Anavex Life Sciences Corp (AVXL) 2018 Q3 法說會逐字稿

Good afternoon. My name is Cheryl, and I will be your conference call operator for today's call. Welcome to the Anavex Life Sciences Fiscal 2018 Third Quarter Fiscal Results Conference Call. As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Mr. Scott Gordon. Please go ahead.

Thank you, Cheryl, 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 the third quarter of fiscal 2018 and highlight recent 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' 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 from equity analysts.

Before we begin, please note that during this conference call, the company will make some projections and forward-looking statements regarding future events. 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.

With that, I would like turn the call over to Dr. Missling.

Thank you. I'd like to thank everyone for joining us on today's conference call to review our third quarter financial results. I'd like to discuss our most recent quarter and share with you our clinical update for ANAVEX2-73. First, we were very pleased to report recently that we have received approval from the Human Research Ethics Committee in Australia for the initiation of our Phase IIb/III 48-week safety and efficacy trial of ANAVEX2-73 for the treatment of early Alzheimer's disease.

The company has also received approval from the Spanish Agency for Medicinal Products and Medical Devices, AEMPS, to move forward with a Phase IIa -- Phase II trial of ANAVEX2-73 in Parkinson's disease patients with dementia, or PDD, which will study the effect of the compound on both the cognitive and the motor impairment of Parkinson's disease for 14 weeks. Both studies will be double-blind, randomized, placebo-controlled studies and we expect initiation of these studies within the next few months.

Last month, Anavex presented at the recent AAIC 2018 Conference the results of an entire genomic DNA and RNA evaluation of the participants in our previous Phase IIa study. Let me make a few comments how to put this in context. It was already established that sufficient ANAVEX2-73 drug exposure among the patients resulted in a group of strong respondents. That means we had already a solid starting ground prior to the biomarker search.

In order to identify any biomarkers, we have taken a completely unbiased, data-driven hypothesis-free approach to the systematic analysis of our Phase IIa study. Using the Artificial Intelligence technology, KEM, from Ariana Pharma, the relation between all parameters, both clinical and genomic, and the impact on outcome was ranked in an entirely unbiased way. The use of machine learning rather than a commonly used hypothesis-driven method, in which you select a hypothesis, which is then tested against data, has several advantages. The machine learning methods are objective and purely data-driven. They enable the analysis of very small cohorts of patients, which systematically ranks biomarkers without any bias and explores the discrimination and patient effect. That means there is no need for an a priori hypothesis. So it is more a -- like, just let the pure data speak.

Out of the initial set of more than 33,000 genes, KEM identified a gene panel of 102 genes linked to CNS, central nervous system. The systematic unbiased analysis of our data identified genetic variance within the sigma-1 receptor and COMT genes as top ranking genes with a significant impact on response of patients exposed to ANAVEX2-73. It is noteworthy that using the same unbiased data-driven approach, the inclusion baseline MMSE score of greater of 20 as well as the concentration of the drug as the main driver of response was identified using this same objective ranking approach. Hence, we expect that our unbiased systematic approach to identifying our biomarkers is likely to increase the chances of success in our follow-up genomic biomarker-driven, late-stage CNS precision medicine trials in Parkinson's disease dementia, Alzheimer's disease and Rett syndrome.

So all forthcoming ANAVEX2-73 clinical study designs will incorporate the inclusion of genomic precision medicine biomarkers identified in the ANAVEX2-73 Phase IIa study. We are very excited as we embark on this next phase of clinical trials, as it could be a unique differentiating factor for Anavex in that we are incorporating a precision medicine paradigm approach borrowed from the field of oncology.

Regarding the Rett syndrome first study in humans, we are on track to initiate this study in this current half of 2018. Additionally, we continue to add staff members to our team so we can execute on our strategic objectives and meet our planned milestones.

And now I would like to direct the call to Sandra Boenisch, Principal Financial Officer of Anavex for a brief financial update.

Thank you, Christopher. Good afternoon. Our cash resources at June 30, 2018 were $25.8 million. Our working capital was $23.5 million and we have no debt. We believe we are sufficiently capitalized to fund our objectives through the next 24 months, given the support we received from the Australian government and other partners. During the quarter, the company used $2.1 million in cash for operations.

Operating expenses for the quarter were $4.6 million, which included $1.7 million noncash charges compared to $3.7 million for the comparable quarter in fiscal year 2017, inclusive of $1.2 million in noncash charges. The increase in operating expenses is primarily attributed to an increase in research and development activity of $0.7 million, due to an increase in expenses incurred in preparation for our upcoming clinical trials and additions to our scientific team. The net loss for the quarter was $2.8 million or $0.06 per share compared to a net loss of $3.6 million or $0.04 per share for the comparative quarter in fiscal 2017.

