Anavex Life Sciences Corp. Q1 FY2023 Earnings Call

Good morning, everyone. And welcome to the Anavex Life Sciences’ Fiscal 2023 First Quarter Conference Call. My name is Clint Tomlinson, and I’ll 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 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. 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 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’d 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 our business update. We are excited about the continued advancement of our lead product candidate ANAVEX 2-73 in Alzheimer disease and Rett syndrome as we maintain our attention on execution across each of our clinical programs and overall business operations. We were very pleased to present top-line data from the randomized double-blind placebo-controlled Phase 2b/3 study for the treatment of early Alzheimer disease at the CTAD Congress 2022 on December 1. The trial met both co-primary and secondary endpoints showing statistically significant reduction of clinical decline as measured by those endpoints. We are excited about the data and plan to submit the data for publication in a peer-reviewed medical journal in the near term. As a reminder, Alzheimer disease represents a growing burden to healthcare systems and societies worldwide. This disease is often multifactorial and complex in nature. We believe that our precision medicine platform and novel central nervous system mechanism improve the chance of clinical success. We are pleased by the results of the placebo-controlled Phase 2b/3 Alzheimer disease trial, which data suggests that ANAVEX 2-73 blarcamesine, an orally available small molecule activator of the upstream sigma-1 receptor, is pivotal to restoring neural cell homeostasis and promoting neuroplasticity and might be at the forefront of biomarker-guided pathway-based targeted precision medicine drug development. We look forward to presenting the complete data set of the study as well as the other long-term study data of the other programs, including Parkinson disease, Dementia, and Rett syndrome. With a deep portfolio of promising therapies, we believe that Anavex remains well positioned to address the urgent needs of patients affected by neurodegenerative and rare neurodevelopmental diseases. Going back to the Rett syndrome program, we announced recently on February 2 last week, the completion of enrollment of the randomized placebo-controlled EXCELLENCE Phase 2/3 study for the treatment of pediatric patients with Rett syndrome. We expect to announce top-line results from this study in the second half of this year. In Parkinson's disease Dementia, we are planning to announce the data from the 48-week open-label extension of the previously successfully completed Phase 2 study. In other indications, recent communication with the FDA confirms our strategy to advance ANAVEX 2-73 for the treatment of Fragile X syndrome. We plan to initiate this trial soon and will share more details about this clinical program in the near term as it becomes available. Furthermore, pipeline expansion of the Anavex platform using gene biomarkers of response, applying precision medicine to neurological disorders is expected, including the planned initiation of an ANAVEX 2-73 imaging-focused Parkinson disease clinical study sponsored by the Michael J. Fox Foundation, a planned initiation of our Phase 2/3 clinical trial for the treatment of a new rare disease indication, and the planned initiation of ANAVEX 3-71 Phase 2 clinical trial for schizophrenia. Last but not least, we expect several clinical publications involving ANAVEX 2-73 and ANAVEX 3-71, and a Rett syndrome burden of illness study. 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 morning to everyone. We continue to demonstrate operating fiscally responsibly. During our first fiscal quarter, general and administrative expenses were $3.3 million, compared to $3.1 million for the comparable quarter of fiscal 2022. Our research and development expenses for the quarter were $12.1 million as compared to $8.7 million for the comparable quarter of fiscal 2022. Overall, we reported a net loss of $13 million or $0.17 per share, inclusive of $5.3 million in non-cash compensation items. Our cash position at December 31, 2022, was $143.6 million. During the quarter, we utilized cash and cash equivalents of $5.8 million to fund our operations. At our current cash utilization rate, we believe we have sufficient cash runway to fund operations and clinical programs beyond the next four years, consistent with guidance in previous quarters. The increase in research and development expenses over the comparable period is primarily related to the expansion of our team and an associated increase in compensation and non-cash charges period-over-period, as well as costs associated with our Phase 2b/3 study, ANAVEX 2-73-AD-004, and the manufacture of additional clinical trial supply for upcoming pipeline programs. Thank you. And now back to you, Christopher.

Thank you, Sandra. This is an exciting time for the company, and we remain on track for completion and readout of ongoing clinical trials and initiation of additional biomarker-driven precision medicine clinical trials as planned. I would like now to turn the call back to Clint for Q&A.

Thank you, Christopher. We will now begin the Q&A session. The first question is going to come from Soumit Roy at Jones Research. You can go ahead, Soumit.

Hi, everyone. Congratulations on the progress. Could you give us a little color on what kind of details on the Alzheimer data we are going to expect? Are we going to see some MRI data? Or a time course of how the reduction in cognitive decline has occurred, or something like that?

