Anavex Life Sciences Corp. (AVXL) Earnings Call Transcript & Summary

Good morning and thank you for joining us today. My name is Michael, and I'm an associate in JPMorgan's Healthcare Group. Before I introduce you to our presenter today, I want to call your attention to the blue button on your screen. This is where you'll submit questions that will be addressed during Q&A. With that, I'm pleased to introduce you to Christopher Missling, CEO of Anavex.

Thank you for the very kind introduction, and thank you for inviting us to this conference. Very excited to share with you our story today. Since we're a public company, I'd like you to read this. It's the second page, forward-looking statement. So let me explain to you what we are doing. The Anavex platform is a platform for neurological diseases. What we understand so far is that neurological chronic diseases have an impaired housekeeping function and an impaired house homeostasis. So this homeostasis imbalance is chronic, and we can see that in many CNS diseases. The good news is that the body itself has decided a way to compensate for that constant chronic conditions by having a protein called sigma-1 receptor available, which gets activated endogenously to compensate for this chronic housekeeping impairments or homeostasis imbalances. And this mechanism is not activated in chronic diseases, which has been shown in Alzheimer disease and Parkinson's disease, where patients have a lower sigma-1 activation available. The good news is that since this molecule, this protein is [ GZ ] coupled receptor, it can be activated also from the outside. And that's what we're doing. And so far, we have noticed that on Slide #3, we've been able to develop drugs for this activation of this protein sigma-1 receptor. And so far, we have been able to demonstrate very strong clinical data and very good and sophisticated preclinical data in the following indications: in Alzheimer's disease; in Parkinson's disease; in Rett syndrome, which is a rare disease; in Fragile X, which is also a rare disease -- it's one of the largest autism spectrum disorders -- as well as other rare diseases. So we were successful in utilizing this body-owned defense mechanism to compensate against these CNS disorders. And when you look at these diseases, what you find in common, what they have is a chronic element of the CNS pathology. In Alzheimer and Parkinson, the chronic element comes in from the aging side. The older you get, the more likely you will get Alzheimer or Parkinson. And the chronic element in the rare diseases is by a genetic function, which comes with birth. So since birth, these patients have a genetic dysfunction of a protein of doing the right thing, and that leads to a chronic manifestation of homeostasis imbalance. And that's why we think we can compensate by using the body-owned defense mechanism to start to push back on the pathology of these CNS diseases. And there are probably more to come because we're working also on other indications in rare diseases, but also common diseases like schizophrenia as well as other rare diseases. The other important feature I'd like to share with you is what will bring the future, potentially not only a therapeutic intervention to these very serious diseases, but also a potential preventative ability to push back on the manifestation of this chronic features since we have seen and demonstrated in animal models, the ability of our lead drug, ANAVEX 2-73, to push back on the manifestation of, for example, Alzheimer's disease. So in an animal model of Alzheimer's disease, we were able to demonstrate that if the drug was given before the animals get sick from Alz in a pathology, they never developed the Alzheimer's symptoms. So that could lead to the potential of using this not only for therapeutic intervention, but maybe also one day in the future for prevention of diseases of Alzheimer and Parkinson and other neurological disorders. What is very important when we do clinical trials is to look for ways to confirm the effect of the drug, not only from the endpoints, but also with objective biomarkers. And this is something in CNS which is often hard to find. We're very privileged that we were able to find that in the target itself in the sigma-1 receptor expression, which I will share you in a minute. But the key important message here is that if you have such a biomarker, you're elevating your chances of success of a clinical trial outcome to a higher level, which has been shown in many examples featured on Slide #5. And on the next slide, you see the manifestation of this biomarker in its action in 3 independent clinical trials. We demonstrated that the sigma-1 activation measured by mRNA sigma-1 levels was correlating extremely clearly with the outcome of the patients. So patients who benefited from ANAVEX 2-73, our lead drug in 3 independent clinical trials on the left side on Page #6 in Alzheimer's disease. on the top right of that page in Parkinson disease, dementia, and the bottom right, the Rett syndrome. You see that every time a patient benefits, the active arm was better than placebo, the correlating sigma-1 mRNA level was also increased. And that is in a way a very good sign because we postulate -- we oxilate the Sigma 1. And as a consequence, the mRNA, the expression of this protein since we activate it, to come out in greater quantities needs to also be sustained and elevated. And that's what we were able to measure. And that's a very nice biomarker of response which we are continuing to include in all our future studies as well. The other important feature in dementia, if I might switch on the next, Slide #7, is also the clinical data so far was very supportive of the fact that we're able to show not only a decline -- a delay of the dementia, pathology in Alzheimer's and dementia with Parkinson, but also actually change of the course of the dementia. We noticed that when patients got the dose right, they were able to actually to shift towards an improvement from baseline. And that's certainly something to look for in our now completely enrolled Alzheimer study, which will read out in second half of this year. So I'd like you to make note of that. On the next slide, on Slide #8, I'd like to share with you that we're not only stopping here with the sigma-1 biomarker and the data, but also we are including all the data features of the trials, individual trials, into an entire AI-powered artificial intelligence-powered system, which we will then try to find, is there anything more we can learn about our drug? And do we find more features of responses? Are we able to identify surrogate endpoints or surrogate biomarkers? So all of these things are all collected and put to work into an unsupervised artificial intelligence computerized model to see if we can drive more