Anavex Life Sciences Corp. (AVXL) Q3 2021 Earnings Report, Transcript and Summary

Good afternoon. My name is Adrian and I'll be your conference call operator today. Welcome to the Anavex Life Sciences Fiscal 2021 Third Quarter Conference Call. As a reminder, this conference call is being recorded. And I'd like to call over your host for today's conference, Clint Tomlinson, please go ahead.

Thank you. And good afternoon, everyone. We appreciate you joining us today for Anavex Life Sciences third quarter conference call to review financial results and discuss the company's business updates. The tape replay of this call will be available after the call. The call will also be available for replay on Anavex's website at www.anavex.com. With us today is Dr. Christopher Missling, President and Chief Executive Officer; and Sandra Boenisch, Principal Financial Officer. Following management's remarks, there will be a question and answer session. Before we begin, please note that during this conference call the company will make some projections and forward looking statements. These statements are only predictions based on current information and expectations and involve a number of risks and uncertainties. We encourage you to review the company's filings with the SEC. This includes without limitation the company's Form-10K and 10-Q, which identify the specific factors that may cause actual results or events to differ materially from those described in these forward looking statements. These factors may include without limitation risks inherent in the development and or commercialization of potential products, uncertainty in the results of clinical trials or regulatory approvals, need an ability to obtain future capital and maintenance of intellectual property rights. And with that, I'd like to turn the call over to Dr. Missling.

Thank you, Clint. And we appreciate everyone joining us on today's conference call to review our financial results and describe the company's whole strategy. Let me start by stating that we can proceed into the remainder of 2021 with a background of a strong balance sheet of over $157 million in cash and no debt. Starting with our lead candidate ANAVEX 2-73, we expect to announce top line results from the confirmatory double blind placebo controlled late stage Phase 2b/3 in Alzheimer's disease in second half 2022. The double blind placebo controlled 509 patient late stage Phase 2b/3 ANAVEX 2-73 trial in patients with Alzheimer disease exceeded enrollment beyond 450 patients at 52 sites across North America, Europe and Australia using others and ADCS ABL activities of daily living and function is primary endpoints. This multicenter, double blind clinical trial is measuring efficacy, tolerability and safety of two different ones daily all on ANAVEX 2-73 doses or placebo. ANAVEX 2-73 is only available small molecule activator of the Sigma 1 receptor. Data suggests that activation of sigma 1 results in the restoration of complete housekeeping function within the body and is pivotal to restoring neural cell homeostasis, and promote neuroplasticity. The study includes a pre-specified precision medicine biomarker, sigma 1 gene expression, which demonstrated correlation with direct measures of clinical benefit, cognition and activities of daily living and previous stage 2 Alzheimer's disease. Parent data previous confirmed those dependent target engagement of sigma 2 with ANAVEX 2-73. As a reminder of our clinical strategy is clearly differentiated from other biopharma companies in clinical studies in CNS ANAVEX is continuing to pioneer the approach of big data in clinical trials to leverage the relevance of phenotypic and genotypic precision medicine analysis of whole exome sequencing and gene expression data in drug development. And in particular, the potential to identify patients and the variants and gene expression changes that may predict increased chances of success of Alzheimer's disease, Parkinson's disease and Rett Syndrome treatments. Additionally, we can announce that we exceeded the enrollment targets for the precision medicine ANAVEX 2-73 Phase 2/3 AVATAR clinical trials in patients with Rett Syndrome. And currently topline results from this study are expected in the second half of 2021. Further clinical milestones are provided in Anavex Life Sciences latest corporate presentation, available at www.anavex.com. And now, I would like to direct the call to Sandra Boenisch, Principal Financial Officer of Anavex for brief financial summary of the recently reported quarter.

Thank you, Christopher and good afternoon to everyone. We can report a significant increase in cash runway. Our cash position on June 30, 2021 was $157.6 million, which we believe is sufficient cash runway to fund operations and clinical programs beyond 2025. We reported a net loss of $10.2 million for the current quarter or $0.14 per share, as compared to $6.5 million or $0.11 per share in the comparable quarter last year. Research and Development expenses for the quarter were $9 million compared to $6.7 million for the comparable quarter of fiscal 2020; this increase is primarily attributable to the continued advancement of our ongoing clinical trials, most notably the full enrollment of our international phase 2b/3 Alzheimer's disease trial, and the continued enrollment and advancement of the International Rett Syndrome program. General and administrative expenses were $2.4 million for the quarter, as compared to $1.4 million for the prior year period. The increase is associated with the growth of our team and non-recurring costs associated with our Annual General Meeting. Thank you. And now I will turn the call back to you Christopher.

