Anavex Life Sciences Corp

NASDAQ:AVXL

Q2-2025 Earnings Call

[Clint Tomlinson, executive]

Good morning, everyone, and welcome to the Anavex Life Sciences Fiscal 2025 Second Quarter Conference Call. My name is Clint Tomlinson, and I'll be your host for today's call. [Operator Instructions] Please note, this conference is being recorded and 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 the 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.

And with that, I would like to turn the call over to Dr. Missling.

[Christopher Missling, executive]

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.

Our portfolio of noninvasive targeted upstream precision compounds continues to advance with special focus on Alzheimer's disease and schizophrenia. We also continue to receive feedback from neurologists, preferring convenient, orally available and clinically meaningful Alzheimer's disease treatment options, which can be assessed without logistical restrictions. In April, we were pleased to present open-label extension data of blarcamesine for Alzheimer's disease at the ADPD 2025 conference. The data confirmed continued clinically meaningful benefit for early Alzheimer's disease patients.

Once-daily oral blarcamesine demonstrated over 3 years of continuous treatment significant amelioration on clinical decline and shown continued clinically meaningful benefit for early Alzheimer's disease patients. Blarcamesine-treated patients continue to accrue benefit grew up to 4 years as measured by the clinical endpoints ADAS-Cog13 and ADCS-ADL. Last month, Marwan Sabbagh, Professor of Neurology at Barrow Neurological Institute and Chairman of Anavex Life Sciences Advisory Board, gave an oral presentation titled Oral Blarcamesine Novel Mechanism for Alzheimer's Disease: Autophagy Restoration through Upstream SIGMAR1 Activation, Clinical Efficacy Phase IIb/III Trial at the 9th International Conference on Alzheimer's Disease and Related Disorders in the Middle East.

The meeting convened a wide range of health care professionals and community advocates from the Middle East and North Africa, U.S.A., Europe and other countries with an interest in epidemiology, clinical research, medicine, basic science and health care advocacy related to Alzheimer's disease and related disorders in the region, specifically with an emphasis on region-specific health care delivery. With respect to schizophrenia, earlier this month, we announced the successful completion of enrollment in our Phase II clinical study of ANAVEX 3-71 for the treatment of schizophrenia. The study has enrolled a total of 71 participants with 16 participants in Part A and 55 participants in Part B. Part A of the study, which investigated multiple ascending doses has been completed with encouraging preliminary safety and electroencephalography, EEG biomarker results previously reported. Part B, which includes more participants and with a longer treatment duration, will provide more comprehensive clinical and biomarker data on the efficacy and safety of ANAVEX 3-71 in individuals with schizophrenia. We expect to report top line data from the study in the second half of this year.

Since our last update, we also expanded our scientific advisory board. In April, we announced the appointment of Professor Dr. Audrey Gabelle, a specialist of predictive, personalized medicine and digital health care in Alzheimer's disease and related disorders to the Anavex Scientific Advisory Board. Dr. Gabelle is a Professor of Neurology, neurologist and doctor neurosciences at the Memory Resources Research Center. The Rare and Early Dementia Reference Center and the European Neurodegenerative Excellence Center of Montpellier University, France. Dr. Gabelle is also a researcher at the Montpellier Institute of Neurosciences and member of the European Alzheimer's disease Consortium.

And 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, executive]

Thank you, Christopher. Good morning to everyone. I'm pleased to share with you today our second quarter financial results for our 2025 fiscal year. Our cash position on March 31 was $115.8 million, and we had no debt. During the quarter, we utilized cash and cash equivalents of $5.9 million in operating activities after taking into account changes in noncash working capital accounts. As of quarter end, we anticipate at the current cash utilization rate and ranges, a runway of approximately 4 years.

During our most recent quarter, general and administrative expenses were $2.6 million as compared to $2.9 million for the comparable quarter of last year. Our research and development expenses for the quarter were $9.9 million as compared to $9.7 million for the comparable quarter of last year. And lastly, we reported a net loss of $11.2 million for the quarter or $0.13 per share. Thank you.

And now I will turn the call back over to Christopher.

[Christopher Missling, executive]

Thank you, Sandra. In summary, we are focused on continuing to advance our precision medicine compounds with a special focus on Alzheimer's and schizophrenia. We are excited to be potentially making a difference for individuals suffering from these diseases by presenting a scalable treatment alternatives alongside the ease of oral administration.

I would now like to turn the call back to Clint for Q&A.

[Operator]

[Operator Instructions] Our first question is coming from Soumit Roy from Jones Research.

