-market offering,

    net of offering expenses of $67,161

551,603

 

 

5,516

 

 

2,148,068

 

 

-

 

 

2,153,584

 

 

-

 

 

2,153,584

Net loss

-

 

 

-

 

 

-

 

 

(4,881,841)

 

 

(4,881,841)

 

 

(84,768)

 

 

(4,966,609)

Balance, January 31, 2019

19,470,235

$

194,702

$

180,336,763

$

(175,052,050)

$

5,479,415

$

(336,145)

$

5,143,270

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

 

4


Table of Contents

 

ANIXA BIOSCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the three months ended

January 31,

2020

2019

Cash flows from operating activities:

 

 

 

 

 

Reconciliation of net loss to net cash used in operating activities:

Net loss

$

(2,616,575)

 

$

(4,966,609)

Stock option compensation to employees and directors

963,880

1,219,560

Stock options and warrants issued to consultants

 

57,454

 

 

46,219

Restricted stock award compensation to employee pursuant to stock  

   incentive plan

-

1,484,385

Depreciation of property and equipment

 

14,998

 

 

6,130

Amortization of operating lease right-to-use asset, net of lease payments

312

-

Amortization of patents

 

-

 

 

251,250

Impairment in carrying amount of patent assets

-

418,750

Change in operating assets and liabilities:

 

 

 

  Receivables

44,216

203,897

Prepaid expenses and other current assets

 

30,482

 

 

(55,086)

Accounts payable

(218,719)

30,928

Accrued expenses

 

(190,464)

 

 

31,040

Net cash used in operating activities

 

(1,914,416)

 

(1,329,536)

 

 

 

 

 

 

Cash flows from investing activities:

Disbursements to acquire short-term investments in certificates of deposit                                                             

     (1,870,000)

 

 

-

Proceeds from maturities of short-term investments in certificates of deposit             

1,350,000

250,000

Purchase of property and equipment

 

(15,790)

 

 

-

Net cash (used in) provided by investing activities

 

(535,790)

 

         250,000

 

 

 

 

 

 

Cash flows from financing activities:

Net proceeds from sale of common stock in at-the-market offering

 

1,751,983

 

 

2,153,584

Proceeds from exercise of stock options

 

28,480

 

           22,700

Net cash provided by financing activities

 

1,780,463

 

 

2,176,284

Net (decrease) increase in cash and cash equivalents

 

(669,743)

 

 

1,096,748

Cash and cash equivalents at beginning of period

 

3,491,625

 

3,055,890

Cash and cash equivalents at end of period

$

2,821,882

 

$

4,152,638

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

   Operating lease right-to-use asset

$

(106,221)

 

$

-

   Operating lease liability

$

106,299

 

$

-

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

 

5


Table of Contents


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 research and development of cancer therapeutics and diagnostics.  Our cancer therapeutics programs consist of development of a vaccine against triple negative breast cancer (“TNBC”) and development of chimeric endocrine receptor T-cell (“CER-T”) technology, a novel form of CAR-T technology, initially focused on treating ovarian cancer.  Our cancer diagnostics program consists of development of the artificial intelligence (AI) driven Cchek™ liquid biopsy platform for early cancer detection. 

 

We hold an exclusive worldwide, royalty-bearing license to use certain intellectual property owned or controlled by The Cleveland Clinic Foundation (“Cleveland Clinic”) related to certain breast cancer vaccine technology developed at Cleveland Clinic.  We are working in collaboration with Cleveland Clinic to develop a method to vaccinate women against contracting breast cancer, focused specifically on TNBC, the most lethal form of the disease.  A specific protein, alpha-lactalbumin, has been identified that is only present during lactation in healthy women, but reappears in many forms of breast cancer, especially TNBC.  Studies have shown that vaccinating against this protein prevents breast cancer in mice.  We are working with researchers at Cleveland Clinic to advance this vaccine toward human clinical testing, and we are in the process of testing the clinical grade materials and upon completion we will be prepared to file an Investigational New Drug (“IND”) application with the U.S. Food and Drug Administration (“FDA”).  We anticipate filing the IND mid-year of 2020.  The IND application, after review and approval by the FDA, will enable us to begin testing our vaccine in human subjects.

 

Our subsidiary, Certainty Therapeutics, Inc. (“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”) relating to Wistar’s CER-T technology.  We have initially focused on the development of a treatment for ovarian cancer, but we may also 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.  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 its CER-T technology for treating ovarian cancer.  Clinical grade materials are currently being manufactured and upon completion will undergo extensive testing.  Once the materials have been successfully tested, we will be prepared to submit an IND application with the FDA.  We anticipate filing the IND by the end of 2020.  The IND application, after review and approval by the FDA, will enable us to begin testing our therapy in ovarian cancer patients. 

 

6


Table of Contents

 

Our subsidiary, Anixa Diagnostics Corporation (“Anixa Diagnostics”), is developing Cchek™, an AI driven platform of non-invasive blood tests for the early detection of cancer which is based on the body’s immune response to the presence of a malignancy.  We have demonstrated the efficacy of Cchek™ with 20 different types of cancer:  breast, lung, colon, melanoma, ovarian, liver, thyroid, pancreatic, appendiceal, uterine, osteosarcoma, leiomyosarcoma, liposarcoma, vulvar, prostate, bladder, cervical, head and neck, gastric and testicular cancers.  Breast, lung, colon and prostate cancers represent the four largest categories of cancer worldwide.

 

Based on a number of factors, including key scientific, clinical, and commercial considerations, for the past year the primary commercial focus for Cchek™ has been on developing a prostate cancer confirmatory test.  In February 2019 we formed a strategic alliance with ResearchDx, a CLIA certified, CAP Accredited laboratory, to prepare the Cchek™ Prostate Cancer Confirmation (“Cchek™ PCC”) test for launch as a laboratory developed test.  In December 2019, upon completion of independent validation by ResearchDx, we announced the commercial launch of Cchek™ PCC.  We are currently conducting a number of activities to support the marketing of Cchek™ PCC, including the development of marketing materials, education of key opinion leaders in urology and development of a reimbursement path for the test. 

 

Over the next several quarters, we expect the development of our breast cancer vaccine, Certainty’s CER-T technology and Anixa Diagnostic’s Cchek™ to be the primary focus of the Company.  As part of our legacy operations, the Company remains engaged in limited patent licensing activities 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 cancer therapeutics and diagnostics programs.  In addition, while we pursue our cancer therapeutics and diagnostics programs, we may also make investments in and form new companies to develop additional emerging technologies.

 

7


Table of Contents

 

Funding and Management’s Plans

 

Based on currently available information as of March 9, 2020, we believe that our existing cash, cash equivalents, short-term investments and expected cash flows will be sufficient to fund our activities for the next twelve months.  We have implemented a business model that conserves funds by collaborating with third parties to develop our technologies.  However, our projections of future cash needs and cash flows may differ from actual results.  If current cash on hand, cash equivalents, short-term investments and cash that may be generated from our business operations are insufficient to continue to operate our business, or if we elect to invest in or acquire a company or companies or new technology or technologies that are synergistic with or complementary to our technologies, we may be required to obtain more working capital.  During the three months ended January 31, 2020, we raised approximately $1,752,000, net of expenses, through the sale of 490,655 shares of common stock in our at-the-market equity offerings. We raised approximately $427,000, net of expenses, through the sale of 112,238 shares of common stock in an at-the market equity offering which expired in November 2019 and approximately $1,325,000, net of expenses, through the sale of 378,417 shares of common stock in an at-the-market equity offering under which we may issue up to $50 million of common stock.   Under our current at-the-market equity program which is currently effective and may remain available for us to use in the future, we may sell an additional approximately $48,587,000 of common stock.  We may seek to obtain working capital during our fiscal year 2020 or thereafter through sales of our equity securities or through bank credit facilities or public or private debt from various financial institutions where possible.  We cannot be certain that additional funding will be available on acceptable terms, or at all.  If we do identify sources for additional funding, the sale of additional equity securities or convertible debt could result in dilution to our stockholders. We can give no assurance that we will generate sufficient cash flows in the future to satisfy our liquidity requirements or sustain future operations, or that other sources of funding, such as sales of equity or debt, would be available or would be approved by our security holders, if needed, on favorable terms or at all.  If we fail to obtain additional working capital as and when needed, such failure could have a material adverse impact on our business, results of operations and financial condition.  Furthermore, such lack of funds may inhibit our ability to respond to competitive pressures or unanticipated capital needs, or may force us to reduce operating expenses, which would significantly harm the business and development of operations.

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X.  Accordingly, certain information and disclosures required by generally accepted accounting principles in annual financial statements have been omitted or condensed.  These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures included in our Annual Report on Form 10-K for the year ended October 31, 2019.  The accompanying October 31, 2019 condensed consolidated balance sheet data was derived from the audited financial statements but does not include all disclosures required by US GAAP.  The condensed consolidated financial statements include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair statement of our financial position as of January 31, 2020, and results of operations and cash flows for the interim periods represented.  The results of operations for the three months ended January 31, 2020 are not necessarily indicative of the results to be expected for the entire year.

 

Noncontrolling Interest

 

Noncontrolling interest represents Wistar’s equity ownership in Certainty and is presented as a component of equity.  The following table sets forth the changes in noncontrolling interest for the three months ended January 31, 2020:

 

8


Table of Contents

 

Balance October 31, 2019

$

(422,975)

Net loss attributable to noncontrolling interest

 

(24,032)

Balance January 31, 2020

$

(447,007)

 

Revenue Recognition

 

Since fiscal 2016 our revenue has been derived solely from technology licensing and the sale of patented technologies.  Revenue is recognized upon transfer of control of intellectual property rights and satisfaction of other contractual performance obligations to licensees in an amount that reflects the consideration we expect to receive. 

 

On November 1, 2018 we adopted Accounting Standards Update 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers using the modified retrospective method.  Upon adoption of ASU 2014-09 we are required to make certain judgments and estimates in connection with the accounting for revenue.  Such areas may include determining the existence of a contract and identifying each party’s rights and obligations to transfer goods and services, identifying the performance obligations in the contract, determining the transaction price and allocating the transaction price to separate performance obligations, estimating the timing of satisfaction of performance obligations, determining whether a promise to grant a license is distinct from other promised goods or services and evaluating whether a license transfers to a customer at a point in time or over time.

 

Our revenue arrangements provide for the payment of contractually determined, one-time, paid-up license fees in settlement of litigation and in consideration for the grant of certain intellectual property rights for patented technologies owned or controlled by the Company.  These arrangements typically include some combination of the following: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies owned or controlled by the Company, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation.  In such instances, the intellectual property rights granted have been perpetual in nature, extending until the expiration of the related patents.  Pursuant to the terms of these agreements, we have no further obligations with respect to the granted intellectual property rights, including no obligation to maintain or upgrade the technology, or provide future support or services.  Licensees obtained control of the intellectual property rights they have acquired upon execution of the agreement.  Accordingly, the performance obligations from these agreements were satisfied and 100% of the revenue was recognized upon the execution of the agreements.  The adoption of ASU 2014-09 had no impact on revenue recognized.

 

Cost of Revenues

 

Cost of revenues include the costs and expenses incurred in connection with our patent licensing and enforcement activities, including inventor royalties paid to original patent owners, contingent legal fees paid to external counsel, other patent-related legal expenses paid to external counsel, licensing and enforcement related research, consulting and other expenses paid to third-parties and the amortization of patent-related investment costs.  These costs are included under the caption “Operating costs and expenses” in the accompanying condensed consolidated statements of operations.

 

9


Table of Contents

 

Research and Development Expenses

Research and development expenses, consisting primarily of employee compensation, payments to third parties for research and development activities and other direct costs associated with developing a platform for non-invasive blood tests for early detection of cancer, developing immuno-therapy drugs against cancer and development of our breast cancer vaccine, are expensed in the consolidated financial statements in the year incurred.

2.         STOCK BASED COMPENSATION

 

The Company maintains equity incentive plans under which the Company may grant incentive stock options, non-qualified stock options, stock appreciation rights, stock awards, performance awards, or stock units to employees, directors and consultants.

 

Stock Option Compensation Expense

 

The compensation cost for service-based stock options granted to employees and directors is measured at the grant date, based on the fair value of the award using the Black-Scholes pricing model, and is recognized as an expense on a straight-line basis over the requisite service period (the vesting period of the stock option) which is one to four years.  We recorded stock-based compensation expense related to service-based stock options granted to employees and directors of approximately $964,000 and $844,000 during the three months ended January 31, 2020 and 2019, respectively. 

 

For stock options granted to employees and directors that vest based on market conditions, such as the trading price of the Company’s common stock exceeding certain price targets, we use a Monte Carlo Simulation in estimating the fair value at grant date and recognize compensation cost over the implied service period (median time to vest).  On May 8, 2018, we issued market condition options to purchase 1,500,000 shares of common stock, to our Chairman, President and Chief Executive Officer, vesting at target trading prices of $5.00 to $8.00 per share before May 31, 2021, with implied service periods of three to seven months.  In October 2018, the first tranche of 500,000 shares of market condition options became exercisable upon achieving an average closing price above $5.00 per share for twenty consecutive trading days.  We recorded stock-based compensation expense related to market condition stock options granted to employees and directors of approximately $376,000 during the three months ended January 31, 2019.   We did not have stock-based compensation expense related to market condition stock options during the three months ended January 31, 2020.

 

10


Table of Contents

 

On November 1, 2018 we adopted Accounting Standards Update 2018-07 (“ASU 2018-07”) for stock options granted to consultants.  Upon adoption of ASU 2018-07 we estimated the fair value of unvested service-based and performance-based stock options at the date of adoption, using the Black-Scholes pricing model.  Subsequent to adoption of ASU 2018-07, future grants to consultants will be measured at the grant date, based on the fair value of the award using the Black-Scholes pricing model, consistent with our policy for grants to employees and directors.  In prior periods we estimated the fair value of service-based and performance-based stock options granted to consultants at each reporting period using the Black-Scholes pricing model.  We recognize the fair value of stock options granted to consultants as consulting expense over the requisite or implied service period of the grant.  We recorded stock-based consulting expense related to stock options granted to consultants of approximately $57,000 and $25,000 during the three months ended January 31, 2020 and 2019, respectively.

 

Stock Option Activity

 

During the three months ended January 31, 2020, we granted options to purchase 800,000 shares of common stock to employees and consultants with  exercise prices ranging from $3.84 to $4.04 per share pursuant to the Anixa Biosciences, Inc. 2018 Share Incentive Plan (the "2018 Share Plan”).  We did not grant any options during the three months ended January 31, 2019.  During the three months ended January 31, 2020 and 2019, stock options to purchase 18,900 and 10,000 shares of common stock, respectively, were exercised with aggregate proceeds of approximately $28,000 and $23,000, respectively. 

 

Stock Option Plans

 

As of January 31, 2020, we have three stock option plans:  the Anixa Biosciences, Inc. 2003 Share Incentive Plan (the "2003 Share Plan"), the Anixa Biosciences, Inc. 2010 Share Incentive Plan (the "2010 Share Plan”) and the 2018 Share Plan, which were adopted by our Board of Directors on April 21, 2003, July 14, 2010 and January 25, 2018, respectively.  The 2018 Share Plan was approved by our shareholders on March 29, 2018.

