Anavex Life Sciences - Q2 2024

Executive Summary

• Pre-revenue biotech quarter with disciplined OpEx and strong liquidity: cash and equivalents were $139.4M (Mar 31), implying roughly four years of runway; net loss improved year over year to $10.5M or $0.13 per share from $13.1M or $0.17 per share on lower R&D and steady G&A.
• Regulatory path firming: management emphasized new FDA Early Alzheimer’s guidance allowing a single cognitive endpoint (e.g., ADAS‑Cog) and reiterated plans to submit an EMA marketing authorization application for oral blarcamesine in 2024; analysis of RNA‑seq from the Phase 2b/3 AD study is underway with interim data expected mid‑2024, and OLE interim data targeted for 2H24.
• Pipeline execution: first cohort in the ANAVEX 3‑71 Phase 2 schizophrenia trial fully enrolled; Parkinson’s disease trials (imaging‑focused and 6‑month Phase 2b/3) expected to initiate in 2H24; Rett syndrome moving toward a Phase 3 12‑week efficacy study with design changes intended to mitigate placebo effect.
• Street estimates: S&P Global consensus for Q2 FY2024 was unavailable at time of analysis (API limit), so no beat/miss determination; as a pre‑revenue company, focus remains on cash burn, regulatory milestones, and clinical catalysts (mid‑2024 RNA‑seq, 2H24 OLE interim, 2024 EMA MAA) (S&P Global consensus unavailable).

What Went Well and What Went Wrong

• What Went Well

  • Regulatory momentum: “the very recently issued FDA guidance for early Alzheimer’s disease … opens another possible pathway,” complementing the EMA MAA process already underway.
  • Biomarker and imaging signals: management highlighted increased plasma Aβ42/40 ratio consistent with reduced brain amyloid and “significant stopping of the shrinking of the brain” on MRI in the active arm vs. placebo in the AD trial; full data to be published.
  • Operational execution and liquidity: first schizophrenia cohort fully enrolled ahead of schedule; cash runway ~4 years supports multi‑indication execution without near‑term financing pressure.

• What Went Wrong

  • No revenue and continued losses: as a pre‑revenue biotech, AVXL reported no commercial revenue and a quarterly net loss of $10.5M (EPS –$0.13), though improved YoY; total operating expenses were $12.5M.
  • Sequentially higher spend vs. Q1: R&D rose to $9.7M from $8.7M and G&A to $2.8M from $2.6M, reflecting advancing programs.
  • Investor concerns on timing and insider signals: questions arose regarding timing of peer‑review publication/EMA filing and the lack of insider buying; management noted trading windows and would not guide on publication timing beyond “as soon as possible”.

Transcript

Clint Tomlinson (Head of Investor Relations)

Good morning and welcome to the Anavex Life Sciences fiscal 2024 second quarter conference call. My name is Clint Tomlinson, and I will 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, and during this session if you would like to ask a question, use the Q&A box or raise your hand. Please note this conference is being recorded. The call will 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. 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 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. With that, I would like to turn the call over to Dr. Missling.

Christopher U. Missling (CEO)

Thank you, Clint, and good morning everyone. Thank you for being with us today to review our most recently reported financial results and to provide our quarterly business update. We are encouraged by the very recently issued FDA guidance for early Alzheimer's disease, which states that one cognitive measure alone, like ADAS-Cog, could be a sufficient primary endpoint for early Alzheimer's disease.

We appreciate this new guidance and believe this opens another possible pathway for us to move forward in parallel to the initiated process of Marketing Authorization Application to the European Medicines Agency (EMA) for blarcamesine for the treatment of Alzheimer's disease, which is already underway. Full data from the blarcamesine study in Alzheimer's disease Phase II-B/III placebo-controlled clinical trial will be published in an upcoming peer-reviewed journal. As well, analysis of RNA sequencing of the trial is underway, and interim data is expected by mid-2024.

Concurrently, the ATTENTION-AD open-label extension trial is ongoing, and we expect to be able to share interim data in the second half of 2024. In Rett syndrome, continued positive real-world evidence feedback from Rett syndrome patients and caregivers participating in the ongoing open-label extension trial and compassionate use program for patients who participated in the EXCELLENCE trial encourages us to continue our partnership with the Rett syndrome community and to proceed with a phase III 12-week efficacy study.

