Anavex Life Sciences Corp (AVXL) 2019 Q1 法說會逐字稿

Good afternoon. My name is Michelle, and I will be your operator for today's call. Welcome to the Anavex Life Sciences Fiscal 2019 First Quarter Financial Results Conference Call. (Operator Instructions) 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, sir.

Thank you, Michelle, and thank you, everybody, for joining us, and good afternoon. 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 first quarter of fiscal 2019, provide a clinical study update 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 1 month. The call will also be available for replay on Anavex' website at www.anavex.com.

With us today are 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.

And with that, it is my pleasure to now 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 fiscal 2019 first quarter financial results and share with you our clinical updates for ANAVEX 2-73.

First, we are pleased to report that since enrollment started on October 30, 2018, for the Phase II ANAVEX 2-73 Parkinson's disease dementia study, we have achieved over 1/3 of the total patient enrollment target to date. The company is also executing well with enrollment for the Phase IIb/III ANAVEX 2-73 Alzheimer's disease study with over 80 patients screened to date.

Regarding our Rett syndrome program, we recently successfully submitted the Phase II ANAVEX 2-73 study to the respective Institutional Review Boards of the first 3 clinical trial sites. And we will continue to add further sites in the United States to the study in the coming months.

Last month, we announced the appointment of Walter Kaufmann, M.D., as Chief Medical Officer of Anavex. We are very excited to have Dr. Kaufmann on our team. Dr. Kaufmann brings extensive experience in Rett syndrome and other disorders related to Anavex target indications. I'm looking forward to his involvement in our execution of the ongoing clinical studies and to the continued development of ANAVEX 2-73 for both neurodevelopmental and neurodegenerative diseases.

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

Thank you, Christopher, and good afternoon, everyone.

Our operating expenses for the first quarter of fiscal 2019 were $7.5 million compared to $4.1 million for the comparable quarter in fiscal 2018. Operating expenses in the first quarter of fiscal 2019 include an aggregate of $2.1 million in noncash charges related to the issuance and vesting of stock options. This compares to $1.1 million in noncash charges in fiscal 2018 first quarter. The increase in operating expenses is also attributable to higher research and development expenses compared to the same period last year.

R&D expenses in the first quarter of fiscal 2019 were $5.7 million, up from $2.7 million reported in the first quarter of fiscal 2018. The increase in research and development expenses is the result of expenses incurred in connection with the advancement of clinical studies for ANAVEX 2-73 as well as nonrecurring expenses of approximately $1 million associated with large-scale manufacturing of ANAVEX 2-73 in quantities reserved for potential future commercial use.

The net loss for the first quarter of fiscal 2019 was $7.3 million or $0.16 per share as compared to $4.1 million or $0.09 per share in the comparative quarter of fiscal 2018.

During the first quarter of fiscal 2019, we used $4.2 million in cash to fund operations, and our cash resources at December 31, 2018, were $20.7 million. We believe that we have sufficient cash resources to fund our objectives for the next 2 years, given our cash on hand and the support we received from the Australian government and other third parties to fund our ongoing clinical trial.

Thank you. And now I will turn it back to Christopher.

Thank you, Sandra. In summary, we are actively focused on execution of the current clinical studies for ANAVEX 2-73. We are very pleased with the pace of enrollment for the novel genomic marker-driven late-stage CNS precision medicine clinical studies in Parkinson's disease dementia and Alzheimer's disease. We are looking forward to providing continuous updates on enrollment for these studies as we advance into 2019. We will be presenting a more detailed company update at the 2019 BIO CEO & Investor Conference on Monday, February 11, 2019, at 1:30 p.m. Eastern Time in New York. We look forward to providing further updates as advancements continue.

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

(Operator Instructions) Our first question comes from Jotin Marango with Roth Capital.

Congratulations on the enrollment progress. My questions to Christopher are about the Rett program. Very interesting new indication, which is getting hotter out there. So is there one functional parameter or perhaps a constellation of parameters that are thought to be clinically meaningful in assaying improvement in the disease? Perhaps if there are several, are some of them more clinically meaningful to the patients? And then lastly, the important part of the question, where do you think regulators are in understanding and then having consensus on what is important in evaluating the disease?