 

2003 Plan    

 

During the three months ended January 31, 2020, the remaining outstanding options granted under the 2003 Share Plan expired.  In accordance with the provisions of the 2003 Share Plan, the plan terminated with respect to the ability to grant future options on April 21, 2013.  Information regarding the 2003 Share Plan for the three months ended January 31, 2020 is as follows:

 

Weighted

Average Exercise

 Price Per Share

Aggregate

 Intrinsic Value

Shares

Options Outstanding at October 31, 2019

400

 

 

$      17.00

 

 

Expired

(400)

 

Options Outstanding and exercisable at

   January 31, 2020

-0-

 

 

$    -0-

 

 

$    -0-

 

11


Table of Contents

 

Information regarding the 2003 Share Plan for the three months ended January 31, 2019 is as follows:

 

Weighted

Average Exercise

 Price Per Share

Aggregate

 Intrinsic Value

Shares

Options Outstanding at October 31, 2018

12,000

 

 

$      2.77

 

 

Options Outstanding and exercisable at

   January 31, 2019

12,000

 

 

$      2.77

 

 

$    33,058

 

The following table summarizes information about stock options outstanding and exercisable under the 2003 Share Plan as of January 31, 2019:

Weighted Average

Remaining

Contractual Life

(in years)

Weighted

Average

Exercise Price

Range of

Exercise Prices

Number

Outstanding

and

Exercisable

$ 0.67 - $17.00

 

12,000

 

0.49

 

$ 2.77

 

 

2010 Plan

 

The 2010 Share Plan provides for the grant of nonqualified stock options, stock appreciation rights, stock awards, performance awards and stock units to employees, directors and consultants.  As of January 31, 2020, the 2010 Share Plan had 800,000 shares available for future grants.  Information regarding the 2010 Share Plan for the three months ended January 31, 2020 is as follows:

 

 Weighted

Average Exercise

 Price Per Share

Aggregate
 Intrinsic

 Value

Shares

Options Outstanding at October 31, 2019

1,998,668

 

 

$    2.80       

 

 

 

Exercised

(18,900)

 

$    1.51       

 

Forfeited

(5,534)

 

 

$    2.58       

 

 

   

Options Outstanding at January 31, 2020

1,974,234

 

$    2.81       

 

$    1,810,395   

Options Exercisable at January 31, 2020

1,721,734

 

 

$    2.86       

 

 

$    1,542,195   

 

The following table summarizes information about stock options outstanding and exercisable under the 2010 Share Plan as of January 31, 2020:

 

Options Outstanding

Options Exercisable

Weighted

Average

Remaining

Contractual Life

(in years)

Weighted

Average

Remaining

Contractual Life

(in years)

Weighted

Average

Exercise Price

Weighted

Average

Exercise Price

Range of

Exercise Prices

Number

Outstanding

Number

Exercisable

 

$0.67 - $2.30

561,500

6.28

$1.56

464,000

6.03

$1.69

$2.58 - $3.13

878,200

3.43

$2.79

878,200

3.97

$2.79

$3.46 - $5.75

534,534

7.94

$4.16

 

379,534

7.76

$4.45

 

12


Table of Contents

 

Information regarding the 2010 Share Plan for the three months ended January31, 2019 is as follows:

 Weighted

Average Exercise

 Price Per Share

Aggregate
 Intrinsic

 Value

Shares

Options Outstanding at October 31, 2018

2,131,868

 

 

       $    2.11

 

 

 

Exercised

(10,000)

 

$    2.27       

 

Options Outstanding at January 31, 2019

2,121,868

 

$    2.11       

 

$    6,454,772   

Options Exercisable at January 31, 2019

1,513,119

 

 

$    1.84       

 

 

$    5,014,151   

 

The following table summarizes information about stock options outstanding and exercisable under the 2010 Share Plan as of January 31, 2019:

 

Options Outstanding

Options Exercisable

Weighted

Average

Remaining

Contractual Life

(in years)

Weighted

Average

Remaining

Contractual Life

(in years)

Weighted

Average

Exercise Price

Weighted

Average

Exercise Price

Range of

Exercise Prices

Number

Outstanding

Number

Exercisable

 

$0.67

938,000

6.44

$0.67

744,251

5.94

$0.67

$ 2.27 -$ 3.01

697,134

3.97

$2.62

622,134

4.32

$2.57

$ 3.46 -$ 7.00

486,734

8.64

$4.16

 

146,734

6.55

$4.66

 

            2018 Plan

 

The 2018 Share Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, stock awards, performance awards and stock units to employees, directors and consultants.  As of January 31, 2020, the 2018 Share Plan had 2,000,000 shares available for future grants.  Information regarding options outstanding under the 2018 Share Plan for the three months ended January 31, 2020 is as follows:

 Weighted

Average Exercise

 Price Per Share

Aggregate
 Intrinsic

 Value

Shares

Options Outstanding at October 31, 2019

3,935,500

 

 

       $    3.74

 

 

 

Granted

800,000

 

$    3.85       

 

Options Outstanding at January 31, 2020

4,735,000

 

$    3.76       

 

         $    -0-   

Options Exercisable at January 31, 2020

1,798,616

 

 

$    3.74       

 

 

$    -0-        

 

The following table summarizes information about stock options outstanding under the 2018 Share Plan as of January 31, 2020:

 

Options Outstanding

Options Exercisable

Weighted

Average

Remaining

Contractual Life

(in years)

Weighted

Average

Remaining

Contractual Life

(in years)

Weighted

Average

Exercise Price

Weighted

Average

Exercise Price

Range of

Exercise Prices

Number

Outstanding

Number

Exercisable

 

$3.70

3,100,000

8.27

$3.70

1,433,334

8.27

$3.70

$ 3.84 - $4.61

1,635,000

9.17

$3.88

365,282

8.32

$3.92

 

 13


Table of Contents

 

Information regarding options outstanding under the 2018 Share Plan for the three months ended January 31, 2019 is as follows:

 

Weighted

Average Exercise

Price Per Share

Aggregate

Intrinsic

Value

Shares

 

Options Outstanding at October 31, 2018

3,482,000

$ 3.73

Options Outstanding at January 31, 2019

3,482,000

 

 

$ 3.73

 

 

 $ 4,879,580

Options Exercisable at January 31, 2019

992,780

 

 

$ 3.72

 

 

 $ 1,401,552

 

The following table summarizes information about stock options outstanding under the 2018 Share Plan as of January 31, 2019:

 

Options Outstanding

Options Exercisable

Weighted

Average

Remaining

Contractual Life

(in years)

Weighted

Average

Remaining

Contractual Life

(in years)

Weighted

Average

Exercise Price

Weighted

Average

Exercise Price

Range of

Exercise Prices

Number

Outstanding

Number

Exercisable

 

$ 3.70 - $4.61

3,482,000

9.27

$3.73

992,780

9.27

$ 3.72

 

            Outside of Share Plans

 

In addition to options granted under the 2003 Share Plan, the 2010 Share Plan and the 2018 Share Plan, the Board of Directors approved the grant of stock options to purchase  shares of common stock to employees and directors.  Information regarding stock options outstanding that were not granted under the 2003 Share Plan, the 2010 Share Plan or the 2018 Share Plan for the three months ended January 31, 2020 is as follows:

Weighted

Average Exercise

Price Per Share

Aggregate

Intrinsic

Value

Shares

 

Options Outstanding at October 31, 2019

1,698,000

$ 2.58

Options Outstanding and exercisable at  

   January 31, 2020

1,698,000

 

 

$ 2.58

 

 

$ 1,655,550

The following table summarizes information about stock options outstanding and exercisable that were not granted under the 2003 Share Plan, the 2010 Share Plan or the 2018 Plan as of January 31, 2020:

 

Weighted Average

Remaining

Contractual Life

(in years)

Number

Outstanding
and

Exercisable

Weighted

Average

Exercise Price

Range of

Exercise Prices

$2.58

1,698,000

2.50

$ 2.58

 

14


Table of Contents

 

Information regarding stock options outstanding that were not granted under the 2003 Plan, 2010 Plan or the 2018 Plan for the three months ended January 31, 2019 is as follows:

 

Weighted

Average Exercise

Price Per Share

Aggregate

Intrinsic

Value

Shares

 

Options Outstanding at October 31, 2018

1,780,000

$ 1.58

Options Outstanding and exercisable at  

   January 31, 2019

1,780,000

 

 

$ 1.58

 

 

$ 6,334,080

 

The following table summarizes information about stock options outstanding and exercisable that were not granted under the 2003 Share Plan, the 2010 Share Plan or the 2018 Plan as of January 31, 2019:

 

Weighted Average

Remaining

Contractual Life

(in years)

Number

Outstanding
and

Exercisable

Weighted

Average

Exercise Price

Range of

Exercise Prices

$0.67

1,046,000

3.55

$ 0.67

$ 2.58-$ 5.56

 

734,000

 

3.09

 

$ 2.88

 

Stock Awards

 

For stock awards granted to employees, directors and consultants that vest at date of grant we recognize expense based on the grant date market price of the underlying common stock.  We did not grant any stock awards during the three months ended January 31, 2020 or 2019.

 

On May 8, 2018, a restricted stock award of 1,500,000 shares of common stock was granted under the 2018 Share Plan to our Chairman, President and Chief Executive Officer.  The restricted stock award vests in its entirety upon achievement of a target trading price of $11.00 per share of the Company’s common stock before May 31, 2021.  For restricted stock awards vesting upon achievement of a price target of our common stock we use a Monte Carlo Simulation in estimating the fair value at grant date and recognize compensation cost over the implied service period (median time to vest).  During the three months ended January 31, 2020 and 2019 we recorded compensation expense related to the restricted stock award of approximately $ -0- and $1,484,000, respectively.

 

Employee Stock Purchase Plan

 

The Company maintains the Anixa Biosciences, Inc. Employee Stock Purchase Plan (the "ESPP") which permits eligible employees to purchase shares at not less than 85% of the market value of the Company’s common stock on the offering date or the purchase date of the applicable offering period, whichever is lower.  The ESPP was adopted by our Board of Directors on August 13, 2018 and approved by our shareholders on September 27, 2018.  During the three months ended January 31, 2020 and 2019, no shares were purchased under the ESPP.

 

15


Table of Contents

 

Warrants

 

During the three months ended January 31, 2019 we issued a warrant, expiring on November 1, 2023, to purchase 25,000 shares of common stock at $4.04 per share, vesting over 12 months, to a consultant for investor relations services.  On November 1, 2019 the warrant was exchanged for a stock option with the same terms as the warrant.  We recorded consulting expense of approximately $ -0- and $21,000 during the three months ended January 31, 2020  and 2019, respectively, based on the fair value of the warrant recognized on a straight-line basis over the vesting period.  No warrants were issued during the three months ended January 31, 2020.

 

As of January 31, 2020, we had warrants outstanding to purchase 500,000 shares of common stock at $5.03 per share expiring on November 30, 2021.

 

3.         FAIR VALUE MEASUREMENTS

US GAAP defines fair value and establishes a framework for measuring fair value.  We have categorized our financial assets, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below.  If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

 

Financial assets and liabilities recorded in the accompanying condensed consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:

 

Level 1 - Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market which we have the ability to access at the measurement date.

 

Level 2 - Financial assets and liabilities whose values are based on quoted market prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets.  

 

Level 3 – Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset and liabilities.

 

16


 Table of Contents

 

The following table presents the hierarchy for our financial assets measured at fair value on a recurring basis as of January 31, 2020:

 

  

Level 1

 Level 2

 Level 3

 Total

      

 

      

 

      

 

      

Money market funds:

    Cash and cash equivalents

$

      

2,535,187

 

$

      

-

 

$

      

-

 

$

      

2,535,187

Certificates of deposit:

   Short-term investments

 

-

 

2,870,000

 

-

 

        

2,870,000

Operating lease right-of-use

    asset

 

-

 

 

-

 

 

93,907

 

 

93,907

Total financial assets

$

2,535,187

 

$

2,870,000

 

$

93,907

 

$

5,499,094

 

The following table presents the hierarchy for our financial assets measured at fair value on a recurring basis as of October 31, 2019:

 

  

Level 1

 Level 2

 Level 3

 Total

      

 

      

 

      

 

      

Money market funds:

    Cash and cash equivalents

$

      

2,706,944

 

$

      

-

 

$

-

 

$

2,706,944

Certificates of deposit:

    Cash and cash equivalents

 

500,000

 

-

 

-

 

500,000

 Short term investments

 

-

 

 

2,350,000

 

 

-

 

 

2,350,000

Total financial assets

$

3,206,944

 

$

2,350,000 

 

$

-

 

$

5,556,944

 

The following table presents the hierarchy for our financial liabilities measured at fair value on a recurring basis as of January 31, 2020:

 

  

Level 1

 Level 2

 Level 3

 Total

      

 

      

 

      

 

      

Operating lease liability

$

    -

 

$

      -

 

$

      94,219

 

$

      94,219

 

Our non-financial assets that are measured on a non-recurring basis include our property and equipment and which are measured using fair value techniques whenever events or changes in circumstances indicate a condition of impairment exists.  The estimated fair value of accounts receivable, prepaid expenses, accounts payable and accrued expenses approximates their individual carrying amounts due to the short-term nature of these measurements.  Cash and cash equivalents are stated at carrying value which approximates fair value. 

 

4.         ACCRUED EXPENSES

 

Accrued expenses consist of the following as of:

 

January 31,

2020

October 31,

2019

Payroll and related expenses

 

161,405

 

 

72,850

Accrued royalty

449,691

449,691

Accrued collaborative research and license expenses

 

66,119

 

 

371,710

Accrued other

 

27,819

 

1,247

 

$

705,034

 

$

895,498

 

17


Table of Contents

 

5.         NET LOSS PER SHARE OF COMMON STOCK

 

Basic net loss per common share (“Basic EPS”) is computed by dividing net loss by the weighted average number of common shares outstanding.  Diluted net loss per common share (“Diluted EPS”) is computed by dividing net loss by the weighted average number of common shares and dilutive common share equivalents and convertible securities then outstanding. 

 

Diluted EPS for all periods presented is the same as Basic EPS, as the inclusion of the effect of common share equivalents then outstanding would be anti-dilutive.  For this reason, excluded from the calculation of Diluted EPS for the three months ended January 31, 2020 and 2019, were stock options to purchase 8,407,234 and 7,395,868 shares, respectively, and warrants to purchase 500,000 and 854,400 shares, respectively.

 

6.         EFFECT OF RECENTLY ADOPTED AND ISSUED PRONOUNCEMENTS

 

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-02 (“ASU 2016-02”) Accounting Standards Codification Topic 842, Leases (ASC 842), which supersedes Topic 840, Leases, and which requires lessees to recognize most leases on the balance sheet.  The new lease standard does not substantially change lessor accounting.  For public companies, the standard was effective for the first interim reporting period within annual periods beginning after December 15, 2018, although early adoption was permitted.  Lessees and lessors were required to apply the new standard at the beginning of the earliest period presented in the financial statements in which they first apply the new guidance. In July 2018, FASB issued ASU 2018-11, Leases, which provides an additional transition option for an entity to apply the provisions of ASC 842 by recognizing a cumulative effect adjustment at the effective date of adoption without adjusting the prior comparative periods presented. The requirements of this standard include a significant increase in required disclosures.  The Company adopted ASU 2016-02 on November 1, 2019.  The adoption of this standard did not have a material impact on our condensed consolidated financial statements.  See Note 8 regarding disclosures related to our office lease.

 

7.         INCOME TAXES

 

We file Federal, New York and California state income tax returns.  Due to net operating losses, the statute of limitations for our income tax returns remains open to examination by taxing authorities since the fiscal year ended October 31, 1999.  We account for interest and penalties related to income tax matters, if any, in general and administrative expenses.  There are no unrecognized income tax benefits as of January 31, 2020 and October 31, 2019.

 

We recognize deferred tax assets and liabilities for the estimated future tax effects of events that have been recognized in our financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.  A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount expected to be realized. We have substantial net operating loss carryforwards for Federal, New York State and California income tax returns. These net operating loss carryforwards could be subject to limitations under Internal Revenue Code section 382. We have provided a full valuation allowance against our deferred tax asset due to our historical pre-tax losses and the uncertainty regarding the realizability of these deferred tax assets.

 

18


Table of Contents

 

8.         LEASES        

We lease approximately 2,000 square feet of office space at 3150 Almaden Expressway, San Jose, California (our principal executive offices) from an unrelated party pursuant to an operating lease that expires September 30, 2021.  Our base rent is approximately $5,000 per month and the lease provides for annual increases of approximately 3% and an escalation clause for increases in certain operating costs.  Under an operating lease that expired on May 31, 2019 we also leased approximately 3,000 square feet of office space at 12100 Wilshire Boulevard, Los Angeles, California (our former executive offices) from an unrelated party.  As of August 1, 2018, we had subleased these facilities.  Rent expense for the three months ended January 31, 2020 and 2019, was approximately $16,000 and $18,000, respectively. 

On November 1, 2019, the Company adopted ASC 842, which increases transparency and comparability by recognizing a lessee’s rights and obligations resulting from leases by recording  them on the balance sheet as lease assets and lease liabilities.  The new guidance requires the recognition of the right-of-use ("ROU") assets and related operating lease liabilities on the balance sheet.  The Company adopted the new guidance using the modified retrospective approach on November 1, 2019.  As a result, the condensed consolidated balance sheet as of October 31, 2019 was not restated and is not comparative.

The adoption of ASC 842 resulted in the recognition of ROU assets of $106,221, and lease liabilities for operating leases of $106,299 on the Company's condensed consolidated balance sheet as of November 1, 2019. The difference between the ROU assets and the operating lease liability represents the difference between the lease cost and the amount of rent paid in October.

The Company elected the package of practical expedients permitted within the standard, which allow an entity to forgo reassessing (i) whether a contract contains a lease, (ii) classification of leases, and (iii) whether capitalized costs associated with a lease meet the definition of initial direct costs.  Also, the Company elected the expedient allowing an entity to use hindsight to determine the lease term and impairment of ROU assets and the expedient to allow the Company to not have to separate lease and non-lease components.  The Company has also elected the short-term lease accounting policy under which Anixa would not recognize a lease liability or ROU asset for any lease that at the commencement date has a lease term of twelve months or less and does not include a purchase option that Anixa is more than reasonably certain to exercise.

