Anavex Life Sciences Corp.

Welcome to the Anabex Life Sciences Fiscal 2022 Third Quarter Conference Call. My name is Clint Tomlinson, and I'll be your host for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. During this session, if you would like to ask a question, please use the Q&A box or raise your hand. Please note that this conference is being recorded. The call will also be available for replay on Anavex's website at www.anavex.com. With us today is Dr. Christopher Misling, President and Chief Executive Officer, and Sandra Brunish, Principal Financial Officer. 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 involve a number of risks and uncertainties. we encourage you to review the company's filings with the NCC. 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 results of clinical trials, 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. Misling.

Thank you, Clint. We appreciate everyone joining us on today's conference call to review our most recently reported financial results and to provide a business update. We are pleased with a continued advancement regarding our lead product candidate Anavex 273 in Alzheimer's disease and Rett syndrome, as we maintain our attention on the execution across each of our clinical programs and overall business operations. We achieved a very important milestone at the end of June, with the last patient, last visit in the randomized placebo-controlled Phase IIb-III study of ANAVEX273 for the treatment of early Alzheimer's disease. We are now focused on completion of associated end-of-trial activities in order to provide top-line results of the placebo-controlled Phase IIb-III study of ANAVEX273 in early Alzheimer's disease. which are expected this coming fall. This is an indication which is a condition of significant unmet need and economic burden for which there are only limited approved pharmacological treatment options. As a reminder, Alzheimer's disease is the most common cause of dementia and the fifth leading cause of death in adults older than 65 years. The estimated total healthcare costs for the treatment of Alzheimer's disease in 2020 is estimated at $305 billion, with a cost expected to increase to more than $1 trillion as the population ages. Most of the direct costs of care for Alzheimer's disease are attributed to skilled nursing care, home health care and hospice care. Indirect costs of care, including quality of life and informal caregiving are likely underestimated and are associated with significant negative societal and personal burden. We also recorded the last patient, last visit in the 48 week open label extension of the Parkinson disease dementia phase two study, occurred this quarter. Data from this study is expected by year end 2022. In our Rett syndrome program, completion of the randomized placebo controlled excellence phase two slash three study for the treatment of patriotic patients with Rett syndrome is expected by the end of 2022. In June, Anavex announced a peer-reviewed publication in American Journal of Medical Genetics, identifying a blood biomarker for assessing treatment effect of Anavex 273 in Fragile X syndrome, which provided strong scientific support for the planned clinical trial of Anavex 273 in Fragile X syndrome. End of July, Anavex presented very important data the first entire clinical women Alzheimer's disease and Parkinson's disease gene pathway data from the Annevix 273 PDD-001 Parkinson's disease dementia study at the Alzheimer's Association International Conference AAIC in San Diego, California. Also at AAIC in early August, Anavex presented long-lasting effect of Anavex 371, preventing cognitive decline in a transgenic rat model of Alzheimer's disease. This new data strengthens the importance and applicability of Anavex Precision Medicine's Sigma-1 platform. and is consistent with previously reported therapeutic significant and dose-dependent preclinical prevention of a beta-induced biomarker-correlated cognitive impairment with Anavex 273. Further pipeline expansion of the Anavex platform using gene biomarkers of response, applying precision medicine for neurological disorders with unmet medical need is expected in 2022, including meeting with the FDA to discuss the Anavex 273 Parkinson disease program, including a pivotal phase three study. Planned initiation of a Anavex 273 imaging-focused Parkinson disease clinical study sponsored by the Michael J. Fox Foundation. And planned initiation of a potential pivotal phase two slash three study in Fragile X syndrome, the most frequent genetic cause of autism spectrum disorder. And planned initiation of a phase two slash three clinical trial for the treatment of a new rare disease indication. And last but not least, planned initiation of Anavex 371 phase two clinical trials for schizophrenia, frontotemporal dementia, and Alzheimer's disease indications. And now, I would like to direct the call to Sandra Boenisch, Principal Financial Officer of Anovex, for a brief financial summary of the recently reported quarter.