An educational presentation will be provided at the 2024 IRSF Rett Syndrome Scientific Meeting taking place this year, June 18 to 19, 2024. Regarding Parkinson's disease, initiation of an ANAVEX®2-73 phase II-B/III six-month trial is expected in the second half of 2024. In Fragile X, new specific translatable and objective biomarker data generated with ANAVEX®2-73 supporting the initiation of the potentially pivotal ANAVEX®2-73 phase II/III clinical trial will be presented at the 19th National Fragile X Foundation Conference taking place July 25 to July 28, 2024.

Related to a new rare disease, we are also in preparation to initiate a potentially pivotal ANAVEX®2-73 phase II/III trial. With respect to ANAVEX®3-71, we are quite pleased to provide an update that the placebo-controlled phase II clinical trial of ANAVEX®3-71 for the treatment of schizophrenia, the study is well underway, with the first cohort of schizophrenia patients being fully enrolled.

We are also expecting further peer-reviewed clinical publications involving both ANAVEX®2-73 and ANAVEX®3-71. Now I would like to direct the call to Sandra Boenisch, Principal Financial Officer of Anavex, for a financial summary of the recently reported quarter.

Sandra Boenisch (Principal Financial Officer)

Thank you, Christopher, and good morning to everyone. I'm pleased to share with you today our second quarter financial results for the 2024 fiscal year. Our cash position at March 31 was $139.4 million. During the quarter, we utilized cash and cash equivalents of $11.7 million in operating activities after taking into account changes in non-cash working capital accounts. At our current cash utilization rate, we believe we have cash runway of approximately four years.

During our most recent quarter, our general and administrative expenses were $2.8 million as compared to $2.6 million in the immediately preceding first quarter. Our research and development expenses for the quarter were $9.7 million as compared to $8.7 million for the immediately preceding first quarter. Lastly, we are reporting a net loss of $10.5 million for the quarter, or $0.13 per share. Thank you. Now back to you, Christopher.

Christopher U. Missling (CEO)

Thank you, Sandra. This is an exciting time for the company, and we are very excited to be entering a new phase of the company's history with our biomarker-driven precision medicine programs. I would now like to turn the call back to Clint for Q&A.

Clint Tomlinson (Head of Investor Relations)

Thank you, Christopher. We'll now begin the Q&A session. If you have a question, raise your hand or put it in the Q&A box. And it looks like our first call is coming from Soumit from Jones Research. You should be live, Soumit.

Soumit Roy (Managing Director)

Yeah. Hey, congratulations on all the progress. And a few questions on the FDA guidance. It's oftentimes a bit qualitative and trying to understand, read through the line when they are saying strong biomarker and strong statistical data to support the clinical outcome on the cognition front. How do you really interpret that? When you're looking at Aβ42/40 ratio, the error bars when you compare with the company is just because of the cohort size is a little larger. How many patients was there, and do you see these to be considered strong, or FDA would ask for a larger trial? Just curious about your thoughts.

Christopher U. Missling (CEO)

So the key background is that for the biomarker of Aβ changes in placebo versus active arm, we have to be reminded that the mechanism of our drug is not an antibody removing Aβ drug, but is an orally available, once daily, easy-to-administer, and scalable drug and has for that a lot of convenience features which the antibodies don't have, in addition to the fact that they are having challenges with the black box warning which they have been given. So there's also a challenge from safety, and repeated safety measures on MRI are required.

Regarding the biomarker data of the Aβ, we were intrigued, but on the other hand, not surprised that we saw a reduction of Aβ in the brain measured by the plasma Aβ42/40 ratio, which is the analogy of measuring a PET Aβ level in the brain, which is intuitively easier to understand because you are showing a decline in the brain. But the Aβ42/40 ratio, which again is representative of this fact of reduction of Aβ in the brain, is then measured in the plasma and shows as an increase of this ratio, favorably showing a decrease in the brain. So if the ratio goes up, that means Aβ in the brain goes down.