For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments. The remaining 20 month lease term as of January 31, 2020 for the Company’s lease includes the noncancelable period of the lease.  The lease does not contain a Company option to extend the lease or an option to extend the lease controlled by the lessor.  All ROU assets are reviewed for impairment.

19


Table of Contents

Balance sheet information related to the Company’s lease is presented below:

Balance Sheet

Location

January 31,

2020

November 1,

2019

October 31,

2019

Operating Lease:

Right-of-use asset

Operating lease right-
   of-use asset

$

93,907

$

106,221

$

-

Right-of-use
  liability, current

Operating lease
   liability

53,384

51,101

-

Right-of-use
  liability, long-term

Operating lease
   liability non-current

40,835

55,198

-

 

As of January 31, 2020, the annual minimum lease payments of our operating lease liabilities were as follows:

For Years Ending October 31,

Operating Leases

2020 (excluding the three months ended January 31, 2020)

$

47,136

2021

 

59,136

Total future minimum payments, undiscounted

106,272

Less: Imputed interest

 

12,053

Present value of future minimum lease payments

$

94,219

9.         COMMITMENTS AND CONTINGENCES 

 

Litigation Matters

 

We are not involved in any litigation or other legal proceedings and management is not aware of any pending litigation or legal proceeding against us that would have a material adverse effect upon our results of operations or financial condition.

10.       SEGMENT INFORMATION          

We follow the accounting guidance of ASC 280 “Segment Reporting” (“ASC 280”).  Reportable operating segments are determined based on the management approach.  The management approach, as defined by ASC 280, is based on the way that the chief operating decision-maker organizes the segments within an enterprise for making operating decisions and assessing performance.  While our results of operations are primarily reviewed on a consolidated basis, the chief operating decision-maker manages the enterprise in three reportable segments, each with different operating and potential revenue generating characteristics: (i) cancer diagnostics,  (ii) cancer therapeutics and (iii) our legacy patent licensing activities.  The following represents selected financial information for our segments for the three months ended January 31, 2020 and 2019 and as of January 31, 2020 and October 31, 2019:

20


Table of Contents

For the Three Months Ended

January 31,

2020

2019

Net loss:

 

 

 

 

 

Cancer diagnostics

$

(1,790,646)

$

(1,804,354)

Cancer therapeutics

 

(825,929)

 

 

(2,487,285)

Patent licensing

 

-

 

(674,970)

Total

$

(2,616,575)

 

$

(4,966,609)

Total operating costs and expenses

$

2,629,869

 

$

4,983,728

Less non-cash share-based compensation

 

(1,021,334)

 

(2,750,164)

Operating costs and expenses excluding

   non-cash share-based compensation

$

1,608,535

 

$

2,233,564

Operating costs and expenses excluding non-cash
    share based compensation expense:

 

 

 

 

 

Cancer diagnostics

$

1,163,924

$

759,534

Cancer therapeutics

 

444,611

 

 

800,791

Patent licensing

 

         -

 

673,239

Total

$

1,608,535

 

$

2,233,564

 

January 31,

2020

October 31,

       2019

Total assets:

 

 

 

 

 

Cancer diagnostics

$

4,411,569

$

2,921,784

Cancer therapeutics

 

1,604,596

 

 

2,872,341

Patent licensing

 

147,786

 

499,568

Total

$

6,163,951

 

$

6,293,693

 

Operating costs and expenses excluding non-cash share-based compensation is the measurement the chief operating decision-maker uses in managing the enterprise. 

 

21


Table of Contents


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

 

Information included in this Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Forward-looking statements are not statements of historical facts, but rather reflect our current expectations concerning future events and results.  We generally use the words “believes,” “expects,” “intends,” “plans,” “anticipates,” “likely,” “will” and similar expressions to identify forward-looking statements.  Such forward-looking statements, including those concerning our expectations, involve risks, uncertainties and other factors, some of which are beyond our control, which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.   These risks, uncertainties and factors include, but are not limited to, those factors set forth in our Annual Report on Form 10-K for the fiscal year ended October 31, 2019 and the condensed consolidated financial statements included in this Report.  Except as required by applicable law, including the securities laws of the United States, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this Report.

 

GENERAL

 

We discuss the description of our business in the Notes to our Condensed Consolidated Financial Statements.

 

RESULTS OF OPERATIONS

Three months ended January 31, 2020 compared with three months ended January 31, 2019

Revenue

 

We had no revenue during the three-month periods ended January 31, 2020 and 2019.

 

Amortization of Patents

 

Amortization of patents was $-0- in the three months ended January 31, 2020 compared to approximately $251,000 in the comparable prior year.  We capitalize patent and patent rights acquisition costs and amortize the cost over the estimated economic useful life.  The decrease in amortization of patents was due to the patent asset being fully amortized in fiscal year 2019.

 

22


Table of Contents

 

Research and Development Expenses

 

Research and development expenses are related to the development of our early cancer detection and cancer immuno-therapy platforms and decreased by approximately $756,000 to approximately $1,491,000 in the three months ended January 31, 2020, from approximately $2,247,000 in the three months ended January 31, 2019.  The decrease in research and development expenses was primarily due to a decrease in employee stock award compensation expense of approximately $950,000, a decrease in employee stock option compensation expense of approximately $231,000, offset by an increase of approximately $363,000 in outside research and development expenses primarily related Anixa Diagnostics’ agreements with its CLIA certified commercialization partner, ResearchDx, Inc. and an increased supply of blood samples provided by its urology practice partners.

 

General and Administrative Expenses

 

General and administrative expenses decreased by approximately $927,000 to approximately $1,139,000 in the three months ended January 31, 2020, from approximately $2,066,000 in the three months ended January 31, 2019. The decrease in general and administrative expenses was principally due to a decrease in employee stock award compensation expense of approximately $534,000, a decrease in expense resulting from the discharge in January 2020 of a disputed liability of approximately $337,000 upon the expiration of the vendor’s statutory right to pursue collection of the disputed liability, a decrease in legal and accounting fees of approximately $283,000 primarily related to fees incurred in fiscal year 2019 in connection with a putative shareholder derivative complaint, offset by an increase in employee compensation and related costs, other than stock option compensation expense and stock award compensation expense, of approximately $170,000.

 

Impairment in Carrying Amount of Patent Assets

 

The impairment in carrying amount of patent assets of approximately $419,000 in the three months ended January 31, 2019 resulted from the write down of the value of patent assets related to our legacy patent licensing activities to the estimated undiscounted future cash flows we anticipate receiving from the patent assets as of January 31, 2019.  Our estimates of future cash flows are based on our most recent assessment of the market for potential licensees, as well as the status of ongoing negotiations with potential licensees.

 

Interest Income

 

Interest income decreased by approximately $4,000 to approximately $13,000 in the three months ended January 31, 2020, from approximately $17,000 in the comparable prior year period as a result of a decrease of cash on hand and a decrease in interest rates.

 

Net Loss Attributable to Noncontrolling Interest

 

The net loss attributable to noncontrolling interest, representing Wistar’s 5% ownership interest in Certainty’s net loss, decreased by approximately $61,000 to approximately $24,000 in the three months ended January 31, 2020, from approximately $85,000 in the three months ended January 31, 2019, as Certainty’s net loss decreased.  The decrease in Certainty’s net loss was primarily due to decreases in employee stock option compensation expense and employee stock award compensation expense.

 

23


Table of Contents

 

LIQUIDITY AND CAPITAL RESOURCES

 

Our primary sources of liquidity are cash, cash equivalents and short-term investments.  We do not expect to generate material revenue from operations in the near future from any of our therapeutic or diagnostic programs

 

Based on currently available information as of March 9, 2020, we believe that our existing cash, cash equivalents, short-term investments and expected cash flows will be sufficient to fund our activities for the next twelve months.  We have implemented a business model that conserves funds by collaborating with third parties to develop our technologies.  However, our projections of future cash needs and cash flows may differ from actual results.  If current cash on hand, cash equivalents, short-term investments and cash that may be generated from our business operations are insufficient to continue to operate our business, or if we elect to invest in or acquire a company or companies or new technology or technologies that are synergistic with or complementary to our technologies, we may be required to obtain more working capital.  During the three months ended January 31, 2020, we raised approximately $1,752,000, net of expenses, through the sale of 490,655 shares of common stock in our at-the-market equity offerings.  We raised approximately $427,000, net of expenses, through the sale of 112,238 shares of common stock in an at-the market equity offering which expired in November 2019 and approximately $1,325,000, net of expenses, through the sale of 378,417 shares of common stock in an at-the-market equity offering under which we may issue up to $50 million of common stock.  Under our current at-the-market equity program which is currently effective and may remain available for us to use in the future, we may sell an additional approximately $48,587,000 of common stock.  We may seek to obtain working capital during our fiscal year 2020 or thereafter through sales of our equity securities or through bank credit facilities or public or private debt from various financial institutions where possible.  We cannot be certain that additional funding will be available on acceptable terms, or at all.  If we do identify sources for additional funding, the sale of additional equity securities or convertible debt could result in dilution to our stockholders. We can give no assurance that we will generate sufficient cash flows in the future to satisfy our liquidity requirements or sustain future operations, or that other sources of funding, such as sales of equity or debt, would be available or would be approved by our security holders, if needed, on favorable terms or at all.  If we fail to obtain additional working capital as and when needed, such failure could have a material adverse impact on our business, results of operations and financial condition.  Furthermore, such lack of funds may inhibit our ability to respond to competitive pressures or unanticipated capital needs, or may force us to reduce operating expenses, which would significantly harm the business and development of operations.

 

24


 Table of Contents

 

During the three months ended January 31, 2020, cash used in operating activities was approximately $1,914,000.  Cash used in investing activities was approximately $536,000, resulting from the purchases of certificates of deposit totaling $1,870,000 and purchases of property and equipment of approximately $16,000, which was offset by the proceeds on maturities of certificates of deposit totaling $1,350,000.  Cash provided by financing activities was approximately $1,780,000, resulting from the sale of 490,655 shares of common stock in at-the-market equity offerings of approximately $1,752,000 and the proceeds from exercise of stock options of approximately $28,000.  As a result, our cash, cash equivalents, and short-term investments at January 31, 2020 decreased approximately $150,000 to approximately $5,692,000 from approximately $5,842,000 at the end of fiscal year 2019.

 

CRITICAL ACCOUNTING POLICIES

 

The Company’s condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America.  In preparing these financial statements, we make assumptions, judgments and estimates that can have a significant impact on amounts reported in our condensed consolidated financial statements.  We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances.  Actual results could differ materially from these estimates under different assumptions or conditions.  On a regular basis, we evaluate our assumptions, judgments and estimates and make changes accordingly.

 

We believe that, of the significant accounting policies discussed in Note 2 to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended October 31, 2019, the following accounting policies require our most difficult, subjective or complex judgments:

 

Revenue Recognition; and

Stock-Based Compensation

Revenue Recognition

 

Our revenue has been derived solely from technology licensing and the sale of patented technologies.  Revenue is recognized upon transfer of control of intellectual property rights and satisfaction of other contractual performance obligations to licensees in an amount that reflects the consideration we expect to receive. 

 

On November 1, 2018 we adopted Accounting Standards Update 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers using the modified retrospective method.  Upon adoption of ASU 2014-09 we are required to make certain judgments and estimates in connection with the accounting for revenue.  Such areas may include determining the existence of a contract and identifying each party’s rights and obligations to transfer goods and services, identifying the performance obligations in the contract, determining the transaction price and allocating the transaction price to separate performance obligations, estimating the timing of satisfaction of performance obligations, determining whether a promise to grant a license is distinct from other promised goods or services and evaluating whether a license transfers to a customer at a point in time or over time.

 

25


 Table of Contents

 

Our revenue arrangements provide for the payment of contractually determined, one-time, paid-up license fees in settlement of litigation and in consideration for the grant of certain intellectual property rights for patented technologies owned or controlled by the Company.  These arrangements typically include some combination of the following: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies owned or controlled by the Company, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation.  In such instances, the intellectual property rights granted have been perpetual in nature, extending until the expiration of the related patents.  Pursuant to the terms of these agreements, we have no further obligations with respect to the granted intellectual property rights, including no obligation to maintain or upgrade the technology, or provide future support or services.  Licensees obtained control of the intellectual property rights they have acquired upon execution of the agreement.  Accordingly, the performance obligations from these agreements were satisfied and 100% of the revenue was recognized upon the execution of the agreements.  The adoption of ASU 2014-09 had no impact on revenue recognized.

 

Stock-Based Compensation

 

The compensation cost for service-based stock options granted to employees and directors is measured at the grant date, based on the fair value of the award using the Black-Scholes pricing model, and is recognized as an expense on a straight-line basis over the requisite service period (the vesting period of the stock option) which is one to four years.  For employee options vesting if the trading price of the Company’s common stock exceeds certain price targets we use a Monte Carlo Simulation in estimating the fair value at grant date and recognize compensation cost over the implied service period. 

 

For stock awards granted to employees and directors that vest at date of grant we recognize expense based on the grant date market price of the underlying common stock.  For restricted stock awards vesting upon achievement of a price target of our common stock we use a Monte Carlo Simulation in estimating the fair value at grant date and recognize compensation cost over the implied service period (median time to vest). 

 

On November 1, 2018 we adopted Accounting Standards Update 2018-07 (“ASU 2018-027”) for stock-based compensation to non-employees.  Upon adoption of ASU 2018-07 we estimated the fair value of unvested awards at the date of adoption, using the Black-Scholes pricing model.  Future grants to consultants will be measured at the grant date, based on the fair value of the award using the Black-Scholes pricing model, consistent with our policy for grants to employees and directors. 

 

The Black-Scholes pricing model and the Monte Carlo Simulation we use to estimate fair value requires valuation assumptions of expected term, expected volatility, risk-free interest rates and expected dividend yield.  The expected term of stock options represents the weighted average period the stock options are expected to remain outstanding.  We use the simplified method, which is a weighted average of the vesting term and contractual term, to determine expected term.  The simplified method was adopted since we do not believe that historical experience is representative of future performance because of the impact of the changes in our operations and the change in terms from historical options.  Under the Black-Scholes pricing model, we estimated the expected volatility of our shares of common stock based upon the historical volatility of our share price over a period of time equal to the expected term of the grants.  We estimated the risk-free interest rate based on the implied yield available on the applicable grant date of a U.S. Treasury note with a term equal to the expected term of the underlying grants.  We made the dividend yield assumption based on our history of not paying dividends and our expectation not to pay dividends in the future. 

 

26


Table of Contents

 

We will reconsider use of the Black-Scholes pricing model and the Monte Carlo Simulation if additional information becomes available in the future that indicates another model would be more appropriate.  If factors change and we employ different assumptions in future periods, the compensation expense that we record may differ significantly from what we have recorded in the current period.

 

EFFECT OF RECENTLY ISSUED PRONOUNCEMENTS

 

We discuss the effect of recently issued pronouncements in the Notes to our Condensed Consolidated Financial Statements.

 

Item 3Quantitative and Qualitative Disclosures About Market Risk.

 

As of January 31, 2020, we had investments in short-term, fixed rate and highly liquid instruments that have historically been reinvested when they mature throughout the year.  Although our existing instruments are not considered at risk with respect to changes in interest rates or markets for these instruments, our rate of return on these securities could be affected at the time of reinvestment, if any.

 

Item 4Controls and Procedures.

 

We carried out an evaluation, under the supervision and with the participation of our management including our President and Chief Executive Officer and our Chief Operating Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13-15(b) of the Exchange Act.  Based upon that evaluation, our President and Chief Executive Officer and our Chief Operating Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of the end of the period covered by this Report. 

 

There was no change in our internal control over financial reporting during the first quarter of fiscal year 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

27


Table of Contents

 

PART II.  OTHER INFORMATION

 

Item 1. Legal Proceedings. 

We are not involved in any litigation or other legal proceedings and management is not aware of any pending litigation or legal proceeding against us that would have a material adverse effect upon our results of operations or financial condition.

Item 1A.  Risk Factors.

 

There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the fiscal year ended October 31, 2019.

 

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.   None.

 

Item 3. Defaults Upon Senior Securities.  None.

 

Item 4. Mine Safety Disclosures.  Not Applicable.

 

Item 5. Other Information. None.

 

Item 6.  Exhibits.

 

31.1     Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated March 9, 2020.

31.2     Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated March 9, 2020.

32.1     Statement of Chief Executive Officer, pursuant to Section 1350 of Title 18 of the United States Code, dated March 9, 2020.

32.2     Statement of Chief Financial Officer, pursuant to Section 1350 of Title 18 of the United States Code, dated March 9, 2020.

 

28


Table of Contents

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

                                                           

 

ANIXA BIOSCIENCES, INC.

