Anavex Life Sciences Corp (AVXL) 2017 Q4 法說會逐字稿

Good afternoon. My name is Michelle, and I will be your conference operator today. Welcome to the Anavex Life Sciences fiscal year 2017 results conference call. As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Clayton Robertson of The Trout Group. Please go ahead, sir.

Thank you, and good afternoon, everyone. We appreciate you joining us today for Anavex Life Sciences conference call and webcast. Our agenda is to review the company's financial results for fiscal year 2017, and to highlight some key corporate developments. A taped replay of this call will be available approximately 2 hours after the call's conclusion and will remain available for 2 weeks. 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. Dr. Missling and Ms. Boenisch will make prepared remarks and then we will take questions.

Before we begin, please note that during the course of this conference call, the company will make some projections and forward-looking statements regarding future events. We encourage you to view the company's filings with the SEC, this includes, without limitation the company's Form 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 to the development and/or commercialization of potential products, uncertainty of the clinical trials or regulatory approvals, need and ability to obtain future capital and maintenance of intellectual property rights. With that, I'd like to turn the call over to Dr. Missling.

Thank you, Clayton. I'd like to thank everyone for joining us at today's conference call to review our financial results and clinical progress. I am pleased to have the opportunity to share our exciting accomplishments from 2017 and give you a sense of some key milestones to look forward to in 2018.

Anavex Life Sciences is a clinical stage biotechnology company, focused on developing effective targeted therapies for the treatment of new developmental and new degenerative diseases under the precision-medicine paradigm. This entails applying to a targeted treatment approach, genomics data and algorithm analysis. Our lead compound is ANAVEX2-73 and orally available small molecule activator of the sigma-1 receptor. Through the sigma-1 receptor activation, ANAVEX2-73 helps to restore cellular homeostasis in both diseases, degenerative diseases and new developmental diseases. This includes reducing protein misfolding, mitochondrial dysfunction, oxidative stress and inflammation as well as modulating calcium and providing neural protection.

Last month, at CTAD, Anavex presented pharmacokinetic and pharmacodynamic data from our Phase IIa clinical trial and Phase IIa extension trial with ANAVEX2-73 in Alzheimer's disease as well as ongoing favorable safety data. We are advancing ANAVEX2-73 into a Phase II/III study in Alzheimer's disease. Extensive analysis of Phase IIa data including the integration of genome sequencing information from the patients treated with ANAVEX2-73 has been performed in order to understand the trial parameters, which should help to increase the odds of late-stage trial success. We are currently in the process of making the necessary regulatory submissions for the Phase II/III trial, which we expect will be completed within the upcoming quarter.

A brief word about Alzheimer's disease. A very recent study supported by the National Institute of Health, NIH, indicates that the number of people in the U.S. population with Alzheimer's, an estimated 6 million adults, is anticipated to more than double by 2060. That is an increase to 15 million by 2060. In addition to the advancement of ANAVEX2-73 for Alzheimer's disease, we have continued to make significant progress in ANAVEX2-73 for other targeted and genetically-caused indications, especially in Rett syndrome and Parkinson's disease. Rett syndrome is a severe neurological disorder caused by mutations in the X-linked gene MECP2, methyl-CpG binding protein 2. We recently filed an IND for ANAVEX2-73 in Rett syndrome, and we are currently expecting feedback from the FDA to finalize the clinical trial protocol for this study, which will be a 12-week randomized, double-blind, placebo-controlled study. As start-up activities with clinical trial sites have been underway, we anticipate dosing of the first patient in due course following FDA approval of the IND. ANAVEX2-73 has been granted orphan drug designation by the FDA.

In May of this year, we reported additional preclinical data for ANAVEX2-73 from an experiment sponsored by the rettsyndrome.org foundation. The additional preclinical study support progressing into a clinical study for Rett syndrome. As previously reported, rettsyndrome.org has committed a financial grant of a minimum of $600,000 towards the cost of the planned U.S. multicenter study.