Thank you, Sandra. We are extremely excited and we believe that Anavex has never been in a stronger position than it is today with our recent double-blinded placebo-controlled study results correlating with predictive biomarker outcomes and the strongest balance sheet to-date, and further strengthening of the Anavex team. In summary, we believe we are positioned for further growth and expect a catalyst bridge upcoming 12 months. So we look forward to providing further updates as advancement continues. I would like to now open the call for questions. Operator, please go ahead.

Thank you. At this time, we'll be conducting a question answer session. And our first question comes to Charles Duncan from Cantor. Your line is open.

How you doing? This is Pete Sabrobuza for Charles. Good afternoon, Christopher and team. Congratulations on the progress and certainly appreciate all the updates. So, I have one question regarding the Rett program. When you think about the accuracy measures that were made, and we're seeing the -- and the efficacy seen in the U.S. adults study, you know, how do you sort of feel about the sample size or the planned effect size out of AVATAR?

So we have been observed in the U.S. Rett study, it allowed dose study of 5 milligrams daily orally, that effect size in the RSPQ was 1.1 Cohen'sD, which is considered very large. And for the Adam Score, it was even larger 1.3; so these are very large effect sizes. In the AVATAR study, we even have a larger population in the placebo-controlled study, and the doses are higher than 5 milligrams; so we expect if there is a dose response curve, which -- positive dose response curve, which we right now assume it has to be the case that this affect size will be sufficient for a positive readout in the AVATAR study as well.

Thank you for all that color. Another question I have regarding the Rett program is that, in clinicaltrials.gov the pediatric excellence study states that the estimated completion date is about November 2021. Are you still on-track to complete the study by that time? And the reason why I'm asking you is, I know that -- I believe that you have a large part of it being conducted in Australia. And now, unfortunately they're going back into lockdown in some parts because of COVID.

This study is right now still enrolling well into the ability to continue to the trial it is still the case, what we cannot know for certainty how much enrollment is impacted by this current situation in Australia. But we still believe as of today that the timelines are accurate to be able to complete the trial in the stated timeframe. But if this will change, we will update accordingly.

All right, thank you. And just one last question on the Alzheimer's program. Can you provide some color on the roll over rates for the phase 2b/3 study into the open label extension?

We were really very impressed with the very high roll over rate into the open label study which was over 95%, which is extremely high. And we also have been informed that the patients who now are reaching the end of this extension study open label have requested and the respective caregiver to stay on study drug. And so we have now been able to also extend because of this request, the open label study by another period of time for allowing the open extension study to give these patients continued access to study drug. But I want to point out that does not affect the timeline of the placebo-controlled study; so it's just in parallel. The ability of the patients who finished the placebo control study to stay on study drug without interruption.

That's good, it's probably perceived a benefit and probably reflects a lack of tolerability issues. So, thank you very much for taking my questions. And congratulations, again.

Thank you.

And the next question comes from Soumit Roy from Jones Research . Your line is open. I apologize, it's Soumit Roy from Jones Trading.

Hi, thank you for taking my questions. First question on the adult AVATAR Rett study. Do we have an idea if -- when you're having FDA conversation? And if the trial size needs to be modified to turn into a pivotal trial, if you can give us any color on that? And also some color on the dosing for both, the AVATAR and EXCELLENCE studies, what kind of dose cohorts are should we expect?

Right. So we are in the dialogue right now with the agency. We have fast track designation and orphan drug designation, as well as the voucher eligibility for Rett Syndrome with ANAVEX 2-73. So we are right now in dialogue with the agency, and I would like to provide an update -- with updates as soon as we have that, that that will be more inappropriate . The second question is regarding the doses, we have a higher dose than 5 milligram. And we have used the dose of upto 50 milligrams in the Rett Syn in the Parkinsons Dementia study, and in the Alzheimer study. But the reason why we are keeping this dosing specifics right now within the blinded information is because the study is in a population which is very new to this trial, and we are concerned that there might be between the family interactions, which could lead to some unblinding of the study or inadvertedly to learning about the effect of the drug and making a calculation back on the envelope as more drug is given, how much the effect would be based on the existing data of the 5 milligram arm . So that's the reason why we keep this right now blinded, but we will obviously disclose it when we have the data, but it is higher than the 5 milligram dose.

I see, I see; very interesting. And one last question on the Alzheimer's trial. Could you give us any color on the baseline MMSE of these patients? It seems like a wide range 20 to 28. What should we be expecting more early stage or mild to moderate enrolling in your phase 2b/3 trial?

Right. So the rationale for that range was, we have seen the phase 2a prior, a very positive response across the entire MMSE baseline score which started from 16 to 28. But we noticed that the patients above 20 MMSE had the ability to improve from baseline on a net positive to reverse the disease symptoms, so the cognition was improved and not only the ability to show a delay of the cognitive decline; while the patients below 20 MMSE were able to stay on a stable score. So the other reason why we included 20 and higher is that these patients are better -- still in a better way to comply with the trial regimen. When you have more advanced cognitive impairment, often that is not the case but the expectation is really like very broad average within this is score of between 20 and 28, which is really also the identified patient population of have now called early Alzheimer's disease, which is probably the majority and the highest unmet need with Alzheimer's disease today.

