Anavex Life Sciences Corp (AVXL) 2021 Q3 法說會逐字稿

Good afternoon. My name is Adrianne, and I'll be your conference call operator today. Welcome to the Anavex Life Sciences Fiscal 2021 Third Quarter Conference Call. As a reminder, this conference call is being recorded.

I'd now like to turn the call over to your host for today's conference, Clint Tomlinson. Please go ahead.

Thank you, and good afternoon, everyone. We appreciate you joining us today for Anavex Life Sciences' third quarter conference call to review financial results and discuss the company's business updates. A taped replay of this call will be available after the call. 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. Following management's remarks, there will be a question-and-answer session.

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, the 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, I'd like to turn the call over to Dr. Missling.

Thank you, Clint, and we appreciate everyone joining us on today's conference call to review our financial results and describe the company's growth strategy. Let me start by stating that we can proceed into the remainder of 2021 with a background of a strong balance sheet of over $157 million in cash and no debt.

Starting with our lead drug candidate, ANAVEX 2-73, we expect to announce top line results from the confirmatory, double-blind, placebo-controlled, late-stage Phase IIb/III study in Alzheimer's disease in second half 2022. The double-blind, placebo-controlled, 509-patient, late-stage Phase IIb/III ANAVEX 2-73 trial in patients with Alzheimer's disease exceeded enrollment beyond 450 patients at 52 sites across North America, Europe and Australia, using ADAS-Cog cognition and ADCS-ADL, activities of daily living and function, as primary endpoints.

This multicenter, double-blind clinical trial is measuring efficacy, tolerability and safety of 2 different once-daily oral ANAVEX 2-73 doses or placebo. ANAVEX 2-73 is an orally available, small molecule activator of the sigma-1 receptor. Data suggests the activation of sigma-1 results in the restoration of complete housekeeping function within the body and is pivotal to restoring neural cell homeostasis and promote neuroplasticity.

The study includes a prespecified precision medicine biomarker sigma-1 gene expression, which demonstrated correlation with direct measures of clinical benefit, cognition and activities of daily living and function in the previous Phase II Alzheimer's disease. Top line data previously confirmed dose-dependent target engagement of sigma-1 with ANAVEX 2-73.

As a reminder, of our clinical strategy is clearly differentiated from other biopharma companies in clinical studies in CNS, Anavex is continuing to pioneer the approach of big data in clinical trials to leverage the relevance of phenotypic and genotypic precision medicine analysis of whole exome sequencing and gene expression data in drug development and, in particular, the potential to identify patients any variance and gene expression changes that may predict increased chances of success of Alzheimer's disease, Parkinson's disease and Rett syndrome treatments.

Additionally, we can announce that we exceeded the enrollment target for the Precision Medicine ANAVEX 2-73 Phase II/III AVATAR clinical trial in patients with Rett syndrome. And currently, top line results from this study are expected in the second half of 2021. Further clinical milestones are provided in Anavex Life Sciences' latest corporate presentation available at www.anavex.com.

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 to everyone. We can report a significant increase in cash runway. Our cash position on June 30, 2021, was $157.6 million, which we believe is sufficient cash runway to fund operations and clinical programs beyond 2025.

We reported a net loss of $10.2 million for the current quarter or $0.14 per share as compared to $6.5 million or $0.11 per share in the comparable quarter last year. Research and development expenses for the quarter were $9 million compared to $6.7 million for the comparable quarter of fiscal 2020. This increase is primarily attributable to the continued advancement of our ongoing clinical trials, most notably, the full enrollment of our international Phase IIb/III Alzheimer's disease trial and the continued enrollment and advancement of the International Rett syndrome program.

General and administrative expenses were $2.4 million for the quarter as compared to $1.4 million for the prior year period. The increase is associated with the growth of our team and nonrecurring costs associated with our Annual General Meeting.

Thank you. And now I will turn the call back to you, Christopher.

Thank you, Sandra. We are extremely excited, and we believe that Anavex has never been in a stronger position than it is today with our recent double-blinded, placebo-controlled study results correlating with predictive biomarker outcomes and the strongest balance sheet to date and the further strengthening of the Anavex team. In summary, we believe we are positioned for further growth and expect a catalyst bridge upcoming 12 months. So we look forward to providing further updates as advancement continues.

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

(Operator Instructions) And our first question comes from Charles Duncan from Cantor.