[Soumit Roy, analyst]

Congrats on all the progress. A quick question on the Alzheimer's front. What can you tell us about the time line around when you expect to hear back from EMA and if you already had some mid-cycle review comments received from the European agency.

[Christopher Missling, executive]

So we expect -- thank you for the question. So we expect to have from what we -- compared to other regulatory review cycles that it would probably take about 12 months. So we submitted in November last year, and it was accepted the submission in December last year. So it's probably prudent to estimate by the end of this year or early next quarter that we would get a feedback. And I also want to point out that we will not be able to give interim updates but we will report the decision from the EMA in its final form.

[Soumit Roy, analyst]

Got it. That's really helpful. Second one is for 2025, what do you see as the key inflection point? Is it schizophrenia data that's coming up in the second half. If you can give us a little bit more details on the trial, the patient characteristics and what will be the bar to beat in these patients?

[Christopher Missling, executive]

So thank you for the question. I think the Phase II study in schizophrenia is the first efficacy study of 3-71. So it's a safety study preliminarily. And we also are focused in the study on the biomarker effect. So we would be very pleased to see a biomarker effect of the drug in these patients, which are very hard to treat patients. And there's a lot of unmet need out there still today, especially with the negative symptoms. So that will be the focus on the trial for the time being. We also included some clinical measures, but the focus is really on the safety for the longer duration as well as biomarker effect of the drug in the brain of patients by using EEG/ERP which has been now validated as a potential biomarker for schizophrenia in these patients.

[Clint Tomlinson, executive]

Our next call comes from Tom Bishop from BI Research.

[Tom Bishop, analyst]

All right. Can you hear me now?

[Clint Tomlinson, executive]

Yes, that's perfect.

[Tom Bishop, analyst]

All right. Sticking with the schizophrenia trial. You mentioned the longer duration, but I didn't quite understand what that meant.

[Christopher Missling, executive]

So the schizophrenia trial is separate in 2 parts. Part A was a short period of single ascending doses and Part B is a longer duration of 28 days. So it's almost a month. And that's what I was referring to, that the Part B, which includes 55 patients randomized to placebo or active arm 1:1 will give us a probably more solid picture of the drug effect in these patients.

[Tom Bishop, analyst]

Well, I kind of meant how many weeks and months.

[Christopher Missling, executive]

It's 4 weeks, 28 days.

[Tom Bishop, analyst]

Okay. And can you go into a little more detail about what the company is doing pre possible launch of blarcamesine in Europe.

[Christopher Missling, executive]

Right. So we have initiated in JPMorgan multiple discussions with potential partners in discussing, if so the drug is available to patients in Europe to move forward quickly with the distribution with the -- providing access to the drug in Europe. We also have discussions with CROs who also provide us as an alternative confidence in the ability to have sales force set up to move forward also in an independent way. This would be more advisable from a value creation point of view. So we like to maximize shareholder value. And the decision is, whatever maximizes the shareholder value will be a decision how to progress. But we are on these fronts active on being ready so we need to be ready.

[Tom Bishop, analyst]

Okay. That's helpful. So basically, the choice is to partner with a major or somebody active in Europe or to go with a European-based clinical sales team.

[Christopher Missling, executive]

These are the options. That's correct. If so, the drug was approved.

[Tom Bishop, analyst]

Okay. Now what's being used in the schizophrenia trial, that's A 3-71. So is that a -- I mean, that's different from blarcamesine, right?

[Christopher Missling, executive]

That's correct. So ANAVEX 3-71 is a completely different molecule. It comes from a different approach and has different affinities to Sigma One receptor. So that is completely independent on of blarcamesine, which is for ANAVEX 2-73, and it's the drug, which is called blarcamesine. So there are 2 different drugs.

[Tom Bishop, analyst]

Okay. That's right. And what are the other countries that might piggyback on a European approval? And then secondly, how are you doing with the FDA, Canada or Australia? Could you cover that?

[Christopher Missling, executive]

Yes. Very good question. So the other countries who are piggybacking on approvals in regions like Europe, EMA would be, I think the entire rest of the world, South America. This would be Africa, this would be Middle East. This would be some countries, I think, also in the Asian region. So this would be a large number of population as well. Regarding U.K. and Canada, we also are planning to proceed in Australia. We're planning to proceed with starting the dialogue with the respective regulatory bodies in parallel this year.

[Tom Bishop, analyst]

So -- but are you waiting for word from Europe first or -- because I know the FDA has been kind of -- possible to have a discussion with them.

[Christopher Missling, executive]

That's also the plan, correct. So we are planning to discuss with these authorities in parallel. So this is in parallel, I would say, is the best way to describe it.