By:

/s/ Dr. Amit Kumar

Dr. Amit Kumar

Chairman, President and
Chief Executive Officer

March 9, 2020

(Principal Executive Officer)

By:

/s/ Michael J. Catelani

Michael J. Catelani

Chief Operating Officer and
Chief Financial Officer

(Principal Financial and

March 9, 2020

Accounting Officer)

 

 

29

 

 

Exhibit 31.1

 

Exhibit 31.1

 

 

CERTIFICATION

 

I, Dr. Amit Kumar, certify that:

 

1.         I have reviewed this quarterly report on Form 10-Q of Anixa Biosciences, Inc.;

 

2.         Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.         Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.        The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)       Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)       Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)       Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)       Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.        The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)        All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)        Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

/s/ Dr. Amit Kumar

Dr. Amit Kumar

Chairman, President and

Chief Executive Officer

March 9, 2020

(Principal Executive Officer)

 

 

Exhibit 31.2

 

Exhibit 31.2

 

 

CERTIFICATION

 

I, Michael J. Catelani, certify that:

 

1.         I have reviewed this quarterly report on Form 10-Q of Anixa Biosciences, Inc.;

 

2.         Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.         Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.        The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)       Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)       Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)       Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)       Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.        The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)        All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)        Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

/s/ Michael J. Catelani

Michael J. Catelani

Chief Operating Officer and

Chief Financial Officer

(Principal Financial and

March 9, 2020

Accounting Officer)

 

 

Exhibit 32.1

 

Exhibit 32.1

 

 

Statement of Chief Executive Officer

Pursuant to Section 1350 of Title 18 of the United States Code

 

 

Pursuant to Section 1350 of Title 18 of the United States Code, the undersigned, Dr. Amit Kumar, the Chairman, President and Chief Executive Officer of Anixa Biosciences, Inc., hereby certifies that:

 

  1. The Company's Form 10-Q Quarterly Report for the period ended January 31, 2020 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

  1. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

/s/ Dr. Amit Kumar

Dr. Amit Kumar

Chairman, President and

Chief Executive Officer

March 9, 2020

(Principal Executive Officer)

 

Exhibit 32.2

 

Exhibit 32.2

 

 

Statement of Chief Financial Officer

Pursuant to Section 1350 of Title 18 of the United States Code

 

 

Pursuant to Section 1350 of Title 18 of the United States Code, the undersigned, Michael J. Catelani, the Chief Operating Officer and Chief Financial Officer of Anixa Biosciences, Inc., hereby certifies that:

 

  1. The Company's Form 10-Q Quarterly Report for the period ended January 31, 2020 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

  1. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

/s/ Michael J. Catelani

Michael J. Catelani

Chief Operating Officer and

Chief Financial Officer

(Principal Financial and

March 9, 2020

Accounting Officer)

 

 

v3.20.1
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
Jan. 31, 2020
Oct. 31, 2019
Current assets:    
Cash and cash equivalents $ 2,821,882 $ 3,491,625
Short-term investments in certificates of deposit 2,870,000 2,350,000
Receivables 22,311 66,527
Prepaid expenses and other current assets 154,490 184,972
Total current assets 5,868,683 6,093,124
Property and equipment, net of accumulated depreciation of $110,013 and $95,015, respectively 201,361 200,569
Operating lease right-of-use asset 93,907
Total assets 6,163,951 6,293,693
Current liabilities:    
Accounts payable 367,098 585,817
Accrued expenses 705,034 895,498
Operating lease liability 53,384
Total current liabilities 1,125,516 1,481,315
Operating lease liability non-current 40,835
Total liabilities 1,166,351 1,481,315
Commitments and contingencies (Note 9)
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
Common stock, par value $.01 per share; 48,000,000 shares authorized; 20,841,309 and 20,331,754 shares issued and outstanding, respectively 208,413 203,317
Additional paid-in capital 189,646,000 186,849,299
Accumulated deficit (184,409,806) (181,817,263)
Total shareholders’ equity 5,444,607 5,235,353
Noncontrolling interest (Note 1) (447,007) (422,975)
Total equity 4,997,600 4,812,378
Total liabilities and equity 6,163,951 6,293,693
Series A Preferred Stock [Member]    
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 [Member]    
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 $100 per share; 140 shares authorized; no shares issued or outstanding
v3.20.1
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS` EQUITY (UNAUDITED) - USD ($)
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Parent [Member]
Noncontrolling Interest [Member]
Total
Balance at Oct. 31, 2018 $ 189,086 $ 175,415,931 $ (170,170,209) $ 5,434,808 $ (251,377) $ 5,183,431
Balance (in Shares) at Oct. 31, 2018 18,908,632          
Stock option compensation to employees and directors   1,219,560   1,219,560   1,219,560
Stock options and warrants issued to consultants   46,219   46,219   46,219
Common stock issued upon exercise of stock options $ 100 22,600   22,700   22,700
Common stock issued upon exercise of stock options (in Shares) 10,000          
Restricted stock award compensation to employee pursuant to stock incentive plan   1,484,385   1,484,385   1,484,385
Common stock issued in at-the-market offering, net of offering expenses of $100,972/$67,161 $ 5,516 2,148,068   2,153,584   2,153,584
Common stock issued in at-the-market offering, net of offering expenses of $100,972/$67,161 (in Shares) 551,603          
Net loss     (4,881,841) (4,881,841) (84,768) (4,966,609)
Balance at Jan. 31, 2019 $ 194,702 180,336,763 (175,052,050) 5,479,415 (336,145) 5,143,270
Balance (in Shares) at Jan. 31, 2019 19,470,235          
Balance at Oct. 31, 2019 $ 203,317 186,849,299 (181,817,263) 5,235,353 (422,975) 4,812,378
Balance (in Shares) at Oct. 31, 2019 20,331,754          
Stock option compensation to employees and directors   963,880   963,880   963,880
Stock options issued to consultants   57,454   57,454   57,454
Common stock issued upon exercise of stock options $ 189 28,291   28,480   28,480
Common stock issued upon exercise of stock options (in Shares) 18,900          
Common stock issued in at-the-market offering, net of offering expenses of $100,972/$67,161 $ 4,907 1,747,076   1,751,983   1,751,983
Common stock issued in at-the-market offering, net of offering expenses of $100,972/$67,161 (in Shares) 490,655          
Net loss     (2,592,543) (2,592,543) (24,032) (2,616,575)
Balance at Jan. 31, 2020 $ 208,413 $ 189,646,000 $ (184,409,806) $ 5,444,607 $ (447,007) $ 4,997,600
Balance (in Shares) at Jan. 31, 2020 20,841,309          
v3.20.1
INCOME TAXES
3 Months Ended
Jan. 31, 2020
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]

7.         INCOME TAXES


We file Federal, New York and California state income tax returns.  Due to net operating losses, the statute of limitations for our income tax returns remains open to examination by taxing authorities since the fiscal year ended October 31, 1999.  We account for interest and penalties related to income tax matters, if any, in general and administrative expenses.  There are no unrecognized income tax benefits as of January 31, 2020 and October 31, 2019.


We recognize deferred tax assets and liabilities for the estimated future tax effects of events that have been recognized in our financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.  A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount expected to be realized. We have substantial net operating loss carryforwards for Federal, New York State and California income tax returns. These net operating loss carryforwards could be subject to limitations under Internal Revenue Code section 382. We have provided a full valuation allowance against our deferred tax asset due to our historical pre-tax losses and the uncertainty regarding the realizability of these deferred tax assets.


v3.20.1
FAIR VALUE MEASUREMENTS
3 Months Ended
Jan. 31, 2020
Fair Value Disclosures [Abstract]  
Fair Value Disclosures [Text Block]

3.         FAIR VALUE MEASUREMENTS


US GAAP defines fair value and establishes a framework for measuring fair value.  We have categorized our financial assets, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below.  If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.


Financial assets and liabilities recorded in the accompanying condensed consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:


Level 1 - Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market which we have the ability to access at the measurement date.


Level 2 - Financial assets and liabilities whose values are based on quoted market prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets.  


Level 3 – Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset and liabilities.


The following table presents the hierarchy for our financial assets measured at fair value on a recurring basis as of January 31, 2020:


  

Level 1

 

 Level 2

 

 Level 3

 

 Total

   

      

 

 

      

 

 

      

 

 

      

Money market funds: 

    Cash and cash equivalents

$

      

2,535,187

 

$

      

-

 

$

      

-

 

$

      

2,535,187

Certificates of deposit:

   Short-term investments

 

-

 

 

2,870,000

 

 

-

 

 

        

2,870,000

Operating lease right-of-use

   asset

 

-

 

 

-

 

 

93,907

 

 

93,907

Total financial assets

$

2,535,187

 

$

2,870,000

 

$

93,907

 

$

5,499,094


The following table presents the hierarchy for our financial assets measured at fair value on a recurring basis as of October 31, 2019:


  

Level 1

 

 Level 2

 

 Level 3

 

 Total

   

      

 

 

      

 

 

      

 

 

      

Money market funds:

    Cash and cash equivalents

$

      

2,706,944

 

$

      

-

 

$

 

-

 

$

 

2,706,944

Certificates of deposit:

    Cash and cash equivalents

 

500,000

 

 

-

 

 

-

 

 

 

500,000

 Short term investments

 

-

 

 

2,350,000

 

 

-

 

 

2,350,000

Total financial assets

$

3,206,944

 

$

2,350,000 

 

$

-

 

$

5,556,944


The following table presents the hierarchy for our financial liabilities measured at fair value on a recurring basis as of January 31, 2020:


  

Level 1

 Level 2

 Level 3

 Total

      

 

      

 

      

 

      

Operating lease liability

$

    -

 

$

      -

 

$

      94,219

 

$

      94,219


Our non-financial assets that are measured on a non-recurring basis include our property and equipment and which are measured using fair value techniques whenever events or changes in circumstances indicate a condition of impairment exists.  The estimated fair value of accounts receivable, prepaid expenses, accounts payable and accrued expenses approximates their individual carrying amounts due to the short-term nature of these measurements.  Cash and cash equivalents are stated at carrying value which approximates fair value. 


v3.20.1
BUSINESS AND FUNDING (Tables)
3 Months Ended
Jan. 31, 2020
Accounting Policies [Abstract]  
Schedule Of Changes In Noncontrolling Interest Table Text Block

Balance October 31, 2019

$

(422,975)

Net loss attributable to noncontrolling interest

 

(24,032)

Balance January 31, 2020

$

(447,007)

v3.20.1
STOCK BASED COMPENSATION (Details) - Warrants - Common Stock [Member] - Warrant [Member] - USD ($)
3 Months Ended
Jan. 31, 2020
Jan. 31, 2019
STOCK BASED COMPENSATION (Details) - Warrants [Line Items]    
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares) 500,000  
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share) $ 5.03  
Consultant [Member]    
STOCK BASED COMPENSATION (Details) - Warrants [Line Items]    
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares)   25,000
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)   $ 4.04
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period   12 months
Consultation Expense $ 0 $ 21,000
v3.20.1
STOCK BASED COMPENSATION (Details) - Stock options outstanding and exercisable under the 2010 Share Plan - 2010 Share Plan [Member] - $ / shares
3 Months Ended
Jan. 31, 2020
Jan. 31, 2019
Range Of Exercise Prices $0.67 To $2.30 [Member]    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Options Outstanding, Number 561,500  
Options Outstanding,Weighted Average Remaining Contractual Life 6 years 102 days  
Options Outstanding, Weighted Average Exercise Price (in Dollars per share) $ 1.56  
Options Exercisable, Number 464,000  
Options Exercisable,Weighted Average Remaining Contractual Life 6 years 10 days  
Options Exercisable, Weighted Average Exercise Price (in Dollars per share) $ 1.69  
Range Of Exercise Prices $2.58 To $3.13 [Member]    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Options Outstanding, Number 878,200  
Options Outstanding,Weighted Average Remaining Contractual Life 3 years 156 days  
Options Outstanding, Weighted Average Exercise Price (in Dollars per share) $ 2.79  
Options Exercisable, Number 878,200  
Options Exercisable,Weighted Average Remaining Contractual Life 3 years 354 days  
Options Exercisable, Weighted Average Exercise Price (in Dollars per share) $ 2.79  
Range Of Exercise Prices $3.46 To $5.75 [Member]    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Options Outstanding, Number 534,534  
Options Outstanding,Weighted Average Remaining Contractual Life 7 years 343 days  
Options Outstanding, Weighted Average Exercise Price (in Dollars per share) $ 4.16  
Options Exercisable, Number 379,534  
Options Exercisable,Weighted Average Remaining Contractual Life 7 years 277 days  
Options Exercisable, Weighted Average Exercise Price (in Dollars per share) $ 4.45  
Range Of Exercise Prices $0.67 [Member]    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Options Outstanding, Number   938,000
Options Outstanding,Weighted Average Remaining Contractual Life   6 years 160 days
Options Outstanding, Weighted Average Exercise Price (in Dollars per share)   $ 0.67
Options Exercisable, Number   744,251
Options Exercisable,Weighted Average Remaining Contractual Life   5 years 343 days
Options Exercisable, Weighted Average Exercise Price (in Dollars per share)   $ 0.67
Range Of Exercise Prices $2.27 To $3.01 [Member]    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Options Outstanding, Number   697,134
Options Outstanding,Weighted Average Remaining Contractual Life   3 years 354 days
Options Outstanding, Weighted Average Exercise Price (in Dollars per share)   $ 2.62
Options Exercisable, Number   622,134
Options Exercisable,Weighted Average Remaining Contractual Life   4 years 116 days
Options Exercisable, Weighted Average Exercise Price (in Dollars per share)   $ 2.57
Range Of Exercise Prices $3.46 To $7.00 [Member]    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Options Outstanding, Number   486,734
Options Outstanding,Weighted Average Remaining Contractual Life   8 years 233 days
Options Outstanding, Weighted Average Exercise Price (in Dollars per share)   $ 4.16
Options Exercisable, Number   146,734
Options Exercisable,Weighted Average Remaining Contractual Life   6 years 200 days
Options Exercisable, Weighted Average Exercise Price (in Dollars per share)   $ 4.66
v3.20.1
STOCK BASED COMPENSATION (Details) - Stock Option Compensation Expense - Share-based Payment Arrangement, Option [Member] - USD ($)
3 Months Ended
May 08, 2018
Jan. 31, 2020
Jan. 31, 2019
Oct. 31, 2018
STOCK BASED COMPENSATION (Details) - Stock Option Compensation Expense [Line Items]        
Share-based Payment Arrangement, Noncash Expense   $ 964,000 $ 844,000  
Chairman President And Chief Executive Officer [Member]        
STOCK BASED COMPENSATION (Details) - Stock Option Compensation Expense [Line Items]        
Share-based Payment Arrangement, Noncash Expense   0 376,000  
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period (in Shares) 1,500,000      
Consultant [Member]        
STOCK BASED COMPENSATION (Details) - Stock Option Compensation Expense [Line Items]        
Share-based Payment Arrangement, Noncash Expense   $ 57,000 $ 25,000  
Minimum [Member]        
STOCK BASED COMPENSATION (Details) - Stock Option Compensation Expense [Line Items]        
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period   1 year    
Minimum [Member] | Chairman President And Chief Executive Officer [Member]        
STOCK BASED COMPENSATION (Details) - Stock Option Compensation Expense [Line Items]        
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period 3 months      
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price (in Dollars per share) $ 5.00      
Maximum [Member]        
STOCK BASED COMPENSATION (Details) - Stock Option Compensation Expense [Line Items]        
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period   4 years    
Maximum [Member] | Chairman President And Chief Executive Officer [Member]        
STOCK BASED COMPENSATION (Details) - Stock Option Compensation Expense [Line Items]        
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period 7 months      
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price (in Dollars per share) $ 8.00      
Share-based Payment Arrangement, Tranche One [Member] | Chairman President And Chief Executive Officer [Member]        
STOCK BASED COMPENSATION (Details) - Stock Option Compensation Expense [Line Items]        
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number (in Shares)       500,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price (in Dollars per share)       $ 5.00
v3.20.1
LEASES (Tables)
3 Months Ended
Jan. 31, 2020
Disclosure Text Block [Abstract]  
Schedule Of Balance Sheet Information Related To Leases [Table Text Block]
 

Balance Sheet

Location

 

January 31,

2020

 

November 1,

2019

 

October 31,

2019

       

Operating Leases:

                   

Right-of-use assets

Operating lease right-
   of-use asset

 

$

93,907

 

$

106,221

 

$

-

Right-of-use
  liability, current

Operating lease
   liability

   

53,384

   

51,101

   

-

Right-of-use
  liability, long-term

Operating lease
   liability non-current

   

40,835

   

55,198

   

-

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

For Years Ending October 31,

 

Operating Leases

2020 (excluding the three months ended January 31, 2020)

