Anavex Life Sciences Corp. Q1 FY2021 Earnings Call

Good afternoon. My name is Aaron, and I will be your conference call operator today. Welcome to the Anavex Life Sciences Fiscal 2021 First Quarter Conference Call. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Clint Tomlinson. Sir, go ahead.

Thank you, and good afternoon, everyone. We appreciate you joining us today for Anavex Life Sciences conference call and webcast. Our agenda is to review the company's financial results for the first quarter of its fiscal 2021 financial year and provide clinical study and business update. A taped replay of this call will be available approximately two hours after the call's conclusion and will remain available for one month. The call will also be available for replay on Anavex's website at www.anavex.com.

Thank you, Clint. We appreciate everyone joining us on today's conference call to review our financial results and business updates. I would like to first share with you our recent clinical and pipeline updates. Let me start with Rett syndrome. Based on recent Phase II U.S. Rett syndrome clinical trial data, which showed positive clinical activity and safety data, potential accelerated approval strategy planning is underway, as the progress with ongoing Phase II/III AVATAR adult Rett Syndrome and Phase II/III EXCELLENCE pediatric Rett syndrome studies. At the same time, the FDA has approved an extension of ANAVEX 2-73 U.S. Rett syndrome Phase II open-label extension study from 12 weeks to 36 weeks. In Australia, Anavex received compassionate use Special Access Scheme approval for Rett syndrome patients to continue treatment with ANAVEX 2-73, after completing the AVATAR adult Rett Syndrome clinical extension study. This is very good news for the patients. And as a reminder, we had previously received compassionate use Special Access Scheme approval for Alzheimer's disease in Australia. Anavex has sufficient ANAVEX 2-73 drug substance available to support all ongoing and planned clinical trials and first year commercial launch needs for the Rett syndrome program. And ANAVEX 2-73 drug substance and oral solution exhibit excellent chemical stability based upon 3 years of stability data in both cases. That is very important. Let me now briefly switch to Parkinson's disease. We announced recently that Anavex has been awarded a research grant of nearly $1 million from the Michael J. Fox Foundation for Parkinson's Research to develop ANAVEX 2-73 for the treatment of Parkinson's disease to explore utilization of PET imaging biomarkers which demonstrates the continued focus on a potential disease-modifying treatment for Parkinson's disease. As a reminder, our clinical strategy is clearly differentiated from other biopharma companies and clinical studies in the central nervous system.

Thank you, Christopher, and good afternoon, everyone. We reported a net loss of $7.9 million for the quarter, or $0.12 per share, as compared to $6.6 million, also $0.12 per share, in the comparable quarter of last year. Research and development expenses were $7.9 million for the quarter compared to $6.3 million in the comparable period, while general and administrative expenses remained unchanged over the comparable period. Our clinical trial expenditures continue to increase gradually as enrollment progresses and the trials expand internationally.

Thank you, Sandra. In summary, we are thrilled to begin the new year with this strong business outlook, which will allow for multiple near-term data announcements, combined with continued fiscally responsible management of resources. This adds to the breadth of strong clinical data we've reported across our precision medicine pipeline using orally once-daily available ANAVEX 2-73 for Rett syndrome, Parkinson's disease dementia and Alzheimer's disease. We look forward to providing, on a timely basis in 2021, multiple clinical data readouts from these clinical programs. The converging biomarker-driven clinical data and further molecular understanding of our biological target, the sigma-1 receptor, is giving us added confidence in our efforts to meet our goal of potentially bringing new therapeutic interventions to patients. Further clinical milestones are provided in our latest corporate presentation, available on www.anavex.com. We are very excited about this year before us, and we look forward to continuing with new data updates throughout 2021. I would now like to open the call for questions. Operator, please go ahead.

Your first question comes from Charles Duncan with Cantor.

I had a couple of questions. First, on the Rett program with 2-73, I'm wondering with regard to the US Rett study, when would you anticipate being able to provide additional details from that study? And congratulations on being able to extend the open-label extension of that study from 12 weeks to 36 weeks. But can you help us understand a little bit the rationale for that extension of the study? And what is the percentage of patients that have enrolled or continued on into the study in that extension phase?

