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Edited Transcript of AVXL earnings conference call or presentation 7-Aug-19 8:30pm GMT

Q3 2019 Anavex Life Sciences Corp Earnings Call

HOBOKEN Oct 11, 2019 (Thomson StreetEvents) -- Edited Transcript of Anavex Life Sciences Corp earnings conference call or presentation Wednesday, August 7, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Christopher U. Missling

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

* Clint Tomlinson

Anavex Life Sciences Corp. - Executive

* Sandra Boenisch

Anavex Life Sciences Corp. - Principal Financial Officer & Treasurer

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Conference Call Participants

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* Anna Vorobyeva

Roth Capital Partners, LLC, Research Division - Analyst

* Clayton Berger;Dawson James Securities, Inc.;Biotech Analyst

* Edward D. Marks

H.C. Wainwright & Co, LLC, Research Division - Research Analyst

* Tom Bishop

BI Research

* Yun Zhong

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

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Presentation

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Operator [1]

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Welcome to the Anavex Life Sciences Fiscal 2019 Third 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.

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

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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 third quarter of fiscal 2019 and provide a clinical study update. The 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' website, 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 development or commercialization of potential products, uncertainty in the results of clinical trials for 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.

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

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Thank you. I'd like to thank everyone for joining us on today's conference call to review our fiscal 2019 third quarter financial results and share with you our clinical update for ANAVEX 2-73 or also called blarcamesine, the nonproprietary name adopted by the United States Adopted Names Council, USAN.

First, we are very pleased to report that enrollment for the U.S. Phase II Rett syndrome study and the AVATAR Rett Syndrome study of blarcamesine are advancing with high priority. The independent Data Safety Monitoring Board for the U.S. Phase II Rett syndrome study of blarcamesine completed its recent pre-planned review of the preliminary Phase II efficacy and safety data. Upon review of the most recent data, the DSMB made the recommendation to continue the study without modification, which is very good news.

We are also very pleased that the Phase II blarcamesine Parkinson's disease, Dementia study is proceeding well. And we are getting close to achieving full enrollment. Further, at the request of investigators, in order to offer all participants of the clinical study access to blarcamesine, a voluntary extension of this study is in preparation, including microbiome assessment. Enrollment for the Phase II/b Stage 3 blarcamesine Alzheimer's disease study is also continuing at its planned pace with over 15 active recruiting clinical centers to date.

Furthermore, at the request of investigators in order to offer all participants of the clinical study access to blarcamesine, a voluntary extension of this study is planned.

Lastly, a recent third-party peer-reviewed scientific publication titled, "Neuronal Sigma-1 Receptors: Signaling Functions and Protective Roles in Neurodegenerative Diseases," details the mechanism of action of sigma-1 receptors, S1R, and references ANAVEX 2-73 among the relevant sigma-1 receptor ligands. The paper summarizes, "In conclusion, sigma-1 receptor is incredibly versatile in its ability to foster neuronal homeostasis in the context of several neurodegenerative disorders".

We believe that this comment is a confirmation that Anavex is on the right track pursuing this very promising therapeutic approach for targeting patients with devastating rare diseases as well as the largest unmet medical need of aging population, which is Alzheimer's disease and Parkinson's disease.

And now I would like to direct the call to Sandra Boenisch, Principal Financial Officer of Anavex, for a brief financial summary of the recent 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. During the third quarter of fiscal 2019, operating expenses were $7.1 million, compared to $4.6 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. Research and development expenses for the quarter were $5.8 million, up from the $3.0 million reported in the third 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 blarcamesine. The net loss for the quarter was $7.1 million or $0.14 per share as compared to $2.8 million or $0.06 per share in the comparative quarter of fiscal 2018.

Our cash resources at June 30, 2019, were $21.2 million. Subsequent to June 30, we received $1.6 million in research and development incentive income in cash from the Australian authorities. We believe that we have sufficient cash, resources and support from third parties to fund our objectives and our ongoing clinical trials for -- in excess of 2 years. With that, I thank you, and I will turn the call back to Christopher.

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

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Thank you, Sandra. In summary, we continue to be actively focused on execution of the ongoing clinical studies for blarcamesine, and we are very 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.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Yun Zhong from Janney Capital.

