- Anavex is targeting Alzheimer's disease and other neurodegenerative diseases.
- It recently announced positive data from two of its programs.
- The company's cash position needs improvement.
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Anavex Life Sciences (NASDAQ:AVXL) is a larger-sized small-cap with a market cap of just over $1bn and a cash balance of just $47mn as of Dec. 31, 2020. The company is targeting a number of neurodegenerative diseases. Its pipeline looks like this:
Lead asset is ANAVEX 2-73, or blarcamesine, which is an agonist of the intracellular sigma-1 chaperone protein. Specifically, it's a mixed ligand for sigma1/muscarinic receptors. SIGMAR1 is an important protein that influences multiple cellular and physiological pathways by being located at the confluence of the mitochondria and the endoplasmic reticulum. According to reports, blarcamesine has "memory-preserving and neuroprotective effects in mice treated with the muscarinic receptor antagonist scopolamine, with synthetic Aβ oligomer injection, or with the NMDA receptor agonist dizocilpine (Villard et al., 2011). Other studies in the Aβ oligomer injection model suggest that blarcamesine may block tau hyperphosphorylation and protect mitochondria (Jan 2013 conference news; Lahmy et al., 2013; Lahmy et al., 2014)."
Clinical and corporate updates
A number of recent developments have been announced by the company. ANAVEX 2-73 received an orphan and a Fast Track designation from the FDA in Rett Syndrome, which has potential to receive a Pediatric Priority Review Voucher, worth millions of dollars. Rett Syndrome is a genetic disease that affects young females and leads to various neurological impairments and has no known cure and only symptomatic treatments. There are between 6,000 and 9,000 US patients.
Anavex completed a US-based phase 2 trial in Rett Syndrome patients. The trial measured the safety of the drug. Efficacy was analyzed using two measurements, specifically the caregiver-reported Rett Syndrome Behaviour Questionnaire (RSBQ) and the Clinical Global Impressions Scale. Data was as follows:
Treatment with the molecule yielded statistically significant results on both scores. The drug was found to be safe and tolerable. Other Rett Syndrome studies are in progress.
In Parkinson's Disease Dementia or PDD, Anavex ran a phase 2 trial which too, according to the company, produced positive data, as follows:
The most important program for the company has been its Alzheimer's disease program. A summary of the molecule's trial history is given here. In the early years of its trial history, it appears that the molecule and the company faced some controversy in terms of trial design and location of trial, and so on. It also appears that the clinical pathway for the molecule has not been simple. Rather, there has been a circular approach toward the regulatory pathway, with multiple trials in different countries, and so on. Of late, however, the company seems to have shed some of those controversies and begun a more straightforward regulatory approach toward an eventual PDUFA at the FDA. It must be understood, however, that Alzheimer's is really the holy grail of all therapeutics, and therefore, its pathway is strewn with the skeletons of dead molecules and fallen companies.
In Alzheimer's, the latest data I can find is the following:
Really, these are small studies, however, the molecule has done significantly well in both scores. A larger, 450-patient phase 2b/3 study is ongoing. Latest news is that the independent DSMB recommended that the study continues without modification.
As I said earlier, Anavex is a decent-sized company with an uncharacteristically low cash reserve for a company of this size. The company in its presentation, page 5, does indicate that it has sufficient cash to last three years, including non-dilutive funding from the Michael J. Fox Foundation, Rettsyndrome.org, and the Australian government. More color on the cash situation is available below from their latest earnings call:
We reported a net loss of $7.9 million for the quarter or $0.12 per share as compared to $6.6 million, also $0.12 per share, in the comparable quarter of last year. Research and development expenses were $7.9 million for the quarter compared to $6.3 million in the comparable period, while general and administrative expenses remained unchanged over the comparable period. Our clinical trial expenditures continue to increase gradually as enrollment progresses and the trials expand internationally.
We reported an increase in other income to $1.6 million for the quarter as compared to $1.1 million in the comparable period. This increase is related to research and development incentive income in connection with our Australian clinical trial activity. Lastly, as of today, our cash balance is approximately $75 million, which is expected to be sufficient for providing a runway of up to three years. Our cash position at December 31, 2020, was $47.4 million.
AVXL is a highly-followed, highly-debated stock with a very interesting price movement paradigm in the last few months. The stock has appreciated nearly 10-fold in the last one year, and then it has halved from there, and yet it's still trading at a premium to its 52-week lows. There was a time when controversy surrounded the stock, but lately, things seem to have quieted down. The market cap of the company also is quite respectable at present. However, its low cash reserve - despite the company's assurances - presents a problem. This looks like an interesting stock and could be added to one's watchlist for observation and possible investment at a future date. I remain neutral at present.
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This article was written by
Avisol Capital Partners is made up of a team of medical experts, finance professionals and techies, all of whom invest their own money in the picks they share. They aim to help readers find the middle ground between value and growth investing, as they demystify the biopharma industry.They lead the investing group Total Pharma Tracker where they offer a monthly updated catalyst database, an investability scoring system for quick reference ideas, and direct access in chat for dialogue and questions. Learn more.
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