This is Pete Stavropoulos on for Charles. Congratulations on the progress and certainly appreciate all the updates. So I have one question regarding the Rett program. When you think about the efficacy measures that were made and we're seeing and the efficacy seen in the U.S. adult study, how do you sort of feel about the sample size or the planned effect size out of AVATAR?

So we have been observed in the U.S. Rett study at a low dose study of 5 milligrams daily orally. The effect size in the RSBQ was 1.1 Cohen’s d, which is considered very large. And for the ADAMS score, it was even larger, 1.3.

So these are very large effect sizes. And in the AVATAR study, we even have a larger population in the placebo-controlled study, and the doses are higher than 5 milligram. So we expect if there is a dose response curve, which -- a positive dose response curve, which we right now assume it is to be the case that this effect size will be sufficient for a positive readout in the AVATAR study as well.

Thank you for all that color. Another question I have regarding the Rett program is in clinicaltrials.gov, the pediatric EXCELLENCE study states like the estimated completion date is about November 2021. Are you still on track to complete the study by that time? And the reason why I'm asking is, I know that -- I believe that you have a large part of it being conducted in Australia. And now, unfortunately, they're going back into lockdown in some parts because of COVID.

This study right now is still enrolling well and the ability to continue the trial is still the case. What we cannot know for certainty how much enrollment is impacted by this current situation in Australia, but we still believe, as of today, that the time lines are accurate to be able to complete the trial in the stated time frame. But if this will change, we will update accordingly.

And just one last question on the Alzheimer's program. Can you provide some color on the rollover rates for the Phase IIb/III study into the open-label extension?

We were really very impressed with the very high rollover rate into the open-label study, which was over 95%, which is extremely high. And we also have been informed that the patients who now are reaching the end of this extension study, open-label, have requested in the respective caregiver to stay on study drug. And so we have now been able to also extend because of this request, the open-label study by another period of time for allowing the open extension study to give these patients continued access to study drug. But I want to point out that does not affect the time line of the placebo-controlled study. So it's just in parallel, the ability of the patients who finished the placebo-controlled study to stay on study drug without interruption.

That's good. It's probably perceived benefit and probably reflects a lack of tolerability issues. So thank you very much for taking my questions, and congratulations again.

And your next question comes from Soumit Roy from JonesTrading.

First question on the adult AVATAR Rett study. Do we have an idea if -- when you're having FDA conversation? And if the trial size needs to be modified to turn into a pivotal trial, if you can give us any color on that? And also some color on the dosing for both the AVATAR and EXCELLENCE studies, what kind of dose cohorts are -- should we expect?

Right. So we are in the dialogue right now with the agency. We have fast track designation and orphan drug designation as well as the voucher eligibility for Rett syndrome with ANAVEX 2-73. So we're right now in dialogue with the agency. And I would like to provide an update -- with updates as soon as we have that, that would be more appropriate.

The second question is regarding the doses. We have a higher dose than 5 milligram, and we have used the dose of up to 50 milligrams in the Rett -- in the Parkinson's dementia study and in the Alzheimer study. But the reason why we were keeping this dosing specifics right now within the blinded information is because the study is in a population which is very new to this trial. And we are concerned that there might be between the family interactions, which could lead to some unblinding of the study or inadvertently to learning about the effect of the drug and making a calculation back on the envelope, if more drug is given how much the effect would be based on the existing data of the 5-milligram arm. So that's the reason why we keep this right now blinded. But we will obviously disclose it when we have the data, but it is higher than the 5-milligram dose.

I see, I see, very interesting. And one last question on the Alzheimer's trial. Could you give us any color on the baseline MMSE of these patients? It seems like a wide range, 20 to 28. What should we be expecting more early-stage or mild-to-moderate enrolling in your Phase IIb/III trial?

Right. So the rationale for that range was we have seen in the Phase IIa prior, a very positive response across the entire MMSE baseline score, which started from 16 to 28, but we noticed that the patients above 20 MMSE had the ability to improve from baseline on a net positive to reverse the disease symptoms, so the cognition was improved in not only the ability to show a delay of the cognitive decline. While the patients below 20 MMSE were able to stay on a stable score.

So the other reason why we included 20 and higher is that these patients are better -- still in a better way to comply with the trial regimen. So you have more advanced cognitive impairment of that is not the case. But the expectation is really like a very broad average within this score of between 20% and 28%, which is really also the identified patient population of now called early Alzheimer's disease, which is probably the majority and the highest unmet need in Alzheimer's disease today.

I see. So you would -- you won't break it up into 2 groups. You would keep it as the entire 20 to 28 groups, and that's how you will present the data?

