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

Good morning, everyone, and thanks again for attending the 41st JPMorgan Healthcare Investment Banking Conference. My name is [indiscernible]. I'm an associate with the health care team based in New York. And before we start, as most of you know by now, this presentation will be followed by a Q&A session to the extent time allows. Today, I'm pleased to introduce Dr. Christopher Missling, President and Chief Executive Officer of Anavex Life Sciences. I'm sure he's very excited to tell you more about this company and the amazing work his team has been doing to improve the lives of patients by developing novel, small medical treatments for some of the most challenging CNS diseases facing society today. With that, I'll pass it to Dr. Missling to share his story.

Thank you very much for the very kind introduction. And I'd like to -- it's great to be here. I'd like to thank first JPMorgan for the kind invitation today. And let me introduce to Anavex Life Sciences. Since we are a public company, I'd like you to read this. Thank you very much. I learned from successful oncology research -- we learned from successful oncology research that one important lesson is the power of the body to fight cancer by activating the body-own defense system. That led to the belief, why wouldn't that be possible in CNS diseases, which consist of even more complex pathologies. Here at Anavex, we like to change things. We want and we aim to move science forward. We believe that we are well positioned to expand the transformative precision medicine platform and capitalize on significant market opportunities. We are dedicated to therapeutic discovery and development of targeted central nervous system treatments. The company's precision platform, Sigma receptor, is at the forefront of the application of precision medicine to address the totality of CNS diseases by unlocking the body's own defenses. The company's portfolio comprises of several promising differentiated therapeutics for a range of serious disorders, including Alzheimer's disease, Parkinson's disease, dementia and other rare diseases, and rare diseases like Rett syndrome. Instead of trying to fix already broken things happening downstream within the neuron, we try to fix things, which are wrong at the start, at the upstream, top of the start of the reaction cascade or processes. This could also apply to genetic anomalies present at birth, such as the horrible symptoms of Rett syndrome as well as other disorders like Fragile X autism spectrum disorder. We are focusing now on CNS disorders, and I'd like to run you through how we do that. The key is to understand the mechanism of this upstream activation of our receptor, which is the sigma-1 receptor. The sigma-1 receptor is a body own receptor involved in restoring homeostasis. And when you have a chronic CNS pathology, like Alzheimer, but also a rare disease since birth like Rett syndrome, these own sigma-1 activators, which are endogenous, are impaired because they're not enough sufficiently available because of the constant chronic stress. So they're basically exhausted. This impaired system can be, however, be damaging because the body is not able to respond to these constant cellular stress. The good news is that since this sigma-1 receptor is a GC-coupled receptor, it can be also activated with small molecules from the outside. And that's exactly what we are doing. So we're using the body own defense mechanism to continue to push back and compensate for pathologies, we -- which the body itself is capable of responding to with ANAVEX 2-73 and other sigma-1 molecules in our portfolio. And ultimately, we noticed that it leads to beneficial therapeutic effect in patients. What is very important is when we follow this trade, we measured very nicely -- we could measure very nicely the sigma-1 biomarker by measuring mRNA sigma-1 levels before and after treatment or even during treatment. And what's very intriguing is every time we did a clinical study in Alzheimer's disease, in Rett syndrome, in Parkinson's disease, dementia, every time the patients benefiting correlated with the higher sigma-1 level expression confirming the approach of sigma-1 activation, leads to improvement by pushing back and compensating for anomalies and upstream cellular stress. And as a consequence, the patient comes out of it with a better outcome. For example, in Alzheimer, we noticed patient improved from baseline versus those who did not receive enough treatment of the drug or had were on placebo. And we have been able to confirm that in Alzheimer's disease, in Parkinson's -- in dementia, Parkinson and Rett syndrome in all our studies so far. Another biomarker response is a very unique one specific to sigma-1, which is the analysis of the sigma-1 variant. The sigma-1 variant shows up in the entire population and it can be looked up in a database in 2 main variants. The main majority is the wild-type sigma-1. We refer to that as the