A brief word about Rett syndrome. Rett syndrome is a rare your X-linked genetic neurological and developmental disorder that affects the way the brain develops, including protein description, which is altered and as a result, leads to severe disruption in neural homeostasis. It is a rare progressive neurodevelopmental disorder and is caused by a single mutation in the MECP2 gene. The mutation is X-linked. Since males have only 1 X chromosome, where females have 2, males who have the genetic MECP2 mutation are affected in a devastating way; most die before birth or in early infancy. For females who survive infancy, Rett syndrome leads to severe impairments affecting nearly every aspect of the child's life, that is, severe cognitive impairment, inability to speak, walk or eat without the use of feeding tube as well as sleeping problems and seizures. Rett syndrome affects approximately 1 in every 10,000 to 15,000 females. For Parkinson's disease, in October, we announced additional data for ANAVEX2-73 in a model for experimental Parkinson at the Michael Fox Foundation Parkinson's disease Therapeutics Conference. The encouraging results gathered further supported the notion that ANAVEX2-73 is a promising clinical candidate for Parkinson's disease. The company is planning to file an upcoming clinical trial application, CTA, with European regulatory authorities to conduct a Phase II trial for ANAVEX2-73 in Parkinson's disease in a randomized, double-blind, placebo-controlled study.

Our team is prepared and excited to execute these studies in Rett syndrome, Alzheimer's disease and Parkinson's disease, all indications with high unmet medical need upon regulatory approval.

In addition to these trials, we've made significant progress in other indications in 2017. In October of this year, we announced the release of additional preclinical data related to multiple sclerosis. The data was presented in an oral presentation by Wayne State University School of Medicine. The data presented indicates that ANAVEX2-73 may promote remyelination in multiple sclerosis disease. We also announced developments in ANAVEX2-73 application to Angelman syndrome and Fragile X syndrome, both indications caused by underlying genetic mutations. The studies were sponsored by the foundation for Angelman syndrome, ANAVEX2-73 was assessed in a mouse model for the development for audiogenic seizures. The results indicated that ANAVEX2-73 administration significantly reduces audiogenic-induced seizures.

Fragile X syndrome, a single-gene mutation of the FMR1 gene, which is Fragile X Mental Retardation 1 gene is the most common form of inherited intellectual disability and the most frequent cause of autism. In a study sponsored by FRAXA Research Foundation, a nonprofit organization focused on finding a cure for Fragile X, data demonstrated that ANAVEX2-73 restored hippocampal brain-derived neurotrophic factor, BDNF, expression to normal levels. BDNF, underexpression, has been observed in many new developmental and new degenerative diseases. BDNF signaling promotes maturation of both excitatory and inhibitory synapses. Previously, ANAVEX2-73 had demonstrated to significantly improve all behaviors tested in a Fragile X syndrome mouse model, hyperlocomotion, associated learning and marble burying. We also committed to further progressing other compounds in our pipeline, and we are making encouraging progress. In April, we presented new mechanism of action data related to the 3 Anavex compounds ANAVEX2-73, ANAVEX 3-71 and ANAVEX-141.

Finally, during fiscal year 2017, we have continued to strengthen our team. In May, we appointed Dr. Emmanuel Fadiran as Senior Vice President of regulatory affairs. Dr. Fadiran has 24 years of regulatory experience within the U.S. in the Food and Drug Administration, FDA, having held leadership positions at the FDA Center of Drug Evaluation and Research, CDER.

At this time, I would like to direct the call to Sandra Boenisch, Principal Financial Officer of Anavex for a financial update.

Thank you, Christopher. Good afternoon. During 2017, we maintained a strong balance sheet. Our cash resources at September 30, 2017, were $27.4 million, as compared to $9.2 million on September 30, 2016. In addition, Anavex had working capital of $24.2 million on September 30, 2017, compared to $6.3 million on September 30, 2016. We believe this is adequate cash resources to fund all our objectives beyond fiscal 2018, and we have no debt.

We are entering fiscal 2018 with the strongest balance sheet in the history of the company. As always, we continue to be prudent in controlling costs, working with foundations and focusing our resources on advancing the most promising programs, which we believe, will add value for the company and its shareholders.