information. And on Page #9, I'd like to share with you where we are today and where we're going to go from here for the remainder of the year. So we are now in several Phase III studies, and we are planning several additional studies, pivotal studies as well as we are in several Phase II studies, and we're planning to move forward in additional Phase II studies, as you can see here. What we're very pleased about that we were able to support our hypothesis with the sigma-1 activation, not only based on one compound, which is the lead compound, ANAVEX 2-73, but also we were able to demonstrate a second compound with the same feature, but a completely different molecule similar features of sigma-1 activation, ANAVEX 3-71, where we just reported very stellar clinical data, Phase I clinical data. And this compound has been given orphan drug designation for frontotemporal dementia, FTD, and is now in the planning phase of a study for FTD, but also for schizophrenia as well as Alzheimer's disease. So we're very excited about moving forward with this additional compound. But what it gives us really clearly is clearly a picture of a platform in addition to multiple data reads out for ANAVEX 2-73 as well as ANAVEX 3-71. And we also own all our compounds, and we have very strong patent protection up to 2030 to 2039 and worldwide rights. So let me go back to the Alzheimer pathology, which is very important in the forefront of the news these days. We know that the Alzheimer's pathology is accelerating in the world, in the U.S. and around the world as well. And these numbers on Slide #10 gives you a picture of that. What's also important is on Slide #11 that the care for Alzheimer is continuously increasing, it's now $20 trillion cumulative cost for Alzheimer disease from 2015-2050. And it's also important to notice that females have a higher prevalence of Alzheimer's disease than males. In the totality of the addressable market, we added a new slide on Slide #12, showing really where we are and what we're aiming for. So I mentioned Alzheimer's disease as one of the major markets and major indications for ANAVEX 2-73, our lead compound, followed by Parkinson disease, where we have a very supportive data in this indication of a double-blind placebo-controlled study, which I will share later in the slide. In frontotemporal dementia, which is an indication we are now going into a Phase II, but also an indication of schizophrenia, which we're now starting soon, we're talking about 1.5 million patients with schizophrenia, and a number double in Europe, and Asia even bigger, and the global amount is 20 million. But very near term, I'd like to bring you to the attention of a rare disease called Rett syndrome, which counts around about 11,000 patients in the U.S. alone and similar numbers in Europe and in Asia, and a global number of 50,000 as well as another rare disease, which is similar in its pathology of autism spectrum, which is Fragile X syndrome, which is the largest autism spectrum disorder with 87,000 patients in the U.S. alone. And we're starting a pivotal study program this year with our lead compound as well given excellent preclinical data, which was published. So let me now focus on Rett syndrome, which is a very good case study and near-term catalyst of events coming for us to share soon. So we have received orphan designation as well as fast track designation and pediatric priority voucher eligibility. And within the context of a gene genetic disease, we are applying this precision medicine of our activation of the sigma-1 protein. And we're also privileged to say that so far, we have the compelling human data in Rett syndrome. But also on a global basis, I'd like to share with you at this point in time, we have enough cash for the next 5 years. So we are well funded without any debt to move forward all our programs. And we also like to thank at this point in time to the Michael Fox Foundation, which gave us a grant for the preclinical work on Parkinson and now also a second grant for the clinical work on the Parkinson study, but also the foundation, International Rett Syndrome Foundation, which funded the study, clinical study in Rett syndrome, as well as the preclinical study. And we have more news to share on other indications we are starting. And on Slide #14, you can see in a summary the catalysts which are very near term. The completion of the top line data of the Phase I of 3-71 I mentioned just before, just came out this week. And we are following very closely with the top line data of AVATAR, the second Rett syndrome study in adult patients with Rett syndrome, which is very near term. And thereafter the study with pediatric patients in Rett syndrome, EXCELLENCE study in the first half of this year, and followed by the Alzheimer's study 2-73 in Alzheimer's patients, which is fully enrolled. I mentioned that before, and it's expected to be reading out after the last patient has finished receiving a dose. So we expect the data to come out the second half of this year. And then we're expecting to initiate this year the imaging-focused Parkinson disease study fully funded by Michael Fox Foundation and the initiation of a Fragile X clinical program as well as the study of a new rare disease. And we also believe this would be likely a pivotal study using our lead compound ANAVEX 2-73, but also, I mentioned before because of our expansion of our portfolio and our platform now that we're able to add also ANAVEX 3-71 as a compound and moving that into a Phase II study in FTD in schizophrenia as well as in Alzheimer's disease. And this is planned also for this year. So very exciting activities ahead of us, and I'm very thrilled about that. So let me now share with you the mechanism of action, which is important to understand why is this drug working the way it does. What we have learned so far is that the downstream effect of sigma-1 activation, again, the body-owned defense mechanism to push back cellular stress and homeostasis imbalance is actually linked to a reduction of all the pathology features which you are familiar with in Alzheimer's disease, for example, or protein is folding like Parkinson's disease or others, which is reduction in Abeta, reduction also in tau, but also activation of autophagy, which is impaired in CNS and also reduction in inflammation, which also brings a strong impairment of the pathology of Alzheimer, for example. So while other programs from other companies just limit themselves to one of those features, downstream features like a Abeta reduction, we found the complexity of CNS is much bigger and harder to comprehend, we believe. So we believe more in the body-owned defense mechanism to do the right thing and by helping the body to do that by activating the sigma-1 receptor. And as a consequence, the body then is able