Anavex Life Sciences Corp. (NASDAQ:AVXL) Q3 2022 Results Conference Call August 9, 2022 4:30 PM ET
Company Participants
Clint Tomlinson – IR
Dr. Christopher Missling – President and CEO
Sandra Boenisch – Principal Financial Officer
Conference Call Participants
Soumit Roy – Jones Research
Yun Zhong – BTIG
Raghuram Selvaraju – H.C. Wainwright
Clint Tomlinson
Good afternoon. Welcome to the Anavex Life Sciences’ Fiscal 2022 Third Quarter Conference Call. My name is Clint Tomlinson, and I’ll be your host for today’s call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. 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.
Before we begin, please note that during this conference call, the Company will make some projections and forward-looking statements. These statements will — 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, risks inherent in the development and/or commercialization of potential products, uncertainty and 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.
Dr. Christopher Missling
Thank you, Clint. We appreciate everyone joining us on today’s conference call to review our most recently reported financial results and to provide a business update.
We are pleased with the continued advancement regarding our lead product candidate, ANAVEX 2-73 in Alzheimer’s disease and Rett syndrome. As we maintain our attention on the execution across each of our clinical programs and overall business operations.
We achieved a very important milestone at the end of June. With the last patient, last visit in the randomized placebo-controlled Phase 2b/3 study of ANAVEX 2-73 for the treatment of early Alzheimer disease. We are now focused on completion of associated end of trial activities in order to provide top line results of the placebo-controlled Phase 2b/3 study of ANAVEX 2-73 for the treatment of early Alzheimer’s disease. We are now focused on completion of associated end-of-trial activities in order to provide top-line results of the placebo-controlled Phase 2b/3 study of ANAVEX 2-73 in early Alzheimer’s disease, which are expected this coming fall. This is an indication, which is a condition of significant unmet need and economic burden. For which there are only limited approved pharmacological treatment options.
As a reminder, Alzheimer disease is the most common cause of dementia and the fifth leading cause of death in adults older than 65 years. The estimated total healthcare cost for the treatment of Alzheimer’s disease in 2020 is estimated at $305 billion, with the cost expected to increase to more than $1 trillion as the population ages.
Most of the direct costs of care for Alzheimer’s disease are attributed to skilled nursing care, home healthcare and hospice care. Indirect costs of care, including quality of life and informal care giving are likely underestimated and are associated with significant negative societal and personal burden.
We also recorded the last patient, last visit in the 48-week open-label extension of the Parkinson disease dementia Phase 2 study occurred this quarter. Data from this study is expected by year-end 2022.
In our Rett syndrome program, completion of the randomized placebo-controlled EXCELLENCE Phase 2/3 study for the treatment of pediatric patients with Rett syndrome is expected by the end of 2022.
In June, Anavex announced a peer-reviewed publication in American Journal of Medical Genetics, identifying a blood biomarker for assessing treatment effect of ANAVEX 2-73 in Fragile X syndrome which provided strong scientific support for the planned clinical trial of ANAVEX 2-73 in Fragile X syndrome.
End of July, Anavex presented very important data. The first entire clinical human Alzheimer’s disease and Parkinson’s disease gene pathway data from the ANAVEX 2-73-PDD-001 Parkinson’s Disease Dementia study at the Alzheimer’s Association International Conference, AAIC, in San Diego, California.
Also at AAIC in early August, Anavex presented long-lasting effect of ANAVEX 3-71, preventing cognitive decline in a transgenic rat model of Alzheimer’s disease. This new data strengthens the importance and applicability of Anavex Precision Medicine SIGMAR1 platform and is consistent with previously reported therapeutic significant and dose-dependent preclinical prevention of a better induced biomarker correlated cognitive impairment with ANAVEX 2-73.
Further pipeline expansion of the Anavex platform using gene biomarkers of response applying precision medicine for neurological disorders with unmet medical need is expected in 2022, including meeting with the FDA to discuss the ANAVEX 2-73 Parkinson’s disease program, including a pivotal Phase 3 study, planned initiation of ANAVEX 2-73 imaging-focused Parkinson’s disease clinical study sponsored by the Michael J. Fox Foundation and planned initiation of a potential pivotal Phase 2/3 study in Fragile X syndrome, the most frequent genetic cause of autism spectrum disorder, and planned initiation of a Phase 2/3 clinical trial for the treatment of a new rare disease indication, and last but not least, planned initiation of ANAVEX 3-71 Phase 2 clinical trials for schizophrenia, frontotemporal dementia and Alzheimer disease indications.
