Welcome to the Anavex Life Sciences Fiscal 2019 Second Quarter Financial Results and Corporate Update Conference Call. My name is Vanessa and I will be your operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session.

[Operator Instructions] I will now turn the call over to your host, Clint Tomlinson..

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 the second quarter of fiscal 2019 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 one month. 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 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-Q and 10-K, 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..

Thank you. I’d like to thank everyone for joining us on today’s conference call to review our financial 2019 second quarter financial results and share with you our clinical updates for ANAVEX2-73.

First, we are very pleased to report that 120 patients Phase 2 ANAVEX2-73 Parkinson disease dementia study has achieved 70% of the total patient enrollment target to date. Additionally, the study is expanding internationally and expect to add several sites based on interests from investigators in Australia.

Enrollment for the 450 patients Phase 2b/3 ANAVEX2-73 Alzheimer disease study is also continuing as planned, with over 20% of patients enrolled to date. Regarding our Rett Syndrome program, we are pleased to report that for the United States Phase 2 ANAVEX2-73 Rett Syndrome study to date 40% of the patients have been enrolled.

Further, we received approval from the Australian Human Research Ethics Committee to initiate the Phase 2 AVATAR clinical study in Rett Syndrome patients. This study will enroll approximately 30 patients and will be double blind randomized placebo controlled over a seven-week period with safety and efficacy and endpoints.

The study is actively enrolling patients and the study details are available at clinicaltrials.gov under the identifier number NCT03941444. 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..

Thank you, Christopher, and good afternoon, everyone. During the second quarter of fiscal 2019 we used $4.3 million in cash to fund operations, while operating expenses for the second quarter of fiscal 2019 were $8.1 million compared to $4.7 million for the comparable quarter in fiscal 2018.

The increase in operating expenses is attributable to higher research and development expenses compared to the same period last year. R&D expenses for the quarter were $6.1 million, up from $3.2 million reported in the second quarter of fiscal 2018.

The increase in research and development expenses is a result of expenses incurred in connection with the advancement of clinical studies for ANAVEX2-73. Operating expenses during the quarter also include an aggregate of $1.9 million in non-cash charges. This compares to $1.2 million in non-cash charges in fiscal 2018 second quarter.

Net loss for the quarter was $8 million or $0.17 per share as compared to $4.8 million or $0.11 per share in the comparative quarter of fiscal 2018. Our cash resources at March 31 were $19.5 million.

We believe that this is sufficient cash resources to fund our objective for the next 18 months, given the cash we have on hand and the support we receive from the Australian government and other third parties to fund our ongoing clinical trial. Thank you. And now I’ll turn the call back to Christopher..

Thank you, Sandra. In summary, we’re actively focused on execution of the current clinical studies for ANAVEX2-73 and we are pleased with the pace at which these studies are advancing. We look forward to providing further updates as advancements continue. I would like now to open the call for questions. Operator, please go ahead..

Thank you, sir. We will now begin our question-and-answer session. [Operator Instructions] We have our first question from Ram Selvaraju with H.C. Wainwright..

Hi, thanks very much for taking my questions.

Can you hear me?.

Yes..

So, firstly, I just wanted to ask if you could go over the principle differences and similarities between the two Rett Syndrome studies and enumerate for us what the specific objectives are of each study, so the study that is already running and the one in Australia, the AVATAR study. Thank you..

So, thank you for the question. So the difference is the number of patients, the U.S. study has 15 patients and the AVATAR study has 30 patients. The focus on the U.S. study is safety and PK, and the 30 patients study, the AVATAR study is safety and efficacy..

Will the AVATAR study be specifically considerable by the FDA or once it is completed, assuming the results are encouraging, would you need to recapitulate the AVATAR study in the U.S.

or would you be able to proceed directly to something more advanced, assuming the AVATAR study yields positive results on the efficacy front?.

So it will depend on the data and the signal, the strength of the signal. But we don’t believe that we have to repeat the same study in the U.S., but however, it’s possible that we could increase the study, the AVATAR study internationally and expand to other sites beyond the Australian region or territory..

Okay. And then just two other quick items, both on the clinical development front.

Can you give us an idea of what the cost differential is for the AVATAR study in terms of running in Australia versus any other territory, including the United States as well as the degree to which you are expected to enroll in a timely fashion, given the fact that it is being run in Australia? And in particular, do you think that you would need to potentially expand it to additional territories in order to meet the full 30 patient compliment? Or do you feel confident that the entire study can be fully enrolled, given the Australian sites that you currently envisage being involved? Thanks..

Yes. So the study is supported and is in collaboration as you saw this morning with the Rett Syndrome Association of Australia, RSAA and they have indicated to us that the number of patients in the AVATAR study is fully – able to be fully enrolled in Australia alone.