So since we don't target Aβ directly with our drug but have a more upstream mechanism of action, again, we were intrigued and surprised to see in all patients, there was no sub-analysis in this analysis of the Aβ ratio showing a significant decline. So now it's a question of dialogue with the agency how this will be interpretable as a biomarker. But I'd like to also point out we have a second strong biomarker which probably even is stronger, specifically from a p-value perspective, which is the changes in the atrophy of the brain.

So in the pathology of the Alzheimer's disease, there is a very well-understood feature of shrinking of the brain over time. And this is intuitive. If the brain is shrinking, it's less active. It cannot have as good memory or activities of execution and function as the brain was not shrinking. We noticed in our trial a significant stopping of the shrinking of the brain with ANAVEX®2-73 blarcamesine in the active arm compared to placebo. So the placebo arm continues to shrink the brain in the patients while they are on placebo, which is standard of care, by the way. It's not placebo itself.

It's including donepezil, memantine. So all the data is always on top of standard of care, which is today includes approved drugs. However, the active arm on blarcamesine or ANAVEX®2-73 shows a significant separation from the placebo by not shrinking the brain any further or delaying the shrinking of the brain in many regions of the brain. And this exact data will be part of the publication which we're expecting.

So I think once this data comes out, I think then we can rediscuss the impact of that biomarker in combination with the Aβ biomarker. And again, with the Aβ biomarker, I'd like to remind again, we did not target with our drug directly Aβ. So it must be a downstream effect of the upstream feature of the Sigma-1 receptor showing also the impact on the entire population in our trial.

Soumit Roy (Managing Director)

These are truly encouraging data. You have quite a few catalysts coming up in the next probably three months. Trying to understand what would be the strategy when you go to FDA, would you wait for the open-label extension arm trial data to come out along with the publication and completion of the European filing and then approach to FDA with the totality of data with biomarker and the long-term, or would you do it before that, meet with FDA before the long-term extension arm data?

Christopher U. Missling (CEO)

Yeah. So we really want to have the best impact, I would say. And you don't have a second chance for first impression, as they say. And certainly, having data of the open label study, which is 96 weeks, probably would be favorable. However, we have not decided how to proceed on the timing exactly, but definitely this year. But also, we can do, since it's an open label, interim cuts. So there's a way to expedite the analysis of the open label study.

Soumit Roy (Managing Director)

That is truly helpful. A last question on if you can provide any guidance on the timeline around completion of the European filing.

Christopher U. Missling (CEO)

Yeah. So we definitely want to expedite this. The teams are working really overtime to put together the modules, which are many pages, a significant package. We talk about a lot of documents, and they all have to be completely ready. Usually, this takes time. Other companies going through the same process need the same time. We are not in a different situation like that. We said we want to submit this year, and we are well on track to do that. We will provide updated timing when we get closer to the filing time. We are very good on time with that. Stay tuned.

Soumit Roy (Managing Director)

Thank you. Congratulations on all the progress.

Christopher U. Missling (CEO)

Thank you.

Clint Tomlinson (Head of Investor Relations)

Our next call is coming from Ram at H.C. Wainwright. Ram, you should be live.

Ram Selvaraju (Managing Director of Equity Research)

Can you hear me?

Clint Tomlinson (Head of Investor Relations)

Yeah. Perfect. Thank you.

Ram Selvaraju (Managing Director of Equity Research)

Okay. With respect to the regulatory process with the European authorities, can you give us a sense of, A, when you expect the MAA filing to be completed, and B, how you anticipate the process to evolve with respect to the CHMP review, how and when they are likely to become involved in the review of the application, and what you understand to be the principal criteria they are going to use to evaluate the suitability of blarcamesine for approval in the European Union? Thank you.

Christopher U. Missling (CEO)

So we stated that just a minute ago that we are filing as soon as possible, definitely this year. And the team is really working overtime to put together the package, which has to be done in one submission. There's also interactions taking place with the EMA to be aligned on the technicalities. So that precedes these submissions. We also are sorry, what was the second question?