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Yun Zhong, Janney Montgomery Scott LLC, Research Division - Equity Research Analyst & Director of Biotechnology Research [2]

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So the first question is, was there any specific reason that triggered the DSMB data review? For example, a certain percentage of patient enrollment.

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

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Yes, there was a cohort, which we had included in an intensive PK, where the PK was measured very often, regularly, and the patient had to stay overnight. And that was accomplished, and that triggered that review. And in that review was efficacy measures of the scores as well as safety measures.

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Yun Zhong, Janney Montgomery Scott LLC, Research Division - Equity Research Analyst & Director of Biotechnology Research [4]

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Okay. To confirm, so the review was done only in that intensive PK cohort or in all patients enrolled so far in the study?

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

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Which was all enrolled patients, it was equivalent. It was the first enrolled patients of the study.

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Yun Zhong, Janney Montgomery Scott LLC, Research Division - Equity Research Analyst & Director of Biotechnology Research [6]

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Okay. And then the next question is, well, looking at the 2 Phase II studies in Rett syndrome, the design seems to be almost identical and -- but currently, the U.S. study is well ahead above the Australian study. So I wonder, will the outcome from the U.S. study have any impact on your decision, whether to continue or discontinue the Australian study? And if you choose to continue both studies through completion, do you have an option to maybe combine the 2 study to do a -- maybe, a more comprehensive analysis?

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

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Yes, that's a good question. So the U.S. study had an initial intensive PK part, which was just mentioned. And ultimately, these 2 studies are looking very similar, and they are very similar for that reason. And the -- there will be certainly no consequence of one or the other to change any -- the study. But after the DSMB brought a positive review, there's now also no reason to change anything in the AVATAR study. So that will proceed as it's intended.

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Yun Zhong, Janney Montgomery Scott LLC, Research Division - Equity Research Analyst & Director of Biotechnology Research [8]

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Okay. And last question, can you remind us if you are getting any external funding support for the AVATAR study?

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [9]

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The AVATAR study is funded by Anavex, and we are getting funding from the Australian government.

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Operator [10]

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The next question comes from Raghuram Selvaraju from H.C. Wainright.

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Edward D. Marks, H.C. Wainwright & Co, LLC, Research Division - Research Analyst [11]

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This is Edward Marks on for Ram. I was just looking at the Rett syndrome studies. I'm wondering if you could provide a little more granularity on the percentage of patients that have completed so far? And how many are moving into that open-label extension?

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

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So we have reported in the last previous quarter, that 40% have been already enrolled. And that number has only now increased. We will make not a specific announcement, what this is today, because we will then announce when the enrollment will be completed. And the first patient was put or volunteered to go into the extension study, which is offered. An extension study consists of an open-label 12-week continuation to stay on study drug, and we expect that this extension study will be extended further, as we also have done it in our previous clinical studies. So we expect that to be not time limited, the extension study.

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Edward D. Marks, H.C. Wainwright & Co, LLC, Research Division - Research Analyst [13]

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Okay. And when might data from the double-blinded portion be reported? And then when we look at some of the efficacy parameters being assessed, which do you think are most likely to show the change over a 7-week period? And just wondering if these are also being assessed in the AVATAR trial?

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

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They are exactly the same in the AVATAR trial. The endpoints are exactly the same both secondary as well as the primary efficacy as well as biomarker measures. And we have seen a very significant effect in animal models on the motor impairment, and we've seen a very a significant effect on the drug in the cognition and in the behavioral part of the Phase IIs Alzheimer's study. So we have the expectation that if the animal study data is also translating into the human data, then we should see in all those measures a signal in the clinical study in Rett syndrome patients.

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Edward D. Marks, H.C. Wainwright & Co, LLC, Research Division - Research Analyst [15]

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Moving on to the Parkinson's dementia study. I was hoping you could provide a little more information on what the enrollment status might be for that trial as well? And then after it's fully enrolled, when might the top line data become available?

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

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The expectation is that we are -- that we have the study completed very soon. We're almost there. And it's a great accomplishment by the team. And we know that the study has a 14-week treatment duration. So if we are able to complete the study, that will then needed to be added to this 14-week in order then to have the data locked and then subsequently, becoming possibly available in a press release, the top line data.

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Edward D. Marks, H.C. Wainwright & Co, LLC, Research Division - Research Analyst [17]

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Excellent. And then my final question, just as a follow-up to a previous question that was asked. Just wondering if there are going to be any more DSMB interim reviews? Or whether this was the single one that was expected?

