Anavex Life Sciences (AVXL) Q3 2021 Earnings Call Transcript

Anavex Life Sciences (AVXL -6.63%)
Q3 2021 Earnings Call
Aug 12, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon. My name is Adrian, and I'll be your conference call operator today. Welcome to Anavex Life Sciences fiscal 2021 third-quarter conference call. [Operator instructions] I'd now like to call over to your host for today's conference, Clint Tomlinson.

Please go ahead.

Clint Tomlinson -- Investor Relations

Thank you, and good afternoon, everyone. We appreciate you joining us today for Anavex Life Sciences third-quarter conference call to review financial results and discuss the company's business updates. A taped replay of this call will be available after the call. The call will also be available for replay on Anavex website www.anavex.com.

With us today is Dr. Christopher Missling, president and chief executive officer; and Sandra Boenisch, principal financial officer. Following management's remarks, there will be a question-and-answer session. 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 involved 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 10K and 10Q 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 in 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.

Christopher Missling -- President and Chief Executive Officer

Thank you, Clint, and we appreciate everyone joining us on today's conference call to review our financial results and describe the company's growth strategy. Let me start by stating that we can proceed into the remainder of 2021 with a background of a strong balance sheet of over 157 million in cash and no debt. Starting with our lead drug candidate, ANAVEX 2-73, we expect to announce top-line results from the confirmatory double-blind placebo-controlled late-stage Phase 2b/3 study in Alzheimer's disease in the second half of 2022. The double-blind placebo-controlled 509 patient late-stage Phase 2b/3 ANAVEX 2-73 trial in patients with Alzheimer's disease exceeded enrollment beyond 450 patients at 52 sites across North America, Europe, and Australia, using ADAS-Cog cognition and ADCS-ADL activities of daily living and function as primary endpoints.

This multi-center double-blind clinical trial is measuring efficacy, tolerability, and safety of two different once-daily oral ANAVEX 2-73 doses or placebo. ANAVEX 2-73 is an orally available small molecule activator of the sigma-1 receptor. Data suggest that activation of sigma-1 result in the restoration of complete housekeeping function within the body and is pivotal to restoring neural cell homeostasis and promote neuroplasticity. The study includes a pre-specified precision medicine biomarker, sigma-1 gene expression, which demonstrated correlation with direct measures of clinical benefit, cognition and activities of daily living and functions in the previous stage 2 Alzheimer's disease.

Parent data previous confirmed those dependent target engagement of sigma-1 with ANAVEX 2-73. As a reminder of our clinical strategy is clearly differentiated from other biopharma companies in clinical studies in CNS, ANAVEX is continuing to pioneer the approach of big data in clinical trials to leverage the relevance of phenotypic and genotypic precision medicine analysis of whole exome sequencing and gene expression data in drug development, and in particular, the potential to identify patients and the variants and gene expression changes that may predict increased chances of success of Alzheimer's disease, Parkinson's disease, and Rett syndrome treatments. Additionally, we can announce that we exceeded the enrollment target for the precision medicine ANAVEX 2-73 Phase 2/3 AVATAR clinical trial in patients with Rett Syndrome. And currently, top-line results from this study are expected in the second half of 2021.

Further clinical milestones are provided in Anavex Life Sciences' latest corporate presentation, available at www.anavex.com. 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 -- Principal Financial Officer

Thank you, Christopher, and good afternoon to everyone. We can report a significant increase in cash runway. Our cash position on June 30, 2021, was $157.6 million, which we believe is sufficient cash runway to fund operations and clinical programs beyond 2025. We reported a net loss of 10.2 million for the current quarter or $0.14 per share as compared to 6.5 million or $0.11 per share in the comparable quarter last year.

Research and development expenses for the quarter were 9 million compared to 6.7 million for the comparable quarter of fiscal 2020. This increase is primarily attributable to the continued advancement of our ongoing clinical trials, most notably the full enrollment of our international Phase 2b/3 Alzheimer's disease trial and the continued enrollment and advancement of the international Rett syndrome program. General and administrative expenses were 2.4 million for the quarter as compared to 1.4 million for the prior-year period. The increase is associated with the growth of our team and non-recurring costs associated with our annual general meeting.

Thank you. And now, I will turn the call back to you, Christopher.

