Anavex Life Sciences (AVXL) Q4 2021 Earnings Call Transcript

Anavex Life Sciences (AVXL -7.34%)
Q4 2021 Earnings Call
Nov 24, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to the Anavex Life Sciences fiscal 2021 fourth quarter conference call. My name is Adrian, and I'll be your operator for today's call. [Operator instructions] Please note, this conference call is being recorded. I'll now turn the call over to our host, Clint Tomlinson.

Clint, sir, you may begin.

Clint Tomlinson -- Investor Relations

Thank you, and good afternoon, everyone. We appreciate you joining us today for Anavex Life Sciences' fourth 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. And the call will also be available for replay on Anavex's website at www.anavex.com.

With us today is Dr. Christopher Missling, president and chief executive officer; and Sandra Boenisch, principal financial officer. Following management's remarks, there will be a question-and-answer session. Before we begin, please note this -- 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 materials -- 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 an 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. We really appreciate everyone's joining us on today's conference call to review our most recently reported financial results and to provide a business update. We concluded an exceptional fiscal year 2021 while continuing our momentum, highlighted by the efficient execution and full enrollment of three precision medicine clinical trials, including the phase 2b/3 ANAVEX 2-73 clinical trial in Alzheimer's disease, the AVATAR 2-73 clinical trial in Rett syndrome, as well as the phase 1 study of ANAVEX 3-71. Starting with our lead drug candidate 2-73, we expect top-line results from the second placebo-controlled AVATAR study for the treatment of outpatients with Rett syndrome, which are expected to be announced around calendar year-end 2021.

This study took place in Australia and the United Kingdom, using a higher dose than the U.S.-based phase 2 study, and enrolled 33 patients over a seven-week treatment period, including ANAVEX 2-73-specific precision medicine biomarkers. Top-line results from the placebo-controlled EXCELLENCE phase 2/3 study for the treatment of pediatric patients with Rett syndrome are expected in the first half of 2022. This phase 2/3 study in pediatric patients with Rett syndrome aged five to 18 will evaluate the safety and efficacy of 2-73 in approximately 84 patients over a 12-week treatment period, including 2-73-specific precision medicine biomarkers. Regarding our Alzheimer's disease program, top-line results from the placebo-controlled phase 2/3 ANAVEX 2-73-AD-004 study for the treatment of Alzheimer's disease are confirmed and are expected in the second half of 2022.

The double-blind, placebo-controlled, 509-patient, late-stage phase 2b/3 study in patients with Alzheimer's disease exceeded enrollment of the targeted patient number of -- at 52 sites across North America, Europe, and Australia, using ADAS-Cog for cognition and ADCS-ADL for activities of daily living and function as primary endpoints. This multicenter, double-blind clinical trial is measuring efficacy, tolerability, and safety of two different once-daily oral 2-73 doses or a placebo. As reported last month, the independent Data Safety Monitoring Board for the company's phase 2b/3 study completed its most recent preplanned review of the preliminary phase 2b/3 study data in Alzheimer's patients. As specified in the protocol, the DSMB reviewed the interim safety data for the 2-73 phase 2b/3 Alzheimer's disease clinical study and its open-label extension, ATTENTION-AD study.

Upon review of the interim safety data, the DSMB recommended to continue the study without modification. And we're very excited also to report that the top-line data from another pipeline compound, ANAVEX 3-71, which had received orphan drug designation by the FDA for frontotemporal dementia. A placebo-controlled phase 1 study in other ANAVEX 3-71 evaluating ANAVEX 3-71 in humans are expected around calendar year-end 2021. During 2022, we will also moving closer to further expanding the pipeline for 2-73 using gene biomarkers of response, applying precision medicine for another neurological disorder with unmet medical needs, including a planned initiation of 2-73 imaging-focused Parkinson's disease clinical study; a planned initiation also of our phase 2/3 clinical trial for the treatment of a new rare disease indication; and lastly, a planned initiation of a pivotal phase 2/3 study in Fragile X syndrome, the most frequent genetic cause of autism spectrum disorder.