[Tom Bishop, analyst]

But we're not waiting for the results for Europe first or are we?

[Christopher Missling, executive]

We could wait, but it's probably also possible to work in parallel to prepare the discussion. So that does not mean it's a submission, but to initiate the discussions and to get the feedback on the respective authorities. And that's what we did with Europe as well. Remember, we had a first initial discussion with the European authorities and led to the feedback to submit. And we...

[Tom Bishop, analyst]

Are any of those planned, though, yes, they're still working on that.

[Christopher Missling, executive]

Pardon me.

[Tom Bishop, analyst]

Are any of those planned yet or we plan to meet with Canada next month or anything like that?

[Christopher Missling, executive]

We will update once we are -- when we get feedback. It's not -- it's too early to provide details on the timing of those discussions. But once we have relevant outcome of this and meaningful outcome. We will update you.

[Tom Bishop, analyst]

Okay. And if Europe gave, say, an approval in November, just to pick a number, how long would it take for the company to see revenue? In other words, the launch process.

[Christopher Missling, executive]

Yes. So in Europe, it's per -- the approval is per all the entire European Union and the sales is done per country. Certain countries you're allowed to market the next day. In other countries, you need to first reach an agreement when to proceed on the timing of the first sale. So it varies. And so some countries, you can start right away.

[Tom Bishop, analyst]

But you'd be in a position, I mean, to have revenue in the March quarter, are you saying or it takes 6 months to get going?

[Christopher Missling, executive]

Yes, I cannot foresee right now there might be some logistical questions, but if we are getting close to this, we will be very likely prepared. That's our working assumption.

[Tom Bishop, analyst]

And my last question is, where is the drug being manufactured and do you have a launch inventory?

[Christopher Missling, executive]

We have a large inventory for a launch. That's correct. And the drug is manufactured by the largest U.S. manufacturer.

[Tom Bishop, analyst]

And is there any tariff impact? It's crazy.

[Christopher Missling, executive]

Right. We don't have any visibility on that right now.

[Clint Tomlinson, executive]

There's another question here, Dr. Missling. What would be the advantage of oral blarcamesine for patients.

[Christopher Missling, executive]

I think the advantage for the patient for blarcamesine would be that they're being helped timely without delays and constraints by cumbersome or limiting inconvenient complex agnostic procedures, and it would allow for quicker time-sensitive access with continued focus on the individual patient. When we compare this to the antibodies, it takes up to sometimes 6 to 9 months once they have been diagnosed and been seen by the doctor before they even get to the chance of getting the drug. And by then, they might move into a different bracket for a pathological severity point of view, it might not be even any more eligible to that drug. In our case, a patient could be visited by a physician and the patient would be identified as Alzheimer's patient right away, and the physician would prescribe him blarcamesine potentially, and he would leave with that prescription for 3 months and been told to come back 3 months later. So that's the difference, possibly.

[Clint Tomlinson, executive]

And then there was a follow-up. Is there any difference -- I know you kind of touched on it, but the similar advantages to family members or physicians.

[Christopher Missling, executive]

Yes. So the advantage for the family would be there's less caregiver stress and likely less financial strain. There is no need to arrange for constant transportation to hospital to measure MRI or better, PET scan. And also, there's no impact because of that on the family members' own work schedule, which is not to be underestimated. Some people cannot just take off work to bring grandmother or grandfather to the hospital every 3 weeks or every 2 weeks. And that's a big problem. Regarding the physicians, the advantage for the physicians would be that there's no logistical barrier for treatment and no need to arrange for complex invasive tax scans or lumber punter, which is spinal taps and -- or repeated MRIs.

And so basically, everybody has less logistical challenges to overcome, and the patient is helped right away. And when you remember the outcome of the long-term extension study presented at AD/PD at the conference we demonstrated that if you delay the treatment of blarcamesine, you delay also the long-term benefit. So you basically prevent the patient to stay on a better quality of life level, which has implications for benefit for dealing with his own life and family interaction. And if you delay this, you basically are preventing this to happen. So it's important to give the drug to the patients once identified as Alzheimer's patient as soon as possible.

[Clint Tomlinson, executive]

Okay. Thank you very much. I think that's the end of the questions here. I'll turn it back over to you to close.

[Christopher Missling, executive]

Thank you. And in closing, we continue to focus on execution and commercial readiness as we advance our therapeutic pipeline to potentially improve patients' lives, living with these devastating conditions. Thank you very much.

[Clint Tomlinson, executive]

Thank you, ladies and gentlemen. That will conclude today's conference call. We appreciate your participation, and you may now disconnect.