Right. Because we saw that there was no difference of the improvement, if you were 28 or you were 20. In both cases, we saw with appropriate dose, an improvement of the score.

Congrats again on the progress.

And your next question comes from Ram Selvaraju from H.C. Wainright.

First of all, again, alluding to the potential role of blarcamesine in Alzheimer's disease. Can you comment on some of the preclinical information that's been presented recently and whether this would potentially point to a protective role for blarcamesine? And specifically, if you can speculate on in which population the use of blarcamesine as a protective might be most relevant from a clinical perspective? For example, those people who are exhibiting signs of prodromal Alzheimer's disease or mild cognitive impairment. I understand that it's an early stage at which to be thinking about that, but just wanted to get your thoughts in this regard.

Appreciate the question. We have learned in a disease, in a preclinical animal model of prevention. So it basically gave to healthy mouse -- mice, the drug for 7 days, every day for 7 days, they stopped the treatment. And then they'll inject Abeta into the brain, which is unknown animal model of the pathology. And then these animals usually, they get sick. They lose cognition. And you see that in the measures of water maze behavior and so forth.

And we noted in the arm, which had been given this 7 days of treatment prevention, that these animals never developed after the injection with Abeta any symptoms of cognitive impairment. They behaved and cognitively stood as their wild-type part. But those who were given the Abeta and without the pretreatment, they developed the cognitive impairment, as you expected from the animal model.

So this is the observation, which led to the potential that one activation with ANAVEX 2-73, which as we know by now, is extremely upstream and possibly able to prevent the cellular stress, which is caused by the Abeta into rejection. And so in the entire challenges of the pathology, which is not limited to Abeta that this could be used as a prevention also in the future, which has to be awfully confirmed.

The intelligence we have in the Alzheimer's study seems to be also giving credibility in that direction since we noticed a gradual ability to improve cognition with earlier-stage status of disease capacities. So when I mentioned before, cognitive impairment lower than 20 MMSE and the lower score means more cognition or more cognitive impairment, better cognitive impairment, that those patients were better off the earlier you treat them.

So we might be able to continue the trajectory into the ability to prevent the cognitive impairment to even take place when we give the drug to patients which are either, as you point out, mildly cognitive impaired or before even any symptoms of cognitive impairment is present, just to be able to always prevent this cellular stress by this activation. And we compare in a way to mini aspirin, which some people take for avoiding cardiovascular problems, and they do that every morning for breakfast. So I'm not saying that this is confirmed in humans, but eventually, we will be able one day to tackle that, and that is the plan in a study.

Great. And also, I wanted to ask about your thoughts regarding lessons, takeaways from the Rett syndrome experience with blarcamesine and their applicability to your potential clinical development initiative with the compound in Fragile X syndrome. And if you could also give us a sense of when you anticipate the Fragile X syndrome program to initiate patient enrollment?

We have included in our Rett syndrome clinical trial, a measure, which is called ADAMS and that score is interesting enough -- secondary score in the Rett syndrome study, but it is often used as a primary endpoint in Fragile X studies and that ADAMS score was extremely positive with behavior improvement of general mood of anxiety and compulsive behavior improvement, which were very significant and very broad and global.

So we believe that in a data readout of the preclinical data of Fragile X with ANAVEX 2-73, which we submitted to a peer-reviewed paper of a nature paper, which we expect to come out as forthcoming that this could be a very good basis for rationalizing, progressing Fragile X into an indication of choice also for ANAVEX 2-73. And the idea is obviously to move this forward as soon as possible given the unmet need of Fragile X, which is the largest population of autism spectrum disorder.

And Rett syndrome is also part of the family of the autism spectrum disorder. So these are correlated diseases, although they are originated in different places in the causation, in the causality, but they have similar symptoms, in overlapping symptoms with each other. So we expect the trial to be initiated once we are able to showcase the data in a peer-reviewed paper.

And our next question comes from Tom Bishop from BI Research.

You said that you expected to include Phase III prevention study or to initiate one for the prevention indication. And I was wondering what's the status is and how soon we could expect that.

So this is something which we would like to discuss with the agency because this is obviously a very important study, and we want to get that right. So we will let that happen first before providing more details on that. But I'd like to just point out the potential for that to be the case, and that gives us also a great hope that given the broad upstream effect of the sigma-1 activation, which is I want to remind everybody.