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.
Sandra Boenisch
Thank you, Christopher, and good afternoon to everyone.
During our third fiscal quarter, we maintained fiscally responsible cash utilization as we continue to execute on our clinical programs.
Our cash position on June 30, 2022, was $153.2 million. To put this in context, at our current cash utilization rate and range, we believe we have sufficient cash runway to fund operations and clinical programs beyond the next four years.
Our research and development expenses for the third quarter of fiscal 2022 were $9.3 million as compared to $9 million for the comparable quarter of fiscal 2021.
General and administrative expenses were $3.2 million compared to $2.4 million for the comparable quarter of fiscal 2021.
Overall, we reported a net loss of $12.4 million for the quarter or $0.16 per share. The overall increased expenses over the comparable period is primarily related to an increase in noncash compensation charges period-over-period which is driven by the continued addition of staff to manage and support our clinical studies and development.
Thank you. And now I will turn the call back over to you, Christopher.
Dr. Christopher Missling
Thank you, Sandra. We’re looking forward to delivering data readouts as we — as well as initiating biomarker-driven precision medicine clinical studies, as planned.
I would like now to turn the call back to Clint for Q&A.
Question-and-Answer Session
A – Clint Tomlinson
Thank you, Christopher. We’ll now begin the question-and-answer session. If you have a question, please raise your hand or enter in the Q&A box. The first question today will be coming from Soumit Roy at Jones Research. Go ahead.
Soumit Roy
Hi, everyone. Congratulations on all the progress. One question on the EXCELLENCE pediatric Rett trial. Could you clarify when you’re mentioning its completion of the trial is expected year-end ‘22? So, is the data getting push back into 2023, or we expect data still at the end of ‘22?
Dr. Christopher Missling
Right. We updated a while ago, the clinicaltrial.gov that the completion of the study will be in December. So, we will obviously try our best to release the data once we have completed the study. But it looks like that we can definitely, at this point in time, confirm that the study completion will be by year-end and soon after the data readout, the top line data of the study. Also I want to point out at this point in time that we have also provided sufficient manufacturing products for a potential rollout or market entry for Rett syndrome. If so, the study — the EXCELLENCE study is positive.
Soumit Roy
Got it. So, is there — do you see any headwind in the enrollment in the pediatric Rett syndrome trial? Or — just trying to understand why the — it seems like it’s taking longer for the enrollment to complete?
Dr. Christopher Missling
We reminded last quarter that we had the situation that the vaccines were approved for pediatric population. And since the trial requires a three months of constant or consistent medication, a vaccine is a trigger for this three months duration. So, when a patient or participant in the study or a willing participant to join the study has a vaccine taken, the last dose will be or that vaccine will be triggering a three-month period before somebody can join the trial. And we noticed that would lead to some slower enrollment, and we just are made aware of that. And that’s part of this process. So, there’s really not anything else, but that we want to make sure that we follow the guidance of the protocol, which requires this three-month period.
Soumit Roy
I totally understand. And last question. So, you are still curious where you are currently on whether to file the adults BLA separately from pediatric BLA, or you want to wait until the entire pediatric data is available and then filling together? Any thoughts on that?
Dr. Christopher Missling
At this point, we are so close to readout of the EXCELLENCE study. And we should remind everyone that Rett syndrome is a pediatrics indication predominantly. It is a study in — it’s an indication which affects girls from an early age onwards and many patients die when they get older. The life expectancy at 40 years is only 50%. And so, that makes it clear that is a pediatric indication predominantly. That’s why also we focused on the study size and the study focused on the patriotic study.
And the adult study is important to get approval for the entire age group. And at this point in time, we also want to make sure that since we have the voucher eligibility, we want to make sure that we are able to submit a successful pediatric study first in order to receive this voucher, which is quite valuable, as you know.
So, again — but the key thing is that we are so far into this EXCELLENCE study that it is just more preferred and prudent in addition to the fact that it’s predominantly a patriotic indication to finish the EXCELLENCE study and then file the entire program, which consists of three placebo-controlled studies, the Phase 2, the Phase 3 AVATAR and the Phase 3 EXCELLENCE study.
Soumit Roy
Thank you for clarifying all the issues. And congratulations again on all the development.
