Anavex Life Sciences Corp. Q2 FY2022 Earnings Call

Welcome to the Anavex Life Sciences Fiscal 2022 Second Quarter Conference Call. My name is Clint Tomlinson, and I will be your host for today's call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Please note that this conference is being recorded. The call will 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. 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 Forms 10-K and 10-Q, which identify the specific factors that may cause actual results or even 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 and ability to obtain future capital and maintenance of intellectual property rights. And with that, I would like to turn the call over to Dr. Missling.

Thank you, Clint. We appreciate everyone joining us on today's conference call to review our most recently reported financial results and to provide a business update. We are pleased with the continued advancement regarding our lead product candidate, ANAVEX 2-73 in ultimate disease and Rett syndrome, as we maintain our attention on execution across each of our clinical programs and overall business operations. In the second half of 2022, we are expecting two pivotal top-line results readouts, including top-line results from the randomized placebo-controlled 2b/3 study ANAVEX 2-73-AD-004 for the treatment of Alzheimer’s and from the randomized placebo-controlled excellent Phase 2/3 study ANAVEX 2-73-RS-003 for the treatment of pediatric patients with Rett syndrome. Next month, ANAVEX will host our R&D Day for investors and analysts on Tuesday, June 21, 2022. This R&D Day will include presentations from the company's leadership team with a focus on the company's clinical development pipeline. Additional details will follow closer to the event. In July, an oral presentation of Effects of the Sigma-1 receptor agonist blarcamesine, ANAVEX 2-73 in a murine model of fragile X syndrome, Neurobehavioral phenotypes and receptor occupancy will be presented at the 18th NFXF International FX International Fragile X Conference, July 14 to 17, 2022, taking place in San Diego, California. Further pipeline expansion of the ANAVEX platform using gene biomarkers of response, applying precision medicine for neurological disorders with unmet medical need is expected in 2022, including meeting with the FDA to discuss the ANAVEX 2-73 Parkinson’s disease program including a pivotal Phase 3 study. Planned initiation of ANAVEX 2-73 imaging-focused Parkinson’s disease clinical study sponsored by the Michael J. Fox Foundation and a planned initiation of a potentially pivotal Phase 2/3 study in Fragile X, the most frequent genetic cause of autism spectrum disorder, and a planned initiation of a Phase 2/3 clinical trial for the treatment of a new rare disease indication. And planned initiation of ANAVEX 3-71 Phase 2 clinical trials for Frontotemporal dementia, schizophrenia, and Alzheimer’s disease indications. And now I would like to direct the call to Sandra Boenisch, Principal Financial Officer of Anavex, for a brief financial summary of the recently reported quarter.

Thank you, Christopher, and good afternoon to everyone. During the quarter ended March 31, 2022, we continued to maintain fiscally responsible cash utilization as we expand and advance our pipeline. Our cash position at March 31, 2022, was $153.3 million, which we believe is sufficient cash runway to fund our operations and our clinical programs beyond the next 4 years. Our research and development expenses for the second quarter of fiscal 2022 were $8.6 million as compared to $6.7 million for the same quarter of fiscal 2021. General and administrative expenses were $2.9 million compared to $2.2 million in the comparable quarter of 2021. Overall, we reported a net loss of $10.1 million for the quarter, which is $0.14 per share. The overall increase compared to the previous year period is primarily related to an increase in non-cash compensation charges period-over-period, which is driven by the addition of staff to manage and support our clinical studies in development. Thank you. And now I'll turn the call back over to you, Christopher.

Thank you, Sandra. So we are looking forward to next month's R&D day event where we will present our broad SIGMAR1 platform portfolio, which allows us to expand further within the neurodegenerative and rare disease space. And we remain on track to deliver data readouts as well as presentations at medical meetings and initiating biomarker-driven precision medicine clinical studies throughout the rest of the year as planned. I would like now to turn the call back to Glenn for Q&A.

Thank you. Our first call is coming from Yun Zhong at BTIG. Go ahead, Yun.

Hi. Yeah, thank you very much for taking the question. On the pediatric Rett syndrome study, I see that the study has not completed patient enrollment. So I assume it's still ongoing. So I wanted to confirm if you're going to put out the press release on patient enrollment completion and on the primary endpoint. Is it reasonable to assume that it's still going to be AUC? And have you talked to the FDA? I believe the last guidance or business guidance after the second data readout from the Rett syndrome was that you were going to talk to the FDA. So has that happened yet, please?

Thank you for the call. Indeed, the last communication is that we are planning to meet the FDA to discuss the Rett program and its procedure to move forward with filing an NDA for approval. And since we finished and completed the AVATAR study in adults, a small study despite the fact that it's a successful study, a Phase II study, which was also small in the ongoing EXCELLENCE study, which is a heterodox study, the largest study. So we are waiting for this meeting to take place. It has not yet happened, but it will take place soon. And then we will learn how to move forward. And indeed, the Rett EXCELLENCE study with pediatric patients is still ongoing and rolling, and we might have a press release when the enrollment is completed.

