HOBOKEN Feb 9, 2020 (Thomson StreetEvents) -- Edited Transcript of Anavex Life Sciences Corp earnings conference call or presentation Thursday, February 6, 2020 at 9:30:00pm GMT

* Christopher U. Missling

Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary

Anavex Life Sciences Corp. - Executive

Anavex Life Sciences Corp. - Principal Financial Officer & Treasurer

H.C. Wainwright & Co, LLC, Research Division - Equity Research Associate

Janney Montgomery Scott LLC, Research Division - Equity Research Analyst & Director of Biotechnology Research

Good afternoon. My name is Anna, and I will be your conference operator today. Welcome to the Anavex Life Sciences to announce fiscal 2020 first quarter financial results conference call. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Clint Tomlinson. Please go ahead.

Clint Tomlinson, Anavex Life Sciences Corp. - Executive [2]

Thank you and good afternoon, everyone. We appreciate you joining us today for Anavex Life Sciences' conference call and webcast. Our agenda is to review the company's financial results for its first quarter of fiscal 2020 and provide a clinical study update. A taped replay of this call will be available approximately 2 hours after the call's conclusion and will remain available for 1 month. The call will also be available for replay on Anavex's website at http://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 equity analysts.

Before we begin, please note that during 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 clinical trials or regulatory approvals, need and 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 U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [3]

Thank you. I'd like to thank everyone for joining us on today's conference call to review our first quarter financial results and share with you some clinical updates for ANAVEX 2-73 or blarcamesine.

We were pleased to announce earlier this week that the U.S. Food and Drug Administration, FDA, has granted Fast Track designation for the ANAVEX 2-73 clinical development program for the treatment of Rett syndrome. FDA Fast Track is a program designed to facilitate and expedite the development and review of a new drug to address unmet medical need in the treatment of a serious and life-threatening condition for which it demonstrates the potential to address unmet medical needs for such a disease or condition. The purpose of the program is to get important new therapies to the patients earlier in order to address the unmet medical need in the treatment of serious and life-threatening diseases. Our clinical Rett Syndrome Program, RS-001 and RS-002, AVATAR, are on track with continued enrollment.

We continue to strengthen our patent position as well. During the quarter, we were granted another U.S. patent to support Anavex' leading drug candidate, ANAVEX 2-73, for the treatment of neurodevelopmental disorders, including Rett syndrome and multiple sclerosis. This patent is expected to remain enforced at least until 2037, not including any patent term extensions. It covers methods of treatment for neurodevelopmental disorders, including Rett syndrome, autism spectrum disorder, Angelman syndrome and cerebral palsy, among others, and also treatment for multiple sclerosis using ANAVEX 2-73.

Regarding the ANAVEX 2-73 Parkinson's disease dementia study, we were pleased to report that we met our enrollment target for the study, the study enrollment over 100 patients at 20 sites across Spain and 3 sites in Australia. We expect to announce top line results from this study by mid-2020.

Enrollment for the Phase IIb/III ANAVEX 2-73 Alzheimer's disease study is 50% complete. Recruitment is expected to accelerate given the anticipated international expansion of the study, which will increase the total number of sites from 15 to approximately 45 in 2020.

We are reporting advancement of another pipeline compound. We have successfully completed IND-enabling toxicology studies and drug product manufacturing for ANAVEX 3-71. ANAVEX 3-71 previously received Orphan Drug Designation from the U.S. FDA for frontotemporal dementia, FTD, and initiation of the first Phase I clinical trial of ANAVEX 3-71 is expected in 2020.

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.

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Sandra Boenisch, Anavex Life Sciences Corp. - Principal Financial Officer & Treasurer [4]

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Thank you, Christopher, and good afternoon, everyone.

We reported a net loss of $6.6 million or $0.12 per share during the quarter compared to a net loss of $6.9 million or $0.15 per share in the comparable first quarter of fiscal 2019. The decrease in reported net loss is due to increased research and development incentive income.

Research and development expenses were $6.3 million for the first quarter of 2020 as compared to $5.7 million for the comparable period in 2019. This increase was driven by increased clinical development activities related to the advancement of our pipeline.

General and administrative expenses were $1.4 million for the first quarter of 2020 as compared to $1.8 million for the comparable period in 2019. This decrease was primarily due to lower noncash stock-based compensation charges.

During the quarter, our cash position grew to $27.5 million at December 31, 2019, from $22.2 million at our year-end September 30, 2019.

Thank you. And now I will turn the call back over to Christopher. Christopher, please go ahead.

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [5]

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In summary -- thank you, Sandra. In summary, we continue to make steady progress towards reaching several important milestones, and we are poised to an exciting 2020 with multiple data readouts. We look forward to providing further updates as advancements continue.

