Earnings Call
Anavex Life Sciences Corp. (AVXL)
Earnings Call Transcript - AVXL Q2 2021
Sandra Boenisch, CFO
Thank you, Christopher, and good afternoon, everyone. We continue to apply fiscally responsible management of cash utilization with moderate increases within budget. We reported a net loss of $8.2 million for the quarter, or $0.12 per share, as compared to $7.2 million, also $0.12 per share, in the comparable quarter of last year. Research and development expenses were $6.7 million for the quarter compared to $6.1 million for the comparable quarter of fiscal 2020. The increase is primarily attributable to the continued advancement of our ongoing clinical trials. General and administrative expenses were $2.2 million for the quarter as compared to $1.7 million for the prior year period. The increase is associated with the growth of our team. Our cash position on March 31, 2021 was $75.9 million, which we believe is sufficient cash runway for up to three years. Thank you. And I will now turn the call back over to Dr. Missling.
Christopher Missling, CEO
Thank you, Sandra. So, in summary, we expect a very data-rich current quarter, with data readouts from multiple clinical trials, and we expect the remainder of 2021 to be a catalyst-rich year for Anavex. We look forward to providing further updates as advancements continue. And I would now like to open the call for questions. Operator, please go ahead.
Operator, Operator
At this time, we will be conducting a question-and-answer session for equity analysts. Our first question comes from Charles Duncan, Cantor Fitzgerald. Please go ahead.
Charles Duncan, Analyst (Cantor Fitzgerald)
Hey. Good afternoon, Chris and team, congratulations on the progress. Certainly appreciate the update on enrollment in the Alzheimer's program. I had a quick question regarding the DSMB decision recently to continue this study without modification. I assume that not only did they look at safety, but did they look at any efficacy endpoints and/or was there an opportunity to change the sizing—upsize the trial to say data, I'll call it noise or dispersion—and that was not done. So, that data is tracking as you would have anticipated on a blinded basis?
Christopher Missling, CEO
Do you mean the Alzheimer study DSMB-related question?
Charles Duncan, Analyst (Cantor Fitzgerald)
Yes.
Christopher Missling, CEO
Right. So the DSMB has access to all data, and we understand that the DSMB made the decision to continue without changes according to their review. We do know also, though, that the focus of the review was on safety.
Charles Duncan, Analyst (Cantor Fitzgerald)
Okay. So, they're looking at safety and adverse events, but were they also considering efficacy? Were there any kind of futility analyses, or did they have the opportunity to recommend upsizing the trial based on data dispersion?
Christopher Missling, CEO
The DSMB has a very independent ability to make recommendations, but the DSMB's priority is the safety assessment.
Charles Duncan, Analyst (Cantor Fitzgerald)
Okay. So it sounds like in this case, they weren't really looking at efficacy at this point.
Christopher Missling, CEO
Again, they have access to all the data, so that is the best way I can answer this question. There was not a specific request to look into something like futility.
Charles Duncan, Analyst (Cantor Fitzgerald)
Okay. Can you provide some color on the rollover rates for that study into the Open Label Extension? Can you give us perspective on whether or not patients are going beyond the planned dosing period?
Christopher Missling, CEO
Yes. We have a very high rollover rate from the placebo-controlled part of this study into the ATTENTION-AD extension study, which is a two-year, 96-week-long open-label extension. We have reached close to the end of this open-label extension study, and we have received early requests for a continuation of patients on this extension study. We will very likely seek an extension of the extension study because of that. That reminds us of what happened in the Phase 2a, which was also originally limited to an extension period, and then because of requests from participants, caregivers, physicians, and investigators, it was extended multiple times to end up a five-year extension in total. After the five-year period, as you know, the participants of the Phase 2a study ended up receiving access to the drug through a compassionate use (expanded access) procedure. This is the feedback we received from the larger Alzheimer Phase 2b/3 study.
Charles Duncan, Analyst (Cantor Fitzgerald)
It seems positive relative to the perceived benefit that the patient is getting and lack of tolerability issues. But when you mentioned high rollover, could I assume that's like a 90% rollover rate or something like that? And then secondarily, in terms of the dropout rate within the placebo-controlled portion, what were your assumptions and how well did the trial do thus far in helping patients stay on that?