perfect sigma-1 gene. But there's a small minority of roundabout 20% in the population, and that also among patients. And this 20% have one small change in one point in the amino acid cascade of the gene. So one amino acid is replaced by another one. And that led to slightly change of the efficiency of the sigma-1 pathway. And what we noticed that in all 3 trials I just described here that every time we look at the performance of the wild-type sigma-1 carriers, which, again, are 80% of the population and often respectively, the 80% in that clinical trial population, they perform better. They outperform the cohort, which has the sigma-1 variant. So again, confirming the sigma-1 activity as the reason for the beneficial outcome in the clinical trials. So 2 independent biomarkers are confirming the outcomes of ANAVEX 2-73. Let me now run through the activities we have achieved so far and the ones we are going to achieve near term and long term. So we completed the Parkinson dementia study Phase II. We completed the U.S. Rett syndrome study Phase II. We completed the Rett syndrome Phase III study in adults, and we had top line data of the Phase I of ANAVEX 3-71, another compound in our pipeline. And we recently reported the top line data of the Phase IIb/III Alzheimer's study. What we're going to do announce and report or initiate in the near term will be the full data of this study, including biomarkers, whole outcomes measures as well as MRI. We also are planning to announce the data of the open-label extension of the Parkinson's disease dementia study over 48 weeks as well as we're initiating a Parkinson's disease Phase II study focusing on imaging as well as completing the enrollment -- announcing the enrollment completion of the EXCELLENCE study, the third Rett study in pediatric patients as well as initiating a Fragile X clinical trial as well as initiating with 3-71, a schizophrenia trial, a Phase II trial. And last but not at least, a new rare disease for ANAVEX 2-73. Again, I want to reconfirm that the importance of biomarkers in CNS, since we don't have the privilege like an oncology where we can measure the size of a tumor, we have to find reliable biomarkers in CNS, which is hard to come by. And we're very fortune we have 2 independent biomarkers, both the mRNA expression levels in the blood, correlating with the outcome and the Sigma-1 variant status analysis. So now let me run through the promising differentiated therapeutics for addressing challenging CNS disorders with very high unmet medical needs. So the indication so far, we have been able to successfully address where Alzheimer's disease in 2 clinical studies, a Phase IIa and a Phase IIb/III Parkinson's disease dementia in a Phase II and we are moving forward with Parkinson's disease this year. And we have 2 successful Rett syndrome studies in adults and 1 ongoing study in pediatric patients. And we are planning to move forward ANAVEX 3-71 in schizophrenia and with orphan designation in frontotemporal dementia. And also, we have very good data, which was published in Alzheimer's disease for ANAVEX 3-71. ANAVEX 3-71 is the -- targets the same as ANAVEX 2-73, the Sigma-1 receptor, just with a different affinity. And ANAVEX 3-71 has also one additional target, which is the M1 agonist. And that's why it's very well positioned to -- and we decided to move forward with ANAVEX 3-71 in schizophrenia, given that they are already successful M1 agonist demonstrating success in schizophrenia. We are now moving also into our earlier stage pipeline, which is very promising, all grounded on very strong preclinical data in ANAVEX 2-73 for Fragile X in infantile spasm, Angelman syndrome and other rare diseases. And ANAVEX 1-41, we have very strong preclinical data in depression, stroke and other rare genetic diseases. And ANAVEX 10-66, last not but not least, we have very strong data in visceral pain and acute neuropathic pain. So let me briefly run through Alzheimer's disease pathology, which is a progressive neurological disease and the most common cause of dementia. It slowly destroys memory and thinking skills. It impacts almost all aspects of a person's life as it progresses. Short-term memory is impaired as well as difficulty to learn things and inability to recognize common things. And currently, the cost of dementia is estimated to be $1 trillion, and this figure is set to double by 2030. So we completed 2 studies of Phase IIa and a Phase IIb/III, and we are also advancing 3-71 in this indication given very strong preclinical data. Parkinson's disease and Parkinson's disease dementia is the second most prevalent disorder in CNS. And up to 80%, given very strong treatment now and relatively successful treatment with L-dopa, lead to now increased aging of this population with Parkinson's. And 80% of this Parkinson's population eventually experienced dementia. So it's a huge unmet need. And we're very intrigued about our Phase II, which demonstrated both improvement in motor impairment as well as