Let me start with the last one first. From the patients who finished the placebo-controlled part of the U.S. study, 100%—all patients—continued in the extension study. The reason for the extension by another six months was the interest from the participating patients and families as well as the ability to continue to learn and add long-term safety data for Rett syndrome patients with our compound. Regarding the first question, we actually have not yet fully released the precise data on the Rett syndrome outcome—the baseline situation of the RSBQ and the other measures as well as the precise changes—and this can be done relatively near term. It will be near-term, together with what we have prespecified in the protocol and in the SAP, the genetic feature of the biomarker effect of the sigma-1 variance, which we identified previously in the clinical Phase IIa study in Alzheimer's patients. So the answer is that this can be relatively near-term to provide more details on exactly the outcomes of the study measures.

We'll look forward to that. Christopher, would you anticipate it being provided in conjunction with an upcoming psychiatric or neurological meeting? Or one that's specifically driven, I guess, from the Rett advocacy community?

The community is very interested in learning more about it, and we are happy to provide it as soon as we can. The variant data requires genetic analysis, which is not ready to be available until now, but we will have it soon. We can either present this at a conference, which we find timely and suitable, or we will provide it in a press release with a webinar together, and that will allow everybody to be informed about this data.

One last question on Rett. Can you provide any color on how the pediatric trial, EXCELLENCE, is going? And then the adult trial, AVATAR? And when would you anticipate being able to read out those two studies?

We think these trials are proceeding well. We stated that the AVATAR study will have a readout within the first half of this year, and the EXCELLENCE study in the second half of this year. That is our latest update and time expectation on these studies.

And then my last question is on the Parkinson's disease side for 2-73. Not a lot of companies have had success in Parkinson's disease dementia. I guess I'm wondering with your provocative data that you spoke about recently, what are the next steps for that program? Could we see that move into a later stage study this year? And would you be seeking agency guidance on that?

We have observed that at least three Parkinson's disease dementia studies by other companies have recently failed, which shows that Parkinson's dementia is an extremely difficult study to execute. We are fortunate that our study was positive. We are now gathering the entire understanding of the participating patients, their background information, the correlation with the outcome, and then plan to present that data to the FDA to seek guidance and to agree on a pivotal study design, which we would then undertake based on that detailed data for patients with Parkinson's disease dementia.

Final question regarding the platform, then I'll hop back in the queue. ANAVEX 3-71, new candidate—congrats on moving that one forward. Can you tell us anything about that candidate relative to 2-73? How does it differ? Is it from a different chemical series? Does it have different brain penetration or different pharmacology? Any color on that would be helpful.

ANAVEX 3-71 is a completely different molecule. It was licensed in from Weizmann Institute in Israel, and we developed all the necessary preclinical data, toxicology, and manufacturing CMC to bring it to where it is now. The differences between ANAVEX 3-71 and ANAVEX 2-73 are twofold. ANAVEX 3-71 has a strong affinity to the sigma-1 receptor and also a more pronounced muscarinic M1 affinity, whereas ANAVEX 2-73 has stronger affinity to other muscarinic receptors but at a much weaker level. We will need to see direct comparative data to understand how they play out clinically. We have received orphan drug designation from the FDA for ANAVEX 3-71 for frontotemporal dementia, and we might bring 3-71 toward indications that do not directly compete with ANAVEX 2-73. We are very excited to have another compound targeting sigma-1 activation, which appears to be biologically important and may be useful for indications not yet covered by 2-73.

And our next question in queue comes from Ram Selvaraju with H.C. Wainwright.

Congratulations, Chris, on all of the recent progress. I wanted to first ask a few questions regarding the Rett syndrome program. Firstly, could you elaborate on any additional gating items, assuming the upcoming data is positive? You had mentioned previously that this could potentially serve as the basis for regulatory submission in the United States, but I wanted to gain a better understanding of what additional gating items there may be as you go through the steps in potential preparation of an NDA? Secondly, I wanted to clarify whether this program, if the subject of an ultimate regulatory approval, would qualify you for the receipt of a priority review voucher? And thirdly, could you comment on the Rett syndrome competitive landscape as it currently stands, where you expect it to be at the time blarcamesine might potentially be introduced into the market as a treatment for Rett syndrome? Also, could you give us a sense of what might be required to launch a drug like blarcamesine into the Rett syndrome population?