 

$

47,136

2021

 

 

59,136

Total future minimum payments, undiscounted

   

106,272

Less: Imputed interest

 

 

12,053

Present value of future minimum lease payments

 

$

94,219

v3.20.1
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial liabilities measured at fair value - USD ($)
Jan. 31, 2020
Nov. 01, 2019
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial liabilities measured at fair value [Line Items]    
Operating lease liability $ 94,219 $ 106,299
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]    
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial liabilities measured at fair value [Line Items]    
Operating lease liability  
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]    
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial liabilities measured at fair value [Line Items]    
Operating lease liability  
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]    
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial liabilities measured at fair value [Line Items]    
Operating lease liability $ 94,219  
v3.20.1
LEASES (Details) - Balance sheet information related to the Company`s lease - USD ($)
Jan. 31, 2020
Nov. 01, 2019
Oct. 31, 2019
Balance sheet information related to the Company`s lease [Abstract]      
Right-of-use assets $ 93,907 $ 106,221
Right-of-use liability, current 53,384 51,101
Right-of-use liability, long-term $ 40,835 $ 55,198
v3.20.1
BUSINESS AND FUNDING (Details) - Changes in noncontrolling interest - USD ($)
3 Months Ended
Jan. 31, 2020
Jan. 31, 2019
Changes in noncontrolling interest [Abstract]    
Balance $ (422,975)  
Net loss attributable to noncontrolling interest (24,032) $ (84,768)
Balance $ (447,007)  
v3.20.1
ACCRUED EXPENSES (Tables)
3 Months Ended
Jan. 31, 2020
Payables and Accruals [Abstract]  
Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]

January 31,

2020

October 31,

2019

Payroll and related expenses

 

161,405

 

 

72,850

Accrued royalty

449,691

449,691

Accrued collaborative research and license expenses

 

66,119

 

 

371,710

Accrued other

 

27,819

 

1,247

 

$

705,034

 

$

895,498

v3.20.1
ACCRUED EXPENSES (Details) - Accrued liabilities - USD ($)
Jan. 31, 2020
Oct. 31, 2019
Accrued liabilities [Abstract]    
Payroll and related expenses $ 161,405 $ 72,850
Accrued royalty 449,691 449,691
Accrued collaborative research and license expenses 66,119 371,710
Accrued other 27,819 1,247
Total $ 705,034 $ 895,498
v3.20.1
LEASES (Details) - Annual minimum lease payments - USD ($)
Jan. 31, 2020
Nov. 01, 2019
Annual minimum lease payments [Abstract]    
2020 (excluding the three months ended January 31, 2020) $ 47,136  
2021 59,136  
Total future minimum payments, undiscounted 106,272  
Less: Imputed interest 12,053  
Present value of future minimum lease payments $ 94,219 $ 106,299
v3.20.1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($)
Jan. 31, 2020
Oct. 31, 2019
Property and equipment, accumulated depreciation (in Dollars) $ 110,013 $ 95,015
Common stock par value (in Dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized 48,000,000 48,000,000
Common stock, shares issued 20,841,309 20,331,754
Common stock, shares outstanding 20,841,309 20,331,754
Series A Preferred Stock [Member]    
Preferred stock par value (in Dollars per share) $ 100 $ 100
Preferred stock, shares authorized 140 140
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Preferred Stock [Member]    
Preferred stock par value (in Dollars per share) $ 100 $ 100
Preferred stock, shares authorized 19,860 19,860
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
v3.20.1
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS` EQUITY (UNAUDITED) (Parentheticals) - USD ($)
3 Months Ended
Jan. 31, 2020
Jan. 31, 2019
Common Stock, offering expenses $ 100,972 $ 67,161
v3.20.1
SEGMENT INFORMATION
3 Months Ended
Jan. 31, 2020
Segment Reporting [Abstract]  
Segment Reporting Disclosure [Text Block]

10.       SEGMENT INFORMATION          


We follow the accounting guidance of ASC 280 “Segment Reporting” (“ASC 280”).  Reportable operating segments are determined based on the management approach.  The management approach, as defined by ASC 280, is based on the way that the chief operating decision-maker organizes the segments within an enterprise for making operating decisions and assessing performance.  While our results of operations are primarily reviewed on a consolidated basis, the chief operating decision-maker manages the enterprise in three reportable segments, each with different operating and potential revenue generating characteristics: (i) cancer diagnostics,  (ii) cancer therapeutics and (iii) our legacy patent licensing activities.  The following represents selected financial information for our segments for the three months ended January 31, 2020 and 2019 and as of January 31, 2020 and October 31, 2019:


 

For the Three Months Ended

January 31,

 

2020

 

2019

Net loss:

 

 

 

 

 

Cancer diagnostics

$

(1,790,646)

 

$

(1,804,354)

Cancer therapeutics

 

(825,929)

 

 

(2,487,285)

Patent licensing

 

-

 

 

(674,970)

Total

$

(2,616,575)

 

$

(4,966,609)

           

Total operating costs and expenses

$

2,629,869

 

$

4,983,728

Less non-cash share-based compensation

 

(1,021,334)

 

 

(2,750,164)

Operating costs and expenses excluding non-cash
    share-based compensation

$

1,608,535

 

$

2,233,564

           

Operating costs and expenses excluding non-cash
    share based compensation expense:

 

 

 

 

 

      Cancer diagnostics

$

1,163,924

 

$

759,534

      Cancer therapeutics

 

444,611

 

 

800,791

      Patent licensing

 

         -

 

 

673,239

      Total

$

1,608,535

 

$

2,233,564

 

         

                           
 

January 31,

2020

 

October 31,

       2019

Total assets:

 

 

 

 

 

Cancer diagnostics

$

4,411,569

 

$

2,921,784

Cancer therapeutics

 

1,604,596

 

 

2,872,341

Patent licensing

 

147,786

 

 

499,568

Total

$

6,163,951

 

$

6,293,693


Operating costs and expenses excluding non-cash share-based compensation is the measurement the chief operating decision-maker uses in managing the enterprise.


v3.20.1
EFFECT OF RECENTLY ADOPTED AND ISSUED PRONOUNCEMENTS
3 Months Ended
Jan. 31, 2020
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]  
New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

6.         EFFECT OF RECENTLY ADOPTED AND ISSUED PRONOUNCEMENTS


In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-02 (“ASU 2016-02”) Accounting Standards Codification Topic 842, Leases (ASC 842), which supersedes Topic 840, Leases, and which requires lessees to recognize most leases on the balance sheet.  The new lease standard does not substantially change lessor accounting.  For public companies, the standard was effective for the first interim reporting period within annual periods beginning after December 15, 2018, although early adoption was permitted.  Lessees and lessors were required to apply the new standard at the beginning of the earliest period presented in the financial statements in which they first apply the new guidance. In July 2018, FASB issued ASU 2018-11, Leases, which provides an additional transition option for an entity to apply the provisions of ASC 842 by recognizing a cumulative effect adjustment at the effective date of adoption without adjusting the prior comparative periods presented. The requirements of this standard include a significant increase in required disclosures.  The Company adopted ASU 2016-02 on November 1, 2019.  The adoption of this standard did not have a material impact on our condensed consolidated financial statements.  See Note 8 regarding disclosures related to our office lease.


v3.20.1
STOCK BASED COMPENSATION
3 Months Ended
Jan. 31, 2020
Share-based Payment Arrangement [Abstract]  
Share-based Payment Arrangement [Text Block]

2.         STOCK BASED COMPENSATION


The Company maintains equity incentive plans under which the Company may grant incentive stock options, non-qualified stock options, stock appreciation rights, stock awards, performance awards, or stock units to employees, directors and consultants.


Stock Option Compensation Expense


The compensation cost for service-based stock options granted to employees and directors is measured at the grant date, based on the fair value of the award using the Black-Scholes pricing model, and is recognized as an expense on a straight-line basis over the requisite service period (the vesting period of the stock option) which is one to four years.  We recorded stock-based compensation expense related to service-based stock options granted to employees and directors of approximately $964,000 and $844,000 during the three months ended January 31, 2020 and 2019, respectively. 


For stock options granted to employees and directors that vest based on market conditions, such as the trading price of the Company’s common stock exceeding certain price targets, we use a Monte Carlo Simulation in estimating the fair value at grant date and recognize compensation cost over the implied service period (median time to vest).  On May 8, 2018, we issued market condition options to purchase 1,500,000 shares of common stock, to our Chairman, President and Chief Executive Officer, vesting at target trading prices of $5.00 to $8.00 per share before May 31, 2021, with implied service periods of three to seven months.  In October 2018, the first tranche of 500,000 shares of market condition options became exercisable upon achieving an average closing price above $5.00 per share for twenty consecutive trading days.  We recorded stock-based compensation expense related to market condition stock options granted to employees and directors of approximately $376,000 during the three months ended January 31, 2019.   We did not have stock-based compensation expense related to market condition stock options during the three months ended January 31, 2020.


On November 1, 2018 we adopted Accounting Standards Update 2018-07 (“ASU 2018-07”) for stock options granted to consultants.  Upon adoption of ASU 2018-07 we estimated the fair value of unvested service-based and performance-based stock options at the date of adoption, using the Black-Scholes pricing model.  Subsequent to adoption of ASU 2018-07, future grants to consultants will be measured at the grant date, based on the fair value of the award using the Black-Scholes pricing model, consistent with our policy for grants to employees and directors.  In prior periods we estimated the fair value of service-based and performance-based stock options granted to consultants at each reporting period using the Black-Scholes pricing model.  We recognize the fair value of stock options granted to consultants as consulting expense over the requisite or implied service period of the grant.  We recorded stock-based consulting expense related to stock options granted to consultants of approximately $57,000 and $25,000 during the three months ended January 31, 2020 and 2019, respectively.


Stock Option Activity


During the three months ended January 31, 2020, we granted options to purchase 800,000 shares of common stock to employees and consultants with  exercise prices ranging from $3.84 to $4.04 per share pursuant to the Anixa Biosciences, Inc. 2018 Share Incentive Plan (the "2018 Share Plan”).  We did not grant any options during the three months ended January 31, 2019.  During the three months ended January 31, 2020 and 2019, stock options to purchase 18,900 and 10,000 shares of common stock, respectively, were exercised with aggregate proceeds of approximately $28,000 and $23,000, respectively. 


Stock Option Plans


As of January 31, 2020, we have three stock option plans:  the Anixa Biosciences, Inc. 2003 Share Incentive Plan (the "2003 Share Plan"), the Anixa Biosciences, Inc. 2010 Share Incentive Plan (the "2010 Share Plan”) and the 2018 Share Plan, which were adopted by our Board of Directors on April 21, 2003, July 14, 2010 and January 25, 2018, respectively.  The 2018 Share Plan was approved by our shareholders on March 29, 2018.


2003 Plan    


During the three months ended January 31, 2020, the remaining outstanding options granted under the 2003 Share Plan expired.  In accordance with the provisions of the 2003 Share Plan, the plan terminated with respect to the ability to grant future options on April 21, 2013.  Information regarding the 2003 Share Plan for the three months ended January 31, 2020 is as follows:


     

Weighted

Average Exercise

 Price Per Share

     
       

Aggregate

 Intrinsic Value

 

Shares

   
               

Options Outstanding at October 31, 2019

400

 

 

$      17.00

 

 

 

Expired

(400)

 

 

       

Options Outstanding and exercisable at

   January 31, 2020

-0-

 

 

$    -0-

 

 

$    -0-


Information regarding the 2003 Share Plan for the three months ended January 31, 2019 is as follows:


     

Weighted

Average Exercise

 Price Per Share

     
       

Aggregate

 Intrinsic Value

 

Shares

   
               

Options Outstanding at October 31, 2018

12,000

 

 

$      2.77

 

 

 

Options Outstanding and exercisable at

   January 31, 2019

12,000

 

 

$      2.77

 

 

$    33,058


The following table summarizes information about stock options outstanding and exercisable under the 2003 Share Plan as of January 31, 2019:


Weighted Average

Remaining

Contractual Life

(in years)

Weighted

Average

Exercise Price

Range of

Exercise Prices

Number

Outstanding

and

Exercisable

$ 0.67 - $17.00

 

12,000

 

0.49

 

$ 2.77


2010 Plan


The 2010 Share Plan provides for the grant of nonqualified stock options, stock appreciation rights, stock awards, performance awards and stock units to employees, directors and consultants.  As of January 31, 2020, the 2010 Share Plan had 800,000 shares available for future grants.  Information regarding the 2010 Share Plan for the three months ended January 31, 2020 is as follows:


     

 Weighted

Average Exercise

 Price Per Share

     
       

Aggregate
 Intrinsic

 Value

 

Shares

   
               

Options Outstanding at October 31, 2019

1,998,668

 

 

$    2.80       

 

 

 

Exercised

(18,900)

 

 

$    1.51       

 

   

Forfeited

(5,534)

 

 

$    2.58       

 

 

   

Options Outstanding at January 31, 2020

1,974,234

 

 

$    2.81       

 

 

$    1,810,395   

Options Exercisable at January 31, 2020

1,721,734

 

 

$    2.86       

 

 

$    1,542,195   


The following table summarizes information about stock options outstanding and exercisable under the 2010 Share Plan as of January 31, 2020:


Options Outstanding

Options Exercisable

Weighted

Average

Remaining

Contractual Life

(in years)

Weighted

Average

Remaining

Contractual Life

(in years)

Weighted

Average

Exercise Price

Weighted

Average

Exercise Price

Range of

Exercise Prices

Number

Outstanding

Number

Exercisable

 

$0.67 - $2.30

561,500

6.28

$1.56

464,000

6.03

$1.69

$2.58 - $3.13

878,200

3.43

$2.79

878,200

3.97

$2.79

$3.46 - $5.75

534,534

7.94

$4.16

 

379,534

7.76

$4.45


Information regarding the 2010 Share Plan for the three months ended January31, 2019 is as follows:


     

 Weighted

Average Exercise

 Price Per Share

     
       

Aggregate
 Intrinsic

 Value

 

Shares

   
               

Options Outstanding at October 31, 2018

2,131,868

 

 

       $    2.11

 

 

 

Exercised

(10,000)

 

 

$    2.27       

 

   

Options Outstanding at January 31, 2019

2,121,868

 

 

$    2.11       

 

 

$    6,454,772   

Options Exercisable at January 31, 2019

1,513,119

 

 

$    1.84       

 

 

$    5,014,151   


The following table summarizes information about stock options outstanding and exercisable under the 2010 Share Plan as of January 31, 2019:


Options Outstanding

Options Exercisable

Weighted

Average

Remaining

Contractual Life

(in years)

Weighted

Average

Remaining

Contractual Life

(in years)

Weighted

Average

Exercise Price

Weighted

Average

Exercise Price

Range of

Exercise Prices

Number

Outstanding

Number

Exercisable

 

$0.67

938,000

6.44

$0.67

744,251

5.94

$0.67

$ 2.27 -$ 3.01

697,134

3.97

$2.62

622,134

4.32

$2.57

$ 3.46 -$ 7.00

486,734

8.64

$4.16

 

146,734

6.55

$4.66


            2018 Plan


The 2018 Share Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, stock awards, performance awards and stock units to employees, directors and consultants.  As of January 31, 2020, the 2018 Share Plan had 2,000,000 shares available for future grants.  Information regarding options outstanding under the 2018 Share Plan for the three months ended January 31, 2020 is as follows:


     

 Weighted

Average Exercise

 Price Per Share

     
       

Aggregate
 Intrinsic

 Value

 

Shares

   
               

Options Outstanding at October 31, 2019

3,935,500

 

 

       $    3.74

 

 

 

Granted

800,000

 

 

$    3.85       

 

   

Options Outstanding at January 31, 2020

4,735,000

 

 

$    3.76       

 

 

         $    -0-   

Options Exercisable at January 31, 2020

1,798,616

 

 

$    3.74       

 

 

$    -0-        


The following table summarizes information about stock options outstanding under the 2018 Share Plan as of January 31, 2020:


 

Options Outstanding

 

Options Exercisable

   

Weighted

Average

Remaining

Contractual Life

(in years)

         
         

Weighted

Average

Remaining

Contractual Life

(in years)

 
   

Weighted

Average

Exercise Price

   

Weighted

Average

Exercise Price

Range of

Exercise Prices

Number

Outstanding

 

Number

Exercisable

 

$3.70

3,100,000

8.27

$3.70

 

1,433,334

8.27

$3.70

$ 3.84 - $4.61

1,635,000

9.17

$3.88

 

365,282

8.32

$3.92


Information regarding options outstanding under the 2018 Share Plan for the three months ended January 31, 2019 is as follows:


     

Weighted

Average Exercise

Price Per Share

   

Aggregate

Intrinsic

Value

         
 

Shares

   

 