But it is not uncommon to add additional sites internationally, if you want to accelerate the enrolment. The other question about the financial, the advantage of a study in Australia is that the government of Australia is giving us a cash back payment of around 40 – over 40% for every dollar spent.

And another element which is relevant, the Australian dollar is a more – is a better foreign exchange, it’s less expensive than the U.S. dollar terms. There is another advantage of cost for a U.S. company doing the study in the Australian region from a foreign exchange standpoint as well..

Okay.

And then just the last verification is that you have given pretty regular updates on the enrolment status of all the ongoing trials, I presume for each one of them as you reach complete enrolments, you’re going to provide us with a notification that has indeed happened, right?.

Once we reached complete enrolment, this will be made public. That’s correct..

Okay. Perfect. Thank you very much..

You’re welcome..

Thank you. Our next question comes from Anna Vorobyeva with Roth Capital Partners..

Hi, Christopher. Thank you for the update. Just two quick questions, one surrounding the sigma-1 receptor variant carriers and whether or not they will also be enrolled, is that part of the criteria is to be enrolled or, well the wild-types and the variant carriers be enrolled in both AVATAR and the U.S.

study?.

The clear answer to this question is, in those studies in Rett Syndrome, both the U.S. and the AVATAR study, both will enroll patients with those genetic variance.

And this will allow to prespecify, they’re still having been in this protocol – in each protocol prespecified in regards to their genetic background, each patient has been prespecified with the genetic background nevertheless..

Right.

And will they be balanced between the arms?.

The balance is not something which we do because it will delay the enrolment rates and we do know that there is a average of patients with a variant, which we expect this will balance out by itself in the study.

And even if so, it will not be the case, they are in a statistical analysis way to allocate or correct for like you do in studies for gender imbalances and so that can be also done in that case for an analysis..

Okay. Great. Thank you. And my second question has to do with sort of similar topic around sigma-1 receptor in Alzheimer’s.

Just wondering if you can provide some color around whether or not you’re going to continue to conduct the studies in Alzheimer’s or whether your thesis on sigma-1 has changed in terms of Alzheimer’s, given all the recent readouts about amyloid? Thank you..

Well, the advantage of the sigma-1 activation is the analogy of the cancer immunostimulation, where the oncology field has moved away from targeting and blocking, but rather activating the body to help to reduce the cancer infiltration. And in the analogies we’re doing the same, we are asking the body to help the patient to help himself.

So we’re activating the sigma-1 receptor and we have seen that when you look at the landscape of the asthma alternatives to amyloid beta, which we never doubted, it’s a thought of the pathology, but it’s not the entire story alone.

We have seen that with Anavex 273, we were able to reduce Tau, hyper-phosporylation, but also calcium imbalance and inflammation as well as mitochondrial dysfunction.

And all these elements I just mentioned have been now more and more confirmed that they are co-aggregators – or responsible within the pathology of asthma in addition to the – a better aggregation.

And we believe for that reason that this approach might be having more merits to address the complexity of this disease by not limiting it to only one phenotype like for example, a better aggregation..

Okay. Great. Thank you. Thank you for taking my questions..

And, thank you. We have our next question from Tom Bishop with BI Research..

Hi, Christopher..

Good afternoon..

I had a question on the cash used $4.3 million. And that was that you mentioned the loss of $8.1 million and some of that was non-cash expenses, which gets you to a little over $6 million use of cash. But the company said that you used $4.3 million of cash in the quarter.

So I’m wondering what that difference is?.

They’ve been difference of a accrual of accounts payable..

Okay. Another question is on back of the Rett Syndrome trials, isn’t one of the differences also age, I thought I saw in the – on the clinical site – the FDA site that there was an age limit on the Rett trail on the U.S. have no age limit in Australia, but maybe you can just clarify both..

Yes. The age is actually in both very same, it’s 18 years and older. And as we continue the plan is according to our Rett Syndrome program to also add patients with younger age to the study as we continue..

So in other words, initially of the 30 patients in Australia, you start with 18 years and older and then within the 30, go below 18?.

No. The plan is to start a study separately with younger patients. So 18 and older will stay the AVATAR study and other patients will be enrolled in a separate study, and that’s why we refer to the….

You got another two studies coming up. So yes, you got another Phase 2 study coming up..

That is the plan to move forward into younger patient population. That’s correct..

And, thank you. It seems we have no further questions in queue at this time. I will now turn the call over to Christopher Missling for closing remarks..

Thank you all for participating in today’s conference call. I hope you are as excited as we are about the recent progress at Anavex and our prospects for the remainder of 2019. Should you need any additional information or have any questions, please visit our website at www.anavex.com or call or e-mail us. This concludes our remarks for today.

Operator, please..

Thank you. Thank you, ladies and gentlemen, this concludes our conference call. We thank you for participating. You may now disconnect..