During the 2017 fiscal year, the company used $9 million in cash to fund operations. This was in line with the company's cash utilization guidance after adjusting for research and development incentive income of $2 million. Operating expenses for fiscal 2017 were $15.7 million, which included $4.1 million in non-cash charges compared to $15.6 million for the comparable period in fiscal year 2016.

We reported a 47% increase in research and development expenditures, which -- this increase was primarily attributable to expenditures in connection with preparations for Phase II and Phase II/III clinical trials, the ongoing clinical trial extension and expanded preclinical work. This increase in research and development expenditures was offset by a 40% decrease in general and administrative expenditures, which were associated with reduced professional fees, reduced one-time compensation-related charges.

The net loss for the fiscal year was $13.5 million or $0.33 per share compared to a net loss of $14.7 million or $0.42 per share for fiscal 2016. With that, I would like to turn the call back over to Christopher.

Thank you, Sandra. We are looking forward to 2018 to applying all diligent proprietary work, including the integration of genome sequencing information from patients treated with ANAVEX2-73, which we expect will enable more robust regulatory submissions.

In summary, we are entering fiscal 2018 with our strongest balance sheet to date, which allows the company to carry out planned clinical studies for ANAVEX2-73. This year has been an extraordinarily productive period for Anavex with advanced preparation underway for studies in Rett syndrome, Alzheimer's disease and Parkinson's disease. All indications with high unmet medical need.

The upcoming year will be focused on deploying key programs through clinical trials with the anticipation of a number of data readouts in 2018. We look forward to updating you as we advance our key programs. I would like now to open the call for questions. Operator, please go ahead.

(Operator Instructions) The first question comes from Jason Olson from Oppenheimer.

I'm curious about the open-label extension trial you have running in Alzheimer's. Can you remind us when we might see data from that study? And do you need that data before you meet with the FDA to discuss your next Alzheimer's study?

The answer to both questions is that the data will be -- the trial will be finished in end of 2018. It will be a full 104 weeks, plus a 57 week from the previous 002 study. So a total of 3-year cumulated daily dosing of ANAVEX2-73. The answer to the second question is, we do not need that data or we do not have to wait for the end of that extension study to initiate a larger Alzheimer’s study. As a matter of fact, it will start before that trial will be finishing.

Okay. And then, have you disclosed what types of patients you will be studying in your next Alzheimer's trial? Will they be mild-to-moderate? And how many patients you plan to enroll in your next trial?

Yes. We did disclose at the CTAD conference that the inclusion will be patients with mild disease. We found a correlation of stronger signal with the patients who had a milder disease stage than more severe stage. So we will focus on mild patients. The final calculation of the patient will dependent, as you just heard, from the integration of the genomic data and that would lead then to the final number of patients in the Phase II/III study.

And then just on multiple sclerosis, it looks like you have some very interesting preclinical data. When should we expect to see you start a clinical trial in MS?

We are moving forward with that program as well. We will update once we have better clarity on that in the course of the coming year.

The next question in the queue comes from Caroline with NOBLE Life Science.

So I just have a question about the Parkinson's disease, the Phase II trial on Parkinson's. Is that now going to be EU only? Or do you also plan on conducting trial in the United States?

This will be now a European trial. We focus on 1 region and that will be in Europe. It's not going to be a study large enough to require additional continents.

Okay. Great. And then just a quick follow-up. Do you still expect the initiations to -- of Rett syndrome and also Parkinson's to take place by the end of this year? Or is that also being pushed out until, like maybe, the first quarter of 2018 calendar year?

The IND was filed for Rett syndrome, and we're expecting any day the feedback from the agencies. So theoretically, this could become still a 2017 start. And the Parkinson will likely be a quarter in 2018 because of -- the submission will be in -- early 2018, the first quarter of 2018.

And there are no other questions in the queue at this time.

Thank you all for participating in today's conference call. I hope you are as excited as we are about the great progress we have made and the prospect for 2018. We will continue to work hard to advance our program and build shareholder value. Should you need additional information or have any questions, please visit our website at www.anavex.com or call or e-mail us. This concludes our remarks for today. Operator?

Thank you, sir. Ladies and gentlemen, this concludes your call today.