I see. So you would -- you want to break it up into two groups, you would keep it as the entire 20 to 28 groups, and that's how you will present the data?

Right. Because we saw that there was no difference of the improvement if you were 28 or you were 20. In both cases, we saw with appropriate dose and improvement of the score.

Got it. Thank you so much for taking the questions. I'll hop back on the queue, and congrats again on the progress.

Thank you.

And the next question comes from Ram Selvu From H.C. Wainwright. Your line is open.

Thanks very much for taking my questions. First of all, again, alluding to the potential role of blarcamesine in Alzheimer's disease. Can you comment on some of the preclinical information that's been presented recently? And whether this would potentially point to a protective role for blarcamesine and specifically, if you can speculate on in which population, the use of blarcamesine as a protective might be most relevant from a clinical perspective? For example, in -- you know, those people who are exhibiting signs of prodromal, Alzheimer's disease, or mild cognitive impairment, I understand that it's an early stage at which to be thinking about that. But just wanted to get your thoughts in this regard.

Appreciate the question. We have learned in a disease in a preclinical animal model of invention ; so it basically gave two healthy mouse -- mice the drug for 7 days, every day for 7 days, then they stopped the treatment. And then you inject the sick into the brain, which is a known animal model of pathology; and then these animals usually, they get sick, they lose cognition, and you see that in the measures of water maze behavior and so forth. And we noticed in the arm which had been given this seven day pretreatment prevention that these adults never developed after the injection with a better any symptoms of cognitive impairment. They behaved in cognitively stood as their wild type path, but those who were given a better and without the pretreatment, they developed the cognitive impairment as you expected from the animal model. So this is the observation which led to the potential that the one activation with ANAVEX 2-73, which as we know by now is extremely upstream and possibly able to prevent the cellular stress which is caused by via better interjection rejection. And so in the entire challenges of the pathology, which is not limited to a data that this could be used as a prevention. Also, in the future, if it has to be awfully confirmed. The intelligence we have the Alzheimer's study seems to be also giving credibility in that direction, since we noticed a gradual ability to improve completion, earlier stage status of productive capacities. So when I mentioned before the cognitive impairment, lower than 20 MMSE and the lower score means more cognition or more cognitive impairment that those were better off the earlier you treat them. So we might be able to continue the trajectory of into the ability to prevent the cognitive impairment to even take place. When we give the drug to patients, which are either as you point out mildly cognitive impaired, or before even any symptoms of cognitive impairment is present, just to be able to always prevent this cellular stress by this activation. And we compare in a way to many aspirin, which some people take for avoiding cardiovascular problems. And they do that every morning for breakfast. So I'm not saying that this is confirmed in human. But eventually we will be able one day to tackle that. And that is the plan in a study.

Great thanks. And also I wanted to ask about your thoughts regarding lessons takeaways from the rest syndrome experience with and their applicability to your potential clinical development initiative with the compound in Fragile X syndrome. And if you could also give us a sense of when you anticipate the Fragile X syndrome program to initiate patient enrollment. Thank you.

We have included in our Red syndrome clinical trial, a measure which is called Adams , and that score is interesting enough a secondary score in the Red syndrome study, but it is often used as a primary endpoint in Fragile X studies in that Adam score was extremely positive with behavior improvement of general mood of anxiety, and compulsive behavior improvement, which were very significant and very broad and global. So we believe that in a data readout of the preclinical data of Fragile X with ANAVEX 2-73, which we submitted to a peer reviewed paper of a nature paper, which we expect to come out as forthcoming, that this could be a very good basis for the rationalizing, progressing Fragile X into an indication of choice also for ANAVEX 2-73 and the ideas of this to move this forward, as soon as possible given the unmet need of Fragile X which is the largest population of autism spectrum disorder. And that syndrome is also part of the family of the autism spectrum disorder. So these are correlated diseases, although they are originated in different places in the causation, causality, but they have similar symptoms in overlapping symptoms with each other. So we expect the trial to be initiated, once we are able to showcase the data in a peer reviewed paper.

Thank you very much.

And our next question comes from Tom Bishop from BI Research.

Hi, Christopher, you said that you were expected to include a phase 3 prevention study, or to initiate one of you know, for the prevention indication, and I was wondering what the status of that was, and how soon we could expect that?