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [18]

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In the Rett study?

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Edward D. Marks, H.C. Wainwright & Co, LLC, Research Division - Research Analyst [19]

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Yes.

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [20]

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The DSMB has an independent board. DSMB can make -- at any junction, at any point, make a request for reviewing data. So we will not know that. So that is the correct answer to this question.

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Operator [21]

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We have a question from Jason Kolbert from Dawson James.

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Clayton Berger;Dawson James Securities, Inc.;Biotech Analyst, [22]

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Yes. This is Clayton Berger on behalf of Jason Kolbert. I just had a quick question about the AD study and if you think the primary completion date is still set to be around December 2020. And then based on the results, do you believe that there's a need to conduct another second Phase III trial?

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [23]

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I could not answer -- I couldn't hear the question very well. Do you mind repeating it? It was hard to hear.

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Clayton Berger;Dawson James Securities, Inc.;Biotech Analyst, [24]

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Yes, sorry about that. So for the Alzheimer study, do you think the primary completion date still stands at December of 2020? And then do you believe that you'll need to conduct a second Phase III trial for FDA approval on the Alzheimer's study?

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [25]

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So the expected date is provided on ClinicalTrials.gov. And I think, that's what you're referring to. That is only an estimate, which we don't provide or confirm at this point in time but obviously, we want to finish a study as soon as possible, as I mentioned today. In all our studies, they all are with the aim of -- for -- done, undertaken to finish it as soon as possible. But the question is, so we will provide an update on the timing when we have more granularity on the overall continuous enrollment, which is very good so far. So I would basically not provide a comment on the timing of the end of that study yet.

Regarding the question of -- if a second study is needed, that's also a question I would defer to once we are able to share the data with the FDA, with the agency, and that determination is done by the agency. So it's not something which we can anticipate at this point.

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Operator [26]

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We have Yun Zhong from Janney Capital on line with a question.

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Yun Zhong, Janney Montgomery Scott LLC, Research Division - Equity Research Analyst & Director of Biotechnology Research [27]

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Yes. So the question is on microbiota and very interesting data presented from the Alzheimer's patient population. And now that you're going to look at Parkinson's patient population, and I'm just curious, do you know the level of similarity between Alzheimer's disease and Parkinson's disease in terms of the microbiota and their reaction to potential efficacious treatment?

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [28]

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Yes, it is a good question. So we presented data in July, last month at AAIC, that the ANAVEX 2-73, blarcamesine was associated with a higher level of gut microbiota diversity in certain microbiota families, which is a good thing. There is a knowledge out there that -- in several studies, that healthy volunteers have a higher diversity of gut microbiota in the gut than Alzheimer patients as well as Parkinson patients. So that led us to the idea of now including that intelligence, that knowledge about this is a another piece of information to check on the effect of ANAVEX 2-73, or blarcamesine, that when we switch the patients from the PDD study, from the Parkinson's disease dementia study, into the open-label extension that we can then monitor the before and after of the gut microbiota of the patients who are on the placebo arm and then getting the drug as well as on the patients who are already on the drug and continues to stay on the drug. And that allows for a differential analysis of the potential effect of the compound of the drug on the gut microbiota.

And since in Parkinson, this applies as well as in Alzheimer. In the Alzheimer study will take longer until it's finished because it's longer. It's 48-week. And the Parkinson Disease Dementia study is 14 weeks. It's shorter. We can make this -- use of this new information of a biomarker information in the Parkinson disease dementia study in -- for the first time, sooner than in the Alzheimer study. We might consider doing that also then if it's appropriate for the Alzheimer study at a later stage.

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Operator [29]

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We received a question from Anna Vorobyeva from Roth Capital.

We will move to the next question. It comes from Tom Bishop from BI Research.

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Tom Bishop, BI Research [30]

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On that microbiota data thing that we were just talking about, is this basically the idea that A 2-73 would itself might improve the bacteria concentration? Or that down the road, you might consider using, say, fecal transplants or something to increase those bacteria that seem to be favorable?

