Anavex Life Sciences Corp.
Q1 2018 Earnings Call Transcript

Published: 11 May 2018

[Operator:]

Welcome to the Anavex Life Sciences Corporation Fiscal Second Quarter 2018 Results Conference Call. My name is Vanessa and I will be your operator for today's call. [Operator Instructions]. And I will now turn the call over to your host, Meggie Purcell, you may begin.

[Meggie Purcell:]

Thank you, everyone, and good afternoon. We appreciate you joining us today for the Anavex Life Sciences Conference Call on webcast. Our agenda is to review the company's financial results for the second quarter of fiscal 2018 and highlight recent corporate developments. A taped replay of this call will be available approximately two hours after the call's conclusion and will remain available for two weeks. 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. Dr. Missling and Ms. Boenisch will make prepared remarks and then we will take questions from analysts. Before we begin, please note that during the course of this conference call, the company will make some projections and forward-looking statements regarding future events. 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 the clinical trials or regulatory approvals, need and ability to obtain the future capital and maintenance of intellectual property rights. And with that, I'd like to turn the call over to Dr. Missling.

[Christopher Missling:]

Thank you, Meggie. I'd like to thank everyone for joining us at today's conference call to review our second quarter financial results. I'd like to discuss our most recent quarter and share with you our clinical update for ANAVEX2-73. First, we are pleased to report that we were recently formed by the Ethics Committee in Australia, that the currently ongoing 104-week Phase IIa extension trial of ANAVEX2-73 has been approved to continue for an additional two years, beyond the cumulative more than three years consisting of the first 57-week and continued 104-week study. The additional two years will now provide over five years of cumulative safety and tolerability data for ANAVEX2-73. This further extension was based on continued request by patients in the study, their caregivers and physicians. The further extension is in addition and independent of the company's planned larger Phase II/II double-blind, placebo-controlled study of ANAVEX2-73 in Alzheimer's disease. Additionally, we are looking forward focusing on executing three new clinical trials using the inclusion of advanced genomic biomarkers into a late-stage CNS precision medicine trials, including the Rett syndrome, Parkinson's disease dementia and Alzheimer's disease trials. With respect to our Phase IIa study - Phase II study in Rett syndrome, we anticipate initiating this clinical trial in the second half of 2018. The company is also moving forward with the Phase II trial of ANAVEX2-73 and Parkinson's disease dementia or PDD, which will study the effect of the compound on both the cognitive and motor impairment of Parkinson's disease. The double-blind, randomized, placebo-controlled Phase II study is expected to initiate in the second half of 2018. We are also on track to submitting the planned Alzheimer's Phase II/III study to regulatory authorities. The randomized, double-blind, placebo-controlled study will evaluate the safety, tolerability and efficacy of ANAVEX2-73 in Alzheimer's disease patients and will be conducted in both Australia and North America. The study is expected to initiate in the second half of 2018. Additional protocol details of these trials will be shared in more detailed as they approach initiation. Finally, as I alluded to earlier, with the recent availability of genome sequencing information from the patients, in the current Phase IIa study using next-generation sequencing and RNA data, Anavex is able to apply a precision medicine strategy to the development of ANAVEX 2-73. Next-generation sequencing or NGS DNA and RNA data from the clinical trial was generated by Eurofins Genomics, one of the world's leading genomics service providers using the Illumina HiSeq 2500 platform and subjected to the highest quality certification standards, including good clinical practice, GCP; good laboratory practice, GLP; and ISO 9001, ISO 17025 and ISO 13485 quality certifications. The choice of accessing both DNA and RNA data enables more complete analysis of the genomic data. The company plans to present data on the genomic analysis at an upcoming scientific meeting. And now I would like to direct the call to Sandra Boenisch, Principal Financial Officer of Anavex, for a brief financial update.

[Sandra Boenisch:]

Thank you, Christopher, and good afternoon. Our cash resources at March 31, 2018, were $25.7 million and we have no debt. We believe we are sufficiently capitalized to fund our objectives for the next 24 months, given the support we receive from the Australian government and other partners. During the quarter, the company used $2.8 million in cash to fund operation. Operating expenses for the quarter were $4.7 million, which included $1.2 million in noncash charges compared to $3.6 million for the comparative quarter in fiscal year 2017, inclusive of $0.9 million in noncash charges. The increase in operating expenses is primarily attributable to an increase in research and development activities, due to an increase in expenses incurred in preparation for the clinical trials that Christopher just discussed, all of which are scheduled to commence during 2018. The net loss for the quarter was $4.8 million or $0.11 per share, compared to a net loss of $1.5 million or $0.04 per share for fiscal 2017. With that, I'll turn the call back over to Christopher.