In Fragile X, we recently announced in August of this year strong preclinical data of 2-73 in Fragile X syndrome published in the peer-reviewed journal, Scientific Reports. The study evaluated 2-73 in Fmr1knockout mice, a validated animal model for the disease, which resulted in the reversal of hyperactivity and restoration of associative learning. Furthermore, 2-73 demonstrated dose-dependent SIGMAR1 receptor occupancy in a Positron Emission Tomography, PET, study. 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 year-end.

Sandra Boenisch -- Principal Financial Officer

Thank you, Christopher, and good afternoon to everybody. We continue to maintain a strong balance sheet and fiscal responsibility. Our cash position on September 30, 2021, was 152.1 million, which we believe is sufficient cash runway to fund operations and clinical programs beyond 2025. During fiscal 2021, cash utilization in operations was 30.4 million.

We reported a net loss of 37.9 million for the full fiscal year, which is $0.54 per share, as compared to 26.3 million, or $0.45 per share, in the comparable year of 2020. Research and development expenses for the year were 33 million, compared to 25.2 million for the comparable fiscal year. The 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 trials and the related open-label extension, and the continued enrollment and advancement of the Rett syndrome studies and expansion of these trials internationally. General and administrative expenses were 9 million for the year, as compared to 5.9 million in the prior year.

The increase is mostly -- significantly associated with an increase in personnel and associated noncash stock option compensation charges. Thank you. And now, I'll return the call back over to you, Christopher.

Christopher Missling -- President and Chief Executive Officer

Thank you, Sandra. And as we look to the remainder of 2021 and into 2022, I'm very excited about the company's potential as we continue to advance and expand our precision medicine clinical programs. As we look ahead, we will continue to focus on driving meaningful growth across our broad SIGMAR1 platform portfolio to deliver transformational treatments for patients with both degenerative and developmental neurological disorders around the world. So, we look forward to providing further updates and advance and continue.

And at this point, I'd like to wish everyone a Happy Thanksgiving. I would like now to open the call for questions. Operator, please go ahead.

Questions & Answers:

Operator

Thank you. We'll now begin the question-and-answer session. [Operator instructions] And our first question comes from Charles Duncan from Cantor Fitzgerald. Your line is open.

Pete Stavropoulos -- Cantor Fitzgerald -- Analyst

Hi, this is Pete Stavropoulos on for Charles. Good afternoon, Christopher and team, and congratulations on the progress, and appreciate all the updates. I have a couple of questions regarding Rett syndrome. When you think about the efficacy measures that were made and the efficacy seen in the U.S.

adult study, you know, how do you feel about the sample size or the planned effect size out of AVATAR and also the EXCELLENCE study? And we saw that you upsized the sample size for EXCELLENCE from 69 to 84 subjects. What drove that decision? If you could give us some color on that.

Christopher Missling -- President and Chief Executive Officer

I appreciate it and thank you. So, the efficacy -- effect size was really significant in the first U.S. study, which was using a low dose, as you remember. And the effect size was in the range of 1.3 to -- 1.1 to 1.3 [Inaudible], which is considered as very large.

And since we expect those responses based on higher doses, we basically are inclined to believe that the second study, the AVATAR study, might show a similar if not higher effect size given that we are using a higher dose in the AVATAR study compared to the U.S. study. The extension of patient number in the EXCELLENCE study from originally 69 to 84 was based on a request -- a regulatory request to also have an additional analysis of the number of patient -- of the patient in different age groups, for example, from five to 18, to also have an additional analysis of patients from five to 12, and then from 12 or 13 to 18. We wanted to make sure we have enough power for this additional calculation.

We thought it was prudent to just add additional number of patients, which ended up to the total number of 84 as we communicated.

Pete Stavropoulos -- Cantor Fitzgerald -- Analyst

Thank you. Very helpful. We also saw that you made a few changes to the primary and secondary endpoints of the EXCELLENCE study. You know, can you give us a -- you know, help us understand what drove those decisions? You know, was it a result of advice or interactions with the FDA or any other regulatory agency?

Christopher Missling -- President and Chief Executive Officer

Right. So, we have noticed that the RSBQ is really the most -- more rigorous endpoint. It is really going through 45 very dedicated questions and detailed questions, which can be answered very precisely. There's also the ability which we have seen and we have demonstrated that in our presentation of doing some analysis of the top scores of the entire score of the RSBQ score.