improvement in cognition. So we really have a very strong edge in an indication which has been unsuccessful in many cases in the past with other compounds in other treatment options. So we are moving forward in a Phase III now with Parkinson's disease dementia, given the success in the Phase II and also moving in parallel in the Phase II/III study in Parkinson's disease in parallel, given the strong data of improving MDS-UPDRS. Rett syndrome, the rare disease we have in the pipeline, is mostly girls. And it's a very sad disease because it's not passed on by genetic from the parents, but it's caused by a spontaneous mutation. So if you do family planning today, you can, for example, identify risks for getting, for example, cystic fibrosis, but you can't do that for Rett syndrome because it's caused by a spontaneous mutation. So you can't eradicate this disease basically, unless you find other ways to do screening, which is not done these days. So we have very -- we are intrigued about 2 successful clinical studies in adult Rett syndrome patients, one U.S. study, RS-001 and one international study, AVATAR RS-002. And both studies in adults are very intriguing because adults usually are not often successful in these developmental disorders. We've seen many other trials of other compounds failing in adults, and then having a weak signal in younger patients. So we are very excited because of the strong signal in effect size in the adult population with ANAVEX 2-73 to also have a successful -- hopefully, successful study in the pediatric study. The multiple successful clinical milestones we have so far reached and allows us now to think -- to start to think to focus on commercial stage level and planning going forward, including the U.S. and around the world. And the pipeline is able to give us this confidence given that we have now reached several Phase III studies successfully as well as moving forward with one ongoing Phase III study in Rett syndrome and planning several other Phase III studies as you can see in the slide. Let me now move to ANAVEX 2-73 blarcamesine for Alzheimer's disease, the most recent Phase IIb/III study. The ANAVEX 2-73-AD-004 Phase IIb/III study in early Alzheimer's disease was a global multi-center, randomized, double-blind, placebo-controlled parallel group 48-week trial evaluating blarcamesine once daily. We randomized 509 patients of early disease pathology with confirmed AD pathology, and the patient's age was between 60 and 85 years old. The MMSE score in entry criteria was 20 to 28. So the range of early Alzheimer's disease. These patients were randomized 1:1:1 to 3 arms, 2 active arms, the medium dose 30-milligram target dose and the high dose target-dose 50-milligram once daily orally. And the third arm was placebo. The analysis of this study, the primary analysis was all patients on active arm against placebo. In measuring ADAS-Cog and ADCS-ADL as co-primary end points. And the key secondary endpoint was CDR-sum of the boxes. We also prespecified the wild-type only patients analysis, which means the exclusion of that one variant of what I mentioned before is run about 20% in the overall population, which is the variant, which has a name called rs1800866. The other analysis was also, which we will report, of course, very soon, structural and functional MRI biomarker both CSF as well as blood of a better 40:42 ratio, a better 40, a better 42 absolute T-tau, P-tau, NFL, YKL-40, neurogranin, BACE1 as well as unique for Anavex, the entire DNA as well as RNA, mRNA before and after patients' treatments for all participants in the study. So not only the Sigma-1 mRNA level will be measured before and after treatment, the entire gene of all participants will be analyzed to extract very valuable information from this trial. The co-primary endpoints, ADAS-Cog and ADL, were measured by using not a T test or another conventional calculation, but using the odd ratio because of the conviction we have seen before in the Phase IIa that patients on ANAVEX 2-73, with the right dose, were able to outperform their peers by improving from baseline after a period of 1 year. So we saw that the odd ratio of ADAS-Cog demonstrated a meaningful improvement in cognition at a threshold of minus 0.5 or better, which is less because ADAS-Cog goes down to improve, and that was a p-value of 0.015. And the same happened successful co-primary endpoint readout of the odd ratio of the ADCS-ADL with a meaningful improvement in function with the threshold of plus 3.5, which is a net improvement from baseline as well as with the success and significant p-value of 0.0255. In other words, the patients treated with ANAVEX 2-73 or blarcamesine were 84% more likely to improve cognitively compared to placebo by the ADAS-Cog -- measured by the ADAS-Cog score with a threshold of net improvement. Or in other words, for ADL at clinical significant levels of improvement in function of the ADL score, the ANAVEX 2-73 blarcamesine treatment was 167% more likely to improve