Christopher Missling -- President and Chief Executive Officer

Thank you, Sandra. We are extremely excited and we believe that Anavex has never been in a stronger position than it is today with our recent double-blinded placebo-controlled study results correlating with predictive biomarker outcomes and the strongest balance sheet to date and the further strengthening of the Anavex team. In summary, we believe we are positioned for further growth than expect a catalyst breached upcoming 12 months. So we look forward to providing further updates as advancement continues.

I would like to now open the call for questions. Operator, please go ahead.

Questions & Answers:

Operator

[Operator instructions] And our first question comes to Charles Duncan from Cantor. Your line is open.

Pete Stavropoulos -- Cantor Fitzgerald -- Analyst

How are you doing? This is Pete Stavropoulos on for Charles. Good afternoon, Christopher and team. Congratulations on the progress and certainly appreciate all the updates. So I have one question regarding the Rett program.

When you think about the efficacy measures that were made and we're seeing, and the efficacy seen in the U.S. adult study, how do you sort of feel about the sample size or the planned effect size out of AVATAR?

Christopher Missling -- President and Chief Executive Officer

So we have been observed in the U.S. Rett study at a low dose study of 5 milligrams daily orally that effect size in the RSBQ was 1.1 Cohen's d, which is considered very large and ADAMS score, it was even larger, 1.3. So these are very large effect sizes. In the AVATAR study, we even have a larger population in the placebo-controlled study and the doses are higher than 5 milligrams.

So we expect if there is a dose response curve, which positive dose response curve, which we right now assume it is to be the case that this effect size will be sufficient for a positive readout in the AVATAR study as well.

Pete Stavropoulos -- Cantor Fitzgerald -- Analyst

Thank you for that color. Another question I have regarding the Rett program is in ClinicalTrials.gov, the pediatric excellent study states that the estimated completion date is about November of 2021. Are you still on track to complete the study by that time? And the reason why I'm asking is I know that I believe that you have a large part of it being conducted in Australia. And now, unfortunately, they're going back into lockdown in certain parts because of COVID. 

Christopher Missling -- President and Chief Executive Officer

The studies right now still enrolling well into the ability to continue the trial is still the case. What we cannot know for certainty is how much enrollment is impacted by this current situation in Australia, but we still believe as of today that the timelines are accurate to be able to complete the trial in the stated timeframe. But if this will change, we will update accordingly.

Pete Stavropoulos -- Cantor Fitzgerald -- Analyst

Thank you. And just one last question on the Alzheimer's program. Can you provide some color on the rollover rates for the Phase 2b/3 study into the open-label extension?

Christopher Missling -- President and Chief Executive Officer

We were really very impressed with the very high rollover rate into the open-label study which was over 95% which is extremely high. And we also have been informed that the patients who now are reaching the end of this extension study, open-label, have requested in the respective caregiver to stay on study drug. And so we have now been able to also extend because of this request the open-label study by another period of time for allowing the open extension study to give these patients continued access to study drug. But I want to point out that does not affect the timeline of the placebo-controlled study.

So it's just in parallel the ability of the patients who finished the placebo-controlled study to stay on study drug without interruption.

Pete Stavropoulos -- Cantor Fitzgerald -- Analyst

That's good. It's probably perceived as a benefit and probably reflects a lack of tolerability issues. So thank you very much for taking my questions and congratulations again.

Christopher Missling -- President and Chief Executive Officer

Thank you.

Operator

And our next question comes from Soumit Roy from JonesTrading. Your line is open. I apologize. That's Soumit Roy from JonesTrading.

Soumit Roy -- JonesTrading -- Analyst

Hi. Thank you for taking my questions. First question on the adult AVATAR Rett study. Do we have an idea if when you're having a deep conversation and if the trial size needs to be modified to turn into a pivotal trial? If you can give us any color on that.

And also some color on the dosing for both the AVATAR and EXCELLENCE studies, what kind of those cohorts are should we expect?

Christopher Missling -- President and Chief Executive Officer

Right. So we are in a dialogue right now with the agency. We have foster designation and orphan drug designation, as well as the voucher eligibility for Rett syndrome with ANAVEX 2-73. So we're right now in dialogue with the agency.