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

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question is from Raghuram Selvaraju from H.C. Wainwright.

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Edward Dean Marks, H.C. Wainwright & Co, LLC, Research Division - Equity Research Associate [2]

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This is Edward Marks on for Ram. Quickly, on the clinical side, I'm just wondering what the gating items are before you're able to initiate the pediatric Rett syndrome trial.

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [3]

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They are -- thank you for the question. There are no gating items. We did announce that we were able to get approval for starting the study. It is really the customary requirements of site initiation visits and preparing the drug to the sites, and then we can start. So I expect this to be over shortly, and we will make that announcement public.

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Edward Dean Marks, H.C. Wainwright & Co, LLC, Research Division - Equity Research Associate [4]

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Okay. Good to hear. And you mentioned the recent patent announcement, and I noticed that multiple sclerosis was mentioned multiple times in there. I'm just wondering if you intend to or if other companies have shown interest in rapidly developing blarcamesine for multiple sclerosis. And I noticed that you also mentioned autism and cerebral palsy in there that are covered by the patent. So are these also planning to be pursued in the future?

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [5]

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So we did actually had encouraging data for MS from an in vitro study from several investigators, which was also presented at ACTRIMS last year or the year -- and the year before. And we have to be aware that -- or mindful that this is a very exciting indication and -- but however, still requires more preclinical work, like an animal study or other forms of validation. But I think the best way to look at this is once we get clarity on the data of Rett syndrome, we would immediately accelerate that program thereafter, and the same applies for the supranuclear palsy indication as well.

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Edward Dean Marks, H.C. Wainwright & Co, LLC, Research Division - Equity Research Associate [6]

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Got it. And then my final question, I was just wondering if there's any more detail available regarding the microbial biomarker analysis for Alzheimer's and Parkinson's. And when do you anticipate releasing some of this data?

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [7]

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So we did get -- received an initial positive signal from the Phase IIa study in Alzheimer's disease that there was a correlation of the gut microbiota changes with drug exposure, and we added this measure into our Parkinson's disease dementia study extension. So we will be able to report this with the Parkinson's dementia study extension outcome where we will be able to see the level of changes in measures of gut microbiota before drug exposure and after as well as for patients on placebo and then on drug -- active drug. So we will have a very good ability to see if we will be able to confirm the correlation of drug effect with increase of variety of gut microbiota, which is the beneficial effect since healthy volunteers have a higher variety of gut microbiome than diseased patients.

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Operator [8]

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Our next question is from Yun Zhong from Janney.

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Yun Zhong, Janney Montgomery Scott LLC, Research Division - Equity Research Analyst & Director of Biotechnology Research [9]

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So the first question is on the status of the 2 ongoing Rett syndrome studies. I believe I heard you said that the 2 studies are still enrolling patients. And I'm wondering, did you run into any challenges in recruiting patient in addition to the fact that just being an orphan indication with the small prevalence?

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [10]

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Sorry. What was the last part of the question?

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Yun Zhong, Janney Montgomery Scott LLC, Research Division - Equity Research Analyst & Director of Biotechnology Research [11]

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I understand that this is an orphan indication with a small prevalence. But did you run into any additional challenges in recruiting patients into those 2 studies?

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [12]

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No, we did not. We just want to make sure that the patients are recruited in a fashion that the right patients are in the study because that study now becomes relevant given that we received Fast Track designation. And so our goal is not to rush the enrollment and make sure we get the right patients into the study. But we did not find any challenges during this -- at this point.

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Yun Zhong, Janney Montgomery Scott LLC, Research Division - Equity Research Analyst & Director of Biotechnology Research [13]

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Okay. Then about the Parkinson's disease dementia study, so I believe that primary efficacy end point is the continuity of ATTENTION. So I assume that you're reporting where you see positive data by mid-2020. Are you going to approach the FDA to discuss about the next step? And do you think the same primary end point will likely be used in the next study?

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [14]

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Yes. So the second question regarding seclusion is a little bit a dialogue with the agency to see if this would be able to be confirmed. But the good news is that the measure you mentioned has been shown to be correlated with a drug, which was approved for Parkinson dementia many years ago. So that is the reason why we picked that measure. And indeed, it's correct to make that assumption. After the data is available, we would sit down with the agency and discuss next steps.

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Yun Zhong, Janney Montgomery Scott LLC, Research Division - Equity Research Analyst & Director of Biotechnology Research [15]

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Okay. So then the last question about the new compound 3-71, what do you expect will be the indication that you pursue with this compound? And how do you plan to position the new compound as compared to the 2-73 -- sorry, 2-73, yes?

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [16]

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Edited Transcript of AVXL earnings conference call or presentation 6-Feb-20 9:30pm GMT - Yahoo Finance