function compared to placebo, very strong data. We also measured the conventional calculation of the secondary endpoint, the key secondary CDR-sum of the boxes, and I'm sure you're more familiar with that, and I will show you that in the next slide. ANAVEX 2-73 blarcamesine was also generally well tolerated and safe. And I mentioned before, the next steps will be an analysis and publication of all full data, including MRI and prespecified biomarkers of response as well as whole genome exome DNA and full mRNA exome expression levels and the collection of this data as biomarkers of neurodegeneration in a peer-reviewed medical journal. We also will continue, for the patients who finished the study, a 40- and 96-week open-label extension in parallel to add additional safety data to this indication. And thereafter, once we have the phase -- full data analysis of the placebo-controlled study. So we don't have to wait for the open-labeled study to finish. We will immediately discuss the data with the regulatory authorities around the globe, in the U.S., in Europe and in Asia to discuss next steps. So let me share with you the CDR-sum of the boxes of blarcamesine versus placebo at 48 weeks, which is demonstrated and showed at the end of the trial, a significant minus 0.42-point improvement of a placebo with a p-value of 0.04 with a 27% slowing of the decline. And to put this in context, blarcamesine was, at 48 weeks, already faster in response since we get asked often the question compared to lecanemab, which received the similar response at week 72. So in a nutshell, blarcamesine attained similar response of efficacy 24 weeks earlier, despite having -- and we looked at the MMSE baseline score of lecanemab compared to our trial, we had a baseline score of MMSE of 2 points, which is quite a lot lower than lecanemab. So the patients in the Anavex trial were more slightly more advanced despite being both early Alzheimer's disease, but slightly more advanced. So despite that, there is a disadvantage to compare -- we are intrigued about the fact despite that more advanced population to have that early effect. And the other key differentiating factor, obviously, is that blarcamesine is an orally once administered treatment and versus the challenges which we hear, the biologic antibodies based intravenous drug are facing. So we believe we are positioned very well to future expansion worldwide for commercial expansion, which also is based on strong IP foundation. And so far in the indication which we are addressing today, which are not the final indication portfolio, we already can count based on dialysis of public databases of more than 67 million patients with these CNS diseases or targeted CNS diseases of the Anavex portfolio globally. We also like to reemphasize that we are positioned to capitalize on a significant and growing market opportunity to treat CNS diseases, especially dementia because that is such a drawing disease worldwide to grow and project to grow over 130 million by 2050. And in all regions of the world, these numbers are increasing. And we are targeting these markets using a differentiated and transformative precision platform. We also have strong IP protection in all regions in the world -- in major regions of the world and we have the -- we also own all our commercial rights to our drugs, and that allows us, combined with worldwide patent protection, which is in the range of 2030, 2039, for the list of product candidates of Anavex portfolio. What is also important is to be able, since we're using 1 drug for several indications, to separate the administration route. And we believe that's our foundation also for more cost-effective and safer treatments for CNS disorders. And we have very clearly drawn a line before the administration to Alzheimer and Parkinson's and Parkinson's dementia using an oral solid formulation, a pill, a capsule, which is demonstrated here on the left side, and separating from the rare disease franchise, which is using oral liquid formulation, and that would be for Rett syndrome, Fragile X, infantile spasm, Angelman syndrome because also these children have a harder time to swallow. And some people -- some of these who children cannot even swallow, they're using a tube -- a feeding tube, which has to be liquid by definition. And ANAVEX 3-71 is also a solid formulation, oral formulation right now developed as an oral solid formulation. So I want to remind again and emphasize the orally administered candidates of immense potential for clinical benefit relatively to costly and logistically challenging biologic monoclonal antibodies-based drugs, which also often present additional safety challenges as we hear. So overall, we also have strong cash position for moving our program forward with strong cash runway because you're using a very disciplined operations and not dilutive -- using non-dilutive cash sources, using -- and we are very grateful for that support from grants from Michael Fox Foundation, where we received