Clint Tomlinson
The next question will come from Yun Zhong at BTIG. Go ahead.
Yun Zhong
So, the first question is on your discussion with the FDA on the pathway for Parkinson’s disease. What’s the possibility of the FDA might ask you for additional information or clinical data from Parkinson’s disease patients given that your Phase 2 study was done in PDD, not really the population of PD patient? And if that’s the case, do you think the imaging study will provide you with sufficient information? And I have a follow-up question.
Dr. Christopher Missling
Yes. So, that’s a good question. So, as a reminder, we’re initiating soon the imaging study in Parkinson’s patients funded. And I want to thank again, Michael Fox Foundation for their support for this, which is the second brand which received for Michael Fox after the first one, which covered the Parkinson’s disease, our proof-of-concept indication in animals in a disease-modifying animal model. And this PET study would be a good support for a study in Parkinson’s disease only.
We have to see though that the Parkinson’s disease, dementia study we believe is very robust to demonstrate parkinsonism because we noticed and we measured in this Parkinson’s dementia study a very strong dose-dependent improvement in the MDS-UPDRS score, which is the standard — gold standard of measuring parkinsonism for Parkinson’s patients features, and that was very robust in its outcome.
So, we believe that we have enough evidence of moving forward in a study, in Parkinson’s disease, in a pivotal study because of the data from a Parkinson’s disease dementia Phase 2 study in 132 patients placebo-controlled study.
Yun Zhong
Okay. My second question is that you have reported quite a lot of interesting biomarker data. So, I wonder, have you incorporated that biomarker information in, for example, patient enrollment in the Alzheimer’s study? And also, do you plan to incorporate that information to allow you to maybe identify a specific patient population in future studies so that you will be able to show maybe better clinical data?
Dr. Christopher Missling
The most important takeaway from the genetic analysis of the whole genome of patients getting ANAVEX 2-73 compared to placebo in the Parkinson’s dementia study was really that the drug shows the ability to resuscitate or to counter down-regulated gene pathways and not only gene pathways but also clusters of gene pathways, which are down-regulated in respective pathology of Alzheimer’s disease as well as in the respective pathology of Parkinson’s disease. And the fact that clusters of gene pathways are down-regulated in these diseases, which is published compared to healthy volunteers in various papers, and we were able to demonstrate that those down-regulated genes were up-regulated again in the ANAVEX 2-73 arm shows really the broad ability to counter these complex pathologies.
And I want to remind again, this is evidence that we are talking about extremely complex indications with different features and not one unilateral pathway in Alzheimer’s disease or — and Parkinson’s disease, but the ability to really address pathways and counter them on a broader range which includes degeneration in various features like mitochondria, autophagy restoration, tau reduction and a better reduction and imbalance homeostasis restoration. All these pathways have been addressed and confirmed in this whole genome analysis. And we’ve noticed that and learned that in pre-clinical animal studies already that ANAVEX 2-73 is capable of doing that. And what is really important is that that is on top of the very clear biomarker data of SIGMAR1 correlation with the outcome of patients benefit.
So again, patients benefit the most who also had the highest SIGMAR1 activation since we activate SIGMAR1. That makes perfect sense and does not come as a surprise, but should give us confidence in the readout of future studies. And that’s why I’m very excited that the whole genome analysis also shows this fundamental strong biomarker correlation with the outcome and not only in one gene, but also broader pathways, which are again impaired in these indications.
Clint Tomlinson
Next question is from Ram Selvaraju from H.C. Wainwright.
Ram Selvaraju
Thank you so much for taking my questions. And congrats on all the progress once again. I just wanted to ask if you could comment on two strategic aspects. One is with respect to the imaging use of 2-73 versus its therapeutic use and how you envision that evolving at a commercial level? Should the molecule ultimately demonstrate its utility on both of those fronts, regardless really of the neurodegenerative disease context. And the other is how you are thinking about optimizing the value of blarcamesine in ex-U.S. territories. And in particular, to what extent you expect to be exploring this through partnerships and what the timing of those might be? I also was wondering if in that context, you could provide some commentary regarding the IP protection of blarcamesine, in particular, in potentially significant commercial territories, like China.
Dr. Christopher Missling
Very good question. May I ask for a clarification on the first question, please? What were you referring to imaging effects of the drug?
Ram Selvaraju
That is correct, yes.
Dr. Christopher Missling
No, may I ask you what do you mean by that?