On gating items, we are doing the same as with Parkinson's dementia: the entire genome/exome analysis is part of the clinical study, and we want to prepare that package and meet the FDA to share the data. The additional data from AVATAR and EXCELLENCE will be supportive, and I expect it to be supportive. The ability to get a voucher is possible given we have orphan designation and the potential for priority review; voucher eligibility is a positive if the pediatric study is positive. Regarding the landscape, we have heard that one of the competitors in Rett syndrome, GW Pharma, has dropped out of the space—they initiated and stopped their trial and retired the program in Rett syndrome, which we believe is positive for us. As to marketing and launch requirements, we would evaluate that further as we approach potential approval and will plan accordingly.

Also, could you comment on the current status of the Special Access Scheme in Australia and whether you think that element of the overall Rett syndrome program is likely to yield usable or significant clinical data that you could use in support of future regulatory applications? If possible, could you give us a sense of what the size of that program is right now and how many patients are receiving drug as part of the program?

The compassionate use program in Australia allows patients who are on the clinical study and who finish the extension study to continue the drug under the supervision of a physician. Right now, we are limiting access largely to the existing patients who entered our study. The advantage is that once the drug is approved, they will automatically become eligible to be prescribed the drug upon market authorization. The program is intended to ensure continuity of care for those patients rather than to be a large external source of clinical data, though it does provide real-world treatment continuity.

I wanted to ask about recent activity in the Alzheimer's space and the greater enthusiasm for proof-of-concept clinical results. Part of that may be attributable to anticipation that, with a favorable regulatory decision on aducanumab, the goalposts may have moved. What are your thoughts regarding what the regulatory environment might look like in a post-aducanumab approval situation, and what implications that has for your Alzheimer's program?

I cannot predict the outcome of the FDA meeting on June 7 regarding aducanumab. If it turns out positive, it could mean the FDA would agree that one robust clinical study may be sufficient to approve a drug in Alzheimer's disease. Since we are running a robust Phase IIb/III study, that could be positive for us. If the decision is negative, it would not impair our program; by that time we will be advanced in our study and have supportive data from Phase IIa. We will continue to proceed with our study and will seek guidance when appropriate. There could be positive resonance if the other study is approved midyear, but our plan is to keep focused on executing our trial.

Three other quick ones: assuming positive data in Rett syndrome, what implications might that have for future development of blarcamesine in other orphan neurological diseases? Could you elaborate on potential highest-priority choices for future orphan CNS indication development? Secondly, what is the commercial significance of the oral solution for Rett syndrome? And lastly, could you comment about the possibility of co-formulation, co-administration, or synergistic combination of blarcamesine with other compounds in the Anavex pipeline? If likely to be explored, which other compounds might be most synergistic with blarcamesine?

On the oral solution: it is a strong advantage because many of these girls have difficulty swallowing. Some cannot eat and have a feeding tube; a liquid formulation is often the only feasible delivery route other than injection, which is inconvenient. This is a strategic advantage. Regarding implications for other orphan diseases, ANAVEX 2-73 has shown strong effects in treatment studies and preclinical models affecting pathology in Fragile X, infantile spasm, and Angelman syndrome. Fragile X is the largest rare disease in the autism spectrum and has many more patients than Rett syndrome. We have strong preclinical data in Fragile X and believe the chances are increased to be successful in a clinical study there; we have developed a study design to move into Fragile X as a next step for ANAVEX 2-73. On synergy and combinations, we do not yet know if combining with another sigma-1 agonist is best. We think synergy could be with compounds targeting different pathways. If an anti-amyloid therapy were approved, combining different mechanisms could be synergistic with ANAVEX 2-73. Also, ANAVEX 2-73 has shown preclinically potential to prevent disease progression, so we are thinking strategically about how it could be used in combination approaches in the future.

And your next question in queue comes from Robert LeBoyer with Ladenburg Thalmann.

I had a quick question on 3-71 and you mentioned that the DSMB had recommended continuing the trial. How long is it going to continue for? When might we see results? If positive, when might that move forward? Also, in the Parkinson's program, I saw that the data from November included some secondary endpoints. Is there any plan to present the full study data on the Parkinson's trial?