Ram Selvaraju (Managing Director of Equity Research)

The involvement of the CHMP, that review committee that typically looks at drug candidates that are submitted to the EMA for approval and renders a positive or a negative opinion prior to an approval decision being taken. Just wanted to know when you expect the CHMP to get involved in the review of the blarcamesine MAA and what criteria you expect them to use to determine what their opinion should be.

Christopher U. Missling (CEO)

Right. Thank you for reminding. The procedure of the submission involves a review of the package before it gets submitted. It's a very healthy procedure because it allows exactly this intelligent feedback to be received. We expect this to take place. To give you a sense of the level of interest, we noted before that the reason we submitted to the EMA was not because we thought it would be a good idea, but because we shared the majority of the data with the EMA beforehand and asked for their input and their feedback. Their response was an unambiguous request to immediately file a submission.

We, of course, hope that this initial feedback will continue to be the case down the road. Right now, we have no reason why it wouldn't. That is, of course, up to the review. So we are coming in here not that we push, but we were pulled into the submission given probably the unmet need in Europe and also the fact that the European Union has no MRI or PET centers in all places in the countries of the European Union.

Like in certain countries, for example, like Hungary or Poland or Romania, there are not enough MRI centers, which would probably be needed for an antibody given its safety profile. So that's the best we can say at this point.

Ram Selvaraju (Managing Director of Equity Research)

Great. And with respect to 371, just wanted to, A, get a sense of how you expect to monitor the efficacy profile of this compound in schizophrenia if you regard, for example, certain domains of the PANSS to be the most appropriate efficacy measures, as well as the extent to which you expect 371 to be differentiated from existing anti-schizophrenic medications and what you expect the principal areas of differentiation to be.

For example, is it safety and tolerability more so than the efficacy, or do you expect on both the safety as well as the efficacy fronts, this drug candidate to demonstrate a differentiated profile versus currently marketed, for example, atypical antipsychotic medications?

Christopher U. Missling (CEO)

Yeah. I think it's exactly as you stated. It could be really both. And if you look at the landscape of drug approvals, you want to always be better than what is out there on the market. So if you're able to show that the safeties have a better feature, better profile, and also translate into stronger, more meaningful efficacy both on the positive as well as the negative domains of schizophrenia, then this would be extremely valuable and helpful. We also want to point out in this study, we are focusing on EEG/ERP as a considered surrogate biomarker of schizophrenia.

So we are excited about finding out how the drug interacts in that regard. And it's a very elegant, non-invasive methodology to identify that. But we also have included the standard PANSS score in addition to this EEG/ERP. So we might learn something about the effect of our drug in this study in those regards, which would then allow us to decide how to proceed with this drug in schizophrenia.

Ram Selvaraju (Managing Director of Equity Research)

Then the last question is sort of a combination of a strategic and financial query. Let's say hypothetically that the EMA agrees that blarcamesine is approvable for treatment of Alzheimer's disease in the European Union. At that juncture, strategically, what do you expect your preferred strategy to be in terms of whether or not you elect to undertake independent self-commercialization activities in Europe or whether you, at that point, would look to identify a partner?

And does your cash burn guidance of runway for the next four years take into account any pre-launch activity-related expenses related to blarcamesine for treatment of Alzheimer's disease in Europe? Or are you assuming that if you get an MAA approval, that you will look to identify a partner with which to launch the drug in Europe? Thank you.

Christopher U. Missling (CEO)

Thank you for the question. So what we try to decide when it comes to that point is what creates most value for shareholders. So if the most value is created by finding a partner who has the expertise and the bandwidth and the strength of executing and maximizing sales of the drug blarcamesine for Alzheimer's, with giving us the appropriate incentive to do so with the upfront payment, with milestone payments and royalties, that would be probably the choice.

If, however, it is not the case, then there are certain combinations of such features where we could also consider a split ability to market the drug, which could also actually be beneficial for the company and shareholders because we might retain more upside down the road. So this is really a decision made at the point in time when we are there to maximize shareholder value. On the other point, you asked about the cash utilization rate. Right now, we are not including any marketing expenses.

It's also not necessary because if it comes to an approval, you would have the ability to raise funds, non-dilutive fund, with that funding and financing and these sort of which would not dilute current shareholders. You would not need to have that money in equity available if you would come to the point that you need to pay expenses for marketing entry for that reason. We would be in a position to leverage the balance sheet without diluting existing shareholders.

