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

Good morning, everyone. Welcome to the Anavex Life Sciences Fiscal 2022 Fourth Quarter Conference Call. My name is Clint Tomlinson and I will be your host for today's call. [Operator Instructions] Please note, this conference is being recorded. The call will 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 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 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 would 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 most recently reported financial results and to provide a business update. We are excited with the continued advancement of our lead product candidate, ANAVEX 2-73 in Alzheimer's disease and Rett syndrome. As we maintain our attention on execution across each of our clinical programs and overall business operations, we are planning to present top line data of the randomized, double-blind, placebo-controlled Phase IIb/III study ANAVEX 2-73-AD-004 for the treatment of early Alzheimer's disease in a late-breaking oral presentation at the upcoming clinical trials in Alzheimer's Disease CTAD Congress 2022 on December 1, 2022, at 4:30 p.m. Pacific Time in San Francisco, California. In our Rett syndrome program, we are nearing completion of the randomized placebo-controlled excellence Phase II/III study for the treatment of pedratic patients with Rett syndrome. We expect to update on the complete enrollment accordingly. Earlier this month, we announced that the FDA granted Orphan Drug Designation to ANAVEX 2-73 for the treatment of Fragile X syndrome. Fragile X syndrome is the most common form of inherited intellectual disability and the most frequent single gene cause of autism spectrum disorder with an estimated population of approximately 62,500 in the U.S. and over 1 million worldwide. Recent guidance received from the FDA confirms our strategy to advance ANAVEX 2-73 for the treatment of Fragile X syndrome in our double-blind, randomized placebo-controlled Phase II/III development program. We will share more details about this clinical program as it becomes available. In August, we reported a relevant new peer-reviewed publication in the journal Science Translational Medicine titled widespread cell stress and mitochondrial dysfunction occurs in patients with early Alzheimer's disease. This publication provided further scientific evidence of the relevance of sigma-1 receptor activation as a compensatory mechanism to chronic CNS diseases. Further pipeline expansion of the Anavex platform using gene biomarkers of response, applying precision medicine for neurological disorders with unmet medical need is expected, including meeting with the FDA to discuss the ANAVEX 2-73 Parkinson's disease program, including our pivotal Phase III study, a planned initiation of an ANAVEX 2-73 imaging-focused Parkinson's disease clinical trial sponsored by the Michael J. Fox Foundation, a planned initiation of a Phase II/III clinical trial for the treatment of a new rare disease indication and a planned initiation of ANAVEX 3-71 Phase II clinical trial for schizophrenia. 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 morning, everyone. During our fourth fiscal quarter, we reported a net loss of $14.3 million or $0.18 per share. The reported net loss includes $6 million in noncash items. Our research and development expenses for the quarter were $11.4 million as compared to $9.4 million for the comparable quarter of fiscal 2021. General and administrative expenses were $3.9 million compared to $2.9 million for the comparable quarter of fiscal 2021. Our cash position on September 30, 2022, and was $149.2 million. During the full fiscal year 2022, we utilize cash and cash equivalents of $24.2 million to fund our operations. Within our current cash utilization range, we believe we have a sufficient cash runway to fund operations and clinical programs beyond the next 4 years. The overall increase in expenses over the comparable period is primarily related to the expansion of our team and an associated increase in noncash charges period-over-period. Thank you. And now I'll turn the call back to you, Christopher.

Thank you, Sandra. This is an exciting time in neuroscience and rare disease drug development and we remain on track for the readout of the placebo-controlled ANAVEX 2-73 Phase IIb/III Alzheimer's disease clinical trial, a condition of significant unmet need in economic burden for which there are only limited approved pharmacological treatment options, 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.

[Operator Instructions] And our first question is coming from Charles Duncan from Cantor Fitzgerald.

Can you hear me?

Yes. You're good Charles.