Options Outstanding at October 31, 2018

3,482,000

   

$ 3.73

     

Options Outstanding at January 31, 2019

3,482,000

 

 

$ 3.73

 

 

 $ 4,879,580

Options Exercisable at January 31, 2019

992,780

 

 

$ 3.72

 

 

 $ 1,401,552


The following table summarizes information about stock options outstanding under the 2018 Share Plan as of January 31, 2019:


 

Options Outstanding

 

Options Exercisable

   

Weighted

Average

Remaining

Contractual Life

(in years)

         
         

Weighted

Average

Remaining

Contractual Life

(in years)

 
   

Weighted

Average

Exercise Price

   

Weighted

Average

Exercise Price

Range of

Exercise Prices

Number

Outstanding

 

Number

Exercisable

 

$ 3.70 - $4.61

3,482,000

9.27

$3.73

 

992,780

9.27

$ 3.72


            Outside of Share Plans


In addition to options granted under the 2003 Share Plan, the 2010 Share Plan and the 2018 Share Plan, the Board of Directors approved the grant of stock options to purchase  shares of common stock to employees and directors.  Information regarding stock options outstanding that were not granted under the 2003 Share Plan, the 2010 Share Plan or the 2018 Share Plan for the three months ended January 31, 2020 is as follows:


     

Weighted

Average Exercise

Price Per Share

   

Aggregate

Intrinsic

Value

         
 

Shares

   

 

Options Outstanding at October 31, 2019

1,698,000

   

$ 2.58

     

Options Outstanding and exercisable at  

   January 31, 2020

1,698,000

 

 

$ 2.58

 

 

$ 1,655,550


The following table summarizes information about stock options outstanding and exercisable that were not granted under the 2003 Share Plan, the 2010 Share Plan or the 2018 Plan as of January 31, 2020:


Weighted Average

Remaining

Contractual Life

(in years)

Number

Outstanding
and

Exercisable

Weighted

Average

Exercise Price

Range of

Exercise Prices

$2.58

1,698,000

2.50

$ 2.58


Information regarding stock options outstanding that were not granted under the 2003 Plan, 2010 Plan or the 2018 Plan for the three months ended January 31, 2019 is as follows:


     

Weighted

Average Exercise

Price Per Share

   

Aggregate

Intrinsic

Value

         
 

Shares

   

 

Options Outstanding at October 31, 2018

1,780,000

   

$ 1.58

     

Options Outstanding and exercisable at  

   January 31, 2019

1,780,000

 

 

$ 1.58

 

 

$ 6,334,080


The following table summarizes information about stock options outstanding and exercisable that were not granted under the 2003 Share Plan, the 2010 Share Plan or the 2018 Plan as of January 31, 2019:


Weighted Average

Remaining

Contractual Life

(in years)

Number

Outstanding
and

Exercisable

Weighted

Average

Exercise Price

Range of

Exercise Prices

$0.67

1,046,000

3.55

$ 0.67

$ 2.58-$ 5.56

 

734,000

 

3.09

 

$ 2.88


Stock Awards


For stock awards granted to employees, directors and consultants that vest at date of grant we recognize expense based on the grant date market price of the underlying common stock.  We did not grant any stock awards during the three months ended January 31, 2020 or 2019.


On May 8, 2018, a restricted stock award of 1,500,000 shares of common stock was granted under the 2018 Share Plan to our Chairman, President and Chief Executive Officer.  The restricted stock award vests in its entirety upon achievement of a target trading price of $11.00 per share of the Company’s common stock before May 31, 2021.  For restricted stock awards vesting upon achievement of a price target of our common stock we use a Monte Carlo Simulation in estimating the fair value at grant date and recognize compensation cost over the implied service period (median time to vest).  During the three months ended January 31, 2020 and 2019 we recorded compensation expense related to the restricted stock award of approximately $ -0- and $1,484,000, respectively.


Employee Stock Purchase Plan


The Company maintains the Anixa Biosciences, Inc. Employee Stock Purchase Plan (the "ESPP") which permits eligible employees to purchase shares at not less than 85% of the market value of the Company’s common stock on the offering date or the purchase date of the applicable offering period, whichever is lower.  The ESPP was adopted by our Board of Directors on August 13, 2018 and approved by our shareholders on September 27, 2018.  During the three months ended January 31, 2020 and 2019, no shares were purchased under the ESPP.


Warrants


During the three months ended January 31, 2019 we issued a warrant, expiring on November 1, 2023, to purchase 25,000 shares of common stock at $4.04 per share, vesting over 12 months, to a consultant for investor relations services.  On November 1, 2019 the warrant was exchanged for a stock option with the same terms as the warrant.  We recorded consulting expense of approximately $ -0- and $21,000 during the three months ended January 31, 2020  and 2019, respectively, based on the fair value of the warrant recognized on a straight-line basis over the vesting period.  No warrants were issued during the three months ended January 31, 2020.


As of January 31, 2020, we had warrants outstanding to purchase 500,000 shares of common stock at $5.03 per share expiring on November 30, 2021.


v3.20.1
STOCK BASED COMPENSATION (Details) - Information regarding the 2003 Share Plan - 2003 Share Plan [Member] - USD ($)
3 Months Ended
Jan. 31, 2020
Oct. 31, 2019
Jan. 31, 2019
Oct. 31, 2018
STOCK BASED COMPENSATION (Details) - Information regarding the 2003 Share Plan [Line Items]        
Options Outstanding   400   12,000
Options Outstanding (in Dollars per share)   $ 17.00   $ 2.77
Expired (400)      
Options Outstanding and exercisable 0   12,000  
Options Outstanding and exercisable (in Dollars per share) $ 0   $ 2.77  
Options Outstanding and exercisable (in Dollars) $ 0   $ 33,058  
v3.20.1
STOCK BASED COMPENSATION (Details) - Information regarding the 2018 Share Plan - 2018 Share Plan [Member] - USD ($)
3 Months Ended
Jan. 31, 2020
Oct. 31, 2019
Jan. 31, 2019
Oct. 31, 2018
STOCK BASED COMPENSATION (Details) - Information regarding the 2018 Share Plan [Line Items]        
Options Outstanding 4,735,000 3,935,500 3,482,000 3,482,000
Options Outstanding $ 3.76 $ 3.74 $ 3.73 $ 3.73
Options Outstanding $ 0   $ 4,879,580  
Options Exercisable 1,798,616   992,780  
Options Exercisable $ 3.74   $ 3.72  
Options Exercisable $ 0   $ 1,401,552  
Granted 800,000      
Granted $ 3.85      
v3.20.1
SEGMENT INFORMATION (Tables)
3 Months Ended
Jan. 31, 2020
Segment Reporting [Abstract]  
Schedule of Segment Reporting Information, by Segment [Table Text Block]
 

For the Three Months Ended

January 31,

 

2020

 

2019

Net loss:

 

 

 

 

 

Cancer diagnostics

$

(1,790,646)

 

$

(1,804,354)

Cancer therapeutics

 

(825,929)

 

 

(2,487,285)

Patent licensing

 

-

 

 

(674,970)

Total

$

(2,616,575)

 

$

(4,966,609)

           

Total operating costs and expenses

$

2,629,869

 

$

4,983,728

Less non-cash share-based compensation

 

(1,021,334)

 

 

(2,750,164)

Operating costs and expenses excluding non-cash
    share-based compensation

$

1,608,535

 

$

2,233,564

           

Operating costs and expenses excluding non-cash
    share based compensation expense:

 

 

 

 

 

      Cancer diagnostics

$

1,163,924

 

$

759,534

      Cancer therapeutics

 

444,611

 

 

800,791

      Patent licensing

 

         -

 

 

673,239

      Total

$

1,608,535

 

$

2,233,564

 

         
                           
 

January 31,

2020

 

October 31,

       2019

Total assets:

 

 

 

 

 

Cancer diagnostics

$

4,411,569

 

$

2,921,784

Cancer therapeutics

 

1,604,596

 

 

2,872,341

Patent licensing

 

147,786

 

 

499,568

Total

$

6,163,951

 

$

6,293,693

v3.20.1
STOCK BASED COMPENSATION (Tables)
3 Months Ended
Jan. 31, 2020
2003 Share Plan [Member]  
STOCK BASED COMPENSATION (Tables) [Line Items]  
Share-based Payment Arrangement, Option, Activity [Table Text Block]
     

Weighted

Average Exercise

 Price Per Share

     
       

Aggregate

 Intrinsic Value

 

Shares

   
               

Options Outstanding at October 31, 2019

400

 

 

$      17.00

 

 

 

Expired

(400)

 

 

       

Options Outstanding and exercisable at

   January 31, 2020

-0-

 

 

$    -0-

 

 

$    -0-

     

Weighted

Average Exercise

 Price Per Share

     
       

Aggregate

 Intrinsic Value

 

Shares

   
               

Options Outstanding at October 31, 2018

12,000

 

 

$      2.77

 

 

 

Options Outstanding and exercisable at

   January 31, 2019

12,000

 

 

$      2.77

 

 

$    33,058

Share-based Payment Arrangement, Option, Exercise Price Range [Table Text Block]

Weighted Average

Remaining

Contractual Life

(in years)

Weighted

Average

Exercise Price

Range of

Exercise Prices

Number

Outstanding

and

Exercisable

$ 0.67 - $17.00

 

12,000

 

0.49

 

$ 2.77

2010 Share Plan [Member]  
STOCK BASED COMPENSATION (Tables) [Line Items]  
Share-based Payment Arrangement, Option, Activity [Table Text Block]
     

 Weighted

Average Exercise

 Price Per Share

     
       

Aggregate
 Intrinsic

 Value

 

Shares

   
               

Options Outstanding at October 31, 2019

1,998,668

 

 

$    2.80       

 

 

 

Exercised

(18,900)

 

 

$    1.51       

 

   

Forfeited

(5,534)

 

 

$    2.58       

 

 

   

Options Outstanding at January 31, 2020

1,974,234

 

 

$    2.81       

 

 

$    1,810,395   

Options Exercisable at January 31, 2020

1,721,734

 

 

$    2.86       

 

 

$    1,542,195   

     

 Weighted

Average Exercise

 Price Per Share

     
       

Aggregate
 Intrinsic

 Value

 

Shares

   
               

Options Outstanding at October 31, 2018

2,131,868

 

 

       $    2.11

 

 

 

Exercised

(10,000)

 

 

$    2.27       

 

   

Options Outstanding at January 31, 2019

2,121,868

 

 

$    2.11       

 

 

$    6,454,772   

Options Exercisable at January 31, 2019

1,513,119

 

 

$    1.84       

 

 

$    5,014,151   

Share-based Payment Arrangement, Option, Exercise Price Range [Table Text Block]

Options Outstanding

Options Exercisable

Weighted

Average

Remaining

Contractual Life

(in years)

Weighted

Average

Remaining

Contractual Life

(in years)

Weighted

Average

Exercise Price

Weighted

Average

Exercise Price

Range of

Exercise Prices

Number

Outstanding

Number

Exercisable

 

$0.67 - $2.30

561,500

6.28

$1.56

464,000

6.03

$1.69

$2.58 - $3.13

878,200

3.43

$2.79

878,200

3.97

$2.79

$3.46 - $5.75

534,534

7.94

$4.16

 

379,534

7.76

$4.45

Options Outstanding

Options Exercisable

Weighted

Average

Remaining

Contractual Life

(in years)

Weighted

Average

Remaining

Contractual Life

(in years)

Weighted

Average

Exercise Price

Weighted

Average

Exercise Price

Range of

Exercise Prices

Number

Outstanding

Number

Exercisable

 

$0.67

938,000

6.44

$0.67

744,251

5.94

$0.67

$ 2.27 -$ 3.01

697,134

3.97

$2.62

622,134

4.32

$2.57

$ 3.46 -$ 7.00

486,734

8.64

$4.16

 

146,734

6.55

$4.66

2018 Share Plan [Member]  
STOCK BASED COMPENSATION (Tables) [Line Items]  
Share-based Payment Arrangement, Option, Activity [Table Text Block]
     

 Weighted

Average Exercise

 Price Per Share

     
       

Aggregate
 Intrinsic

 Value

 

Shares

   
               

Options Outstanding at October 31, 2019

3,935,500

 

 

       $    3.74

 

 

 

Granted

800,000

 

 

$    3.85       

 

   

Options Outstanding at January 31, 2020

4,735,000

 

 

$    3.76       

 

 

         $    -0-   

Options Exercisable at January 31, 2020

1,798,616

 

 

$    3.74       

 

 

$    -0-        

     

Weighted

Average Exercise

Price Per Share

   

Aggregate

Intrinsic

Value

         
 

Shares

   

 

Options Outstanding at October 31, 2018

3,482,000

   

$ 3.73

     

Options Outstanding at January 31, 2019

3,482,000

 

 

$ 3.73

 

 

 $ 4,879,580

Options Exercisable at January 31, 2019

992,780

 

 

$ 3.72

 

 

 $ 1,401,552

Share-based Payment Arrangement, Option, Exercise Price Range [Table Text Block]
 

Options Outstanding

 

Options Exercisable

   

Weighted

Average

Remaining

Contractual Life

(in years)

         
         

Weighted

Average

Remaining

Contractual Life

(in years)

 
   

Weighted

Average

Exercise Price

   

Weighted

Average

Exercise Price

Range of

Exercise Prices

Number

Outstanding

 

Number

Exercisable

 

$3.70

3,100,000

8.27

$3.70

 

1,433,334

8.27

$3.70

$ 3.84 - $4.61

1,635,000

9.17

$3.88

 

365,282

8.32

$3.92

 

Options Outstanding

 

Options Exercisable

   

Weighted

Average

Remaining

Contractual Life

(in years)

         
         

Weighted

Average

Remaining

Contractual Life

(in years)

 
   

Weighted

Average

Exercise Price

   

Weighted

Average

Exercise Price

Range of

Exercise Prices

Number

Outstanding

 

Number

Exercisable

 

$ 3.70 - $4.61

3,482,000

9.27

$3.73

 

992,780

9.27

$ 3.72

Stock Options Not Granted Under 2003 Share Plan 2010 Share Plan Or 2018 Share Plan [Member]  
STOCK BASED COMPENSATION (Tables) [Line Items]  
Share-based Payment Arrangement, Option, Activity [Table Text Block]
     

Weighted

Average Exercise

Price Per Share

   

Aggregate

Intrinsic

Value

         
 

Shares

   

 

Options Outstanding at October 31, 2019

1,698,000

   

$ 2.58

     

Options Outstanding and exercisable at  

   January 31, 2020

1,698,000

 

 

$ 2.58

 

 

$ 1,655,550

     

Weighted

Average Exercise

Price Per Share

   

Aggregate

Intrinsic

Value

         
 

Shares

   

 

Options Outstanding at October 31, 2018

1,780,000

   

$ 1.58

     

Options Outstanding and exercisable at  

   January 31, 2019

1,780,000

 

 

$ 1.58

 

 

$ 6,334,080

Share-based Payment Arrangement, Option, Exercise Price Range [Table Text Block]

Weighted Average

Remaining

Contractual Life

(in years)

Number

Outstanding
and

Exercisable

Weighted

Average

Exercise Price

Range of

Exercise Prices

$2.58

1,698,000

2.50

$ 2.58

Weighted Average

Remaining

Contractual Life

(in years)

Number

Outstanding
and

Exercisable

Weighted

Average

Exercise Price

Range of

Exercise Prices

$0.67

1,046,000

3.55

$ 0.67

$ 2.58-$ 5.56

 

734,000

 

3.09

 