Christopher Missling, CEO
The percentage is in the range of what you indicated in terms of retention into the extension from what we understand, and we have modeled the dropout rates similar to other drugs in this field for Alzheimer's disease. It's a long study, so there are patients with comorbidities, not only Alzheimer's but also cardiovascular conditions, and therefore there is often the phenomenon that patients do not finish an entire study. We have assumed similar rates as in other comparable studies, and I think we are not different from, or worse than, those numbers.
Charles Duncan, Analyst (Cantor Fitzgerald)
Okay. That's helpful. Last question regarding the Parkinson's disease dementia program: were you thinking about going to the agency with, say, an end-of-Phase 2 meeting? And if so, can you provide some color on when that might be?
Christopher Missling, CEO
Yes. We said that we would do that. Once the data is completed—we're about to wrap up—you have to understand that in the PDD study there were a lot of measures included: the CDR system, the UPDRS, actigraphy, the sleep paradigms, and most importantly, and what has been the most time-consuming, the genomic analysis. All of this together will be put into the respective report and that will be shared with the FDA, and then we will be able to get recommendations for the pivotal study in PDD.
Charles Duncan, Analyst (Cantor Fitzgerald)
Could that be this quarter or…?
Christopher Missling, CEO
We will do it as soon as we can. We will do it as soon as we can.
Charles Duncan, Analyst (Cantor Fitzgerald)
Okay. Appreciate you taking my questions and the added color.
Christopher Missling, CEO
Thank you very much.
Operator, Operator
Thank you. Our next question comes from Ram Selvaraju, H.C. Wainwright. Please go ahead. Perhaps your phone is on mute. You may go ahead. We will go to the next question. It comes from Jeffrey Cohen from Ladenburg Thalmann. Please go ahead.
Jeffrey Cohen, Analyst (Ladenburg Thalmann)
Hi, Christopher and Sandra. How are you?
Christopher Missling, CEO
Hello? How are you?
Jeffrey Cohen, Analyst (Ladenburg Thalmann)
Doing fine. Just a few questions. First, on the incentive income—Sandra, can you help us out on the incentive income for the quarter and what that might look like for the balance of the year, as far as our modeling purposes?
Sandra Boenisch, CFO
What is the question exactly?
Jeffrey Cohen, Analyst (Ladenburg Thalmann)
I wanted to know about R&D development, Sandra—1.27 for the quarter—and how that may look like for the balance of the year?
Sandra Boenisch, CFO
I think it was $960,000 for the quarter, and we expect that will remain consistent throughout the remainder of the year.
Jeffrey Cohen, Analyst (Ladenburg Thalmann)
Okay. Got it. And for sure, can you give us some insight into the 2-73 trial more specifically as far as any discussion with the agency, as far as fast-track or accelerated approval?
Christopher Missling, CEO
Do you mean for Rett syndrome?
Jeffrey Cohen, Analyst (Ladenburg Thalmann)
Yes.
Christopher Missling, CEO
We completed the first U.S. Rett syndrome study, RS-001, and we saw a very positive outcome where we presented topline data recently last year. We will now be able to share the entire data of the study, and with that data we will go to the FDA and discuss the path forward, given that we have two ongoing studies: RS-002 in the older age group with higher doses and RS-003, which is also higher doses in a younger patient population. We believe that RS-002 could potentially be pivotal together with the U.S. study, and that is the discussion we'd like to have with the agency. We'll explore approval strategies for the younger patient population with RS-003.
Jeffrey Cohen, Analyst (Ladenburg Thalmann)
Okay. Got it. And any update on the PDD Phase 2 and the AVATAR Phase 2/3 in Rett? Are those timelines still on track?
Christopher Missling, CEO
Exactly. So the RS-001 full data will be this quarter, and the PDD study full data will be this quarter. The topline data release of RS-002 is expected by mid-year.
Jeffrey Cohen, Analyst (Ladenburg Thalmann)
Okay. And that's in an adult population, correct?
Christopher Missling, CEO
That's the adult population, higher dose, that's right.
Jeffrey Cohen, Analyst (Ladenburg Thalmann)
Okay. Perfect. That's all for me. Thanks for taking the questions.
Christopher Missling, CEO
Thank you.
Operator, Operator
Thank you. And we have Mr. Ram back on line. Please go ahead.