[Christopher Missling:]

Thank you, Sandra. In summary, we continue to maintain a strong financial position, which will allow us to carry out the planned clinical studies for ANAVEX2-73. We anticipated our efforts will result in several significant key milestones and accomplishments in 2018 with the advancement of three clinical trials utilizing a precision medicine approach. We look forward to updating you as advancements are made and I would like to now open the call for questions. Operator, please go ahead.

[Operator:]

[Operator Instructions]. We have our first question from Robert LeBoyer with Roth Capital.

[Robert LeBoyer:]

And congratulations on meeting these milestones in - during the quarter. I had a question on the genomic presentation and whether there has been any meetings that you've identified to present this data at this point?

[Christopher Missling:]

Yes, we do have identified the meeting where we present scientific meeting.

[Robert LeBoyer:]

Just to rephrase that, is that something that can be announced at this point?

[Christopher Missling:]

We'll announce it once we have the abstract being approved. It's a process. At scientific meetings, you have to submit an abstract or abstracts and if they do get approved, then you will be able to present the data and once that happens, we will then update if that is the case.

[Robert LeBoyer:]

And just on the financial side, are you expecting any increases in the quarterly spending this year? Is it something that would be sequential and gradual or any inflection points or any guidance for expense levels?

[Christopher Missling:]

We actually will expect not a real increase or not a significant for two factors. First of all, we expect a reimbursement from the government in Australia for the prior advanced or repayment of contribution of grants. And the second part is that, our payments of the clinical trials is already basically in process because the trial is not paid over the period of when they start actually - the trial actually initiates, but it's even doubt over the entire period of a study, and the study also includes perforation and for that reason, the budget in the forthcoming quarters will not be much different than the previous quarters.

[Operator:]

We have our next question from Caroline Palomeque with the Maxim Group.

[Caroline Palomeque:]

So on the Phase IIa extension study, the additional 104 weeks that will be added. My question was about - will you be stratifying the patients according to the concentration - the high concentration of drug, as in the past - I know the high - the patients that had a high concentration had that sustained cognitive benefit. And I'm wondering if that's the stratification - that's the cohort that you are going to do or is that something that is going to be identified in a post-hoc analysis after the fact. That was my first question.

[Christopher Missling:]

So can you summarize again the question, so to -

[Caroline Palomeque:]

Sure. Yes, I'm wondering if the patients will be stratified by their concentration of drug, like the ones that had high concentration in the past had a different result than the ones that didn't, and I don't mean the higher level of drug that was dosed, but I mean the actual concentration of drug that they're able to sustain metabolically. Will that be - will they be satisfied by that?

[Christopher Missling:]

You're talking about the Phase IIa, right?

[Caroline Palomeque:]

Right, the Phase IIa - the upcoming extension, yes.

[Christopher Missling:]

So since it is a Phase IIa, you can look at, analyze it at any like - in any shape or form you like. So we can do it based on drug dose, drug based on concentration, in all forms or shapes. So we don't know how we're going to do it, but we will analyze it as we see a fit. But the most important thing is to keep in mind is that, that extension is a safety study, so we're focusing really on accumulating data on daily dosing for this extended period of time, which we believe will be beneficial further down the road when we are submitting studies for potential discussion with the agencies and we are able then to provide extremely long safety data of the drug. And that's I believe could be an advantage coming forward because of the one thing you can never catch up with - a prolonged exposure that of a drug.

[Caroline Palomeque:]

Then my other question was just about, how important is the genomic data for the future studies? I mean, will you be have - I mean, how do you expect that to sort of play out? If you could just elaborate more on your genomic data and how that will be incorporated into the future studies, because I'm assuming that you're doing not only in AD, but also in the other studies as well?

[Christopher Missling:]

That's correct. So we believe that the genomic data of ANAVEX2-73 in the respective patients will be extremely important and this is for the following reason, we believe that the genomic data what we have seen and the data will be presented at scientific meeting is relevant for the compound - in the interaction with the compound, and that means, if the impact on all future studies and that information will be applied - the stratification will be able to applied in all future studies of ANAVEX2-73 and because of it is known that biomarker based on gene information has a significant advantage because it makes patient groups more homogeneous that also result in a higher chances of succeeding in clinical trials among other things being equal, and that's been provided in the literature very extensively. And so we are using really the same path of clinical study of rigor to applying to the CNS indications Rett Syndrome, Parkinson's with dementia and Alzheimer's disease, which so far has been only applied to oncology and that's also something which Anavex believes is at the forefront in that regard.

[Operator:]

[Operator Instructions]. I do not see any further questions at this time.

[Christopher Missling:]

Thank you all for participating in today's conference call. I hope you are as excited as we are about the great progress and the prospects for the remainder of 2018. Should you need additional information or have any questions, please visit our website at www.anavex.com. or call or email us. This concludes our remarks today, operator.

[Operator:]

And thank you, ladies and gentlemen. This concludes today's conference. We thank you for participating. You may now disconnect.