And I would like to provide an update with updates as soon as we have that, that would be more appropriate. The second question is regarding the doses. We have a higher dose than 5 milligram and we have used the dose of up to 50 milligram in the Parkinson's and dementia study and in the ULTIMA study. But the reason why we were keeping this dosing specifics right now within the blinded information is because the study is in a population which is very new to this trial and we are concerned that there might be between the family interactions which could lead to some unblinding of the study or inadvertently to learning about the effect of the drug and making a calculation back on the envelope.

If more drug is given how much the effect would be based on the existing data of the 5-milligram arm. So that's the reason why we keep this right now blinded. But we will fully disclose that when we have the data but it is higher than the 5-milligram dose.

Soumit Roy -- JonesTrading -- Analyst

I see, I see. Very interesting. And one last question on the Alzheimer's trial could you give us any color on the baseline MMSE of these patients. It seems like a wide range 20 to 28.

What should we be expecting more early stage or mild to moderate enrolling in your Phase 2b/3 trial?

Christopher Missling -- President and Chief Executive Officer

Right. So the rationale for that range we have seen in the face to a prior a very positive response across the entire MMSE baseline score which started from 16 to 28 but we noticed that the patients above 20 MMSE had the ability to improve from baseline on a net positive to reverse the disease symptoms. So the cognition was improved and not only the ability to show a delay of the cognitive decline while the patients below 20 MMSE were able to stay on a stable score. So the other reason why we included 20 and higher is that these patients are better -- still in a better way to comply with the trial regimen.

You have more advanced cognitive impairment often that is not the case. But the application is really like a very broad average within this score of between 20 and 28, which is really also the identified patient population of now called early autumn a disease, which is probably the majority and the highest unmet need in Alzheimer's disease today.

Soumit Roy -- JonesTrading -- Analyst

I see so you won't to break it up into two groups. You would keep it as the entire 20 to 28 group, and that's how you will present the data.

Christopher Missling -- President and Chief Executive Officer

Right. Because we saw that there was no difference of the improvement if you were 28 or you were 20. In both cases, we saw with our appropriate dose an improvement of the score 

Soumit Roy -- JonesTrading -- Analyst

Got it. Thank you so much for taking the questions. I'll hold back on the queue, and congrats again on the progress.

Christopher Missling -- President and Chief Executive Officer

Thank you. 

Operator

And our next question comes from Ram Selvaraju from H.C. Wainwright. Your line is open.

H.C. Wainwright & Co., LLC -- H.C. Wainwright & Co., LLC -- Analyst

Thanks very much for taking my questions. First of all, again alluding to the potential role of Blarcamesine in Alzheimer's disease. Can you comment on some of the preclinical information that's been presented recently and whether this would potentially point to a protective role for Blarcamesine? And specifically, if you can speculate on in which population the use of Blarcamesine as a protective might be most relevant from a clinical perspective. For example, in those people who are exhibiting signs of prodromal Alzheimer's disease, or mild cognitive impairment.

I understand that it's an early stage at which to be thinking about that. But just wanted to get your thoughts in this regard.

Christopher Missling -- President and Chief Executive Officer

I appreciate the question. We have learned in a disease in a pretty clinical animal model of prevention. So it basically gave to healthy mice the drug for seven days every day for seven days then stopped the treatment, and then you eject a bat into the brain which is a known animal models to pathology. And then these animals usually they get sick, they lose ignition.

And you see that in the measures water maze behavior, and so forth. And we noticed in the arm which had been given this seven-day treatment prevention that these adults never developed after the injection with a better, any symptoms of cognitive impairment. They behaved and cognitively stood as their wild-type path, but those who were given a better and without the pretreatment, they developed the cognitive impairment as you expected from the animal model. So this is the observation which led to the potential the one activation with ANAVEX 2-73, which as we know by now is extremely upstream and possibly able to prevent the cellular stress which is caused by via better interjection rejection.

And so in the entire challenges of the pathology, which is not limited to a data that this could be used as a prevention which in the future, which has to be awfully confirmed. The intelligence we have in the ULTIMA study seems to be also giving credibility in that direction, since we noticed a gradual ability to improve completion, earlier stage status of productive capacities. So when I mentioned before the cognitive impairment, lower than 20 MMSE and the lower score means more cognition or more cognitive impairment that those patients were better off the earlier you treat them. So we might be able to continue the trajectory of into the ability to prevent the cognitive impairment to even take place.