However, when we looked at the CGI-I, we noticed that there was a weaker ability to make this because it's really a global assessment. It is also have a very known and it's published weak, I would say, reliability. But we basically are including that still, but we didn't want to overemphasize that score. So, that was the background for the focus on the RSBQ.

Pete Stavropoulos -- Cantor Fitzgerald -- Analyst

All right. Thank you. And my last question in regard to the Parkinson's disease dementia program. You know, can you provide any updates on that program? You know, have you met with the agency to discuss it, and -- or do you plan to any time in the near future?

Christopher Missling -- President and Chief Executive Officer

Yeah, we plan -- right. Thank you very much. Yes, we plan to do that. We actually are in the process of now discussing the data with the foundation, and we are expecting to get valuable feedback for input on the design of pivotal studies for Parkinson's and also pivotal studies for Parkinson's dementia.

And with that, you know, in our package, if you so like, we then feel more robustly educated and fully informed to go through the discussion with the agency about a proper pivotal study in -- with respect to indications.

Pete Stavropoulos -- Cantor Fitzgerald -- Analyst

Do you think by some chance you're going to wait for the imaging study results or it'll -- the meeting will occur beforehand?

Christopher Missling -- President and Chief Executive Officer

This will be before the imaging study. But definitely, we are still including what we have not yet reported, the total gene analysis of the PDD study. So, that means we not only looked at the sigma-1 gene expression changes of the mRNA but also the gene expression of all genes of all participants that is in the active arm, as well as in the placebo arm. And we need this additional intelligence can we draw an [Inaudible] to -- and make an informed design of a study, which increases further the chances of a pivotal study down the road.

Pete Stavropoulos -- Cantor Fitzgerald -- Analyst

All right. Thank you. Thank you very much for taking my questions and congratulations again on the progress. And Happy Thanksgiving.

Christopher Missling -- President and Chief Executive Officer

Likewise. Appreciate it.

Operator

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

Magnus Fyhr -- H.C. Wainwright and Company -- Analyst

Hi, Christian and team. This is Magnus on for Ram. Congrats on the progress and thanks for taking our questions. So, firstly, how early in 2022 do you envisage filing an NDA for blarcamesine in Rett syndrome for arriving you at positive results from the three trials?

Christopher Missling -- President and Chief Executive Officer

It's really -- I would let the data first come out, and then we can talk about that. But obviously, pending data, as soon as possible.

Magnus Fyhr -- H.C. Wainwright and Company -- Analyst

Excellent. And then with regards to 2-73, what learnings are you transitioning into your Fragile X syndrome development? For example, are you planning on cross analyzing data from the Rett syndrome and the Fragile X syndrome trials given that these two syndromes sort of share overlapping symptoms, as well as underlying cellular mechanisms?

Christopher Missling -- President and Chief Executive Officer

That's exactly right. There are two pockets here to look at. One is the preclinical pocket, and we see a very strong response in the animal model of Fragile X and it leading to even the reversal of the pathology. And then we look also at the clinical study of the Rett syndrome, and we see that the phenotypes are overlapping between these two indications and there are some endpoints which are included in the Rett syndrome study, for example, ADAMS is one of them.

And that had been responding very well with the drug, and we believe this could be also used as a key measure for the Rett -- for the Fragile X study since that has been also even used prior in Fragile X study as our primary endpoint. The decision is not yet made exactly about how to use that endpoint, but this could be one potential venue. 

Magnus Fyhr -- H.C. Wainwright and Company -- Analyst

Very, very helpful. And we read with interest your recent published paper and expert opinion on therapeutic targets where you described 2-73 and 3-71 as hand-in-hand targets for Alzheimer's disease. We were wondering if you've, number one, benchmarked these drugs together preclinically, and number two, test their combination? If not, do you plan to do so?