Thank you, Christopher, and good afternoon to everyone. During our third fiscal quarter, we maintained fiscally responsible cash utilization as we continue to execute on our clinical programs. Our cash position on June 30th, 2022 was 153.2 million. To put this in context, at our current cash utilization rate and range, we believe we have sufficient cash runway to fund operations and clinical programs beyond the next four years. Our research and development expenses for the third quarter of fiscal 2022 were 9.3 million, as compared to 9 million for the comparable quarter of fiscal 2021. General and administrative expenses were 3.2 million compared to 2.4 million for the comparable quarter of fiscal 2021. Overall, we reported a net loss of 12.4 million for the quarter or 16 cents per share. The overall increased expenses over the comparable period is primarily related to an increase in non-cash compensation charges, period over period, which is driven by the continued addition of staff to manage and support our clinical studies and development. Thank you. And now I will turn the call back over to you, Christopher.

Thank you, Sandra. We're looking forward to delivering data readouts as well as initiating biomarker-driven precision medicine clinical studies as planned. I would like now to turn the call back to Clint for Q&A.

Thank you, Christopher. We'll now begin the question and answer session. If you have a question, please raise your hand or enter it in the Q&A box. The first question today will be coming from Sumit Roy at Jones Research. Go ahead.

Hi everyone, congratulations on all the progress. One question on the excellence pediatric red trial. Could you clarify when you're mentioning it's completion of the trial is expected year in 22. So is the data getting pushed back into 2023 or we expect data still at the end of 2022?

Right, we updated a while ago the clinicaltry.gov that the completion of the study will be in December. So we will only try our best to release the data once we have completed the study. But it looks like that we can definitely, at this point in time, confirm that the study completion will be by year end and soon after the data readout, the top line data of the study. I also want to point out at this point in time that we have also provided sufficient manufacturing products for a potential rollout or market entry for Rett syndrome. If so, the study, the excellent study is positive.

Got it. So do you see any headwind in the enrollment in the pediatric Rett syndrome trial or is trying to understand why it seems like it's taking longer for the enrollment to complete?

We reminded last quarter that we had the situation that the vaccines were approved for pediatric population. And since the trial requires a three months of constant or consistent medication, a vaccine is a, trigger for this three-month duration. So when a patient or participant in the study or a willing participant to join the study has a vaccine taken, the last dose of that vaccine will be during a three-month period before somebody can join the trial. And we noticed that would lead to some slower enrollment. And we just are made aware of that. And that's part of this process. So there's really not anything else but that we want to make sure that we follow the guidance of the protocol, which requires this three-month period.

I see. Totally understandable. And last question. So you are still curious where you are currently on whether to file the adult BLA separately from pediatric BLA? you want to wait until the entire pediatric data is available and then file it together. Any thoughts on that?

At this point, we are so close to read out of the excellent study. And we should remind everyone that Rett syndrome is a patriotic indication predominantly. It is a study in, it's an indication which affects girls from an early age onwards. And many patients die when they get older. The life expectancy, it fluctuates. 40 years is only 50%. And so that makes it clear that is a patriotic indication predominantly. That's why also we focused on the study size and the study focus on the patriotic study. And the adult study is important to get approval for the entire age group. And at this point in time, we also wanna make sure that since we have the voucher eligibility, we wanna make sure that we are able to submit a successful patriotic study first in order to receive this voucher, which is quite valuable, as you know. So again, but the key thing is that we are so far into this excellent study that it is just more preferred and prudent, in addition to the fact that it's predominantly a patriotic indication, to finish the excellent study and then file the entire program, which consists of three placebo-controlled study, the phase two, the phase three avatar, and the phase three excellent study.

Thank you for clarifying all the issues, and congratulations again on the development. Thank you.

The next question will come from Yunzong at BTIG.