Good questions regarding the Rett indication. So the -- I will start with the second question first. So there has been a response from a sponsor with our proposed Phase III design, and that Phase III design has a primary endpoint of the RSBQ. The RSBQ has been actually developed by Walter Kaufmann, which is now our Chief Medical Officer. And the RSBQ consists of a group of behavioral and a compositive questionnaire of the symptoms of the Rett pathology. We do know that the Rett pathology is manifold in its pattern. There is not a unifying feature of the disease. I'll give you just a few examples. One of them is cognitive impairment. The other one is seizures. The third one is motor impairment, and the third -- fourth one is anxiety. So in all of these 4 features or phenotypes are adequately addressed in this RSBQ, Rett Syndrome Behavioural Questionnaire. And so that now also answers your first questions, I assume. And that's also the measurement we're using for our study.

And the last question. In the Rett study or in the Rett program overall, do you expect that engagement of sigma-1 could segregate responders based on target variance similarly to what you saw in Alzheimer's? Or do you think that response here, whatever the endpoint may be, could be more homogeneous because the disease itself is also monogenic differently from Alzheimer's?

It's a very good question. And since there has not been a whole genome analysis of Rett syndrome patients yet, we cannot answer the question if there is a correlation of the sigma-1 variance in that group of patients. If we do find out that there is a different response of the patients with the variant which we identified being not responding as much as the wild-type genetic function of the sigma-1 receptor, then we would be able to tease that out because we have included in our Rett syndrome study the prespecified endpoint of separating those 2. So we would be able to tease that out and separate it. If, however, there would be just one of those 2 variants, then we would then evaluate the effect of it. And the observation was, in our Alzheimer's 2-73 study, that the variant which was not, a, giving the patients who have the variant not an effect at all, it was just not as good as the wild-type variant. So it's not that the patients with the variant are completely not able to respond to our drug, but the ones with the wild-type variant seemed to be responding better. I hope that answers the questions.

The next question comes from Ram Selvaraju with H.C. Wainwright.

Regarding the enrollment pace in the Parkinson's study, that's very helpful that you provide us with some granularity regarding the current status of enrollment. But I wanted to know if you expect the current pace of enrollment to stay the same, to quicken or to slow down as you go through the remainder of the enrollment period. And if it is going to accelerate, how faster might it become? And what implications would that have for the potential time frame within which you would be able to complete enrollment in the study? And then the second question I had was with regard to this additional clinical-grade supply material that you indicated had been manufactured. I believe in the press release, it made allusion to some of this being for commercial use. And I was wondering if you could give us some additional color on what specifically that means.

Right. So the first question is about the enrollment of the Parkinson's disease dementia study. So we reached over 30% to date, and we initiated on October 30. So 2 factors are here contributing. One is that the study sites at the beginning are usually not the entire complete study sites active. And as you progress into the study, so there is a chance of at least keeping that acceleration at that level or maybe even to accelerate it further. So the chance is potentially given. We have not given yet a time line of when the data, the top line data will be reported. But at this point in time, it's fair to say it will be a 2019 event, and we will specify that once we have more visibility on the continuation of the enrollment of the trial. The second question regarding the manufacturing of the material, which could be also for potential commercial use. We have scaled up the ANAVEX 2-73 manufacturing to levels which are beyond the need of the clinical material. And for that reason, knowing and having the stability confirmed also that this material will be used and available, if so, for future commercial use if that would be taking place or if that would be required.

Okay. And then just one very quick question. If you can comment on current trending of stock-based compensation, if you think that the amount recorded for this period would be predictive of the amounts you expect to record for subsequent periods as we get further into the calendar year.

May I ask what -- a specific question? What are you referring to? What stock?

Stock-based compensation.

For management?

Not necessarily just for management. In general, if we look at the stock-based compensation expense that you booked on your cash flow statement for this most recently reported period, I just wanted to know if we should expect that amount to be the same for the next couple of quarters or if you expect it to trend up or trend down.

I think it depends on the staffing strategy of the company, so I would not be able to give a guidance on this. But I would fairly assume that it's good -- safe to assume that it could stay in that current level.

(Operator Instructions) Okay, there are no questions in the queue. I'll turn the call back over to Dr. Missling for final remarks.

Thank you all for participating in today's conference call. I hope you are as excited as we are about the recent progress at Anavex and our prospects for the year ahead. Should you need any 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, please.

Thank you. Ladies and gentlemen, this concludes our conference call. You may now disconnect.