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [31]

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So from the data we have seen, we believe, and we have to confirm that because the clinical study was measuring only at one point in time the gut microbiota levels that the compound that ANAVEX 2-73, blarcamesine, is able to correlate with an improvement, and those patients also had a higher diversity in the gut. So we will find out exactly that, if that is triggered by the drug. And the expectation is that it is. And we think that the concept of homeostasis might be not limited to an effect in the brain or in the central nervous system of ANAVEX 2-73, or blarcamesine, but it might also trickle down into the entire body's homeostasis beneficial system. So that would be then the signal of a better gut microbiota diversity, which is preferred over lower level of diversity.

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Tom Bishop, BI Research [32]

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Well, it'll be interesting to see how that comes out. So on the Rett study, I just wanted to be clear, the 6 that were analyzed by the DSMB for safety and efficacy. That was part of the 15 or a separate a cohort that preceded them, the 15?

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [33]

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That was a cohort, which will be -- which was part of it and will be -- will proceed at the 15 patients.

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Tom Bishop, BI Research [34]

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So you're analyzing actually 21 now? Or...

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [35]

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That's exactly right. The total number in the Rett syndrome study is 15 plus 6, is 21.

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Tom Bishop, BI Research [36]

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Okay. Is -- there was one part of the press release that I had a little trouble with, and now, I don't see it. Okay, let me ask something else. This name for blarcamesine, you said this was determined by an unrelated entity? I don't understand that. The company doesn't get to pick the name of their drug?

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [37]

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Yes, that is actually right. It's not a commercial name, it's the generic name. So that is like donepezil or whatever name...

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Tom Bishop, BI Research [38]

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Because you will get to pick the name of your drug down the road?

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [39]

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That's right. And the name is consist of a neutral front part, which is the first part, and the end part is demonstrating a sigma-1 receptor agonist. So the mesine part is depicting, it's consistent with sigma-1 receptor and the blarca is an independent neutral, what was picked by the Adopted Names Council of the U.S. That's how this name was picked. When it comes to the naming of the commercial name, this will be in our court to find a name, and we are working with specialists on deciding what names to pick for commercial name.

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Operator [40]

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We received a question from Anna Vorobyeva from Roth Capital.

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Anna Vorobyeva, Roth Capital Partners, LLC, Research Division - Analyst [41]

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Okay, great. I have a two-fold question on Rett Syndrome. Question number one is really related to whether or not we might see any data come out from the extension patients? Do you think that'll be part of the release for the U.S. study, at least? And maybe we can get through that first.

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [42]

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What was the question? Sorry, I couldn't hear exactly the first word?

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Anna Vorobyeva, Roth Capital Partners, LLC, Research Division - Analyst [43]

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Sure. We -- I guess, we want to know whether or not any of the U.S. Rett study, syndrome patients, will we get any data from that when the Rett syndrome study reads out year-end, at least for the U.S. one?

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [44]

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Yes. So we've pointed out that we are looking forward to providing updates on the studies by year-end, and that could be a readout.

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Anna Vorobyeva, Roth Capital Partners, LLC, Research Division - Analyst [45]

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Okay. And my other question really also surrounds the Rett syndrome study. And here, I just wanted to know whether or not some of the data will be sort of really, really granular in terms of understanding efficacy and safety for the various age groups.

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [46]

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Sorry, what was exactly the question on that, please?

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Anna Vorobyeva, Roth Capital Partners, LLC, Research Division - Analyst [47]

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Whether or not the data, when it does read out for the Rett syndrome study, in terms of how granular will it be? Will we see the data come out and be evaluated by age? So thinking about each segment. I know that the patients are -- there's a really wide range of age in terms of the enrollment, so I wanted to know whether or not the data will be segmented once it does read out.

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [48]

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We don't know yet how this will be provided, but we know that from the practicality, the patients are 18 and older. And I think we are in a range from 18 to 45 years old. But the practicality is -- most of the patients are closer to the 18-year age group range. So it will actually not that -- will not likely be that diverse.

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Operator [49]

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I would like to turn the call back to Dr. Missling.

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Christopher U. Missling, Anavex Life Sciences Corp. - Chairman, President, CEO & Secretary [50]

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Thank you all for participating in today's conference call. I hope that based on the described developments today, you're looking forward to the rest of 2019 as much as we are.

Should you need additional information or have any questions, please visit our website, anavex.com, or call or e-mail us.

This concludes our remarks for today. Operator, please.

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Operator [51]

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Ladies and gentlemen, this concludes our call today. You may now disconnect.