Congrats on the progress in the quarter. I had a couple of questions with regard to the AD top line that you're planning to talk about towards the end of this week. I guess I'm wondering what would define success for you? And can you help us understand the enrollment criteria for those patients. Was it primarily a clinical diagnosis of Alzheimer's? Or was there some imaging or some other confirmation for those patients being Alzheimer's?

Very good questions. So let me address this. The requirement for enrollment into the study required AD pathology, which was assessed by physician assessment of criteria of Alzheimer's pathology as well as if available, PET scan or spinal tap confirmation of a better presence in the patient.

Okay. And then defining success, obviously, statistical significance is one thing. But what would you like to do with the data? And what could be next steps?

I think it really depends on the data. I would refer to waiting for Thursday to then be able to respond more properly to this question.

Okay. And then moving on to the EXCELLENCE study. In terms of the endpoint, can you help us understand what is the endpoint that you're most focused on? Is it RSBQ AUC in Rett? Or is it the Clinical Global Impression of Improvement?.

It's really both. So the RSBQ is the assessment of the parents and the CGI-I is the assessment by the physician. So both are relevant and they should actually match or correlate with each other. And so we believe both endpoints are critical.

And can we anticipate readout from that study in, say, the first quarter of the coming year?

I would say the first half since we have to finish the trial, which is 12-week long. If we complete the enrollment this quarter, which we expected, and we are on track to do that, we would need to add 12 weeks. So it will be then in the first half.

Our next call is from Soumit Roy from JonesTrading.

Congratulations on all the progress and certainly a big quarter for Anavex. On the Alzheimer data that's coming up next Thursday, could you give us a little detail like how the data will be presented? Is it the primary endpoint? Would you combine the 2 high-dose and median dose arm and then look versus placebo or each of the arm will be individually assessed against placebo? And are they powered enough to show us like 20% improvement? How is it going to look like when we see the press release?

Yes, I would really recommend to wait for the data on the first of December. And we just have powered the study according to our knowledge from previous clinical trials. So we think we are in good shape. I would recommend to wait for December 1.

Got it. Totally understandable. Quick question. Can you disclose like what percent of patients agreed to have the -- either the scan or CNS tap to look at further biomarkers?

I think that the -- it's not -- I don't have that information on top of my head. So we have to wait for December 1.

The next question comes from Yun Zhong at BTIG.

So a follow-up question on the Alzheimer's data. And I know it's probably difficult to speculate what the data will look like. But Christopher, can you talk about your plan if the study meets the primary endpoint? Or if the study fails to meet primary endpoint, what's your plan on individual scenarios, please?

Again, I would comment just to recommend to wait for December 1. It's not a good point today to speculate on that. We are very close. So I think it's best to discuss it when the data is there. We always know that the FDA responds best when there's existing data to discuss. So that's my recommendation.

Okay. Then maybe a question on the cash runway guidance. The full year runway is very encouraging, but does that include a potential additional Alzheimer's study if you need to do another one, please?

Guidance is really based on the historical advancement of our cash utilization rate, which was always very consistent over the last years. So it's an extrapolation, if you so like. So it's a conservative exploration. So with the increase -- and it has definitely all the studies, which we have planned to initiate and to execute included in that budget.

Okay. Last question and to confirm the Parkinson's disease program. So there is a possibility that the next study that you'll conduct in Parkinson's disease will be a pivotal study based on your discussion with the FDA?

We are aiming for that. We have very strong evidence from the PDD study that the effect on MDS-UPDRS, which is the main primary endpoint of this indication has been very favorable with ANAVEX 2-73. So the plan would be to make sure we are able to move forward as quickly as possible. That would mean to aim for Phase III.

I don't see any further questions at this time. Dr. Missling.

So 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 need and economic burden. And we're looking forward to clinical trial readouts in autism disease and pediatric Rett syndrome . Thank you.

Thank you, ladies and gentlemen. This concludes today's conference call, and we thank you for participating. Have a great week.