Anavex Life Sciences Corp (AVXL) 2021 Q2 法說會逐字稿

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 the second quarter of its fiscal 2021 financial year and provide a clinical study and business update. 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'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 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 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'd like to turn the call over to Dr. Missling.

Thank you, Clint. We appreciate everyone joining us on today's conference call to review our financial results and business updates. Let me start with our lead drug candidate, ANAVEX 2-73, which is currently in a Phase IIb/III Alzheimer's disease clinical trial, utilizing differentiated patient selection criteria. The study is presently over 98% enrolled and randomized. So we are very close to complete enrollment.

What is important is, in that regard, is that the independent Data and Safety Monitoring Board, DSMB, for the Phase IIb/III Alzheimer's disease study of ANAVEX 2-73 has completed its recent preplanned review of the preliminary Phase IIb/III study data as specified in the protocol the DSMB reviewed, the interim safety data for the Phase IIb/III Alzheimer's disease study AD-004 and its open-label extension attention AD study. Upon review of the interim safety data, the DSMB made the following recommendation. The DSMB recommendation is to continue the studies without modification. This is very encouraging news and it indicates we are on the right track with these studies.

Additionally, ANAVEX 2-73 has been featured recently in a peer-reviewed publication in the journal of Neuropharmacology titled, Future avenues for Alzheimer's disease detection and therapy, from the series of the special issue on the quest for disease-modifying therapies, so new degenerative disorders. Separately, the independent Data and safety Monitoring Board, DSMB, also led for the ongoing clinical trial program, including the late-stage AVATAR RS-002, EXCELLENCE RS-003, and the U.S. Rett syndrome extension study, RS-EP-001 of ANAVEX 2-73 has also completed its recent pre-planned review of the respective interim safety data for these 3 separate clinical studies. Upon review of the interim safety data, the DSMB made the following recommendation for each of the 3 studies. The DSMB recommendation is to continue the studies without modifications. This is very good news and indicates we're on the right path with all these studies.

As a reminder, our clinical strategy is to clearly differentiate from other biopharma companies and clinical studies in CNS. Anavex is continuing to pioneer the approach of big data, including ANAVEX in clinical trials to leverage the level of phenotypic and genotypic precision medicine analysis of whole-genome sequencing and gene expression data in drug development. And in particular, the potential to identify patient's genetic variance and gene expression changes that may predict increased chance of success for Rett syndrome, Parkinson's disease and Alzheimer's disease treatments.

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. We continue to file fiscally responsible management of cash utilization, with moderate increases within budget. We reported a net loss of $8.2 million for the quarter or $0.12 per share as compared to $7.2 million also $0.12 per share in the comparable quarter of last year.

Research and development expenses were $6.7 million for the quarter compared to $6.1 million for the comparable quarter of fiscal 2020. The increase is primarily attributable to the continued advancement of our ongoing clinical trial. General and administrative expenses were $2.2 million for the quarter as compared to $1.7 million for the prior year period. The increase is associated with the growth of our team. Our cash position on March 31, 2021, was $75.9 million, which we believe is sufficient cash runway for up to 3 years.

Thank you, and I will now turn the call back over to Dr. Missling.

Thank you, Sandra. So in summary, we expect a very data-rich current quarter with data readouts from multiple clinical trials and also the remainder of 2021 to be a catalyst-rich year for Anavex. We look forward to providing further updates as advancements continue and I would now like to open the call for questions.

Operator, please go ahead.

(Operator Instructions) Our first question comes from Charles Duncan, Cantor Fitzgerald.

Chris and team, congratulations on the progress. Certainly appreciate the update on enrollment in the Alzheimer's program. So had a quick question regarding the DSMB decision recently to continue this study without modification, I assume that not only did they look at safety but did they look at any efficacy endpoints and/or was there an opportunity to change the sizing, upsize the trial due to say data, I'll call it, noise or dispersions and that was not done, so that data is tracking as you would have anticipated on a blinded basis?

The Alzheimer's study DSMB related question?

Yes.

Right. So the DSMB has access to all data. And we understand that the DSMB made the decision to continue without changes according to their review. We do know also though that the focus on the review was on safety.

Okay. So they're looking at safety adverse events but were they also considering efficacy? Were there any kind of futility analyses or did they have the opportunity to recommend upsizing the trial based on data dispersion?