Ram Selvaraju
So if, for example, there were some, let’s call it, diagnostic utility of the drug above and beyond sort of imaging for the purpose of optimizing treatment, is there a way to optimize the value of the compound in both, the diagnostic and therapeutic context?
Dr. Christopher Missling
Now I understand. Thank you. So, let me pick that first. So, as you might remember, and I want to re — and point that out. So, we did notice that in all three studies, so far, clinical studies, Alzheimer’s, Parkinson’s, dementia and Rett syndrome. We noticed that the SIGMAR1 shows up in two different genetic forms. One is more prevalent than the other. We call it wild-type, WT. It’s the most predominant. We talk about 80% to 90% of all participants in studies or in the world have this SIGMAR1 wild-type gene.
And we noticed that with relatively everything being equal, those patients had a slightly better response that those patients, which then are the minority of 10% to 20% with a SIGMAR1 variant and one amino acid, which seems to change the confirmation and hence might be not as expedited in its activity in the body, but still doing its job because we noticed that when we dose high enough, then there is no real difference between those two genetic forms in a patient.
But having said that, if things would become — needed that we would need to focus on patients with wild-type gene, we are in parallel developing a test, diagnostic test, which would then allow to use this as — call diagnostic, committed companion diagnostic for the therapeutic for ANAVEX 2-73. So, we then would be able to go into the market with that companion diagnostic to identify patients only with this wild-type SIGMAR1 gene, which again is over 80% of the population. And then, having — making sure that these patients benefit most from ANAVEX 2-73.
But so far, we will see if the Alzheimer’s study and the pediatric Rett study don’t even need that kind of like additional cohort selection. And we might just find out that all patients respective of the genetic background will benefit from ANAVEX 2-73. But again, if it does not be the case, we will have that ability to move into that precision medicine, companion diagnostic therapeutic approach.
Secondly, regarding planning for commercialization outside of the U.S. We stated in Rett syndrome, we would be happy and able to and are planning to move forward ourselves in marketing ANAVEX 2-73 in Rett syndrome and possibly also Fragile X. And in Rest of the World, we are actively in discussions and we’re planning to expand the dialogue with European, Asian and including Chinese companies for marketing the drug outside of the U.S.
There’s also the potential of partnerships globally, ex-U.S. or in regional partnerships, for example, Asia or a separate Japan and rest of Asia and then Europe and South America. So, we are in discussions on that already in order to maximize also the rollout of the drug worldwide.
Did I miss any additional question?
Ram Selvaraju
Just as an adjunct to that, I was asking about the IP protection for blarcamesine currently in China.
Dr. Christopher Missling
Thank you for reminding. So, we did make sure that when we started the company’s portfolio strategy to include China very aggressively in IP protection, so with all the patents we have filed so far, that is going back to the last 7 years, 7 to 9 years. We included always the patent application in China specifically as well. So, we always make sure that we not only have protection in the largest market, but specifically also added China into this group of IP protection.
Ram Selvaraju
Okay. And then, just one last question was with respect to when you expect to disclose the identity of the new ultra rare indication for blarcamesine for which you expect to initiate Phase 2/3 clinical development as per the guidance from the press release still this year? When do you disclose the identity of that indication?
Dr. Christopher Missling
Right. I want to give a bit of background about this. We would be happy to disclose it. It’s not that we don’t want to disclose it. We just don’t want to convey the message as if we would not be focused and convinced about the existing indications. That’s the only reason we don’t want to distract the market.
The reason why we have this in this form or shape mentioned is that we have several indications where we are very robust pre-clinical data with ANAVEX 2-73 in rare diseases and ultra-rare diseases. And we like to just make sure that we are progressing first with the FDA to discuss those indications to make sure we pick the one which has the highest chance of succeeding in our clinical trial and progressing in the clinical trial success. And then, we will make the disclosure.
But really, the predominant reason is that we like to make sure that we don’t get the impression that we are not focusing on the existing indications, which we are very excited about as we speak.
Ram Selvaraju
Just one very minor financial clarification, if I may. Based on your guidance with respect to the length of the cash runway, can you confirm whether or not that effectively includes whatever budget assumptions you may have to make regarding actual commercialization of blarcamesine? One might say, for example, the highest likelihood is commercial-related expenses associated with the deployment of the drug in Rett syndrome, but possibly also another indication. And I just wanted to clarify whether your financial runway guidance actually includes those commercial expenses along with the other operating expenses as well.
