Anavex Life Sciences Corp. Q2 FY2024 Earnings Call

Good morning, and welcome to the Anavex Life Sciences Fiscal 2024 Third 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 this conference is being recorded, and 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 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, the 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, and good morning, everyone. Thank you for being with us today to review our most recently reported financial results and to provide our quarterly business update. We continue to meaningfully advance our differentiated precision medicine clinical program, highlighted by the recent presentation of comprehensive results from the Phase 2b/3 clinical trial of blarcamesine, ANAVEX®2-73, which was presented at the Alzheimer's Association International Conference AAIC. This showed that oral, once-daily blarcamesine significantly slowed clinical decline for early Alzheimer's disease patients, with a good comparative safety profile and/or associated neuroimaging adverse events. Full data from the blarcamesine study in Alzheimer's disease Phase 2b/3 placebo-controlled clinical trial will be published in an upcoming peer-reviewed journal. The initiated process for submitting a Marketing Authorization Application, MAA, to the European Medicine Agency, EMA, under the Centralized Procedure is underway, with full regulatory submission of blarcamesine expected in Q4 of 2024. The Marketing Authorization would allow direct market access throughout the European Union for oral blarcamesine for the treatment of Alzheimer's disease. There are an estimated 7 million people in Europe with Alzheimer's disease, a number expected to double by 2030, according to the European Brain Council. Analysis of RNA sequencing RNA-seq, which would reveal which genes are actively transcribed or, in other words, expressed in Alzheimer's patients in comparison between placebo and blarcamesine of the placebo-controlled Phase 2b/3 blarcamesine trial is underway. This data might have relevant value, as it may provide insight into Alzheimer's disease pathology and how cells function in the presence of placebo or in the presence of blarcamesine, respectively. Interim data is expected in the second half of 2024. In June, we completed the last patient last visit in the ATTENTION-AD open-label extension 96-week trial. Interim data from this trial is expected in the second half of 2024. The reason the AAIC 24 meeting resulted in constructive feedback, coupled with enthusiasm around our Alzheimer's disease program, was strengthened by the recent addition of an experienced clinical team, which supports Anavex's future plans. Educational outreach will continue as work progresses toward MAA submission and beyond. We are also pleased to report that the clinical team continues to beat the planned timelines in the ongoing Phase 2 clinical trial of ANAVEX®3-71 in schizophrenia patients. We have completed dosing of the first cohort and are nearing the completion of enrollment of the second cohort of schizophrenia patients in Part A of the trial. In Parkinson's disease, initiation of ANAVEX®2-73 Phase 2b/3, an over six-month trial, including biomarkers, which we believe may be key for understanding drug effect on Parkinson's disease pathology, is expected in the second half of 2024. In Rett Syndrome, an educational presentation was provided at the 2024 IRSF Rett Syndrome Scientific Meeting, held from June 18 to June 19, 2024, which demonstrated the commitment of Anavex to the Rett syndrome community through direct engagement with patients and families. Positive and supportive feedback was received from families and investigators about the continued Anavex Rett syndrome program. Regarding Fragile X, new disease-specific translatable and objective biomarker data generated with ANAVEX®2-73, supporting the initiation of the ANAVEX®2-73 Phase 2/3 clinical trial was presented at the 19th NFXF International Fragile X Conference. Meeting with the NFXF leadership team strengthened Anavex's relationship with the community, coupled with increased awareness of Anavex's Fragile X syndrome program by engaging with patients and families in attendance. We are also expecting the initiation of the Anavex Phase 2/3 clinical trial in a new rare disease in the future. Finally, we are building medical affairs capabilities to expand education and physician support activities to ensure optimal medical impact, including continued clinical publications involving ANAVEX®2-73 and ANAVEX®3-71. And now I would like to direct the call to Sandra Boenisch, Principal Financial Officer of Anavex, for a financial summary of the recently reported quarter.