Raghuram Selvaraju, Analyst (H.C. Wainwright)
Sorry. Thank you very much for taking my questions. I apologize. I must have had a problem with the signal before. First of all, I was wondering if you could comment on strategic thoughts regarding the potential commercialization of blarcamesine in Rett syndrome versus PDD, and what implications that may have in terms of Anavex's overall positioning? Are you looking at those indications as opportunities to self-commercialize entirely, or are you looking at each of them differently in terms of the degree to which Anavex is going to be directly involved in the actual sale of the drug?
Christopher Missling, CEO
That's a very good question. I think we would not be the first company to market a rare disease product ourselves, if approved. That is the current plan for Rett syndrome. We have put in place steps to prepare for that. For PDD, we will need another study, a pivotal study, because the first study was a Phase 2 proof-of-concept study. So we have more time to think about PDD in terms of commercialization, whether we would license it or structure a partnership, if needed going forward. That is not a decision we must make right now, but for Rett syndrome we would be able to market it ourselves in the U.S.
Raghuram Selvaraju, Analyst (H.C. Wainwright)
And pursuant to that, have you made a definitive decision regarding the disposition of the priority review voucher that you would be eligible for if you won approval of blarcamesine in Rett syndrome? In other words, would you apply the PRV to something else in your own pipeline, or would you definitively monetize it?
Christopher Missling, CEO
We have flexibility regarding the voucher. We are planning to open another study shortly after the Rett study in Fragile X, where we have very good preclinical data. Fragile X is also within the autism spectrum disorder family, like Rett syndrome, and we expect the drug to be superior to current symptomatic treatments in Fragile X. We also have another rare disease program we have not disclosed. There are different ways to think about using the voucher, but we don't have to make a decision yet.
Raghuram Selvaraju, Analyst (H.C. Wainwright)
Okay. Great. And one last question: the clinical development timeline with respect to Fragile X—can you walk us through what you expect the near-term clinical development milestones to be in the Fragile X indication?
Christopher Missling, CEO
So, the RS-001 full data will be this quarter. The RS-002 topline will be mid-year. The RS-003 will be in the second half of this year. In between, we will have discussions with the agency, which will determine how the data can be utilized to get approval for patients who currently have no therapeutic available for Rett syndrome.
Raghuram Selvaraju, Analyst (H.C. Wainwright)
Thank you very much.
Christopher Missling, CEO
Thank you.
Operator, Operator
Thank you. Our next question comes from Tom Bishop from BI Research.
Tom Bishop, Analyst (BI Research)
Hey, Christopher. I got a couple of little questions. I've always assumed that an Open Label Extension study means that everyone gets the drug. Is that a correct assumption?
Christopher Missling, CEO
Everybody who participated in the prior study—whether they were on placebo or active drug—can roll into the open-label extension and receive the drug. It doesn't mean the general public receives it; it's for participants who were involved in the study previously.
Tom Bishop, Analyst (BI Research)
Right. And they get the drug for free still?
Christopher Missling, CEO
That's right. Nobody has to pay for anything.
Tom Bishop, Analyst (BI Research)
Okay. Sandra, could you just tell me the number of shares outstanding now, not average for the quarter, but now?
Sandra Boenisch, CFO
I think we disclosed it in the 10-Q. It should be about 70 million.
Tom Bishop, Analyst (BI Research)
70 million? Okay. And I was wondering how many Alzheimer's patients from the original A2-73 study, which was 32 patients, are still on the drug. There's a graphic showing the number of patients on the medium and low dose that showed a sharp decline in MMSE, and those on the high dose showing very little decline. But the total of the two was like 21 or 22 patients. I'm just wondering where the others went.
Christopher Missling, CEO
That was from the three-year interim analysis. We will be able to share the remainder timeframe possibly in the future. The patients who were in the study have now been switched over to eligibility for compassionate use or expanded access; they're not in a clinical trial anymore because the trial officially completed the extension, but they continue to take the drug. I understand the number is less than 21; I think it's between 10 and 21 patients, if I'm not mistaken. It's very encouraging that there are still people taking the drug after five years.
Tom Bishop, Analyst (BI Research)
Yeah. Also, regarding Alzheimer's, I've read some articles where other companies said they are working on the Alzheimer's indication, one has a partner and another has NIH funding, and of course Anavex has neither. But I think there's a good reason for both. I'd rather hear it from you than from me.