For ANAVEX 3-71, we have several panels in the Phase I. The first two panels were single ascending dose, and it was impressive that we got the green light to move forward into panels evaluating sex differences, repeat dosing, and food effect. The most important hurdle in Phase I is the dose-ascending portion, which was well tolerated up to the highest planned dose. That is the crucial information. Now we are completing nuances of Phase I. We previously said we would have the data within the first half of 2021. It looks like we may have the data earlier than June given the current progress with the study. Regarding the Parkinson's trial, the CTAD presentation focused on the dementia portion and was limited by time. We will present the full suite of measures, including the other CDR system measures, actigraphy data, and other Parkinson's-related data, in a proper format—either at a conference, in a peer-reviewed form, or a webinar—on relatively short notice. That aggregated data will also be presented to the FDA when we seek guidance to design a pivotal study in Parkinson's disease dementia.

Did you mention any plans to move Fragile X into clinical trials this year?

One of the anticipated milestones we provided previously was to initiate a Fragile X clinical study, and we will do that with guidance from the FDA. We have submitted a paper of the entire preclinical package for Fragile X with ANAVEX 2-73 and expect that paper to be published hopefully soon. That preclinical data package will make a strong case that moving ANAVEX 2-73 into the Fragile X clinic is warranted.

And next question in queue comes from Tom Bishop with BI Research.

Christopher, I'm a little puzzled. Back in November you said you were over 80% enrolled, and now you're saying 86% enrolled. If you do the quick math, 6% of 450 is only about 27 patients in the last three months. What am I missing about the complexity of signing these patients up?

You have to appreciate that between the last time we spoke in December and now, we had the holidays, and enrollment activity effectively paused during that period. We also added more sites, and I expect acceleration from now on. We want to ensure we enroll the right patients, and we have a solid screening process to make sure they meet inclusion criteria. We would rather enroll correctly than enroll too quickly with the wrong patients. So I would not read too much into the incremental increase; it reflects holiday slowdown and careful screening. Overall, we are comfortable with enrollment compared to other companies.

How many sites are enrolling right now?

If I add them all up, it's around 40 to almost 50 sites. We added sites in Germany, the U.K., Canada and the Netherlands.

So we're still hoping for early 2021 end of enrollment?

Yes. We have not changed that expectation. We set the data announcement timeline, which actually matters, to be in the first half of 2022. It will be about a year after the last patient is enrolled, plus time for data lock and cleaning, but the timeline is unchanged.

Regarding the $75 million in the bank as of today, does that indicate you've been able to take advantage of the recent increase in the stock price, maybe with your ATM? That seems like a big jump, given you've also had a quarter of spending in the last period. Have you been able to use the ATM at these higher prices and not have to dilute the shares as much?

That's an excellent question. We were fortunate to have the ATM tool in place, and it was meant for exactly this reason: when there is an unexpected and positive share price move, we're able to use this tool to raise capital with the least dilution possible so we can continue to progress our assets. That was possible in the last weeks to do.

How many shares are outstanding now?

We took advantage of the stock move, but the details will be provided in our next filing, which will show up early next week. Monday is a holiday, so it will be next week, likely Tuesday. You will find the share count on the cover of the 10-Q.

So SFVA or Cassava has proven that interim data may allow a company to start a Phase III trial while a Phase IIb or IIIa trial is still continuing. Is there any thought of an interim readout for your Phase IIb/III trial? Is that possible that interim data could enable you to start a Phase III while the full enrollment and readout are ongoing?

In theory, an interim analysis is possible and allowed in our protocol. We will discuss that possibility with the FDA and seek guidance. The Phase IIb/III is intended as our pivotal study, so that is the Phase III study. If an interim analysis were considered, it would be in discussion with regulators and based on the protocol and regulatory guidance.

And I think if I understood another question, they were asking about Parkinson's physical data—we are still awaiting that, right?

Yes. The genome data, actigraphy data, and the movement-related Parkinson's measures will be included in the fuller data presentation. We will release the comprehensive data in short order once we have it aggregated, and we will present it at a conference or webinar so everyone can see the full effect of the drug in these patients.

Thank you. Ladies and gentlemen, this concludes today's questions and today's conference. Thank you for participating. You may now disconnect.