Go ahead. Great. Thank you very much for taking the question. So the first question is on your discussion with the FDA on the pathway for Parkinson's disease. What's the possibility of the FDA might ask you for additional information or clinical data from Parkinson's disease patient, given that your phase two study was done in PDD, not really the broad population of PD patients. And if that's the case, do you think that imaging study will provide you with sufficient information? And I have a follow-up question.

Yeah, so that's a good question. So as a reminder, we're initiating soon the imaging study in Parkinson patients funded, and I want to thank again Michael Fox Foundation for their support for this, which is the second grant which received for Michael Fox after the first one, which covered the Parkinson disease proof of concept indication in animals in a disease modification, disease modifying animal model. And this PET study would be a good support for a study in Parkinson's disease only. We have to say, though, that the Parkinson's disease dementia study, we believe, is very robust to demonstrate Parkinsonism because We noticed and we measured in this Parkinson dementia study a very strong dose dependent improvement in the MDS-UPDRS score, which is the standard gold standard of measuring Parkinsonism or Parkinson patients features and that was very robust in its outcome. So we believe that we have enough evidence of moving forward in a study in Parkinson's disease in a pivotal study because of the data from a Parkinson's disease dementia phase two study in 132 patients placebo controlled study.

Okay, my second question is that you have reported quite a lot of interesting biomarker data. So I wonder, have you incorporated that biomarker information in, for example, patient enrollment in the Alzheimer's study? And also, do you plan to incorporate that information to allow you to maybe identify a specific patient population in future studies so that she will be able to show maybe better clinical data?

So, right, the most important takeaway from the genetic analysis of the whole genome of patients getting ANAVEX2CM3 compared to placebo in the Parkinson's dementia study was really that the drug shows the ability to resuscitate or to counter down-regulated gene pathways and not only gene pathways, but also clusters of gene pathways, which are down-regulated in respective pathology of Alzheimer's disease, as well as in the respective pathology of Parkinson's disease. And the fact that clusters of gene pathways are down-regulated in these diseases, which is published compared to healthy volunteers in various papers. And we were able to demonstrate that those down-regulated genes were up-regulated again in the ANAVEX-3 arms shows really the broad ability to counter these complex pathologies. And I want to remind again, this is evidence that we're talking about extremely complex indications with different features and not one unilateral pathway in Alzheimer's disease or in Parkinson's disease, but the ability to really address pathways and counter them on a broader range, which includes degeneration in various features like mitochondria, autophagy restoration, tau reduction, and abeta reduction, and calcium imbalance, homeostasis restoration. All these pathways have been addressed and confirmed in this whole genome analysis. And we've noticed that and learned that in preclinical animal studies already that Anavax273 is capable of doing that. And what is really important is that that is on top of the very clear biomarker data of sigma 1 correlation with the outcome of patients benefit. So again, patients benefit the most who also had the highest Sigma-1 activation. Since we activate Sigma-1, that makes perfect sense and does not come as a surprise, but should give us confidence in the readout of future studies. And that's why we're very excited that the whole genome analysis also shows this fundamental strong biomarker correlation with the outcome, and not only in one gene, but also in broader pathways, which are, again, impaired in these indications.

Great. Thank you very much.

Thank you.

Next question is from Ram Salvaraju from HC Wayne. Go ahead, Ram.

Thank you so much for taking my questions and congrats on all the progress once again. I just wanted to ask if you could comment on two strategic aspects. One is with respect to the imaging use of 273 versus its therapeutic use and how you envision that evolving at a commercial level, you know, should the molecule ultimately demonstrate its utility on both of those fronts, regardless really of the neurodegenerative disease context. And the other is how you are thinking about optimizing the value of blarcamazine in XUR territories, and in particular, to what extent you expect to be exploring this through partnerships and what the timing of those might be. I also was wondering if in that context you could provide some commentary regarding the IP protection of Blar Camusine, in particular in potentially significant commercial territories like China.

Very good question. May I ask for clarification on the first question, please? were you referring to imaging effects of the drug?