It's not something we came up with, but it's really the endogenous, the body own defense mechanism to avoid and to prevent cellular stress, which causes diseases like Alzheimer's, but also Parkinson and other cognitive impairment indications and probably also the degenerative as well as the new developmental indications, which is the reason why we see the strong effect, beneficial effect with the drug in this broad therapeutic different indications. So this is something we'd like to discuss with the agency first before making -- providing more details. But this is the long short, and this is probably the big prize that one day, this could be used as a prevention treatment for all degenerative diseases and not only for treatment.

That's a very exciting possibility. What is the status of the meeting to proceed on to Phase III in Parkinson's? Sometimes, it seems like we lose a lot of time between trials. I know you've presented the final data. And I'm just wondering what the time line is here to -- have you scheduled a meeting with the FDA or had one?

That's a very good question. The key background is to know that the trial itself has finished, but the analysis is not limited to the endpoints, which we reported. There are more workup ongoing right now. And this is also unique for Anavex and differentiates other companies that we have included in our trials, including the PDD trial, the Parkinson disease dementia trial, the whole genomic exome analysis, both DNA but also RNA. And you know that we reported the RNA changes of the sigma-1 gene.

What we have not yet done is to have the intelligence on the RNA of all the other genes, which is the whole genome. So there will be so much more intelligence from this PDD study, which we are right now putting together. And once we have that, then we will have the ability to put this all forward because this will determine a much more robust Phase III design of a pivotal study in Parkinson's disease dementia as well as in Parkinson, but that requires also the dialogue with the agency first. But before that, we have to have the entire data at hand.

Well. Okay. And the status of the Michael J. Fox $1 million imaging study. Is Michael J. Fox doing that independently of you? I mean you're supplying the drug, but they're doing the imaging. I mean how is that going?

No. It's basically a grant that allows us to do this study, and we are in the process of starting this year. It's a study, which will capture the imaging and the profile of the ANAVEX 2-73 of the drug in the brain, in the human with the same PET ligand, which we have done already in animals. So this will be a confirmatory of that effect in human brains and that is the study which was fully funded by Michael Fox Foundation, which we are executing, and they basically funded that study with a grant.

I see. Okay. And you indicated a mystery indication earlier this year. And also, there's a 3-71 trial. Is there not Phase I ongoing? Could you comment on those 2. So are they same, I don't know.

Right. It's not a mystery indication. We have only said we have not disclosed yet the indication. We have several animal models where ANAVEX 2-73 has been positive, very well achieving a confirmatory effect on disease, which is rare in nature, ultrarare nature. And we want to make sure before we move forward with the clinical trial that we pick the right one to do because we have the choice of several indications and we are doing this right now. So once we have that -- completed that assessment, we will disclose that indication and start that trial also right away.

And regarding ANAVEX 3-71, it's basically another molecule, it had its own IP and that is now in a Phase I, and we expect data readout in the second half of this year is progressing well. And we are excited because it confirms the -- validates the mechanism of action of our platform portfolio to focus on sigma-1 modulation. And also, it has received orphan drug designation for frontotemporal dementia, which is also an unmet need. So we are now preparing after the Phase I, the next stage of that, which will be studied in an indication of cognitive impairment. And it could very well be frontotemporal dementia or another indication with an unmet need with cognitive impairment.

But the Phase I study is -- are you saying it's done?

It is about to wrap up, and we will be able to report this -- the data in the second half of this year. That's correct.

Will that include any efficacy data or it's just the safety trial literally?

It's predominantly a safety trial, but I will allow us to basically share the data once we have it, and that gives us better visibility on what is included in that outcome measures beyond Phase I data on safety data.

Okay. Well, I've been very encouraged by the breadth of the positive readouts you're getting on a variety of indications, and I think that helps support the idea that A2-73 really does something in the brain, which I think you have a little doubt, even I do, too, but it's just good to see so many different positive readouts coming.

If I may add, it is really important to notice and to highlight the fact that in all clinical trials, we have performed so far, not only was ANAVEX 2-73 efficacious at the right doses, but it also demonstrated a dose response curve, which is always a very clear indication of our effect. And thirdly, we have noticed that all the data, all the trials so far performed had a very strong biomarker of response or predictive biomarker response, which was borne by the level of mRNA expression of the target of our drug itself. So there's really no better way of showing efficacy and confirming efficacy of a drug with these strong biomarker outcomes, which correlated with all the primary and secondary endpoints of the trials we have performed.

Like I said, it's very encouraging.

Thank you, ladies and gentlemen. This concludes today's conference call. You may now disconnect.