Dr. Christopher Missling
This is an excellent question. So, let me break it down this way. So, for the commercialization, we already have, as I mentioned just briefly before, sufficient drug product for the entire commercial rollout of ANAVEX 2-73 in Rett syndrome. The marketing rollout cost as you know when you have an approved drug, your ability to access capital and resources for that is broader than the equity capital market. You have access to debt financing and other financial vehicles which are basically not dilutive. And we certainly will make use of that. So, the cash is — available, is not limited to equity, which is right now the focus in a stage where the company does not yet have revenue. But this can change very quickly and hopefully very soon that we’re able to expand on the ability to use financial vehicles and resources, which are basically non-dilutive to shareholders.
Clint Tomlinson
Okay. Thank you. Our next question is going to come from Charles Duncan at Cantor.
Unidentified Analyst
Hi. It’s Avian [ph] on for Charles. Thank you for taking our questions. And congratulations on the progress. So I guess a quick question regarding the Alzheimer’s program. I was wondering if you could speak to enrollment rates into the open-label extension.
Dr. Christopher Missling
Say it again, what’s the question, please?
Unidentified Analyst
Could you please discuss enrollment rates in the open-label extension from the Phase 2/3 Alzheimer’s study?
Dr. Christopher Missling
Yes. So, we have very high enrollment of the extension, which you — as you know is two years after the placebo-controlled study, which just finished last June. And so, I think, the last number I received was in the range of 94% — 93%, 94%.
Unidentified Analyst
Okay, great. Yes. Awesome. Sounds good. And then, I have a couple of questions regarding the Rett syndrome program. So, I guess, first, could we expect a potential press release or an update when last patient last visit is reached?
Dr. Christopher Missling
From the EXCELLENCE study?
Unidentified Analyst
Yes, exactly.
Dr. Christopher Missling
Right. We will provide that.
Unidentified Analyst
Okay, wonderful. Thank you. And then, my last question is you had mentioned earlier in the call that should the results be positive, you would try to move forward with an NDA submission. But, I guess, I was sort of wondering, how are you distinguishing between positive or positive enough to move forward with an NDA versus positive that, hey, there’s a signal we should continue to explore further. And I was wondering if you could — how you’re thinking about that distinction? And what sort of feedback the FDA has related to you regarding what it would take to get an approval? Thank you.
Dr. Christopher Missling
Right. So, we have — and we stated the last time, we have now very strong two clinical studies, placebo-controlled studies, the Phase 2 study and the AVATAR study. And we have now submitted these studies to the FDA and also the existing design of the ongoing EXCELLENCE study in order to make sure that the agency is comfortable with our design, with our data to also make sure that we get a clear feedback from these — our submission potentially in order to maximize the chance of getting the — moving forward with the NDA approval.
So, we expect this feedback, and that will be also communicated accordingly. So, this is basically the best way to make sure we’re not running into a roadblock or whatever when the data is out. So, we want to make sure before the study finishes, the EXCELLENCE study, that we have a clear path to approval.
Unidentified Analyst
Okay. Wonderful. Yes. Thank you for taking our questions. And congrats on the quarter.
Dr. Christopher Missling
Thank you.
Clint Tomlinson
The next question comes from Caroline Palomeque from Berenberg.
Caroline Palomeque
I just have a follow-up on the mechanism work. Do you plan on doing any genomic analysis, gene expression work on 3-71 such as an FDD or some indication like that as well?
Dr. Christopher Missling
That’s correct. So, we have done, now since our first study in Alzheimer’s disease, the Phase 2a, where we, for the first time, used genome analysis, we will now include that as well as in the ANAVEX 3-71 program because of the broad applicability and the way we believe we can learn more about the effect of the drug. So, we will clearly also include that in the ANAVEX 3-71 program.
Clint Tomlinson
I believe that was the last question, Dr. Missling.
Dr. Christopher Missling
Thank you. Again, we are very much looking forward and we’re very excited about the Company’s potential as we build on biomarker-driven precision medicine studies. With significant unmet medical needs and economic burden, and we are looking forward to clinical trial readouts in Alzheimer’s disease and pediatric Rett syndrome. Thank you very much.
Clint Tomlinson
Thank you, Dr. Missling. Ladies and gentlemen, this concludes today’s conference. We thank you for participating, and you may now disconnect.
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