Earnings Call Transcript - AVXL Q1 2024

Operator, Operator

Good morning. Welcome to the Anavex Life Sciences Fiscal 2024 First 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. And during this session, if you would like to ask a question, please use the Q&A box or raise your hand. Please note during this conference – 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 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 would like to turn the call over to Dr. Missling.

Christopher Missling, CEO

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 are poised for a very exciting year for Anavex. In December, the Committee for Medicinal Products for Human Use within the European Medicines Agency agreed to the oral blarcamesine for Alzheimer’s disease being eligible for submission of an application for a Union Marketing Authorization in the EU under the European Medicines Agency centralized procedure. The market authorization would allow direct market access throughout the European Union for oral blarcamesine for the treatment of Alzheimer’s disease. We are actively engaged in this process and aiming to submit the market authorization application as early as possible in 2024. Full data from the blarcamesine in Alzheimer’s disease Phase 2/3 randomized clinical trial is forthcoming and will be published in an upcoming peer-reviewed journal. Also, we’d like to mention that the respective open-label extension 96-week trial ATTENTION-AD is ongoing. Top line data from ANAVEX2-73-RS-003 Phase 2/3 EXCELLENCE pediatric clinical trial was announced last month. We intend to further assess the results and discuss with the regulatory authorities next steps. A high enrollment rate into the OLE open-label extension of over 91%, as well as the high level of requests for the Compassionate Use Program of 93%, provide solid numerical evidence for the positive real world evidence reported by patients and their caregivers with Rett syndrome under Compassionate Use Authorization. Previously, we announced the first entire clinical gene pathway data from the ANAVEX2-73-RS-002 AVATAR Rett syndrome trial. We believe that this is the first time a whole genome exome analysis comparing drug and placebo in patients with Rett syndrome was performed, and we believe the results confirm that Rett syndrome is indeed a neurodevelopmental disorder with a key metabolic component, which can be addressed with therapeutic intervention and is likely relevant for other neurodevelopmental diseases as well. Related to ANAVEX3-71, our second clinical small molecule, we were pleased to announce the initiation of the U.S. FDA cleared placebo-controlled Phase 2 trial of ANAVEX3-71 for the treatment of schizophrenia, which is expected to begin in the second quarter of calendar 2024. Regarding the Parkinson's disease program, we are in preparation to initiate the ANAVEX2-73 imaging-focused trial and the ANAVEX2-73 Phase 2b/3 six months trial. For Fragile X, we believe new disease specific translatable and objective biomarker data generated recently with ANAVEX2-73 should be strengthening the support for the initiation of the potentially pivotal ANAVEX2-73 Phase 2/3 clinical trial in Fragile X. Related to a new rare disease, we are also preparing to initiate a potentially pivotal ANAVEX2-73 Phase 2/3 clinical trial. We are also expecting further peer-reviewed clinical publications involving ANAVEX2-73 and ANAVEX3-71. Last month, we announced a new peer-reviewed publication in clinical pharmacology and drug development, findings from ANAVEX3-71, first in human study, which met its safety objectives. The publication is entitled 'Population-Based Characterization of the Pharmacokinetics and Food Effect of ANAVEX3-71, a Novel Sigma-1 Receptor and Allosteric M1 Muscarinic Receptor Agonist in Development for Treatment for Frontotemporal Dementia, Schizophrenia, and Alzheimer’s disease.' The publication reports pharmacokinetic dose proportionality of ANAVEX3-71 in humans and food had no effect on the PK of ANAVEX3-71. This is very good news, and this data also expands the safety objectives met in this first in human study of ANAVEX3-71, further supporting its drug development program. Lastly, also last month, we announced the expansion and strengthening of our patent portfolio with the United States Patent and Trademark Office granting a new U.S. patent entitled 'NEURODEVELOPMENTAL DISORDER THERAPY.' Anavex’s newest patent expands coverage of ANAVEX2-73 therapy to ameliorate various conditions associated with loss of function mutations of the gene encoding MeCP2 protein. 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.

Sandra Boenisch, Principal Financial Officer

Thank you, Christopher, and good morning to everyone. I’m pleased to share with you today our first quarter financial results for our 2024 fiscal year. Our cash position at December 31 was $143.8 million. During the quarter, we utilized cash and cash equivalents of $7.3 million to fund operations. At our current cash utilization rate, we believe we continue to have sufficient cash runway to fund operations and clinical programs beyond the next four years. During our most recent quarter, general and administrative expenses were $2.6 million, which is consistent with the immediately preceding fourth quarter of fiscal 2023. Our research and development expenses for the quarter were $8.7 million as compared to $10 million for the most recent fourth quarter of fiscal 2023. And lastly, we reported a net loss of $8.6 million for the quarter or $0.11 per share. Overall, we plan to continue to be fiscally responsible and we believe we continue to have sufficient cash runway to fund operations and clinical programs beyond the next four years. Thank you. Back to you, Christopher.