The DSMB has usually a very independent ability of recommendations. But the DSMB itself, the priority is on the safety assessment.

Okay. So it sounds like, in this case, they weren't really looking at efficacy at this point.

Again, they have access to all the data, so that is the best way I can answer this question. So there was not a specific request to look into something like futility.

Okay. Can you provide some color on the rollover rates for that study into say, the Open Label Extension, can you give us perspective on whether or not patients are going beyond the planned dosing period?

Yes. So we have a very high rollover rate on the placebo-controlled part of the study into ATTENTION-AD extension study, which is a 2-year 96-week long extension open label, and we happen to reach the close to the end of this open label extension study, and we have been received all the request for continuation of patients on this extension study, and we will very likely seek extension of the extension study because of that. And that reminds us of what happened in the Phase IIa, which was also originally limited to a extension period.

And then, because of request from participants and caregiver and physicians, investigators, it was extended multiple times to end up a 5-year extension in total. And after the 5 year as you know the participants of the Phase IIa study ended up being allowed to continue studies of the drug on a humanitarian exception procedure. And so this is the feedback we received from the larger Alzheimer's study Phase IIb/III.

It seems like the positive relative to the perceived benefit that the patient is getting or lack of tolerability issues, but when you mentioned high rollover could I assume that's like 90% rollover rate or something like that? And then, secondarily, in terms of the failure rate within or -- excuse me, dropout rate within the placebo-controlled portion, what were your assumptions, and how well did the trial do thus far in patients with same...

Right. So the percentage is in the range of what you indicated of retention, so extension into the open label study from what we understand and we have modeled the dropout rate similar to other drugs in this field with Alzheimer's disease, it's a long study. So there is in patients with a impairment like an Alzheimer's with multiple diseases. Not only Alzheimer's but also cardiovascular features. So there is often this phenomenon that the patients do not finish an entire study, so we have assumed similar rates as in the other studies in the comparable lengths. And I think we are not in any form or fashion different than or worse than these numbers.

Okay. That's helpful. Last question regarding the Parkinson's disease dementia program, were you thinking about going to the agency with say an end of Phase II meeting and if so, can you provide some color on when that might be?

Yes. So we said that we would do that, and once the deal is completed, we are about to wrap up. You have to understand in the PDD study, there were a lot of measures included, the CDR system, the UPDRS, the echography, the sleep paradigms and most importantly what have been the most time consuming one, the gene analysis. And all this together will be put together in the respective report and that will be shared with the FDA. And then we will be able to get the recommendation for the pivotal study in PDD.

Could that be this quarter or in the...

We will do it as soon as we can.

Our next question comes from Ram Selvaraju, H.C. Wainwright.

We will go to the next question. It comes from Jeffrey Cohen from Ladenburg Thalmann.

Just a few questions. So first on the income statements. Sandra, can you help us out on the incentive income for the quarter and what they might look like for the balance of the year as far your modeling purposes?

What is the question exactly?

I wanted to know about the R&D development incentive income of $1.27 million for the quarter, and how that may look like for the balance of the year?

I think it was [$960,000] for the quarter and we expect that, that will remain consistent throughout the remainder of the year.

Okay. Okay. Got it. And Christopher, you some insight into the 2-73 trial more specifically as far as any discussion with the agency as far as fast track or accelerate that approval?

For Rett syndrome?

Yes.

Yes. So we have the first study finished, which was a very first study in Rett syndrome, the U.S. Rett syndrome to RS-001 study and then we had seen a very positive outcome where we presented top line data at -- recently last year. And we will now be able to share the entire data of the study. And with that data, we will go to the FDA and discuss with them the path forward given that we have 2 ongoing studies. One is the RS-002 in age group with higher doses and RS-003, which is also higher doses with a younger patient population. And we believe that the first study, the RS-002 could be potentially pivotal together with the U.S. study. And that is the discussions we like to have with the agency. Thereafter, we'll explore the approval for the younger patient population with the RS-003.

Okay. Got it. Any update on the PDD Phase II and the AVATAR Phase II/III in Rett, are those time lines still on track?

Exactly. So the RS-001 full data will be this quarter, and the PDD study will be this quarter and the release of the top line data of the RS-002 is expected by mid of this year.

Okay. And that's in the adult population, correct?

That's the adult population, higher dose. That's right.