When we give the drug to patients, which are either as you point out mildly cognitive impaired, or before even any symptoms of cognitive impairment is present, just to be able to always prevent this cellular stress by this activation. And we compare in a way to many aspirin, which some people take for avoiding cardiovascular problems. And they do that every morning for breakfast. So I'm not saying that this is confirmed in human.

But eventually, we will be able one day to tackle that. And that is the plan in a study.

H.C. Wainwright & Co., LLC -- H.C. Wainwright & Co., LLC -- Analyst

Great, thanks. And also I wanted to ask about your thoughts regarding lessons takeaways from the Rett syndrome experience with Blarcamesine and their applicability to your potential clinical development initiative with the compound in Fragile X syndrome. And if you could also give us a sense of when you anticipate the Fragile X syndrome program to initiate patient enrollment. Thank you.

Christopher Missling -- President and Chief Executive Officer

We have included in our Rett syndrome clinical trial a measure which is called ADAMS. And that score is interesting enough a secondary score in the Rett syndrome study. but it is often used as a primary endpoint in Fragile X studies. And the ADAMS score was extremely positive with behavior improvement of the general mood of anxiety, and compulsive behavior improvement, which were very significant and very broad and global.

So we believe that in a data readout of the preclinical data of Fragile X with ANAVEX 2-73, which we submitted to a peer-reviewed paper of a nature paper, which we expect to come out as forthcoming, that this could be a very good basis for the rationalizing, progressing Fragile X into an indication of choice also for ANAVEX 2-73 and the ideas of this to move this forward, as soon as possible given the unmet need of Fragile X which is the largest population of autism spectrum disorder. And Rett syndrome is also part of the family of the autism spectrum disorder. So these are correlated diseases, although they are originated in different places in the causation, causality, but they have similar symptoms and overlapping symptoms with each other. So we expect the trial to be initiated once we are able to showcase the data in a peer-reviewed paper.

H.C. Wainwright & Co., LLC -- H.C. Wainwright & Co., LLC -- Analyst

Thank you very much.

Operator

And our next question comes from Tom Bishop from BI Research.

Tom Bishop -- BI Research -- Analyst

Hi, Christopher. You said that you were expected to include a Phase 3 prevention study or to initiate one for the prevention indication. And I was wondering what the status of that was, and how soon we could expect that?

Christopher Missling -- President and Chief Executive Officer

So this is something which we like, discuss with the agency, because it's an awfully a very important study. And we want to get that right. So we will let that happen first, before providing more details on that. But I'd like to just point out the potential for that to be the case.

And that gives us also a great hope that given the broad upstream effect of the sigma-1 activation, which is I want to remind everybody, it's not something we came up with, but it's really the endogenous the body's own defense mechanism to avoid and to prevent cellular stress, which causes diseases like Alzheimer, but also Parkinson and other cognitive impairment, indications. And probably also the degenerative and as well as the new developmental vacations, which is the reason why we see this strong effect, beneficial effect with a drug in this broad therapeutic, different indications. So this is something we like to discuss with the agency first, before making providing more details. But this is the long shot.

And as of probably the big prize, that one day, this could be used as a prevention treatment for all degenerative diseases, and not only for treatment.

Tom Bishop -- BI Research -- Analyst

That's a very exciting possibility. What is the status of the meeting to proceed on to Phase 3 and Parkinson's? Sometimes it seems like we lose a lot of time between trials. I know you've presented the final data. And I'm just wondering what the timeline is here.

Have you scheduled the meeting with FDA, or had one?

Christopher Missling -- President and Chief Executive Officer

There's a very good question. Your key background is to know that the trial itself has finished but the analysis is not limited to the endpoints which we reported. There are more work or work up ongoing right now. And this is also unique for ANAVEX and differentiates other companies that we have included in our trials, including the PDD trial, the Parkinson disease dementia trial, the whole genomics exome analysis, both DNA but also RNA.

And you know that we reported the RNA changes of the sigma-1 gene. What we have not yet done is they have the intelligence on the RNA of all the other genes, which the whole genome. So there will be so much more intelligence from this PDD study, which we are right now putting together. And once we have that, then we will have the ability to put this all forward because this will determine a much more robust Phase 3 design of a pivotal study in Parkinson disease dementia, as well as in Parkinson.