Christopher Missling, CEO

Thank you, Sandra. Not only have we demonstrated to continue to be fiscally responsible, but this is also an exciting time for the company and we’re very excited to be entering a new phase of the company’s history with our biomarker driven precision medicine programs. I would now like to turn the call back to Clint for Q&A.

Operator, Operator

Thank you, Christopher. We will now begin the Q&A session. Our first question is coming from Jones Research, and I’m assuming this will be Soumit Roy.

Soumit Roy, Analyst

Hi, Clint. Hi, everyone. Thank you for taking my question. A few on the timeline point of view for the Alzheimer program. What is the expected time for submission of the publication for the Alzheimer’s data, and when are you thinking to get the submission for the European filing done this year?

Christopher Missling, CEO

Both are in progress, and we cannot provide timelines because the paper’s review process is not in our hands. There are different average times for these, so it’s hard for us to assess it, but I think we are on the right path here. Regarding the EMA submission, we would like to do this as soon as possible in 2024 and that’s exactly what we’re doing. So we are very actively preparing every module to submit it.

Soumit Roy, Analyst

Should we expect these to be first half events, more like second quarter?

Christopher Missling, CEO

I would rather say, we try to do our best. We would provide an update once it's submitted, but it’s really not easy for us to commit to something, and we would like to do that as soon as possible and we will update everybody once it’s submitted.

Soumit Roy, Analyst

Understood.

Christopher Missling, CEO

And this happens in a dialogue, so it’s not just in a backlog. The submission is in a dialogue with the agency, and that’s kind of like also is important.

Soumit Roy, Analyst

Understood. A similar question on the timeline for the OLE data or any other update we’re going to get from the Alzheimer trial.

Christopher Missling, CEO

So the OLE data is ongoing. Therefore, there is always a possibility for doing an interim analysis because it’s an open-label extension study, but the OLE study is ongoing. It’s really focused on that.

Soumit Roy, Analyst

I’ll go switching to the Rett program. Two questions. One is if you can provide us some kind of detail on there was a difference between your trial and Acadia’s trial. The reduction in the even the placebo arm or the treatment arm is much pronounced in your trial. Does that mean the baseline characteristic was very different in the enrolled patient? And the second is you saw a quick early four-week possibly clinical benefit, but then it kind of waned away at the 12-week time point. You see as a pharmacokinetics or a dosing issue.

Christopher Missling, CEO

No. I think if I can start with the last part, there’s not such a thing actually. The trial was showing an extremely nice improvement score in the active arm with over minus 12.9 in our analysis, which is extremely strong. Trofinetide showed only an improvement in the active arm of minus 5.1. So we showed a stronger signal in the active arm. What happened was in our trial, the placebo also improved and in the trofinetide, the placebo did not improve. So that is basically really the difference in the standard error. So the variability of the scores was much higher in our trial than in the trofinetide trial. We laid out several factors why that is possible, and we now understand exactly what happened and we can factor that in, in the explanation very nicely. It’s really like the variability of the trial, the noise, if you like was much higher in our trial. And let’s not forget, we had a smaller study. We also had a Phase 2/3 which was not a pivotal study, Phase 3. We had just a two-to-one randomization with 60 patients or 62 in the active arm and 30 in the placebo arm. These 30 patients, if a few of them are just basically very noisy, that could derail and increase the noise in the trial and increase the standard error, which we saw in our trial.

Soumit Roy, Analyst

So should we expect that rate still being kind of one of the primary focuses for the company? And maybe one path forward would be to start a fresh pivotal trial with 180 patients, one-to-one randomized, kind of the Acadia size trial.

Christopher Missling, CEO

That is a very good point, and it's exactly a possibility. And again, we would not do that; however, without further regulatory input, because we might get some feedback that could be very favorable. But indeed, that is something which could be easily done. It’s a 12-week study; it’s not too long. We have a strong interest from the community, given the strong interest, and to continue to stay on study drug and patients in Rett syndrome from our program have been now on this drug for over four years – up to four years. That really shows a very high sticky interest to keep our drug and not to switch to anything else in the meantime.