Thank you, Christopher, and good morning to everyone. I'm pleased to share with you today our third-quarter financial results for our 2024 fiscal year. Our cash position at June 30th was $138.8 million, and we have no debt. During the quarter, we utilized cash and cash equivalents of $5.2 million in operating activities after taking into account changes in non-cash working capital accounts. At our current cash utilization rate, we believe we have a cash runway of approximately four years. During our most recent quarter, general and administrative expenses were $2.9 million as compared to $2.8 million for the immediately preceding second quarter. Our research and development expenses for the quarter were $11.9 million as compared to $9.7 million for the immediately preceding second quarter. And lastly, we reported a net loss of $12.2 million for the quarter, which is $0.14 per share. Thank you. And now back to you, Christopher.

Thank you, Sandra. In summary, we remain dedicated to developing medicines for individuals suffering from brain disorders within neurodegenerative and neurodevelopmental disorders, which could further expand our differentiated precision medicine platform to deliver scalable treatments coupled with convenient oral dosing. I would now like to turn the call back to Clint for Q&A.

Thank you, Christopher. We'll now begin the Q&A session. And the first question comes from Tom Bishop, BI Research. Tom, you should be…

Hey. Can you hear me now?

Yep. Great. Thanks, Tom.

Okay. I had a couple of questions. What are your plans to meet with the FDA or regulators in Asia, which you also alluded to recently, as you did earlier with EMA, and has a date been set for either or is there some sort of hold up or additional data you're waiting for?

Thank you for the question. There's no hold up. There's only the focus right now on the EMA submission, which takes a lot of resources. We have to submit and put together a package of many modules, which can be many pages and documents. So we focus on that. But the time will come; we don't know yet when to also meet regulatory bodies around the world, including the agency in this country as well.

Thank you for the question. Regarding the recent presentation at the AAIC of the Phase 2b/3 data, it's important to address the varying number of patients included in the different measures presented by the company. I understand that this variation may stem from the fact that it's not always possible to require patients in the trial to undergo certain tests, particularly more invasive ones, which could clarify the situation. However, some critics might suggest that this is a form of cherry picking. Could you please elaborate on this issue and clarify if there is any manipulation of the data provided?

May I understand better to talk about the number of patients in each visit, scheduled visits?

In the different things like Cog13 and whatever that you presented in to the AAIC. So the number of patients, some of these.

So it is a time point? Yes, there is no other way to explain it than that every patient does not always present at the time point in question. They can skip. They can be impaired because of COVID, and this trial was during COVID. It's very normal. You just have to account for when you have a data point, and that's exactly described in the presentation. When you look up other papers from previous studies, they are exactly the same. Every number is different at every time point because not all patients attend the visit, so that's a very common procedure.

But you use the data exactly as given to you by the biostatistical firm? And who was that?

Yes, of course. There is no other way than to take every available data point. There is no other way to do that other than that.

Okay. And I wanted to clear up or confirm for myself this the so-called $150 million stock offering that the various news headlined, that was just a shelf offering to be used as needed opportunistically in the future. Correct?

So the company has been extremely cautious with financing. We've been very conservative. While other companies spend a ton of money, we've been very diligent on being very cautious with our fiscal responsibility. So what we did was just to make sure that one day in the future, when we do need more resources for market entry or other reasons, we have that in place. So it's not meant to be used today or tomorrow, but the opportunity could arise; it was just to put in place something, so we have it in place for the future.

Okay. And regarding Rett, is there a date to initiate another Rett trial? Or I'm not sure what was going on there?

So we have had very good feedback from the conference I mentioned, and there's no date yet. But we proceed as we stated to do a larger study for Rett Syndrome as well.

Okay. And finally, with regards to Fragile X, was there a Phase 1? You mentioned going to a Phase 2b/3, I think and…

The Phase 1 was done with Blarcamesine with ANAVEX®2-73 already, so we can start into a Phase 2 because the Phase 1 was already done prior to this because the drug was already tested in healthy human volunteers.

Okay. And, actually, I had one more. With regards to Schizophrenia, can you remind us a little more or explain the first cohort, the second cohort, Part A; is there a Part B? I mean, could you just run through that again?

Sure. So Part A involves signal ascending doses. We test the tolerability of the patients for the first doses, lower dose, and a higher dose subsequently, and the second higher dose is now almost completed enrollment. Part B will be a longitudinal study lasting about, I think it's 28 days or so. The drug will be given at the dose which will be considered the best tolerated dose, and we will then observe patients over a longer period of time.