But that requires also the dialogue with the agency first. But before that, we have to have the entire data at hand.

Tom Bishop -- BI Research -- Analyst

Well, OK, and the status of the Michael J. Fox million-dollar imaging study. Is Michael J. Fox doing that independently of you? I mean, you're supplying the drug, but they're doing the imaging.

I mean, how's that going?

Christopher Missling -- President and Chief Executive Officer

Nope, it's basically a grant that allows us to do this study. And we are in the process of starting this year. It's a study which will capture the imaging and the profile of the ANAVEX 2-73 of the drug in the brain in the humans with the same pet like which we have done already in animals. So this will be a confirmatory of that effect in human brains.

And that is the study which was fully funded by Michael Fox Foundation, which we are executing and they basically funded that study with a grant.

Tom Bishop -- BI Research -- Analyst

Oh, I see. OK. And you indicated a mystery indication earlier this year. And also, there's a 371 trial, is there not a Phase 1 ongoing? Could you comment on those two, were they the same? I don't know.

Christopher Missling -- President and Chief Executive Officer

Right, it's not a mystery indication. We have only said, we have not disclosed yet the indication. We have several animal models were ANAVEX 2-73 has been positive very well, achieving a confirmatory effect on a disease which is rare in nature, ultra-rare in nature. And we want to make sure, before we move forward with the clinical trial, that we pick the right one to do, because we have the choice of several indications, and we are doing this right now.

So once we have that completed that assessment, we will disclose that indication and start that trial also right away. And regarding ANAVEX 3-71 is basically another molecule has its own IP, and that is now in a Phase 1. And we expect data without in the second half of this year, is progressing well. And we are excited because it confirms, validates the mechanism of action of our platform portfolio to focus on sigma-1 modulation.

Also it has received an orphan drug designation for frontotemporal dementia, which is also an unmet need. So we are now preparing after the Phase 1. The next stage of that which will be studied in an indication of cognitive impairment. And it could very well be frontotemporal dementia for another indication with an unmet need with cognitive impairment.

Tom Bishop -- BI Research -- Analyst

But the Phase 1 study is -- are you saying that it's done?

Christopher Missling -- President and Chief Executive Officer

It is about to wrap up, and we will be able to report this data in the second half of this year. That's correct.

Tom Bishop -- BI Research -- Analyst

Will it include any efficacy data or just the safety trial literally?

Christopher Missling -- President and Chief Executive Officer

It's predominantly a safety trial. But I will allow us to basically share the data once we have it. And that gives us better visibility on what is included in that outcome measures beyond Phase 1 data on safety data.

Tom Bishop -- BI Research -- Analyst

OK, well, you know, I've been very encouraged by the breadth of the positive readouts, you're getting on a variety of indications. And I think that helps support the idea that 2-73 really does something in the brain, which I think you have a little doubt of, and I do too, but it's just good to see so many different positive readouts coming. Thank you.

Christopher Missling -- President and Chief Executive Officer

If I might add, it is really important to notice. And to highlight the fact that in all clinical trials we have performed so far, not only was ANAVEX 2-73 efficacious at the right doses, but it was also demonstrated a dose-response curve, which is always a very clear indication of our effect. And thirdly, we have noticed that all the data, all the trials so far performed, had a very strong biomarker of response or predictive biomarker response, which was borne by the by the level of mRNA expression of the target of our drug itself. So there's really no better way of showing efficacy in confirming the efficacy of a drug with these strong biomarker outcomes, which correlated with all the primary and secondary endpoints of the drugs we have performed.

Tom Bishop -- BI Research -- Analyst

Like I said, it's very encouraging. All right, thank you.

Christopher Missling -- President and Chief Executive Officer

Thank you.

Operator

[Operator signoff]

Duration: 32 minutes

Call participants:

Clint Tomlinson -- Investor Relations

Christopher Missling -- President and Chief Executive Officer

Sandra Boenisch -- Principal Financial Officer

Pete Stavropoulos -- Cantor Fitzgerald -- Analyst

Soumit Roy -- JonesTrading -- Analyst

H.C. Wainwright & Co., LLC -- H.C. Wainwright & Co., LLC -- Analyst

Ram Selvaraju -- H.C. Wainwright & Co., LLC -- Analyst

Tom Bishop -- BI Research -- Analyst

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