Soumit Roy, Analyst

Understood. Thank you again for taking the questions and congratulations on all the projects.

Christopher Missling, CEO

Thank you.

Operator, Operator

Looks like our next call comes from Tom Bishop with BI Research. Go ahead, Tom.

Tom Bishop, Analyst

Hi, can you hear me?

Operator, Operator

Yes, go ahead.

Tom Bishop, Analyst

Good. Where do you stand with the FDA as far as Alzheimer’s goes? I was really pleased with the news about the EMA, but what about the FDA?

Christopher Missling, CEO

Yes, it’s a great question. We actually have noticed that last night we saw the release from Eisai and the pickup of the antibodies of lecanemab was relatively muted. So we saw that in the last quarter, they were not able to reach their target numbers of patients on the drug in the market. They basically stated that they have reached a very limited amount of patients on the drug. That tells us that the antibodies indeed seem to be not well received in the community, or the procedures are very cumbersome, or the pet centers are not able to accommodate patients, or the MRI centers are not able to schedule on time. It’s a combination of factors which I cannot really talk about, but seems to be really not an easy task. This gives us an interesting position from a timing perspective to prepare now a dialogue with the agency to share our data with the small molecule, which has the advantage of being easily administrable; you don’t need any challenging procedures. You don’t need a PET study upfront, you don’t need an MRI study upfront or during the treatment, and you can just go to the physician and be assessed and have Alzheimer’s disease, and the physician will say, take these capsules or pills and come back in a few weeks or months again. This is really a big advantage from our procedure. There’s also no requirement to have a demonstrated level of a beta in the brain because in our study it was not required. We measured a beta in the brain, but it was not an entry criterion. So the entire population of the Alzheimer population in the world, including every region, would be a target population for ANAVEX2-73 blarcamesine while the antibodies only can target patients with MCI in a certain level or threshold of a beta in the brain. It turns out not all patients with Alzheimer have that high threshold of a beta in the brain, so they would not be eligible for an antibody treatment. This means that the available population in Alzheimer disease is much larger for blarcamesine to penetrate than for the antibodies. This is a long winding answer. So we are proceeding with this dialogue.

Tom Bishop, Analyst

So would – do you plan perhaps to speak to the FDA soon or are you scheduled to, or have you already to make your case?

Christopher Missling, CEO

We’re planning to proceed with what I just said, and the timing could not be better.

Tom Bishop, Analyst

Okay. Great. And as far as Rett goes, what I sort of heard you say was given that the data for A2-73 was even better than the drug that recently got approved, except for how the placebo went. Is it possible that the FDA might just go ahead and encourage you to file for approval based on this data?

Christopher Missling, CEO

We don’t know, and everything is possible. That’s why we said we want to reserve and analyze the data completely and then discuss this with the agency. Then we take the next steps from there. But we cannot promise anything. Again, as I mentioned before, there’s a very easy way to address this as a backup plan, to have just another study, a 12-week study, and putting in place all the features which would not allow for a placebo response as we have seen, a larger study, similar in size to trofinetide, and also other features which can be included.

Tom Bishop, Analyst

How big was the study again?

Christopher Missling, CEO

Pardon me. 12-week.

Tom Bishop, Analyst

How big was it though: 180?

Christopher Missling, CEO

180 patients, I think about 180 patients total. So randomization 90/90, active arm and placebo equally randomized. The Phase 2 was – Phase 2/3 study was half of this size, with a caveat that we had only 30 patients in the placebo arm. These measures are very noisy, as we have noticed. And so unless you get unblinded, they are noisy and they’re just not measures which are perfect, and that’s what we noticed. But there are ways to address it to avoid this noisiness. Now we can implement that.

Tom Bishop, Analyst

Okay. Well, Godspeed. Thank you.

Christopher Missling, CEO

Thank you.

Operator, Operator

So I don’t see any other questions at this time. Dr. Missling?

Christopher Missling, CEO

Thank you. Again, this is exciting progress in the field relating to treating neurodegenerative diseases, which highlights the significant potential for our broad therapeutic portfolio and differentiated precision medicine platform to deliver easy access and scalable treatment options demonstrated by the initiated process of Marketing Authorisation Application to the European Medicines Agency, EMA for blarcamesine related to the treatment of Alzheimer’s disease. We continue to focus on execution and commercial readiness, as we advance our therapeutic pipeline to potentially improve the lives of patients living with neurodegenerative, neurodevelopmental disorders, and schizophrenia. Thank you.

Operator, Operator

Thank you all for participating today. This concludes our conference. You may now disconnect.