Yes. So several items will be in the paper, in the publication. Of course, we made sure that the study has a lot of biomarkers and additional measures of endpoints. Among them is MRI, which is a very important marker of pathology, which is the most accurate picture of the brain, and it's very well described that brain atrophy moves in this pathology aggressively. So that will be part of the analysis as well as additional biomarkers of pathology like a better intel as well as the biomarker which are specific to Anavex, which is the sigma-1 variant analysis, which was clearly prespecified. You remember we noted that patients with a wild type sigma-1 receptor did much better compared to those who had a variant. However, because the variant carriers were in the minority, often that signal overall was not affecting the significance of all patients, but it was notable that there was a better outcome in patients with wild type sigma-1 carrier status in previous studies. So we are looking forward to seeing how this plays out in this study as well. Additionally, we will see the response to the endpoints of the study depending on doses as well as over time because we measure every three months the time points within the study. Then you will see additional endpoints that have been included in the study, like quality of life, sleep quality, and other behavioral measures related to Alzheimer pathology.

Thank you for the detail. That was really helpful. Should we expect the data to come out in the first half of this year? Or will it be more like the second half?

We actually try to do this as soon as possible because we want to share that also with the agencies in the FDA and Europe. We are really keen to do that as soon as possible. However, at this point in time, it's too premature to give guidance on the timing, but you can be assured we will do that as soon as we can.

Great. Thank you so much for taking the questions. And congrats on all the progress.

Thank you.

The next call comes from Yun Zhong at BTIG. You can go ahead, Yun.

Hi, good morning. Thank you very much for taking my question. So Christopher, can you talk about your plan for the regulatory discussion with the FDA on the Alzheimer's indication? Have you started any talks with the FDA?

It was a bit cut off. So do mind.

Sorry, could you ask that again? We had a glitch.

Okay. No problem. So, yeah, I was wondering about your plan for the discussion with the FDA. Have you initiated anything? Or do you have to wait for additional data to be available before you can start that conversation with the FDA?

That's correct. The FDA engages when there is data, and that's exactly where we are. Having a complete data set is essential for us, and that's why we are eager to finalize that, as I mentioned, because it's critical for engaging with both the FDA and the European EMA agency.

Okay. Regarding the Rett syndrome study, I noticed the press release about enrollment mentioned that with the FDA's guidance, you are utilizing the primary endpoint. Can you confirm that the primary endpoint is RSBQ and that it is similar or identical to the one used in the EBITDAR study? Also, has the FDA consented to the AUC, the modified RSBQ scale as a suitable endpoint for the Rett syndrome study?

We have it described in clinicaltrial.gov, and it was never changed in clinicaltrial.gov for the EXCELLENCE study. It is the RSBQ primary endpoint, and the CGI is the key secondary endpoint over the course of the trial.

Is that the same endpoint that was used in the AVATAR study?

Slightly different. So it's actually the measurement over time from beginning to end of the trial. AUC.

Not AUC?

Not AUC.

Exactly, yes. Because the study is large enough that it can carry the signal by itself without AUC. Okay. Great. So the last question, I believe that the original plan was to initiate all those studies that you talked about by year-end last year. I understand that the focus was on the Alzheimer's disease program. But are there any specific reasons for the delay? Or are you able to provide any specifics in terms of timing? When do you expect to initiate those studies?

Yes. We were very ambitious last year when we made those plans. The attention to detail required really to finance and work on the specific protocol because it's easy to start any trial. It's more difficult to finish a trial successfully, and that's what we're aiming for. So I think we should appreciate that initiating a trial is not difficult, it's about making the trial successful and meaningful for when it's growing. Therefore, when you look at each trial, there are always things to consider and you learn to improve it as you go before you really start it. We didn't want to rush it, so that's why we want to say we want to do this with the right timing. But obviously, we will catch up very nicely now with all these trials, which we plan to do. They are still on track to be executed.

Okay, great. Thank you very much.

You're welcome.

I don't see any further questions at this time. Christopher?

Good. Thank you. Again, we are very much looking forward and we're very excited about the company's potential as we build on biomarker-driven precision medicine studies with significant unmet medical needs and economic burden. We're looking forward to upcoming data readouts in the Parkinson's dementia and Alzheimer's disease with complete data set as well as Parkinson's dementia open-label extension and the pancreatic Rett syndrome study. Thank you very much.

All right. Thank you, ladies and gentlemen. This concludes today's conference. We appreciate you participating. And you may now disconnect.