to coordinate individually with every patient being probably different and not the same to then reduce Abeta or tau or inflammation where it's needed. And that's really the beauty about that concept. And when you look at it from a higher picture point of view, it's a bit the analogy of immunostimulation oncology, where we don't micromanage the disease, we macro manage the disease. The other important feature of mechanistically explanation of how the drug works is that the sigma-1 receptor has found now very recently, not to only have this downstream features I just explained, but also is able to go further upstream and intervene at the nuclear level to restore what is impaired in many diseases of Alzheimer as well as genetic diseases, which is the chromatin DNA packaging. So the sigma-1 receptor has been demonstrated to restore chromatin remodeling as well as preventing post-transcriptional toxic expression of proteins. So the RNA, which is not properly sequenced will be prevented by sigma-1 to be expressed in proteins, which are toxic and pathological as a consequence. So these are very recent features, which were found and the publications are shown on Slide #17, which gives you another important feature of how broad and deep the sigma-1 activation actually works in our body beneficially. A very important question has been always asked is that does our drug really connect with the sigma-1 protein? So do we really have proof that we activate actually the sigma-1 protein? And the answer is clearly, yes, shown on Slide #18, where you see a dose-dependent target engagement slide with the sigma-1 pet ligand confirming that with a very broad therapeutic window, which is very important. Also, I mentioned that we are measuring the mRNA in sigma-1, but we're not stopping there. We're also measuring in all our studies, the mRNA of all genes. Believe it or not, all our studies are now including the entire genome, both DNA as well as RNA before and after to learn anything more, anything more possible about features, which gives us better clarity of the mechanism of action or find more about patient selection biomarkers or surrogate endpoints and identify new indications possibly. Now let me switch to the rare disease of Rett syndrome, which is a very core target indication for Anavex. And let me share with you that this indication is relatively rare but not ultrarare. We're talking about 11,000 patients in the U.S. alone. There's no treatment approved yet and there's no currently cure for this indication. And what is very saddening about this disease, it affects mostly girls because it's a mutation of a gene, which is the MECP2, which is located on the X chromosome, and girls have a second X chromosome, which makes them surviving this disease if it's mutated, but boys don't. So boys don't survive this disease, unfortunately, so they often die in the uterus or right after birth. The features of this disease is really very saddening. These girls cannot speak. They cannot walk. They have impairment of breathing. And what is really saddening is that you really cannot prevent this disease because it's a genetically spontaneous mutation. So even if you have family planning and you're testing both parents and they have no risk genes visibly, the birth can still be of a Rett girl patient because it's a spontaneous mutation which happens and it's not genetically passed on. We did one study. The first study was the U.S. study called RS-001 and we did it over a period of 7 weeks, which is sufficient to show a signal. And it was really nice to see, despite a very small study of 25 patients only, but we did a placebo-controlled. And we measure all the key measures which are required for this indication, RSBQ and CGI, but also we added another element of a behavioral measure in the biomarker as I mentioned, the sigma-1 of response. And it's really nice to see that on Slide #22, a very solid response in all patients in the study that showed a very strong response of the patients getting the drug compared to the controlled, the placebo-controlled, with patients with the active arm always were superior in the response of the drug in the key features of the measures, which is the RSBQ, which stands for Rett Syndrome Behavioral Questionnaire, which is a measure which is assessed by the parents. And the CGI with the global impression of clinical changes, which is an assessment performed by the physician, obviously like a 4 eye principle. And the ADAMS, which is the behavior measure I mentioned before, which is important to assess if their behavior changes, which is also important for the quality of life of these patients. In all of these 3 indications -- in measures, we saw a clinically significant and a statistical significant improvement of all these features. And it's very important because this was the first study, a very small study, and we are now following up with our second study, which is also not much bigger. So we have very high hope about the second study, and then -- which we will release very soon. I'd also like to mention that we have a benchmark of a feature of another study, which was published, trofinetide, and we demonstrated so far that our drug, ANAVEX 2-73 was already more favorable on its efficacy compared to the other drug trofinetide, but also very importantly to mention that the effect of the drug on the safety profile was extremely important since we saw no features of diarrhea and vomiting and fever, which is for a child which is bedridden or in the wheel chair, very inconvenient. I'd also like to share with you the more details of the RSBQ quickly, and the ADAMS, which was significant and picking up really nicely and separating for placebo. But also I want to share with you now the next study on Slide #29, which captures now the design of this study RS-002, called AVATAR study, which is randomized 3:2 active arm and placebo and is similar to the first U.S. study, and it has just slightly a different dose regimen, slightly higher doses. And we're measuring similarly to before in the description shown, RSBQ, CGI and the ADAMS score. And it's important to mention that the RSBQ and the CGI are very important scores, which are connected because one is the assessment by the parents, the other one is by the physician. So they have to basically be connected for that reason, and it's a feature which is also important and shown in the literature. And the following study, the AVATAR study is the EXCELLENCE study, which is a larger study now in pediatric patients, so patients of age 5 to 18, and that's ongoing and going very well, and we're expecting the data of this study in the first half of this year, we're thinking most likely towards the end of the first half of this year. Now let me switch to Parkinson's disease, which is a disease which is also a