$ 2.88

v3.20.1
STOCK BASED COMPENSATION (Details) - Stock Option Activity - USD ($)
3 Months Ended
Jan. 31, 2020
Jan. 31, 2019
Share-based Payment Arrangement, Option [Member]    
STOCK BASED COMPENSATION (Details) - Stock Option Activity [Line Items]    
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in Shares) 800,000  
Share-based Payment Arrangement, Noncash Expense $ 964,000 $ 844,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period (in Shares)   10,000
Proceeds from Stock Options Exercised $ 28,000 $ 23,000
Restricted Stock [Member]    
STOCK BASED COMPENSATION (Details) - Stock Option Activity [Line Items]    
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in Dollars per share) $ 1,484,000  
Share-based Payment Arrangement, Noncash Expense $ 0 $ 18,900
Minimum [Member] | Share-based Payment Arrangement, Option [Member]    
STOCK BASED COMPENSATION (Details) - Stock Option Activity [Line Items]    
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in Dollars per share) $ 3.84  
Maximum [Member] | Share-based Payment Arrangement, Option [Member]    
STOCK BASED COMPENSATION (Details) - Stock Option Activity [Line Items]    
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in Dollars per share) $ 4.04  
v3.20.1
SEGMENT INFORMATION (Details) - Segments Information - USD ($)
3 Months Ended
Jan. 31, 2020
Jan. 31, 2019
Oct. 31, 2019
Net loss:      
Net Loss $ (2,616,575) $ (4,966,609)  
Total operating costs and expenses 2,629,869 4,983,728  
Less non-cash share-based compensation (1,021,334) (2,750,164)  
Operating costs and expenses excluding non-cash share-based compensation 1,608,535 2,233,564  
Total assets:      
Total Assets 6,163,951   $ 6,293,693
Operating Segments [Member] | Cancer Diagnostics [Member]      
Net loss:      
Net Loss (1,790,646) (1,804,354)  
Operating costs and expenses excluding non-cash share-based compensation 1,163,924 759,534  
Total assets:      
Total Assets 4,411,569   2,921,784
Operating Segments [Member] | Cancer Therapeutics [Member]      
Net loss:      
Net Loss (825,929) (2,487,285)  
Operating costs and expenses excluding non-cash share-based compensation 444,611 800,791  
Total assets:      
Total Assets 1,604,596   2,872,341
Operating Segments [Member] | Patent Licensing [Member]      
Net loss:      
Net Loss (674,970)  
Operating costs and expenses excluding non-cash share-based compensation $ 673,239  
Total assets:      
Total Assets $ 147,786   $ 499,568
v3.20.1
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value - USD ($)
Jan. 31, 2020
Nov. 01, 2019
Oct. 31, 2019
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value [Line Items]      
Operating lease right-of-use asset $ 93,907 $ 106,221
Total financial assets 5,499,094   5,556,944
Short-term Investments [Member]      
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value [Line Items]      
Short-term investments     2,350,000
Money Market Funds [Member]      
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value [Line Items]      
Cash and cash equivalents 2,535,187   2,706,944
Certificates of Deposit [Member]      
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value [Line Items]      
Cash and cash equivalents     500,000
Certificates of Deposit [Member] | Short-term Investments [Member]      
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value [Line Items]      
Short-term investments 2,870,000    
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]      
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value [Line Items]      
Operating lease right-of-use asset    
Total financial assets 2,535,187   3,206,944
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]      
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value [Line Items]      
Operating lease right-of-use asset    
Total financial assets 2,870,000   2,350,000
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]      
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value [Line Items]      
Operating lease right-of-use asset 93,907    
Total financial assets 93,907  
Fair Value, Recurring [Member] | Short-term Investments [Member] | Fair Value, Inputs, Level 1 [Member]      
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value [Line Items]      
Short-term investments    
Fair Value, Recurring [Member] | Short-term Investments [Member] | Fair Value, Inputs, Level 2 [Member]      
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value [Line Items]      
Short-term investments     2,350,000
Fair Value, Recurring [Member] | Short-term Investments [Member] | Fair Value, Inputs, Level 3 [Member]      
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value [Line Items]      
Short-term investments    
Fair Value, Recurring [Member] | Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member]      
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value [Line Items]      
Cash and cash equivalents 2,535,187   2,706,944
Fair Value, Recurring [Member] | Money Market Funds [Member] | Fair Value, Inputs, Level 2 [Member]      
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value [Line Items]      
Cash and cash equivalents  
Fair Value, Recurring [Member] | Money Market Funds [Member] | Fair Value, Inputs, Level 3 [Member]      
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value [Line Items]      
Cash and cash equivalents  
Fair Value, Recurring [Member] | Certificates of Deposit [Member] | Fair Value, Inputs, Level 1 [Member]      
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value [Line Items]      
Cash and cash equivalents     500,000
Fair Value, Recurring [Member] | Certificates of Deposit [Member] | Fair Value, Inputs, Level 2 [Member]      
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value [Line Items]      
Cash and cash equivalents    
Fair Value, Recurring [Member] | Certificates of Deposit [Member] | Fair Value, Inputs, Level 3 [Member]      
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value [Line Items]      
Cash and cash equivalents    
Fair Value, Recurring [Member] | Certificates of Deposit [Member] | Short-term Investments [Member] | Fair Value, Inputs, Level 1 [Member]      
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value [Line Items]      
Short-term investments    
Fair Value, Recurring [Member] | Certificates of Deposit [Member] | Short-term Investments [Member] | Fair Value, Inputs, Level 2 [Member]      
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value [Line Items]      
Short-term investments 2,870,000    
Fair Value, Recurring [Member] | Certificates of Deposit [Member] | Short-term Investments [Member] | Fair Value, Inputs, Level 3 [Member]      
FAIR VALUE MEASUREMENTS (Details) - Hierarchy for financial assets measured at fair value [Line Items]      
Short-term investments    
v3.20.1
LEASES (Details)
3 Months Ended
Jan. 31, 2020
USD ($)
ft²
Jan. 31, 2019
USD ($)
Nov. 01, 2019
USD ($)
Oct. 31, 2019
USD ($)
LEASES (Details) [Line Items]        
Monthly Base Rent Expense $ 5,000      
Base Rent Annual Increase Percentage 3.00%      
Operating Leases, Rent Expense $ 16,000 $ 18,000    
Operating Lease, Right-of-Use Asset 93,907   $ 106,221
Operating Lease, Liability $ 94,219   $ 106,299  
Lease Expiring on September 2021 [Member]        
LEASES (Details) [Line Items]        
Area of Real Estate Property (in Square Feet) | ft² 2,000      
Lease Expired on May 2019 [Member]        
LEASES (Details) [Line Items]        
Area of Real Estate Property (in Square Feet) | ft² 3,000      
v3.20.1
BUSINESS AND FUNDING
3 Months Ended
Jan. 31, 2020
Accounting Policies [Abstract]  
Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

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 research and development of cancer therapeutics and diagnostics.  Our cancer therapeutics programs consist of development of a vaccine against triple negative breast cancer (“TNBC”) and development of chimeric endocrine receptor T-cell (“CER-T”) technology, a novel form of CAR-T technology, initially focused on treating ovarian cancer.  Our cancer diagnostics program consists of development of the artificial intelligence (AI) driven Cchek™ liquid biopsy platform for early cancer detection. 


We hold an exclusive worldwide, royalty-bearing license to use certain intellectual property owned or controlled by The Cleveland Clinic Foundation (“Cleveland Clinic”) related to certain breast cancer vaccine technology developed at Cleveland Clinic.  We are working in collaboration with Cleveland Clinic to develop a method to vaccinate women against contracting breast cancer, focused specifically on TNBC, the most lethal form of the disease.  A specific protein, alpha-lactalbumin, has been identified that is only present during lactation in healthy women, but reappears in many forms of breast cancer, especially TNBC.  Studies have shown that vaccinating against this protein prevents breast cancer in mice.  We are working with researchers at Cleveland Clinic to advance this vaccine toward human clinical testing, and we are in the process of testing the clinical grade materials and upon completion we will be prepared to file an Investigational New Drug (“IND”) application with the U.S. Food and Drug Administration (“FDA”).  We anticipate filing the IND mid-year of 2020.  The IND application, after review and approval by the FDA, will enable us to begin testing our vaccine in human subjects.


Our subsidiary, Certainty Therapeutics, Inc. (“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”) relating to Wistar’s CER-T technology.  We have initially focused on the development of a treatment for ovarian cancer, but we may also 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.  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 its CER-T technology for treating ovarian cancer.  Clinical grade materials are currently being manufactured and upon completion will undergo extensive testing.  Once the materials have been successfully tested, we will be prepared to submit an IND application with the FDA.  We anticipate filing the IND by the end of 2020.  The IND application, after review and approval by the FDA, will enable us to begin testing our therapy in ovarian cancer patients. 


Our subsidiary, Anixa Diagnostics Corporation (“Anixa Diagnostics”), is developing Cchek™, an AI driven platform of non-invasive blood tests for the early detection of cancer which is based on the body’s immune response to the presence of a malignancy.  We have demonstrated the efficacy of Cchek™ with 20 different types of cancer:  breast, lung, colon, melanoma, ovarian, liver, thyroid, pancreatic, appendiceal, uterine, osteosarcoma, leiomyosarcoma, liposarcoma, vulvar, prostate, bladder, cervical, head and neck, gastric and testicular cancers.  Breast, lung, colon and prostate cancers represent the four largest categories of cancer worldwide.


Based on a number of factors, including key scientific, clinical, and commercial considerations, for the past year the primary commercial focus for Cchek™ has been on developing a prostate cancer confirmatory test.  In February 2019 we formed a strategic alliance with ResearchDx, a CLIA certified, CAP Accredited laboratory, to prepare the Cchek™ Prostate Cancer Confirmation (“Cchek™ PCC”) test for launch as a laboratory developed test.  In December 2019, upon completion of independent validation by ResearchDx, we announced the commercial launch of Cchek™ PCC.  We are currently conducting a number of activities to support the marketing of Cchek™ PCC, including the development of marketing materials, education of key opinion leaders in urology and development of a reimbursement path for the test. 


Over the next several quarters, we expect the development of our breast cancer vaccine, Certainty’s CER-T technology and Anixa Diagnostic’s Cchek™ to be the primary focus of the Company.  As part of our legacy operations, the Company remains engaged in limited patent licensing activities 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 cancer therapeutics and diagnostics programs.  In addition, while we pursue our cancer therapeutics and diagnostics programs, we may also make investments in and form new companies to develop additional emerging technologies.


Funding and Management’s Plans


Based on currently available information as of March 9, 2020, we believe that our existing cash, cash equivalents, short-term investments and expected cash flows will be sufficient to fund our activities for the next twelve months.  We have implemented a business model that conserves funds by collaborating with third parties to develop our technologies.  However, our projections of future cash needs and cash flows may differ from actual results.  If current cash on hand, cash equivalents, short-term investments and cash that may be generated from our business operations are insufficient to continue to operate our business, or if we elect to invest in or acquire a company or companies or new technology or technologies that are synergistic with or complementary to our technologies, we may be required to obtain more working capital.  During the three months ended January 31, 2020, we raised approximately $1,752,000, net of expenses, through the sale of 490,655 shares of common stock in our at-the-market equity offerings. We raised approximately $427,000, net of expenses, through the sale of 112,238 shares of common stock in an at-the market equity offering which expired in November 2019 and approximately $1,325,000, net of expenses, through the sale of 378,417 shares of common stock in an at-the-market equity offering under which we may issue up to $50 million of common stock.   Under our current at-the-market equity program which is currently effective and may remain available for us to use in the future, we may sell an additional approximately $48,587,000 of common stock.  We may seek to obtain working capital during our fiscal year 2020 or thereafter through sales of our equity securities or through bank credit facilities or public or private debt from various financial institutions where possible.  We cannot be certain that additional funding will be available on acceptable terms, or at all.  If we do identify sources for additional funding, the sale of additional equity securities or convertible debt could result in dilution to our stockholders. We can give no assurance that we will generate sufficient cash flows in the future to satisfy our liquidity requirements or sustain future operations, or that other sources of funding, such as sales of equity or debt, would be available or would be approved by our security holders, if needed, on favorable terms or at all.  If we fail to obtain additional working capital as and when needed, such failure could have a material adverse impact on our business, results of operations and financial condition.  Furthermore, such lack of funds may inhibit our ability to respond to competitive pressures or unanticipated capital needs, or may force us to reduce operating expenses, which would significantly harm the business and development of operations.


Basis of Presentation


The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X.  Accordingly, certain information and disclosures required by generally accepted accounting principles in annual financial statements have been omitted or condensed.  These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures included in our Annual Report on Form 10-K for the year ended October 31, 2019.  The accompanying October 31, 2019 condensed consolidated balance sheet data was derived from the audited financial statements but does not include all disclosures required by US GAAP.  The condensed consolidated financial statements include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair statement of our financial position as of January 31, 2020, and results of operations and cash flows for the interim periods represented.  The results of operations for the three months ended January 31, 2020 are not necessarily indicative of the results to be expected for the entire year.


Noncontrolling Interest


Noncontrolling interest represents Wistar’s equity ownership in Certainty and is presented as a component of equity.  The following table sets forth the changes in noncontrolling interest for the three months ended January 31, 2020:


Balance October 31, 2019

$

(422,975)

Net loss attributable to noncontrolling interest

 

(24,032)

Balance January 31, 2020

$

(447,007)


Revenue Recognition


Since fiscal 2016 our revenue has been derived solely from technology licensing and the sale of patented technologies.  Revenue is recognized upon transfer of control of intellectual property rights and satisfaction of other contractual performance obligations to licensees in an amount that reflects the consideration we expect to receive. 


On November 1, 2018 we adopted Accounting Standards Update 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers using the modified retrospective method.  Upon adoption of ASU 2014-09 we are required to make certain judgments and estimates in connection with the accounting for revenue.  Such areas may include determining the existence of a contract and identifying each party’s rights and obligations to transfer goods and services, identifying the performance obligations in the contract, determining the transaction price and allocating the transaction price to separate performance obligations, estimating the timing of satisfaction of performance obligations, determining whether a promise to grant a license is distinct from other promised goods or services and evaluating whether a license transfers to a customer at a point in time or over time.


Our revenue arrangements provide for the payment of contractually determined, one-time, paid-up license fees in settlement of litigation and in consideration for the grant of certain intellectual property rights for patented technologies owned or controlled by the Company.  These arrangements typically include some combination of the following: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies owned or controlled by the Company, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation.  In such instances, the intellectual property rights granted have been perpetual in nature, extending until the expiration of the related patents.  Pursuant to the terms of these agreements, we have no further obligations with respect to the granted intellectual property rights, including no obligation to maintain or upgrade the technology, or provide future support or services.  Licensees obtained control of the intellectual property rights they have acquired upon execution of the agreement.  Accordingly, the performance obligations from these agreements were satisfied and 100% of the revenue was recognized upon the execution of the agreements.  The adoption of ASU 2014-09 had no impact on revenue recognized.


Cost of Revenues


Cost of revenues include the costs and expenses incurred in connection with our patent licensing and enforcement activities, including inventor royalties paid to original patent owners, contingent legal fees paid to external counsel, other patent-related legal expenses paid to external counsel, licensing and enforcement related research, consulting and other expenses paid to third-parties and the amortization of patent-related investment costs.  These costs are included under the caption “Operating costs and expenses” in the accompanying condensed consolidated statements of operations.


Research and Development Expenses


Research and development expenses, consisting primarily of employee compensation, payments to third parties for research and development activities and other direct costs associated with developing a platform for non-invasive blood tests for early detection of cancer, developing immuno-therapy drugs against cancer and development of our breast cancer vaccine, are expensed in the consolidated financial statements in the year incurred.


v3.20.1
Document And Entity Information - shares
3 Months Ended
Jan. 31, 2020
Mar. 09, 2020
Document Information Line Items    
Entity Registrant Name Anixa Biosciences Inc  
Document Type 10-Q  
Current Fiscal Year End Date --10-31  
Entity Common Stock, Shares Outstanding   21,007,077
Amendment Flag false  
Entity Central Index Key 0000715446  
Entity Current Reporting Status Yes  
Entity Filer Category Non-accelerated Filer  
Document Period End Date Jan. 31, 2020  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q1  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Interactive Data Current Yes  
v3.20.1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Parentheticals) - USD ($)
3 Months Ended
Jan. 31, 2020
Jan. 31, 2019
Research and Development Expense [Member]    
Non-cash share-based compensation expenses $ 397,523 $ 1,573,779
Selling, General and Administrative Expenses [Member]    
Non-cash share-based compensation expenses $ 623,811 $ 1,176,385
v3.20.1
STOCK BASED COMPENSATION (Details) - Information regarding stock options outstanding that were not granted under the 2003 Share Plan, the 2010 Share Plan or the 2018 Share Plan - Stock Options Not Granted Under 2003 Share Plan 2010 Share Plan Or 2018 Share Plan [Member] - USD ($)
Jan. 31, 2020
Oct. 31, 2019
Jan. 31, 2019
Oct. 31, 2018
STOCK BASED COMPENSATION (Details) - Information regarding stock options outstanding that were not granted under the 2003 Share Plan, the 2010 Share Plan or the 2018 Share Plan [Line Items]        
Options Outstanding   1,698,000   1,780,000
Options Outstanding   $ 2.58   $ 1.58
Options Outstanding and exercisable 1,698,000   1,780,000  
Options Outstanding and exercisable $ 2.58   $ 1.58  
Options Outstanding and exercisable $ 1,655,550   $ 6,334,080  
v3.20.1
STOCK BASED COMPENSATION (Details) - Employee Stock Purchase Plan
3 Months Ended
Jan. 31, 2020
Employee Stock Purchase Plan [Member]  
STOCK BASED COMPENSATION (Details) - Employee Stock Purchase Plan [Line Items]  
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent 85.00%
v3.20.1
STOCK BASED COMPENSATION (Details) - Information regarding the 2010 Share Plan - 2010 Share Plan [Member] - USD ($)
3 Months Ended
Jan. 31, 2020
Jan. 31, 2019
Oct. 31, 2019
Oct. 31, 2018
STOCK BASED COMPENSATION (Details) - Information regarding the 2010 Share Plan [Line Items]        
Options Outstanding 1,974,234 2,121,868 1,998,668 2,131,868
Options Outstanding $ 2.81 $ 2.11 $ 2.80 $ 2.11
Options Outstanding $ 1,810,395 $ 6,454,772    
Options Exercisable 1,721,734 1,513,119    
Options Exercisable $ 2.86 $ 1.84    
Options Exercisable $ 1,542,195 $ 5,014,151    
Exercised (18,900) (10,000)    
Exercised $ 1.51 $ 2.27    
Forfeited (5,534)      
Forfeited $ 2.58      
v3.20.1
LEASES
3 Months Ended
Jan. 31, 2020
Disclosure Text Block [Abstract]  
Lessee, Operating Leases [Text Block]

8.         LEASES        


We lease approximately 2,000 square feet of office space at 3150 Almaden Expressway, San Jose, California (our principal executive offices) from an unrelated party pursuant to an operating lease that expires September 30, 2021.  Our base rent is approximately $5,000 per month and the lease provides for annual increases of approximately 3% and an escalation clause for increases in certain operating costs.  Under an operating lease that expired on May 31, 2019 we also leased approximately 3,000 square feet of office space at 12100 Wilshire Boulevard, Los Angeles, California (our former executive offices) from an unrelated party.  As of August 1, 2018, we had subleased these facilities.  Rent expense for the three months ended January 31, 2020 and 2019, was approximately $16,000 and $18,000, respectively. 