So the second dose is the higher dose?

The second dose from Part A is the higher dose, and Part B will be the dose which we choose once it starts, which would be a longer trial of 28 days or four weeks, basically.

All right. Thank you.

Thank you.

Thank you, Tom. Our next question comes from Soumit Roy at Jones Research.

Good morning everyone, and thank you for taking the question. And also congrats on executing on multiple fronts. On the AAIC data, Alzheimer disease, could you give us a little color and make us understand the dose dependency or a clear lack of dose dependency between 30 milligrams and 50 milligrams? There was ADAS Cog working a little better for the 50 milligram versus CDR-SB for the 30 milligram. And the discontinuation rate, what percent of the 50 milligram did you see had to scale back to 30 milligram because of adverse events in the open-label extension?

So let me address the first question first. The two arms are those groups, and we use the expression for that reason. When you read our description in the presentation, we talk about the dose groups, 30 milligram dose group or 50 milligram group. Since we allow titration to the best tolerated dose for those two arms, as well as placebo, we realized that the target dose for most patients was relatively close to each other in those two arms. So while in the 50 milligram group, there were some with 50 milligrams, there were also some with 30 milligrams. It was a bit higher than the 30 milligram group, but not by much. So they're pretty much close, and that's why I also prespecified the two arms together against placebo in a predefined analysis. We have seen prior to that a dose response curve in our Phase 2A, so there's no doubt that the dose response is confirmed. But what we noticed in this trial, where we forced patients to uptake trait to the target dose 50 very quickly, within two weeks and then to three weeks, we noticed that it wasn't very well received. Some patients experienced dizziness, and they wouldn't feel comfortable about it. Because they're not impaired patients, they are early Alzheimer patients, they felt uncomfortable saying maybe we have COVID; I don't want to continue this. It was during the time of COVID, of course, as well. So that's why we had some dropouts at the higher dose more than in the lower dose group. We therefore realized that, during the open-label study where we allowed a more lenient and less stringent way of up titration and also allowed patients to take the drug at nighttime instead of in the morning, we noticed that there was much higher tolerance for either dose of 30 or 50 as long as they were allowed to get used to the drug for a longer period. This was also seen in the Compassionate Use program with extremely higher tolerance, allowing patients to titrate to 50 or 30 as long as they had sufficient time to do that and then take nighttime dosing. We don't see the adverse events we've seen in this trial because, again, we forced them to titrate so quickly up to the target dose. It's a manageable and addressable adverse event; it's not like, when you look at brain bleeding or brain swelling from antibodies, which we don't have, and no matter how you take the drug, you always will have 30% or more of patients with these very dangerous side effects from the antibodies, which we don't have. In our case, dizziness is a manageable issue and just depended on the titration schedule, which can be flexibly changed. That’s what we will continue to do in the future. Also, it's worth noting that we've heard from physicians that the dizziness signs are not experienced by all patients. We should put this into perspective; it's a sign that shows penetration in the brain and demonstrates that something is happening within the brain. Lastly, I would like to point out that this dizziness lasted, on average, between seven to 11 days for those patients who experienced it, making it a mild form of dizziness and a very easy-to-address situation. This emerged in the trial because we forced patients to go to high doses very quickly, and we've learned the lesson that we can avoid that.

That is really helpful color. So last question is, when should we expect the open label 96-week data? Is it CTAD or more toward the end of the year? Should we expect after that data, you would approach the FDA with the entire packet submitted to the European Authority plus this open level? Or if you can provide any details there?

Yes, so let us first put the data together. But once we have it, we will make the decision. But all your suggestions could be valid recommendations.

Thank you, and congratulations again on the progress.

Thank you. Appreciate it.

That's all the questions for now, Dr. Missling.

Thank you. So in closing, we continue to focus on execution and commercial readiness as we advance our therapeutic pipeline to potentially improve patients' lives living with these devastating conditions. Thank you very much.

Thank you, ladies and gentlemen. This concludes today's conference call. We appreciate your participation, and you can now disconnect.