That is correct, yes.

No, may I ask you what you mean by that?

So if, for example, there were some, let's call it, diagnostic utility of the drug above and beyond imaging for the purpose of optimizing treatment, is there a way to optimize the value of the compound in both the diagnostic and therapeutic contexts?

Now I understand. Thank you. So let me pick that first. So as you might remember, and I want to point that out, so we did notice that in all three studies so far, clinical studies, Alzheimer, Parkinson's, dementia, and Rett syndrome, we noticed that the sigma 1 shows up in two different genetic forms. One is more prevalent than the other. We call it wild type, WT. It's the most predominant. We talk about 80 to 90% of all participants in studies or in the world have this sigma-1 wild type gene. And we noticed that with relatively everything being equal, those patients had a slightly better response that those patients, which then are the minority of 10 to 20% with a Sigma-1 variant in one amino acid, which seems to change the confirmation and hence might be not as expedited in its activity in the body, but still doing its job because we noticed that when we dose high enough, then there is no real difference between those two genetic forms in a patient. But having said that, if things would become needed that we would need to focus on patients with the VALTAP gene, we are in parallel developing a diagnostic test, which would then allow to use this as co-diagnostic, companion diagnostic for the therapeutic for Anavax273. So we then would be able to go into the market with a companion diagnostic to identify patients only with this wild-type sigma-1 gene, which again is over 80% of the population, and then making sure that these patients benefit most from Anavex 273. But so far, we will see if the Alzheimer's study and the pediatric RET study don't even need that kind of like additional cohort selection, and we might just find out that all patients, irrespective of the genetic background, will benefit from Anavex 273. But again, if it does not be the case, we will have that ability to move into that precision medicine, companion diagnostic therapeutic approach. Secondly, regarding planning for commercialization outside of the US, we stated in RAD syndrome, we would be happy and able to, and are planning to move forward ourselves in marketing Anavex 2.3 in RAD syndrome and possibly also Fragile X. And in rest of the world, we are actively in discussions And we're planning to expand the dialogue with European, Asian, and including Chinese companies for marketing the drug outside of the US. There's also the potential of partnerships globally ex-US or in regional partnerships, for example, Asia. or separate Japan and rest of Asia, and then Europe and South America. So we are in discussions on that already in order to maximize also the rollout of the drug worldwide. Did I miss any additional question?

Just as an adjunct to that, I was asking about the IP protection for Blarkamacine currently in China.

Thank you for reminding. So we did make sure that when we started the company's portfolio strategy to include China very aggressively in IP protection. So with all the patents we have filed so far, that is going back to the last seven years, seven to nine years, we included China always the patent application in China specifically as well. So we always made sure that we not only have protection in the largest market, but specifically also added China into this group of IP protection.

Okay, and then just one last question was with respect to when you expect to disclose the identity of the new ultra-rare indication for Blarcomacin for which you expect to initiate phase 2, 3 clinical development as per the guidance from the press release of still this year. When do you expose the identity of that indication?

Right. I want to give a bit of background about this. We would be happy to disclose it. It's not that we don't want to disclose it. We just don't want to convey the message as if we would not be focused and convinced about the existing indication. That's the only reason. We don't want to distract the market. The reason why we have this in this form or shape mentioned is that we have several indications where we are very robust preclinical data with Anavex 273 in rare diseases and ultra rare diseases. And we like to just make sure that we are progressing first with the FDA to discuss those indications to make sure we pick the one which has the highest chance of succeeding in a clinical trial and progressing in a clinical trial to success. And then we will make the disclosure. But really, the predominant reason is that we like to make sure that we don't get the impression that we are not focusing on the existing indications, which we are very excited about as we speak.

Just one very minor financial clarification, if I may. Based on your guidance with respect to the length of the cash runway, can you confirm whether or not that effectively includes whatever budget assumptions you may have to make regarding actual commercialization of Blark-Amazine. One might say, for example, the highest likelihood is commercial-related expenses associated with the deployment of the drug in Rett syndrome, but possibly also in other indications. And I just wanted to clarify whether your financial runway guidance actually includes those commercial expenses along with the other operating expenses as well.