Ram Selvaraju (Managing Director of Equity Research)

Thank you for all the clarity. Congrats again on all the progress.

Christopher U. Missling (CEO)

Thank you.

Clint Tomlinson (Head of Investor Relations)

Thank you, Ram. Next question comes from Tom Bishop at BI Research. Tom, you should be live. I think you're muted, Tom.

Tom Bishop (Managing Director and Senior Equity Research Analyst)

Okay.

Clint Tomlinson (Head of Investor Relations)

Perfect.

Tom Bishop (Managing Director and Senior Equity Research Analyst)

Can you hear me now?

Clint Tomlinson (Head of Investor Relations)

Yeah. You're good. Thank you.

Tom Bishop (Managing Director and Senior Equity Research Analyst)

Okay. I wasn't clear about this comment about the first cohort of schizophrenia being fully enrolled. Is this a 30-day trial? Would data presumably be forthcoming in H2, at least?

Christopher U. Missling (CEO)

We have to finish the trial. It consists of several cohorts and several parts. This was the first cohort and first part. Again, I want to point out this is a testament of the execution of the team, which has done this so quickly. Again, we are ahead of time because we are anticipating starting the trial actually in this quarter. We ended up starting the trial in the previous quarter.

Now already have enrolled the first cohort. It's very encouraging. I would leave the analysis and when the study is finished, when we get closer to that point, to announce that. But we are very encouraged so far about the speed and the process of the study.

Tom Bishop (Managing Director and Senior Equity Research Analyst)

Are these different cohorts? What are they targeting? And how long does the trial last in terms of dosing?

Christopher U. Missling (CEO)

So there are two cohorts and two parts. The first part is just identifying the doses of what is the best dose for the schizophrenia patients. So it's an ascending dose escalation part. And the second part is then at the optimal dose, if you like, a longer study of almost 30 days. So that is the second part. So we are right now in the first part.

Tom Bishop (Managing Director and Senior Equity Research Analyst)

Okay. It's good to hear about the phase 3 Rett trial. What can you tell us about the timing and the number of patients? I guess it's going to be 50/50 this time with placebo. Can you tell us more about the trial?

Christopher U. Missling (CEO)

Right. So we really think that with Rett syndrome, we have really a good chance of what we refer to learn our lessons from the previous trial where we really were only impacted by a very high placebo effect. And that was contributed, among others, as you pointed out, to the 2:1 randomization, which gave the sense of a participating family to think that so 2:1 means that two chances are higher to be on active arm and randomizing only a small portion, one-third, to placebo. So 60 patients ended up in the active arm and 30 in the placebo.

But because of that, people thought or had the impression or certainly the aspiration to have a higher chance of being in the active arm. That leads for those who are on placebo and have completely blinded, so don't know if they get the placebo or the active arm, to suspect or hope that they are in the active arm psychologically. So that's what is this bias most likely. So to avoid this, we would have a 50/50 randomization, 1-to-1, so that there is no anticipated ability to expect that to be in the active arm and triggering a placebo effect in the placebo arm. So that would be one thing.

The other part is there also features to reduce placebo response by features of the trial, which are specific to technicalities. Then we also would do a larger study. It turned out that, indeed, the measurements are volatile. Only a few participants in the placebo arm could basically cause noise of the signal to be not significant. That's what we observed. There was a very good trend and directional improvement. We have to now make sure that the signal is strong enough to be significant.

That's the ability to do that. The timing is we will provide update when we get closer. The community is receptive to this. We are engaging with the community as we speak. Also, we mentioned that we are presenting at the conference in June in Colorado, as a matter of fact, to connect with the community about the next steps of this trial.

Tom Bishop (Managing Director and Senior Equity Research Analyst)

Okay. You don't quite yet know the number in the trial, which would affect how long it takes to get it to go on?

Christopher U. Missling (CEO)

So the good news is that it's a relatively short trial. It's 12 weeks. So it's not too long. It can be done relatively timely because the matter of fact is it's not a long trial to begin with. And if there is, again, ability to scale this up and there's strong interest in an alternative marketed drug to Rett syndrome patients, this could help actually accelerate this trial to start and to kick off. Again, we will provide update as we know more.