And we have Mr. Ram Selvaraju back on line.

I apologize. I must have had a problem with the signal before. First of all, I was wondering if you could comment on strategic thoughts regarding the potential commercialization of blarcamesine in Rett syndrome versus PDD, and what implications that may have in terms of Anavex's overall positioning? Are you looking at those indications as opportunities to self-commercialize entirely or are you looking at each of them differently in terms of the degree to which Anavex is going to be directly involved in the actual sale of the drug?

So it's a very good question. I think we are not -- would be not the first company to market a rare disease ourselves is approved, and that is right now the going planned for Rett syndrome. So we have put in place steps in order to prepare for that. For the PDD we have to be aware we have to do another study, which is not -- which we didn't -- we have planned anyway a pivotal study because the first study was our Phase II proof-of-concept study. And so we have some more time to think about the second indication in PDD in terms of marketing if we would like to license it or how to structure a partnership, if at all needed, going forward. So this will be something we don't have to decide right now. But Rett syndrome, we would be able to market it ourselves this current plan in the U.S.

And pursuant to that, have you made a definitive decision regarding the disposal of the putative priority review voucher that you would be eligible for if you one approval of blarcamesine in Rett syndrome? Would you, in other words, apply the PRV to something else in your own pipeline or would it be definitive that you would monetize it?

Right. This is the same flexibility we are able to retain given that we are planning to also open another study shortly after the Rett study in Fragile X where we have very good pre-clinical data and the drug also is within the family of autism spectrum disorder like Rett syndrome is as well. And where the drug is expected to be also superior to current treatments or syndrome treatments to current opportunities in Fragile X. But also we have another rare disease -- other rare disease, which we have not disclosed. So there are different ways to think about that, but we don't have to make the decision yet regarding how to address the voucher.

Okay. Great. And one last question, the clinical development time line with respect to Fragile X, can you just walk us through what you expect the near-term clinical development milestones to be in the Fragile X indication?

So for approval, you mean?

Starting with the near-term clinical development milestones, the next clinical study, when that is likely to start and when it is likely to report data?

Right. So the RS-001 full data will be this quarter, the RS-002 topline will be mid of the year, and the RS-003 will be in the second half of this year. And in between discussion with the agency, which will determine how the data can be utilized in order to get approval for the drug for patients, which have no therapeutic available for Rett syndrome.

Our next question comes from Tom Bishop from BI Research.

Christopher, I've got a couple of little questions, but I have always assumed that Open Label Extension study means that everyone gets the drug, is that a correct assumption?

Everybody who had participated in the study previously, that is Open Label Extension. For those who have finished the study either in placebo or in active drug, they are able to get the drug. Not everybody without any association or being -- not involved in the study.

Right. Right. And they get the drug for free still?

That's right, yes. Nobody has to pay for anything.

Okay. Sandra, could you just tell me the number of shares outstanding now? Not average for the quarter but now?

I think we disclosed in the Q. It should be about 70 million.

It should be what?

70 million.

70 million, okay. And I was wondering if the -- how many Alzheimer's patients still from the original A 2-73 study, which was 32 patients, are still on the drug and there is a famous graphic that I like that shows the number of patients that were on the medium and low dose that showed a sharp decline in MMSE and et cetera, and those are on the high dose showing very little decline. But the total of the 2 as I recall, was like 21 or 22 patients and I'm just sort of wondering where the others went?

Yes. So that was in the 3-year interim analysis. We will be able to share the remainder time frame possibly in the future, but the patients who have been in the study, they have now been switched over to a eligibility of Humanitarian Device exception -- exemption that means they're not in the clinical trial anymore because the clinical trial has completed officially the extension. But they continue to take the drug and I understand that roundabout it's less than 21. I think it's between 10 and 21 patients, if I'm not mistaken. So that's a very encouraging number that still people after 5 years are taking drug.

Yes. That's true. Also with regards to -- I've read some articles where the other companies that are working on the Alzheimer's indication, one guy -- one of them has a partner and the other one's got NIH funding, and of course, Anavex has neither, but I think that there is a good reason for both but I'd rather hear it from you than me.