Christopher Missling -- President and Chief Executive Officer

So, the two compounds came from different angles and different labs, but they are now moving more into what we call [Inaudible] then as we go. But so far, we could not find a comparable assay other than a very early preclinical assay of target engagement and their differences in the affinity to the sigma-1 receptor and also difference in the muscarinic receptor, which we believe is also important. And ultimately, we will be only able to see really the difference of the two if we run really both drugs in the same indication and the same trial. So, we think that each drug has its own merits, and it could very well be that 3-71, it's really grouped at focusing more and -- on frontotemporal dementia, which we have offered designation for, and could also be very good at Alzheimer's.

But right now, we have 2-73 more advanced, so we will eventually find out.

Magnus Fyhr -- H.C. Wainwright and Company -- Analyst

Appreciate the color. And then just finally, you've talked about 2-73 using in a prophylactic manner. We saw a recent Science Advances article which describes a unique kind of brain proteomics signature in younger cohorts, mean age of 39. Are you currently working on or planning a genetic or protein test in a younger cohort to kind of help your 2-73 administration in the future?

Christopher Missling -- President and Chief Executive Officer

Yeah, we'll look into that. And it's a very good point because while the disease is showing up correlating with age, it's clear that a -- early intervention is really most likely the most efficient way to intubate or inoculate this disease. And since our preclinical data indicates that potential, which was done very successfully in animals that we draw up the drugs before they got injected with a toxic a better load, and they never developed the symptoms of Alzheimer's disease. So, there is really high likelihood that we should -- or encouragement to also proceed, and we said and we committed to eventually do that with the appropriate -- in the appropriate time down the road.

So, we are committed to look into that what you described early on.

Magnus Fyhr -- H.C. Wainwright and Company -- Analyst

OK. Excellent. That's it from us. Congrats again and Happy Thanksgiving to you and everyone on the call.

Thanks.

Christopher Missling -- President and Chief Executive Officer

Likewise.

Operator

And our next question comes from Soumit Roy from JonesTrading. Your line is open.

Soumit Roy -- JonesTrading -- Analyst

Hello, everyone, and thank you for taking the question. Could you give us a little color on the upcoming adult Rett study? So, as I understand, there will be different dose cohorts, so could you give us an idea of the size, and I think there are going to be intra-cohort dose escalation, what should we expect?

Christopher Missling -- President and Chief Executive Officer

Yeah, so let me explain that there's not a different dose, it's just target dose is higher than the U.S. study. So, there's only one dose and one placebo arm, and that one dose would be a target dose. So, that is just higher than the U.S.

study, so there would be no multiple doses technically. It's just one higher dose.

Soumit Roy -- JonesTrading -- Analyst

OK, got it. So -- and you know this [Inaudible] if it's going to be 10, 20, or 30?

Christopher Missling -- President and Chief Executive Officer

Right, we will find out when we disclose that data, and we will be able to learn about that.

Soumit Roy -- JonesTrading -- Analyst

Got it. And the -- any color on the Alzheimer's trial? What are you planning as patients are coming out of the 48th week? Is -- are they going to go into a maintenance trial or what is the plan there?

Christopher Missling -- President and Chief Executive Officer

Right. So, we have an extension study called ATTENTION-AD, which is a two-year study of following up. It's our open-label after the 48 weeks, which has started, you know, after the first patient finished the 48 weeks. And because these patients have -- actually, some of them finished this phase 2 open-label extension, they had requested to continue to stay on study drugs.

And so, what we did, we initiated and we're successful in expanding now this ATTENTION-AD study open-label extension from two years to actually three years. So, patients who finished this study, the placebo-controlled study, entered into the extension study, finished the two years, will now continue to go into the third year. And that is because of requests by the patients, the caretakers, and the physicians. And also, I'd like to add that the -- I'd like to add also that the conversion from the placebo-controlled part of the study to the open-label is very high.

It's about 94% content, which is a good sign.

Soumit Roy -- JonesTrading -- Analyst

Great. It's really good to hear. And one last question on the -- back to the Rett program. Where you are with the FDA and the conversation turning whether this kind of be the registration trial data?

Christopher Missling -- President and Chief Executive Officer

It's really a question of the data and the data has to speak for itself. And we also said it's a potential field study so what really weighs in. And the data really will determine this, how this will be looked at. We have to point out that for adults, there is no treatment available and the patient populations also are harder to bring into a trial because they're more [Inaudible].