Thank you. And now I'll turn it back to Christopher.

Thank you, Sandra. In summary, we continue to maintain a strong balance sheet, which will allow us to carry out planned clinical studies for ANAVEX2-73. We anticipate our efforts will result in several significant key milestones and accomplishments in 2018, with the advancement of 3 clinical trials utilizing a precision medicine approach. We look forward to updating you as advancements are made.

I would like now to open the call for questions. Operator, please go ahead.

(Operator Instructions) And our first question comes from Jason Kolbert from H.C. Wainwright.

Can you talk a little bit about the practical use of the genomics information that you derived and presented at the Alzheimer's meeting this summer, and how that's going to be used as an entry criteria for the Alzheimer's disease trial that's planned for Australia? And since you now have approval in Australia, when exactly do you think that trial will be positioned to begin? And then the last part would be, I noticed that you have some grant awards that offset the capital burn rate. Can you give us a little bit more granularity in terms of what those awards are related to? Are they really related to the Alzheimer's disease program in Australia? And what should we be modeling in going forward?

Thank you for the questions. So let me start with the last part, the grant. So we are -- we have 2 grants. One is from the Rett Foundation, where we have a grant, which will accumulate over the period of the study. And the second one is for Alzheimer's disease, which is a grant from the government in Australia where we will be able to get a cash back on about 40% of the expenses incurred in Australia. So that is what is possibly to model into the financial model. The use of the biomarker, which we identified, will be done in the following way, so we can stratify the patients which are coming into the study into those who have the gene variant and those who have the wild-type variant. And the wild-type variant is, on average, in a genetic biobank provided in the overall population to be in the range of 80%, 8-0. And that population seemed to indicate it responds better to ANAVEX2-73 than the remaining 20% with a sigma-1 variant. The way it will be included is that we will -- because it's a requirement from the regulatory to look for what happens to all patients in -- with this -- with any disease, like Alzheimer's, that we will include all patients and we will then pre-specify the analysis of the outcome active against placebo in the analysis by also incorporating our calculation what is the outcome of the response in the active arm without the gene variant compared to the control arm without the gene variant. And it's important to appreciate that this approach is not limited to the Alzheimer's study. This exact approach will be also incorporated in the Parkinson dementia study as well as in the Rett syndrome study. So you have the ability basically to have 2 shots on goal, if you so like. So you will, one, find an outcome of all patients against the placebo arm in the study in all these 3 studies as well as then a pre-specified analysis of the outcome calculation of patients which are supposed to be more benefiting in the drug without the gene variant against the control without the gene variant, to compare apples with apples and oranges with oranges. Regarding the timing, we said that we would start the trial in the next couple of months. And we will upgrade -- update everybody at the same time with an announcement.

It sounds like we could see the Parkinson's dementia trial, the Rett syndrome trial and the Alzheimer's disease trial, it's possible, we could see them all start by the end of this year. Yes?

We have announced prior that it would be within 2018, and we still stand by this.

Our next question comes from Robert LeBoyer from Roth Capital Partners.

The question I have is related to the genomic studies and the description that you just gave, Christopher, was very thorough and complete. The only other questions I would have on top of those things were whether you found any other correlations with other genes that have been associated with Alzheimer's, such as ApoE4 or presenilin or any of the APP processing factors that have been preliminarily tied to Alzheimer's. I wonder if there's any kind of information there.

Very good question. And obviously, the KEM analysis is exactly meant to find if there is a correlation to identify such a correlation. And we did not find any one for the ApoE4 predominant genes or not. And I think the way to explain this is that the ApoE4 seems to be indicating a risk factor of the Alzheimer's pathology so it is a correlation with the fact that you will likely become pathological with Alzheimer's disease. But what we are looking at is the response with our drug and the good news is that, independently, if you have ApoE4 gene carrying or if you do not have that gene or have ApoE3 or ApoE2, that seems to indicate you will have the same beneficial effect of the drug treatment, independently of the fact that if you are likely getting Alzheimer's disease or not. So the drug seems to be responding in the same way independently of any risk factors of getting Alzheimer's disease in the first place. And that is right now our current understanding based on the analysis.

And I would now like to turn the call back over to Dr. Missling for closing comments.

Thank you for participating in today's conference call. I hope you are as excited as we are about the recent progress and the prospects for the year ahead. 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. This concludes today's conference call. Thank you for your participation. You may now disconnect.