So with regard to the primary endpoint, is it still going to be...

That's right. So when we presented AVATAR, we learned from the first Phase II study that the RSBQ AUC that includes the CGI-I linked responder analysis. So the RSBQ AUC includes the CGI-I respond analysis linked response analysis. That is the endpoint, which we will also propose for the EXCELLENCE study. That is correct. It's consistent with the AVATAR study.

Okay. So the second question is on the Parkinson's disease program. And can you remind us what you would like to achieve with the imaging study? And do you need to talk to the FDA before you initiate that imaging study?

It's a good question. So the goal is to show what we have already seen with the presently available data that the Sigma-1 is completely and clearly dose-dependent target engaging the Sigma-1 receptor in the brain. And that is an additional confirmation in humans, among them also in Parkinson's patients. That's why we were able to receive the full support non-dilutive funding as a grant from the Michael J. Fox Foundation for this study. And we will very likely use that opportunity to meet also with the FDA to discuss the Parkinson's program in its totality, including the Phase III, which we said we are happy to move forward with, given the successful Phase II PDD study.

Okay. Great. Thank you very much. And we look forward to the R&D Day in June.

Thank you very much.

Thank you. The next call is from Pete Stavropoulos from Cantor. Go ahead, Pete. Pete, I think you're muted.

Hi, Christopher. How are you?

Good. How are you?

Good. Thank you. So I don't know if I missed it in the previous question, but I know that you haven't spoken to the agency recently. But from previous discussions, do you have a sense of whether you or not are you going to need to wait for the pediatric data to file for the adult indication?

So the pediatric data is a larger study. And in theory, if you would file for adults, you would not need it because it's a different age group. But what we believe is probably a prudent assumption is to include the pediatric study in its totality for the Rett program. But as we stated, we don't know that yet until we meet the FDA for guidance on how to move forward in terms of regulatory filing for approval of ANAVEX 2-73 for Rett syndrome.

Thanks for the clarification. So I also wanted to ask about your thoughts regarding the lessons and takeaways from the Rett syndrome experience with 273 and their applicability to potentially clinical development initiatives with the compound, say, in fragile X. And if you could give us a sense of when you anticipate the fragile X program to initiate patient enrollment.

All right. So we are very excited about the fragile X program for two reasons. First of all, we have very solid and strong evidence in the animal model in fragile X, which was published last year. And there is new data coming out and among them, it will be presented also at the conference in July, which we pointed out, and there will be additional biomarker information making very clear the pathology biomarker that can demonstrate that the drug really improves the phenotype of this disease, which is the largest autism spectrum disorder. And why it's exciting for the second reason is that this largest autism spectrum disorder is similar to Rett syndrome among autism spectrum disorders. We measured the ADAM score, which is a key measure of anxiety, which is a known feature of limitation and problem for these patients with autism. We were very successful in both Rett studies in Phase II and in Phase III AVATAR with successful improvement with the drug on the endpoint of the ADAM score. This is why we are very excited, both from the preclinical data, as well as from the clinical data perspective. So what we are now doing is we want to make sure that the protocol is very robust because the challenge of fragile X is a very diverse patient profile. They have very different profiles of the disease, which are not similar. We want to ensure we are using a trial population that is as homogeneous as possible in order to avoid a trial failure because the drug doesn't work, but because the patients are so different and the endpoints you selected for these patients don't apply to all. This is key, and we are now in the process of figuring that out, and then we will meet with the agency and confirm that approach, ensuring that we can run this as a pivotal study. So we expect this to take place in the second half of this year.

Okay. And then at the same time, will you be also consulting with the EMA? Or that will be at a later time point?

That's right. Since we will likely also include pediatric patients, we will also include the discussion with EMA, which is important because they want to be engaged before that trial starts.

And just one last question on the Alzheimer's program. Can you provide any type of color on the rollover rate from the Phase IIb/III into the open-label expansion?

Yeah. So the last I heard was that there was over a 90% rollover from patients who finished the placebo-controlled study into the open label extension. So that's a very positive sign. We are very excited because we're getting really close to finishing the study of the last patient out, and then we can start the process of data cleanup, as well as locking the database and then subsequently releasing the data. We're very excited about this.

Excellent. Thank you very much for taking our questions.

Thank you, Pete.

The next question is I'm guessing from Soumit Roy at Jones Research.

Hi. It's Iad here for Soumit.

Okay, great. Sorry.

Comebacks on all the progress. A question on the Alzheimer front, could you give us a little more detail on when we should expect the data to come out? Is it still - is it third quarter or fourth quarter?

It's a good question. Since we stated the second half, I'd like to stick to that because we don't know exactly how long the data feed-up takes. If it takes quicker than performed, then it might be in Q3. If it takes longer, then it will just slip into Q4. It's best really to call it the second half of 2022. When we have more clarity, we'll provide a closer update. Was that the only question?

Thank you.

Thank you.

I have one question from H.C. Wainright. They asked, what are the key points of the agenda for your upcoming meeting with the FDA regarding the Parkinson's disease program pivotal study? For example, with a biomarker endpoint being pushed up in priority due to our recent success with Sigma-1 mRNA expression data in Phase II?