Tom Bishop (Managing Director and Senior Equity Research Analyst)

Okay. Can you remind us of the Fragile X data to date? Is it just phase one kind of safety data and food data, or is it or do I forget kind of some trial results we've gotten that you're considering moving to phase II-B/III trial?

Christopher U. Missling (CEO)

Which indication? Sorry, I missed that.

Tom Bishop (Managing Director and Senior Equity Research Analyst)

Fragile X.

Christopher U. Missling (CEO)

Yeah. So this is very intriguing data. It's a biomarker, which is measurable both in patients, in humans, as well as in animals. And it's correlating very clearly, it has been published, to the pathology of Fragile X or to showing a reduction of the pathology of Fragile X. And this will be presented for the first time at the conference in July.

And we're very excited about it because it strengthens, first of all, the evidence that Fragile X is an extremely good indication for blarcamesine, for ANAVEX®2-73. But also, it would give us, in a clinical trial, a biomarker, which is so important in CNS, which is hard to find, biomarkers of a pathology. So these are the two reasons why we're very excited about this presentation coming up.

Tom Bishop (Managing Director and Senior Equity Research Analyst)

You could move into a potentially pivotal phase 2b/3 trial just based on your biomarker data to date, is it?

Christopher U. Missling (CEO)

Yeah. So that biomarker data we presented will also we have to also appreciate that there are physicians, patients, advocates group who want to learn why would you why you want to be part of a trial. And this information would give somebody that information to say to be excited about being part of a trial because of the fact that it would define the chances of being beneficial to a Fragile X patient in real world. And that's what this biomarker data would be to get the excitement in the community to also then have a smooth enrollment and trial execution, which is important.

Tom Bishop (Managing Director and Senior Equity Research Analyst)

Okay. Finally, I just wanted to ask. I worry about I never thought we'd see the stock under $5 again, let alone $4. And I'm wondering if this could be concern about the delay in the peer-reviewed article that we've been anticipating for so long and possibly even the lack of any insider buying. I mean, is there something preventing legally the company from doing insider buying? And if not, I would highly encourage it to show some faith here.

Christopher U. Missling (CEO)

Yeah. I appreciate the feedback. We are, of course, not happy about it either. But we have to also be aware that the whole market is in challenging positions. But the fortunate thing for us is that we have really enough cash without any debt. We have a very good team, which can execute. We also hired additional team members. And we're expanding in our execution of trials, which we pointed out also today. And we are really excited and moving forward. So that's the part we can do. And that's what we will do. So it would be futile to comment on the stock market.

Tom Bishop (Managing Director and Senior Equity Research Analyst)

Oh, I mean, is there any chance of some insider buying? Or is there some, have you, is the lawyers telling you you can't do it?

Christopher U. Missling (CEO)

Every insider has the chance to buy it when we have a window. We have to check if we have a window. If we do have a window, this is a choice for every board member or insider to do. Thank you.

Tom Bishop (Managing Director and Senior Equity Research Analyst)

Yeah. I was just wondering if the window is now closed. And that's why we're not seeing.

Christopher U. Missling (CEO)

It's right now closed. But it could open. So we will see.

Tom Bishop (Managing Director and Senior Equity Research Analyst)

All right. Thank you.

Christopher U. Missling (CEO)

Thank you.

Clint Tomlinson (Head of Investor Relations)

Looks like that's all the questions today, Dr. Missling.

Christopher U. Missling (CEO)

Thank you. And in closing, we remain committed to the development of our programs within neurodegenerative, neurodevelopmental, and neuropsychiatric disorders, which could further expand our portfolio of transformative investigational therapies, utilizing our differentiated precision medicine platform to deliver easy access and scalable treatment options for brain disorders. We continue to focus on execution and commercial readiness as we advance our therapeutic pipeline to potentially improve patient lives living with these devastating conditions. Thank you very much.

Clint Tomlinson (Head of Investor Relations)

Great. Thank you, ladies and gentlemen. That concludes today's conference call. We appreciate your participation. You're now welcome to disconnect.