I think we're moving very quickly. When you look at those who did -- kept the NIH grants you have to have published data and then it takes a long time to get a grant. And even if you get the grant, it takes a long time until you get the money. So that's no preferred way of moving for the asset. We've been very quick in moving forward the assets and the down -- sort of partnering too early is that you're kept with the upside, so it's about the company, you just have not retained the upside for shareholder. And by pushing this out, that is the advantage of having more upside for shareholders of Anavex.

Great. And I was just wondering if you've ever had some interest from other people in partnering or if you just shut them down because you want to keep the 100%?

We have always been called upon and knocked on the door to discuss this and we participate regularly at the conferences like Bio regularly, so we are in discussions with big pharma companies. But again, it has to be a mutually beneficial structure for striking something. And we are very excited about our project, our pipeline, and we'd like to retain the upside. For that reason we are proceeding as we speak right now. It does not mean that we will not do a partnership eventually at the right time, but we are aiming for a shareholder value and to maximize it and that requires to have this flexibility in mind.

Okay. And last question, the Rett 003 trial, the adolescent trial, is that 003 or 004?

003.

Is that due -- I was wondering how the enrollment is coming on that and what is the size, if you could remind us?

Yes. We increased the size from -- we have set more than 68, 69, so it's going to be more than 69. And we have stated that it will be in the second half of this year and the enrollment is going well.

We have a follow-up question from Charles Duncan, Cantor Fitzgerald.

Christopher, I had a couple of questions, one back on the PDD and the other is on Rett. Going back to the PDD, your answer before I'm just trying to figure it out, first of all, do you intend to present the data or more findings from that study in the near term? And then with regard to the genomic analysis, I know that lab function has been a little bit COVIDified, if you will, in the last year, but would you anticipate, call it, days or weeks or months or quarters in which you'd be able to move forward with perhaps end of Phase II meeting with the agency?

Right. So the PDD data will have a lot of data because the entire CDR system has multiple measures. We're talking about total of -- it's a lot of the cognitive domains have been captured in the system very granularly and there is no total CDR system score and they all capture different levels of cognitive domains like picture recognition, virtual cognition, picture accuracy, memory, the word accuracy, and short-term memory, long-term memory, we -- and reaction time, short reaction time, memory reaction time.

So the different levels of cognitive tests, which are there, so that is already a lot of measures, which we will present. And then comes entire battery of what we call more participating measures of the Parkinsonian disease like the UPDRS. UPDRS I, II, III, IV and then we have the echography, the sleep paradigms with 2 different sleep paradigms. And then on top of it, we have the genomic analysis of how the sigma-1 moves and what it does for patients in regarding the sigma-1 status but despite that we are now there to finish this up and we expect this data to be announced presented this quarter as we speak. And the discussion with the agency as they will follow up very rapidly once we have that.

Just to understand the agency requests a report, the report has to be completed, has to be audited and reviewed it and signed and that basically requires also some additional time but this is now all done. And this will be all done when we submit to the agency. And so we expect we need to be, I would say, more question of months. Not days, but not too many months. That's probably the best way to describe it.

Okay. That's helpful. And then my follow-up on the Rett program. Just quickly on the safety database in terms of its size and given the range of age groups that you're studying, what has the agency said to in terms of what's going to be required for that safety database? It is rare disorders, so I imagine it's not 2 owners.

Yes. So we included in all our Rett clinical studies and extension study. So in the RS-001 it's a pretty 6 months, pretty 6-week study of extension open label that was already originally extended before. We have a 1-year extension in the RS-002, and also the same 1-year extension RS-003 within the history, and we believe these are sufficient time lines for safety -- around safety extension. And from the feedback, also from the European, EU side of the equation. But we believe that what will happen very likely, and that's what Anavex is committing to patients and that's why we are here for, is that those patients who started a study with Anavex will also have always a chance to continue to stay on the study drug of ANAVEX 2-73. So it's very likely we'll also extend these extensions beyond the time period anticipated.

And at this moment I would like to hand the call back to Christopher Missling.

So thank you very much, and I want to reiterate we're very excited about our program. We believe we have a really strong pipeline and a platform, which allows us to address multiple unmet needs. In summary, we expect a very data-rich current quarter with data readouts from multiple clinical trials and the remainder of 2021 to be also a catalyst-rich year for Anavex. With that, we look forward to providing further updates as advancements continue, and stay tuned. And thank you very much and have a good week -- good afternoon. Thank you.

Ladies and gentlemen, this concludes our call today. You may now disconnect.