This will all be on the agenda. Since we are sharing this data very timely now. We want to also ensure we can include the extension data of the Parkinson's study. Now that this is completed, we will have a bigger picture of the Parkinson's program, and the items you just referred to will all be discussed.

Okay. A second question from Moose is can you give us a preview of the new indication that you're excited about in the neurodegenerative and rare disease space that you'll be showcasing at your upcoming R&D Day event?

Right. So we will have the ability to choose between several rare disease indications, and that's why we have kept it like that. It really shows the work and the value of the platform we have. It's backed by preclinical data on different indications. We want to ensure we are prioritizing the right rare disease if we are comfortable with the clinical design to show efficacy. That's really what we're working on. That’s why we didn't mention what indication it is. But there are different separate independent indications that could become the indication we will release once the trial starts. It's only because we have the opportunity to showcase several rare disease indications positively impacted by the drug ANAVEX 2-73 in respective chemical animal models.

Amos, I see you're in the chat now. You can go ahead and ask your own questions.

Thank you. Hi, Chris, thanks for taking our questions. So in terms of your upcoming 273 imaging-focused Parkinson's study, we were wondering if you collected imaging data from the Phase II trial. If you did, could this methodology from your current study be used to combine the data?

If I may ask, combining the data with what exactly...

From - if you may have collected imaging data in the Phase II trial or you did not collect any imaging?

Yeah, we did not. In the Phase II Parkinson's disease dementia study, there were no imaging studies collected. That's why this imaging study separately is now taking care of that.

Okay. Okay. Understood. And in terms of 371 for Alzheimer’s disease, will you use the same cohort characteristics? Or do you think this drug could potentially differentiate from 273 and be more efficacious in some subpopulations of AD patients?

That's an excellent question. We're expecting additional data on 371 preclinically also to give us guidance on this to fine-tune the indication. But right now, without any further knowledge, it could be the best choice for going into patients with AD, who have the best, I would say, cohort consistency and homogeneity to make the trial as robust and as quick as possible in its enrollment. This will more likely focus on early Alzheimer's disease patients, similar to what the Phase II of the ANAVEX 2-73 study is right now.

Okay, understood. And just finally on 371. We're looking forward to this one. Could you expound briefly on the strategy for three indications for this program? So clearly, FTD appears to be a front-run here. How confident are you in the schizophrenia indication given the Sigma-1 receptor action that's been associated with off-target effects in psychosis?

Yeah. We are very excited because 3-71, as a reminder to everyone, is not only a Sigma-1 agonist, but also an M1 agonist. There are trials out now that have shown very successful results in this indication of schizophrenia with pure M1 agonists. If you look at what we heard from the inventor of ANAVEX 3-71, he always told us that he looked at M1 agonists as targets and found ANAVEX 3-71 to be more potent than all the other previous drugs we have developed as M1 agonists. We looked at the profile of the 371 molecule and discovered that there was not only M1 agonism but also Sigma-1 activity. This gives us hope that ANAVEX 3-71 in schizophrenia could be even more proactive and successful due to the Sigma-1 action. We are excited about the 371 in schizophrenia as well.

Brilliant. Thanks for taking my questions. Good luck this year.

Thank you very much. You look like maybe you had a follow-up question or...

Yes. Thank you very much for the follow-up question. It looks like you have a lot of milestones planned for the second half of this year. I'm not questioning the capacity to complete all the milestones since there are many activities. But if you have to talk about the priority, which one do you think could be the most important for pipeline development?

I think it's really consistent with the bullet points you have seen today. It's really finishing the Alzheimer's study, which is on autopilot. We just have to do the cleanup work, if you like, and the same applies to finishing the Rett study. Following that, I would say the priority is the Fragile X study, given that's a relatively short study and can be pivotal potentially. This is important, especially given the huge unmet need—it's seven times the size of Rett syndrome in terms of the number of patients. Following that will be the Parkinson's disease pivotal study. I wouldn't rule out frontotemporal dementia and schizophrenia for 371, especially schizophrenia, which is a relatively short study. I don't want to forget to mention the rare disease, for which we have not yet provided a name, in order to conduct a pivotal study. This is really consistent with the bullet points you've seen.

Okay, great. Thank you for the confirmation.

Thank you. It looks like we may have a follow-up question from Pete as well. No? Maybe not.

So, Christopher, I think that I have no further questions at this time, so you can continue.

Thank you very much. Again, to reiterate, we are looking forward to the remainder of 2022. We're very excited about the company's potential platform, especially as we build on successful completion of two important biomarker-driven precision medicine pivotal studies. We're looking forward to pivotal clinical readouts in Alzheimer's disease and pediatric syndrome. We are also very excited to move forward with the planned studies that we want to initiate due to unmet needs, and we're eager about this. We look forward to updates and will reach out to you for any questions.

Thanks, Christopher. Ladies and gentlemen, that concludes the call today. Thank you for participating, and you may now disconnect.