very unmet need. And especially when patients with Parkinson are now getting L-dopa, they're all getting older and they develop dementia unfortunately. So Parkinson dementia is a huge unmet need and up to 80% develop this pathology. We did a Phase II study of 132 patients, a placebo-controlled patients in 3 arms on Slide #32, the design is displayed with a high dose, a medium dose and a placebo. And we found that after 14 weeks after measuring the key measure of the Parkinson pathology, which is MDS-UPDRS on Slide #33, a very significant improvement of MDS-UPDRS by an improvement of 10.98 points, which is a quite strong signal and the placebo declined by 3.53. So it's a delta difference of 14.51 points with a significant p-value of 0.034. So in 14 weeks, that is a really strong signal. And we found that in the high-dose arm, so clearly a dose response here on the drug. And what is also intriguing is that not only the movement impairment features of Parkinson were improved, but also the cognitive feature of these patients were all cognitive impaired in episodic memory, attention, language, visual spatial skills and executive function. And this is a very precise tool called the called CDR system, which is not CDR sum of the boxes, which often gets mixed up. The CDR system captures all these individual elements of cognition very nicely. And what we found on Slide #38, summarize really nicely a really clearly dose response where the placebo arm declined, as you would expect in a degenerative disease, the medium dose stopped the decline, so it didn't change from baseline, and the high dose that actually improved on a net basis from baseline. So it's a clear shift of the pathology in the cognition. And what's very neat about this episodic memory, quality of episodic memory measure of this system is that it's been published to correlate very highly with the ADAS-Cog. And the ADAS-Cog happens to be our primary endpoint in the forthcoming Alzheimer's study. And what's also important, the Alzheimer study uses the same dose regimen as this Parkinson's disease dementia study, PDD. I don't want to go over the additional results of the PDD study, but we're moving forward in discussion with Parkinson Foundation to design pivotal studies, respectively, for Parkinson, now in Parkinson dementia separately, obviously, because of the unmet need for both indications, given the strong data. Let me now move to Alzheimer pathology, which is on the mind of everybody. So our first Phase II study in -- with 2-73 was really profound because we demonstrated over a long period of time, and it's on Slide #38 that Alzheimer patients, which got the right drug dose, they never developed a decline of the features of cognition or activities of daily living, measured by MMSE and ADCS-ADL. And those patients who did not get enough drug, they declined, as you would expect in a natural hysteria study. So what's also intriguing, we were able to showcase also that the response was not only featured by depending on the dose, which is obviously important. But also it was confirmed by the genetic features of the sigma-1 receptor. There's a slight variance in some patients, which is the minority. So we talk about 10% to 20%. We have a not fully functional sigma-1 gene. And that gene, it's RS1800866. We noticed that also in the Parkinson and in the Rett study, by the way. And that makes the sigma-1 activity not as strong, still better than placebo, I want to point that out, but not as strong, so you find a differential. And that was demonstrated in this Phase IIa study. So it shows that those patients with that slightly, I would say, impaired sigma-1 receptor, which is the target of our drug, so it has to be perfectly working order, was not as responsive as the patients who had the fully functional wild-type gene, which is -- we're talking about the 80%, the majority of the patients. So just for mechanistically explaining the mechanism is another feature of showcasing how high fidelity and how precise our drug works, and that is on Slide #39. And on the next slide, on Slide #40, you see the design of the pivotal study, which is of 509 patients in measuring ADAS-Cog and ADL over a period of 48 weeks and included a lot of biomarkers, which is blood biomarkers as well as CSF and included also CDR sum of the boxes by the way. And again, very important, this study reading out second half of this year. And now let me just finish and wrap up with ANAVEX 3-71, which we reported recently, which has now shown a very solid safety profile and now moving into the indication of FTD, schizophrenia and Alzheimer's disease. And on Slide 42, you see the slide of the safety profile, which is really nice to see that there were very similar rates of adverse events in the active arm compared to placebo, and there were no patients with serious adverse event and no patients withdrawing from the study and the adverse event profile is very expected in CNS indication. So again, and the next steps are the biomarker-driven development program, dementia program of ANAVEX 3-71 for the treatment of FTD, schizophrenia and Alzheimer's disease. And I want to finish with giving you a full picture of Anavex being really at the forefront of addressing large markets. We're talking about Alzheimer, Parkinson, Parkins dementia, schizophrenia and to develop this global aging bracket of CNS diseases, but also addressing the rare diseases like Rett syndrome and Fragile X, which is an unmet need and/or FTD as well. And we are able to showcase that with precision medicine platform, we now have been clearly established with 2 independent drugs showing clinical utility that we are combined with a novel mechanism of action of the sigma-1 activation also combined with a biomarker of response, which is truly connected to the mechanism of the drug with very compelling clinical data, which you have seen and very strong IP protection as well as commercial rights to this, but also -- last not but not least -- enough cash to expand on our programs and move forward with our programs. And again, we have enough cash for over 5 years with no debt. And again, I'd like to thank the foundation, especially the Michael Fox Foundation and the International Rett Foundation for their support. Without them, we would not be able to make this happen. And last but not least, I would also like to share this would not possible without a strong team and a strong scientific advisory group, which you can see here, where we really have the breadth of the -- the background of expertise reaching from expertise from former FDA offices as well as people with big pharma background and scientific background for the respective diseases in rare diseases. And with that, I'd like to thank you for your attention, and stay tuned for the news, as mentioned, which is coming up.