They also are -- and because of the disease early, you know, passing on, there are not that many patients available to find in a trial. So, the focus is really on the pediatric study for that reason, but still, there's an unmet need for patients of all ages for Rett syndrome.

Soumit Roy -- JonesTrading -- Analyst

So, we could expect you could even start a rolling submission with the adult trial, and if need be, that could be approved first before the pediatric really gets filed?

Christopher Missling -- President and Chief Executive Officer

I would say it cannot be excluded and -- but I cannot promise it either. So, that's why I said we would have with AVATAR study and the U.S. Rett study two independent placebo-controlled study in our rare disease, which usually is beyond the request from -- for rare diseases usually. So, this would be, if successful, a very powerful package. 

Soumit Roy -- JonesTrading -- Analyst

Got it. Congratulations again for -- on all the progress and Happy Thanksgiving.

Christopher Missling -- President and Chief Executive Officer

Happy Thanksgiving. Thank you.

Operator

And our next question comes Yun Zhong from BTIG. Your line is open. 

Yun Zhong -- BTIG -- Analyst

Hi. Thanks very much for taking the question. So, the first one is on Rett syndrome. And so, the definition of a responder, is that -- its efficacy endpoint, is that going to be the same in pediatric patient as compared to an adult patient? And also, the definition of a responder, is that consistent with how clinicians are viewing as clinically meaningful improvement?

Christopher Missling -- President and Chief Executive Officer

That's correct. It's consistent with the first study and then consistent with the assessment of physician. That's correct.

Yun Zhong -- BTIG -- Analyst

OK. Then I think I didn't see an update on the 3-71 program in 2020 -- sorry, 2022 in terms of upcoming milestones, so I just wanted to check if frontotemporal dementia is still going to be the first indication for that program, and when do you expect a study potentially to start?

Christopher Missling -- President and Chief Executive Officer

Right. So, we have mentioned that we will move ahead with frontotemporal dementia, but we'd like to have really the solid phase 1 data in hand before we say we commit to this. And -- but we'll definitely move forward with FTD or any other related dementia indication. 

Yun Zhong -- BTIG -- Analyst

OK. And then on the pipeline, I think -- well, it's very encouraging to be able to target multiple for indications, but just wonder, which indications do you think you would like to prioritize going forward? Of course, the Rett syndrome and -- is going to be the leading indication, but which indications do you think might be suited for partnerships?

Christopher Missling -- President and Chief Executive Officer

So, we believe that we have with the rare disease franchise, which is Rett syndrome, Fragile X, and others the ability, and it's not the first time that a company has built this into a commercial entity with rare disease -- targeting rare diseases. So, that seems to be very doable. In terms of the indication like Alzheimer's disease and Parkinson's disease, which requires also the involvement of detailing general practitioners, physicians, or general physicians, then it might be more powerful to penetrate the market with the support of a large pharma partner. And at the right time, to make sure that we retain most upsides for Anavex and for our shareholders, this will be done at the right time and not prematurely to give up to much of the upside.

But there's no doubt that these large indications require additional support.

Yun Zhong -- BTIG -- Analyst

OK, great. Thank you very much and Happy Thanksgiving.

Christopher Missling -- President and Chief Executive Officer

Thank you. Likewise.

Operator

And our next question comes from Paul Nouri from Noble Equity. Your line is open.

Paul Nouri -- Noble Equity -- Analyst

Hi. My questions were on the Parkinson's programs, and they're already answered. So, thanks for taking the question.

Christopher Missling -- President and Chief Executive Officer

Thank you.

Operator

[Operator signoff]

Duration: 29 minutes

Call participants:

Clint Tomlinson -- Investor Relations

Christopher Missling -- President and Chief Executive Officer

Sandra Boenisch -- Principal Financial Officer

Pete Stavropoulos -- Cantor Fitzgerald -- Analyst

Magnus Fyhr -- H.C. Wainwright and Company -- Analyst

Soumit Roy -- JonesTrading -- Analyst

Yun Zhong -- BTIG -- Analyst

Paul Nouri -- Noble Equity -- Analyst

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