On November 1, 2019, the Company adopted ASC 842, which increases transparency and comparability by recognizing a lessee’s rights and obligations resulting from leases by recording  them on the balance sheet as lease assets and lease liabilities.  The new guidance requires the recognition of the right-of-use ("ROU") assets and related operating lease liabilities on the balance sheet.  The Company adopted the new guidance using the modified retrospective approach on November 1, 2019.  As a result, the condensed consolidated balance sheet as of October 31, 2019 was not restated and is not comparative.


The adoption of ASC 842 resulted in the recognition of ROU assets of $106,221, and lease liabilities for operating leases of $106,299 on the Company's condensed consolidated balance sheet as of November 1, 2019. The difference between the ROU assets and the operating lease liability represents the difference between the lease cost and the amount of rent paid in October.


The Company elected the package of practical expedients permitted within the standard, which allow an entity to forgo reassessing (i) whether a contract contains a lease, (ii) classification of leases, and (iii) whether capitalized costs associated with a lease meet the definition of initial direct costs.  Also, the Company elected the expedient allowing an entity to use hindsight to determine the lease term and impairment of ROU assets and the expedient to allow the Company to not have to separate lease and non-lease components.  The Company has also elected the short-term lease accounting policy under which Anixa would not recognize a lease liability or ROU asset for any lease that at the commencement date has a lease term of twelve months or less and does not include a purchase option that Anixa is more than reasonably certain to exercise.


For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments. The remaining 20 month lease term as of January 31, 2020 for the Company’s lease includes the noncancelable period of the lease.  The lease does not contain a Company option to extend the lease or an option to extend the lease controlled by the lessor.  All ROU assets are reviewed for impairment.


Balance sheet information related to the Company’s lease is presented below:


 

Balance Sheet

Location

 

January 31,

2020

 

November 1,

2019

 

October 31,

2019

       

Operating Leases:

                   

Right-of-use assets

Operating lease right-
   of-use asset

 

$

93,907

 

$

106,221

 

$

-

Right-of-use
  liability, current

Operating lease
   liability

   

53,384

   

51,101

   

-

Right-of-use
  liability, long-term

Operating lease
   liability non-current

   

40,835

   

55,198

   

-


As of January 31, 2020, the annual minimum lease payments of our operating lease liabilities were as follows:


For Years Ending October 31,

 

Operating Leases

2020 (excluding the three months ended January 31, 2020)

 

$

47,136

2021

 

 

59,136

Total future minimum payments, undiscounted

   

106,272

Less: Imputed interest

 

 

12,053

Present value of future minimum lease payments

 

$

94,219


v3.20.1
ACCRUED EXPENSES
3 Months Ended
Jan. 31, 2020
Payables and Accruals [Abstract]  
Accounts Payable and Accrued Liabilities Disclosure [Text Block]

4.         ACCRUED EXPENSES


Accrued expenses consist of the following as of:


January 31,

2020

October 31,

2019

Payroll and related expenses

 

161,405

 

 

72,850

Accrued royalty

449,691

449,691

Accrued collaborative research and license expenses

 

66,119

 

 

371,710

Accrued other

 

27,819

 

1,247

 

$

705,034

 

$

895,498


v3.20.1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)
3 Months Ended
Jan. 31, 2020
Jan. 31, 2019
Revenue
Operating costs and expenses:    
Amortization of patents 251,250
Research and development expenses (including non-cash share-based compensation expenses of $397,523 and $1,573,779, respectively) 1,490,588 2,247,272
General and administrative expenses (including non-cash share-based compensation expenses of $623,811 and $1,176,385, respectively) 1,139,281 2,066,456
Impairment in carrying amount of patent asset 418,750
Total operating costs and expenses 2,629,869 4,983,728
Loss from operations (2,629,869) (4,983,728)
Interest income 13,294 17,119
Loss before income taxes (2,616,575) (4,966,609)
Provision for income taxes
Net loss (2,616,575) (4,966,609)
Less: Net loss attributable to noncontrolling interest (24,032) (84,768)
Net loss attributable to common shareholders $ (2,592,543) $ (4,881,841)
Net loss per common share attributable to common shareholders:    
Basic and diluted (in Dollars per share) $ (0.13) $ (0.25)
Weighted average common shares outstanding:    
Basic and diluted (in Shares) 20,703,882 19,170,591
v3.20.1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)
3 Months Ended
Jan. 31, 2020
Jan. 31, 2019
Cash flows from operating activities:    
Net loss $ (2,616,575) $ (4,966,609)
Stock option compensation to employees and directors 963,880 1,219,560
Stock options and warrants issued to consultants 57,454 46,219
Restricted stock award compensation to employee pursuant to stock incentive plan 1,484,385
Depreciation of property and equipment 14,998 6,130
Amortization of operating lease right-to-use asset, net of lease payments 312
Amortization of patents 251,250
Impairment in carrying amount of patent assets 418,750
Change in operating assets and liabilities:    
Receivables 44,216 203,897
Prepaid expenses and other current assets 30,482 (55,086)
Accounts payable (218,719) 30,928
Accrued expenses (190,464) 31,040
Net cash used in operating activities (1,914,416) (1,329,536)
Cash flows from investing activities:    
Disbursements to acquire short-term investments in certificates of deposit (1,870,000)
Proceeds from maturities of short-term investments in certificates of deposit 1,350,000 250,000
Purchase of property and equipment (15,790)
Net cash (used in) provided by investing activities (535,790) 250,000
Cash flows from financing activities:    
Net proceeds from sale of common stock in at-the-market offering 1,751,983 2,153,584
Proceeds from exercise of stock options 28,480 22,700
Net cash provided by financing activities 1,780,463 2,176,284
Net (decrease) increase in cash and cash equivalents (669,743) 1,096,748
Cash and cash equivalents at beginning of period 3,491,625 3,055,890
Cash and cash equivalents at end of period 2,821,882 4,152,638
Supplemental disclosure of non-cash investing and financing activities:    
Operating lease right-to-use asset (106,221)
Operating lease liability $ 106,299
v3.20.1
STOCK BASED COMPENSATION (Details) - Stock Awards - Restricted Stock [Member] - USD ($)
3 Months Ended
May 08, 2018
Jan. 31, 2020
Jan. 31, 2019
STOCK BASED COMPENSATION (Details) - Stock Awards [Line Items]      
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in Dollars per share)   $ 1,484,000  
Share-based Payment Arrangement, Noncash Expense   $ 0 $ 18,900
2018 Share Plan [Member] | Chairman President And Chief Executive Officer [Member]      
STOCK BASED COMPENSATION (Details) - Stock Awards [Line Items]      
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in Shares) 1,500,000    
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in Dollars per share) $ 11.00    
v3.20.1
STOCK BASED COMPENSATION (Details) - Stock options outstanding and exercisable under the 2003 Share Plan - 2003 Share Plan [Member] - Range Of Exercise Prices $0.67 To $17.00 [Member]
3 Months Ended
Jan. 31, 2019
$ / shares
shares
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]  
Options Outstnding and Exercisable, Numbers | shares 12,000
Options Outstanding and Exercisable, Weighted Average Remaining Contractual Life 178 days
Options Outstanding and Exercisable, Weighted Average Exercise Price | $ / shares $ 2.77
v3.20.1
STOCK BASED COMPENSATION (Details) - Stock options outstanding and exercisable under the 2018 Share Plan - 2018 Share Plan [Member] - $ / shares
3 Months Ended
Jan. 31, 2020
Jan. 31, 2019
Range Of Exercise Prices $3.70 [Member]    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Options Outstanding, Number 3,100,000  
Options Outstanding,Weighted Average Remaining Contractual Life 8 years 98 days  
Options Outstanding, Weighted Average Exercise Price (in Dollars per share) $ 3.70  
Options Exercisable, Number 1,433,334  
Options Exercisable,Weighted Average Remaining Contractual Life 8 years 98 days  
Options Exercisable, Weighted Average Exercise Price (in Dollars per share) $ 3.70  
Range Of Exercise Prices $3.84 To $4.61 [Member]    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Options Outstanding, Number 1,635,000  
Options Outstanding,Weighted Average Remaining Contractual Life 9 years 62 days  
Options Outstanding, Weighted Average Exercise Price (in Dollars per share) $ 3.88  
Options Exercisable, Number 365,282  
Options Exercisable,Weighted Average Remaining Contractual Life 8 years 116 days  
Options Exercisable, Weighted Average Exercise Price (in Dollars per share) $ 3.92  
Range Of Exercise Prices $3.70 To $4.61 [Member]    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Options Outstanding, Number   3,482,000
Options Outstanding,Weighted Average Remaining Contractual Life   9 years 98 days
Options Outstanding, Weighted Average Exercise Price (in Dollars per share)   $ 3.73
Options Exercisable, Number   992,780
Options Exercisable,Weighted Average Remaining Contractual Life   9 years 98 days
Options Exercisable, Weighted Average Exercise Price (in Dollars per share)   $ 3.72
v3.20.1
COMMITMENTS AND CONTINGENCES
3 Months Ended
Jan. 31, 2020
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure [Text Block]

9.         COMMITMENTS AND CONTINGENCES 


Litigation Matters


We are not involved in any litigation or other legal proceedings and management is not aware of any pending litigation or legal proceeding against us that would have a material adverse effect upon our results of operations or financial condition.


v3.20.1
NET LOSS PER SHARE OF COMMON STOCK
3 Months Ended
Jan. 31, 2020
Earnings Per Share [Abstract]  
Earnings Per Share [Text Block]

5.         NET LOSS PER SHARE OF COMMON STOCK


Basic net loss per common share (“Basic EPS”) is computed by dividing net loss by the weighted average number of common shares outstanding.  Diluted net loss per common share (“Diluted EPS”) is computed by dividing net loss by the weighted average number of common shares and dilutive common share equivalents and convertible securities then outstanding. 


Diluted EPS for all periods presented is the same as Basic EPS, as the inclusion of the effect of common share equivalents then outstanding would be anti-dilutive.  For this reason, excluded from the calculation of Diluted EPS for the three months ended January 31, 2020 and 2019, were stock options to purchase 8,407,234 and 7,395,868 shares, respectively, and warrants to purchase 500,000 and 854,400 shares, respectively.


v3.20.1
STOCK BASED COMPENSATION (Details) - Stock Option Plans
Jan. 31, 2020
shares
2010 Share Plan [Member]  
STOCK BASED COMPENSATION (Details) - Stock Option Plans [Line Items]  
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in Shares) 800,000
2018 Share Plan [Member]  
STOCK BASED COMPENSATION (Details) - Stock Option Plans [Line Items]  
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in Shares) 2,000,000
v3.20.1
BUSINESS AND FUNDING (Details) - USD ($)
1 Months Ended 2 Months Ended 3 Months Ended
Nov. 30, 2019
Jan. 31, 2020
Jan. 31, 2020
Jan. 31, 2019
BUSINESS AND FUNDING (Details) [Line Items]        
Equity Method Investment, Ownership Percentage   5.00% 5.00%  
Stock Issued During Period Value At The Market Offering $ 427,000 $ 1,325,000 $ 1,751,983 $ 2,153,584
Stock Issued During Period Shares At The Market Offering (in Shares) 112,238 378,417    
Market Equity Program Available Offering Amount   $ 50,000,000 50,000,000  
Market Equity Program Available, Additional Offering Amount   $ 48,587,000 $ 48,587,000  
Common Stock [Member]        
BUSINESS AND FUNDING (Details) [Line Items]        
Stock Issued During Period Shares At The Market Offering (in Shares)     490,655  
v3.20.1
FAIR VALUE MEASUREMENTS (Tables)
3 Months Ended
Jan. 31, 2020
Fair Value Disclosures [Abstract]  
Fair Value, Assets Measured on Recurring Basis [Table Text Block]

  

Level 1

 

 Level 2

 

 Level 3

 

 Total

   

      

 

 

      

 

 

      

 

 

      

Money market funds: 

    Cash and cash equivalents

$

      

2,535,187

 

$

      

-

 

$

      

-

 

$

      

2,535,187

Certificates of deposit:

   Short-term investments

 

-

 

 

2,870,000

 

 

-

 

 

        

2,870,000

Operating lease right-of-use

   asset

 

-

 

 

-

 

 

93,907

 

 

93,907

Total financial assets

$

2,535,187

 

$

2,870,000

 

$

93,907

 

$

5,499,094

  

Level 1

 

 Level 2

 

 Level 3

 

 Total

   

      

 

 

      

 

 

      

 

 

      

Money market funds:

    Cash and cash equivalents

$

      

2,706,944

 

$

      

-

 

$

 

-

 

$

 

2,706,944

Certificates of deposit:

    Cash and cash equivalents

 

500,000

 

 

-

 

 

-

 

 

 

500,000

 Short term investments

 

-

 

 

2,350,000

 

 

-

 

 

2,350,000

Total financial assets

$

3,206,944

 

$

2,350,000 

 

$

-

 

$

5,556,944

Fair Value, Liabilities Measured on Recurring Basis [Table Text Block]

  

Level 1

 Level 2

 Level 3

 Total

      

 

      

 

      

 

      

Operating lease liability

$

    -

 

$

      -

 

$

      94,219

 

$

      94,219

v3.20.1
STOCK BASED COMPENSATION (Details) - Stock options outstanding and exercisable that were not granted under the 2003 Share Plan, the 2010 Share Plan or the 2018 Plan - Stock Options Not Granted Under 2003 Share Plan 2010 Share Plan Or 2018 Share Plan [Member] - $ / shares
3 Months Ended
Jan. 31, 2020
Jan. 31, 2019
Range Of Exercise Prices $2.58 [Member]    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Options Outstanding and Exercisable, Number 1,698,000  
Options Outstanding and Exercisable, Weighted Average Remaining Contractual Life 2 years 6 months  
Options Outstanding and Exercisable, Weighted Average Exercise Price (in Dollars per share) $ 2.58  
Range Of Exercise Prices $0.67 [Member]    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Options Outstanding and Exercisable, Number   1,046,000
Options Outstanding and Exercisable, Weighted Average Remaining Contractual Life   3 years 200 days
Options Outstanding and Exercisable, Weighted Average Exercise Price (in Dollars per share)   $ 0.67
Range Of Exercise Prices $2.58 To $5.56 [Member]    
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]    
Options Outstanding and Exercisable, Number   734,000
Options Outstanding and Exercisable, Weighted Average Remaining Contractual Life   3 years 32 days
Options Outstanding and Exercisable, Weighted Average Exercise Price (in Dollars per share)   $ 2.88
v3.20.1
NET LOSS PER SHARE OF COMMON STOCK (Details) - shares
3 Months Ended
Jan. 31, 2020
Jan. 31, 2019
Share-based Payment Arrangement, Option [Member]    
NET LOSS PER SHARE OF COMMON STOCK (Details) [Line Items]    
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 8,407,234 7,395,868
Warrant [Member]    
NET LOSS PER SHARE OF COMMON STOCK (Details) [Line Items]    
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 500,000 854,400
v3.20.1
SEGMENT INFORMATION (Details)
3 Months Ended
Jan. 31, 2020
Segment Reporting [Abstract]  
Number of Reportable Segments 3