So this is something which we like, discuss with the agency, because it's an awfully a very important study. And we want to get that right. So we will let that happen first, before providing more details on that. But I'd like to just point out the potential for that to be the case. And that gives us also a great hope that given the broad upstream effect of the sigma 1 activation, which is I want to remind everybody, it's not something we came up with, but it's really the endogenous the body's own defense mechanism to avoid and to prevent cellular stress, which causes diseases like Alzheimer, but also Parkinson and other cognitive impairment, indications, and probably also the degenerative and as well as the new developmental vacations, which is the reason why we see this strong effect, beneficial effect with a drug in this broad therapeutic, different indications. So this is something we like to discuss with the agency first, before making providing more details. But this is the long shot. And as of probably the big prize, that one day, this could be used as a prevention treatment for all degenerative diseases, and not only for treatment.

That's a very exciting possibility. What is the status of the meeting to proceed on to phase three and Parkinson's? Sometimes it seems like we lose a lot of time between trials. I know you've presented the final data. And I'm just wondering what the timeline is here. Have you scheduled the meeting with FDA or add one or?

There's a very good question. Your key background is to know that the trial itself has finished but the analysis is not limited to the endpoints which we reported. There are more work or work up ongoing right now. And this is also unique for ANAVEX and differentiates other companies that we have included in our trials, including the PDD trial, the Parkinson disease dementia trial, the whole genomics exome analysis, both DNA but also RNA. And you know that we reported the RNA changes of the Sigma 1 gene, what we have not yet done is they have the intelligence on the RNA of all the other genes, which the whole genome. So, there will be so much more intelligence from this PDD study, which we are right now putting together and once we have that, then we will have the ability to put this all forward because this will determine a much more robust phase three design of a pivotal study in Parkinson's dementia, as well as in Parkinson, but that requires also the dialogue with the agency first but before that, we have to have the entire data at hand.

Well, okay, and the status of the Michael J. Fox million dollar imaging study. Is Michael J. Fox doing that independently of you. I mean, you're supplying the drug, but they're doing the imaging. I mean, how's that going?

Nope, it's basically a grant that allows us to do this study. And we are in the process of starting this year. It's a study which will capture the imaging, and the profile of the ANAVEX three of the drug in the brain in the humans with the same pet like and which we have done already in animals. So this will be a confirmatory, of that effect in human brains. And that is the study which was fully funded by Michael Fox Foundation, which we are executing and they basically funded that study with a grant.

Oh, I see. Okay. And you indicated a mystery indication earlier this year. And also, there's a 371 trial, is there not a phase 1 ongoing? Could you comment on those two, where they same? I don't know.

Right, it's not a mystery indication, we have only said, we have not disclosed yet, the indication, we have several animal models were ANAVEX 2-73 has been positive, very well, achieving a confirmatory effect on a disease which is rare in nature, ultra rare nature. And we want to make sure, before we move forward with the clinical trial, that we pick the right one to do, because we have the choice of several indications, and we are doing this right now. So once we have that completed that assessment, we will disclose that indication and start that trial also right away. And regarding ANAVEX 3-71 is basically another molecule has its own IP, and that is now in a phase 1. And we expect data without in the second half of this year, is progressing well. And we are excited, because it confirms, the validates the mechanism of action of our platform portfolio to focus on sigma 1 modulation, and also it has received an orphan drug designation for Frontotemporal dementia, which is also an unmet need. So we are now preparing after the phase one, the next stage of that which will be studied in an indication of cognitive impairment, it could very well the Frontotemporal dementia for another indication with an unmet need with cognitive impairment.

But the phase one study is, are you saying it's done?

It is about to wrap up. And we will be able to report this data in the second half of this year. That's correct.

Will it include any efficacy data or just the safety trial literally?

It's predominantly a safety trial. But I will allow us to basically share the data once we have it. And that gives us better visibility on what is included in that in that outcome measures beyond phase one data on safety data.

Okay, well, you know, I've been very encouraged by the breadth of the positive readouts, you're getting on a variety of indications. And I think that helps support the idea that 2-73 really does something in the brain, which I think you have a little doubt of, and I do too, but it's just good to see so many different positive readouts coming. Thank you.

If I might add, it is really important to notice. And to highlight the fact that in all clinical trials we have performed so far, not only was ANAVEX 2-73 efficacious at the right doses, but it was also demonstrated a dose response curve, which is always a very clear indication of our effect. And thirdly, we have noticed that all the data, all the trials so far performed, had a very strong biomarker of response or predictive biomarker response, which was borne by the by the level of mRNA expression of the target of our drug itself. So there's really no better way of showing efficacy and confirming efficacy of a drug with these strong biomarker outcomes, which correlated with all the primary and secondary endpoints of the drugs we have performed.

Like I said, it's very encouraging. All right, thank you.

Thank you, ladies and gentlemen, this concludes today's conference call. You may now disconnect.