Christopher Missling, CEO
We're moving quickly. When you look at companies that get NIH grants, you generally need published data and it takes a long time to get a grant and then to get the money. That's not a preferred way of moving an asset forward. We have been very quick in advancing assets, and the advantage of being early is that you retain upside. A partner might reduce upside for shareholders. We're proceeding now, but that does not mean we won't consider partnerships at the right time. We're aiming to maximize shareholder value and to retain flexibility.
Tom Bishop, Analyst (BI Research)
Right. Have you had interest from other companies in partnering, or have you just shut them down because you want to keep 100%?
Christopher Missling, CEO
We have been approached regularly and participate at conferences, so we are in discussions with big pharma companies. But it has to be a mutually beneficial structure. We are excited about our pipeline and want to retain upside. That said, we might pursue a partnership at the right time, but our current approach is focused on maximizing shareholder value.
Tom Bishop, Analyst (BI Research)
Last question: the Rett 003 trial, the ANAVEX trial, is that 003 or 004?
Christopher Missling, CEO
003.
Tom Bishop, Analyst (BI Research)
How is enrollment coming on that and what is the size, if you could remind us?
Christopher Missling, CEO
We increased the size from what we originally stated. It's more than 68 or 69 patients, so it's going to be more than 69, and we have stated it will complete in the second half of this year. Enrollment is going well.
Tom Bishop, Analyst (BI Research)
All right. Fair enough. Thank you, Chris.
Christopher Missling, CEO
Thank you.
Operator, Operator
Thank you. We have a follow-up question from Charles Duncan, Cantor Fitzgerald. Please go ahead.
Charles Duncan, Analyst (Cantor Fitzgerald)
Hey, Christopher, thanks for taking the follow-up. Had a couple of questions, one back on the PDD and the other on Rett. Going back to the PDD, do you intend to present more findings from that study in the near term? And with regard to the genomic analysis, I know lab functions have been affected by COVID in the last year, but would you anticipate days, weeks, months, or quarters until you're able to move forward with perhaps an end-of-Phase 2 meeting with the agency?
Christopher Missling, CEO
The PDD study will generate a lot of data because the CDR system includes multiple measures across many cognitive domains—picture recognition, word recognition, accuracy, short-term and long-term memory, reaction time—so there are many granular measures. In addition, we have multiple Parkinsonian disease measures: UPDRS parts 1 through 4, actigraphy, two different sleep paradigms, and the genomic analysis regarding sigma-1 status. We are finishing this up and expect to announce this data this quarter. The discussion with the agency will follow rapidly once we have the report. The agency requires an audited and reviewed report with signatures, which takes additional time. I would describe the timeline as a matter of months rather than days, but not too many months.
Charles Duncan, Analyst (Cantor Fitzgerald)
Okay. That's helpful. My follow-up on the Rett program: regarding the safety database sizing, given the range of age groups you're studying, what has the agency said regarding what's required for that safety database? It's a rare disorder, so I imagine the requirement isn't extremely large.
Christopher Missling, CEO
We included in all our Rett clinical studies and extension studies sufficient safety follow-up: RS-001 had a 36-week study plus an open-label extension that was extended, RS-002 includes a one-year extension, and RS-003 includes a one-year extension. Given the history and feedback from the European side as well, we believe these timelines are sufficient for safety assessment. Anavex is committed to patients, and those who start a study with Anavex will generally have a chance to continue on study drug or ANAVEX-2 and -3. It's very likely we'll extend these extensions beyond the initially anticipated time periods.
Charles Duncan, Analyst (Cantor Fitzgerald)
Okay. Very good. Thanks for taking my follow-up.
Operator, Operator
Thank you. At this moment I would like to hand the call back to Christopher Missling.
Christopher Missling, CEO
So, thank you very much. I want to reiterate that we're very excited about our programs. We believe we have a really strong pipeline and a platform that allows us to address multiple unmet needs. In summary, we expect a very data-rich current quarter with data readouts from multiple clinical trials, and we expect the remainder of 2021 to be a catalyst year for Anavex. We look forward to providing further updates as advancements continue. Stay tuned, and thank you very much. Have a good afternoon.
Operator, Operator
Ladies and gentlemen, this concludes our call today. You may now disconnect.