recently a second grant from Michael Fox as well as the International Rett Syndrome Foundation, which we'd like to thank very much and the Australian government. And that leads us to this slide showing that we have an expected runway of at least roundabout 4 years, sustainable cash runway due to our operation management. All this would not happen without an experience and team dedicated to helping patients. And this includes also former officers from the FDA, which we have 2 of them in our company. Also, I'd like to point out, we have very strong support from scientific advisers, which consist of respective experts in the field in order to discuss the tailored Anavex portfolio. And last but not the least, I'd like to summarize, again, we're very well positioned to expand on this transformative precision medicine platform and capitalizing on significant market opportunities, which are very large markets. And the CNS disorder market opportunity, as we understand, is roundabout $232 billion. And we're doing that by using precision medicine platform, addressing novel central nervous system mechanism, improving -- with demonstrated improved clinical trial success by targeting CNS disease conditions with these genomic precision medicine. We have several promising differentiated therapeutic candidates for challenging CNS diseases with unmet medical need and we're using a novel approach using this transformative technology. And we think we'll likely continue to produce a variety of CNS treatments. We also achieved multiple successful clinical milestones in progressing from our research focus to a commercial space company to bring therapies to patients around the world. And ANAVEX 2-73 blarcamesine met the co-primary end points and key secondary end points, for example, of the most recent study in early Alzheimer's disease. We're also positioned for future expansion with worldwide commercial rights and strong IP foundation. And we're positioned to capitalize on the significant market opportunities around the world with orally administered candidates, which are convenient to take. And we have, last but not least, sufficient cash runway using disciplined operations and non-dilutive cash sources like Michael Fox Foundation, International Rett Syndrome Foundation and the Australian government. And the runway -- expected runway is currently 4 years. With that, thank you very much, and we are open to questions.

Okay. I'm happy to start with some online questions. First one, do you think ANAVEX 2-73 could be disease modifying?

Thank you for the question. So, so far in preclinical studies, we have seen exactly this confirmation of disease modification. And when we look at the outcome of the biomarker data, which we expect to come out, we probably will get a definitive answer to that question also in patients from the clinic.

Okay. Next question. On Rett syndrome so Acadia has noticed diarrhea in your clinical study. Has Anavex seen any similar adverse effect in clinical studies?

Yes, that's a very good question. So diarrhea was not noticed in our clinical studies. And what's important maybe to be aware of in Rett syndrome, these girls usually have constipation. So the opposite of diarrhea. So it's really also important to have adverse event profile, which is less invasive and disturbing overall in these patients. So no, we have not noticed this diarrhea adverse events in our clinical studies.

Got it. Okay. We have a couple of others? Questions? Another one on Rett syndrome. What are the limitations of the RSBQ as an endpoint?

So in Rett syndrome, there are not many clinical outcomes developed because it's a rare disease and there have not been many clinical trials so far. The RSBQ is a patient administered endpoint or outcome. That's why it's also important to be aware of that who makes the assessment, if it's the parent. And what was reported in a publication recently was that the RSBQ seems to have a very high variability in repeat measures between time points without any intervention. So that makes it a little bit of like an imprecise baseline measure and outcome measure. And we -- for that reason, we used in our analysis of our trial, an anchor-based methodology by using the CGI-I, a measure of more concrete assessment by an independent group of assessors, which are the physicians. So that allows for a more objective assessment, and we anchored the CGI-I to the RSBQ outcome, and that allows for reducing variability of this RSBQ. But again, you cannot replace the RSBQ because there are not many alternatives which are in Rett syndrome as validated endpoints. But that's a very good way of also raising the bar of using respond analysis, using a threshold of net improvement and not just having an outcome number of change from baseline, which is more a rigorous approach in respond analysis with a threshold of net improvement with -- which the CGI-I anchored RSBQ is. So we basically are able to address the perfection of the RSBQ as a stand-alone by this methodology.