This is an excellent question. So let me break it down this way. So for the commercialization, we already have, as I mentioned just briefly before, sufficient drug products for the entire commercial rollout of Anovex 273 and Rett syndrome. The marketing rollout cost As you know, when you have an approved drug, your ability to access capital and resources for that is broader than the equity capital market. You have access to debt financing and other financial vehicles which are basically not dilutive. And we certainly will make use of that. So the cash available is not limited to equity, which is right now the focus in a stage where the company does not yet have revenue. But this can change very quickly and hopefully very soon that we're able to expand on the ability to use financial vehicles and resources, which are basically non-dilutive to shareholders.

Thank you.

Thank you. Okay, thank you. Our next question is gonna come from Charles Duncan at Cantor.

Go ahead, Charles. Hi, it's Avi on the line for Charles. Thank you for taking our questions and congratulations on the progress. So I guess quick question regarding the Alzheimer's program. I was wondering if you could speak to enrollment rates and to the open label extension.

Say it again, what's the question, please?

could you please discuss enrollment rates in the open label extension from the phase two slash three Alzheimer's study?

Yes. So we have a very high enrollment of the extension, which you, as you know, is two years after the placebo-controlled study, which just finished last June. And so I think the last number I received was in the range of 94, 93, 94%.

Okay, great. Yeah, awesome. Sounds good. And then I have a couple of questions regarding the Rett syndrome program. So I guess first, could we expect a potential press release or an update when last patient, last visit is reached?

From the excellent study?

Yes, exactly.

Right. We will provide that.

Okay, wonderful. Thank you. And then my last question is, you'd mentioned earlier in the call that, you know, should the results be positive, you would try to move forward with an NDA submission. But I guess I was sort of wondering how are you distinguishing between positive for, you know, positive enough to move forward with an NDA versus positive that, hey, there's a signal we should continue to explore further. And now I was wondering if you could, you know, how you're thinking about that distinction and, you know, what sort of feedback the FDA has relayed to you regarding, you know, what it would take to, you know, get an approval. Thank you.

Right. So we have, and then we stated the last time, we have now a very strong two clinical studies, placebo controlled studies, the phase two study and the avatar study. And we have now submitted these studies to the FDA and also the existing design of the ongoing excellence study in order to make sure that the agency is comfortable with our design, with our data, to also make sure that we get a clear feedback from our submission potentially in order to maximize the chance of getting the moving forward with the ND approval. So we expect this feedback and that will be also communicated accordingly. So this is basically the best way to make sure We're not running into a roadblock or whatever when the data is out. So we want to make sure before the study finishes, the excellent study, that we have a clear path to approval.

OK, wonderful. Yeah, thank you for taking our questions. And congrats on the quarter. Thank you.

Thank you. The next question comes from Carolyn Palamec from Barenburg. Go ahead, Carolyn.

Hi, thanks for taking the question. I just have a follow up on the mechanism work. Do you plan on doing any genomic analysis gene expression work on 371? such as an FDD or some indication like that as well?

That's correct. So we have done now since our first study in Alzheimer's disease, the phase 2A, where we for the first time used genome analysis. We will now include that as well as in the ANAVEX 371 program because of the broad applicability and the way we believe we can learn more about the effect of the drug. So we will clearly also include that in the Anavex 371 program. Great, thank you. Thank you.

I believe that was the last question, Dr. Meslin.

Thank you. Again, we're very much looking forward and we're very excited about the company's potential as we build on biomarker-driven precision medicine studies with significant unmet medical need and economic burden. And we are looking forward to clinical trial readouts in Alzheimer's disease and patriotic Rett syndrome. Thank you very much.

Thank you, Dr. Misling. Ladies and gentlemen, this concludes today's conference. We thank you for participating and you may now disconnect.