Thank you very much, Christopher, for sharing the great story. We had a question from the audience. Question was according to Slide 14. It talks about the top line AVATAR data. And the question was, when do you expect the data readouts from the pivotal adult RTT clinical trial?

As I said, it's literally around the corner. I think that's what I can say at this point, and we are very excited.

The next question was, you briefly talked about the new safety 3-71 data. What does that mean, the new safety data mean to the company?

It means really a lot because we have established with that a second compound with -- targeting sigma-1 receptor. But also what is different to ANAVEX 2-73 is that M1 is activated with ANAVEX 3-71. So it's a really unique combination of receptors, and they go far along in the indication of schizophrenia, for example. And that's why we're very excited to initiate studies in schizophrenia with ANAVEX 3-71, which is completely has its own trajectory in pathologies and indications compared to ANAVEX 2-73. Very excited about this.

And before wrapping this up, one last question we had was what's the current cash position of the company?

Right. So we last reported that we have over $150 million in the bank, and our cash utilization rate is per month, $2 million to $2.5 million. So that's why you come to the conclusion that we have round about 5 or more years of cash available and no debt.

Got it. We have one last minute question if you have availability. The question was, have you seen any differences depending on ethnicity?

Difference to what?

Ethnicity. Any difference in data depending on ethnicity is the question.

Yes. So we have looked at -- we have also -- I remember with also Asian and other ethnicity in our clinical trials, we have not seen any differences in that regard.

Got it. Thank you very much. And thank you again for your time sharing your great story.

Thank you. It's a pleasure.