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This is great news! Sure beats the last month or so when the stock price kept dropping every day.
I agree. There’s no reason to do an interim look and risk the integrity of the blinded trial because a handful of investors want to see this at $100 tomorrow so that they can cash out.
What’s in the best interest of the company? Steady as it goes…
There was a bombing in Kabul.
Not every price drop is orchestrated.
SAVA's diagnostic blood test has the potential to make billions of dollars. There are probably competitors but the point is that if Anavex could get into the diagnostic and preventative markets simultaneously it would be excellent horizontal integration.
It would also take a competing drug off the market. At this point it's a foot race to the FDA and AVXL gave up some of its lead to focus on Rett, PDD, etc.
An acquisition like this would strengthen AVXL's moat. But for now it's too expensive with AVXL's market cap undervalued relative to its peers.
Do you own SAVA? I don't know much about it, never bothered to research it. At current prices it's tempting, but there's still an overhanging element of risk that tilts the ROI profile in favor of AVXL, and when you take the current data, timeline, etc. into account AVXL seems like even more of a value pick for long-term investors.
AVXL is off everyone's radar. In time I'd be surprised if we didn't get a similar smear job as we inch closer to FDA approval. SAVA hit a FDA milestone. What will happen when AVXL hits them?
I simply cannot buy the claims that a company would go so far as to manipulate data. That's criminal-level activity and to do so in such a public manner is rare. Could SAVA be the next big fraudulent biotech? It has all the ingredients. Wall Street darling. Hot shot CEO. Massive TAM. Maybe it's the next Theranos but I doubt it, especially after the FDA recently showed that it'll grant approval in the Alzheimer's space with spurious data.
Today's price action is interesting. First we see a panic set in that ripples through every stock that's associated with Alzheimer's. Now we're seeing value investors swooping in to redeem their 20% off coupons.
I still maintain AVXL should merge with SAVA if their drugs complement each other. Even if they don't, there is real potential in its blood test. Alzheimer's diagnostics is going to be a huge market too, especially when coupled with a preventative treatment.
Here's the thing. As much as I want to see AVXL succeed, I want it to succeed on its own merit -- not because SAVA failed.
And for what it's worth, I think this SAVA news is a glorified hit piece. AVXL has been subjected to them for years. What makes their hit pieces valid and the ones about AVXL invalid? Seems like a lot of confirmation bias going on there for AVXL investors reveling in SAVA's red day today.
This could just as easily happen to us in the future. Anyone can file a citizens petition. And if SAVA were as bad as advertised, it's highly unlikely the FDA would have granted an SPA. The timing seems suspicious.
No position in SAVA but I have a feeling this is a non-event in its long-term price chart, and a potential buying opportunity for those who do believe in its drug platform.
AVXL is still probably the better value though.
I hope this isn't what they're discussing right now. Way too premature. The trials aren't even over and the FDA hasn't even started the review process. This is what is called putting the cart before the horse, counting your money while you're sitting at the table....
In time these will all be important factors to consider. Right now though their attention ought to be focused on getting the drug into the FDA's hands.
I've got my shares tucked safely away underneath my bed. The funds can have some of them at $110/share.
You are correct that their goal is to acquire the stock for as cheap as possible, because funds are measured by their performance-based returns. It doesn't take a lot of money or effort to influence the stock price for a company like Anavex. I won't get into the machinations but there's plenty of interviews with former hedge fund analysts that provide a how-to primer.
As Anavex continues to mint new millionaires, previously strong hands will become weak as their goal shifts from profit making to profit protection. We're seeing this play out a bit already right now and funds are able to capitalize.
The good news is that Anavex is still majority owned by people like you and me. If somehow it remains this way when the FDA announces its decision for Alzheimer's, I'd expect a massive transfer of wealth as funds swoop in and take this to 75%-85% institutionally owned.
fine with me. they can pump it all the way to $100 for all I care.
It's normal consolidation. Look at any other biotech and you'll see a similar pattern. Why would traders hold this stock when there isn't any immediate news? We're still a bit away from Rett results being made public, and there are lots of other news-driven stocks for people to trade.
Most of the people who are in this for the long-term aren't going to average up -- they're trying to protect massive profits. And pretty much anyone who hasn't bought in by now is probably waiting for the risk to be diminished -- they've been on the sidelines for a while.
What's happening with the pullback is that people are selling their shares and others are buying them. Do you think those buying stock at $17 have any interest in selling at $20? Some might but a lot of them will look for $25-$30. When it gets there it may pull back a bit and new buyers will come who will hold until it gets to $40 or $45 on the next wave of good news, etc...
It's consolidation and it's nothing to worry about. It's not as if bad news is leaking that A273 is failing its blinded trials...
“ Until the FDA approves the drug, it is categorically and unconditionally unsafe and ineffective. Period. ”
I hope this is sarcasm. Because this isn’t Schrödinger’s cat where as long as we don’t hear from the FDA…A drug can be safe and effective and delivering positive effects while still being unrecognized as effective or safe by the FDA.
But you already knew that, because sarcasm.
Nice post and thanks for your contributions here.
Ponzi scheme or not, long term the buy and hold strategy trumps trying to trade the market wave by wave. The absolute worst thing that most retirees should do is trade in and out of the market. Buffett is proof of this strategy.
Hopefully most retirees have reduced their exposure well before this downturn so the impact is minimal. The market is due for a correction but It’ll keep roaring back immediately after — it always will because where else are people going to put their money? Gold has its own set of issues, bitcoin is too volatile and nobody wants to own rental properties either.
You say that very few people make money in the market. I’d venture that anyone who invested in the S&P, or Berkshire Hathaway, or Coca Cola 30 years ago is doing just fine through a conservative buy, hold and reinvest dividends strategy.
I respect your trading skills but I don’t think any blip in the market will last because, again, what is the alternative? Cash is an asset but certainly not a good one during an inflationary period or worse, during stagflation.
The prevention trial should start before Alzheimer’s trial ends. That’s going to require a lot of money if they’re looking to show blarcamasine may prevent multiple cns disorders.
I do not think you understood what I was saying. I understand that right now 75 million shares is the current O/S. My point is that the fully diluted number of shares is greater now than in the past. It's possible for AVXL to now go over 100 million shares. That wasn't possible a few years ago.
Personally, the fewer shares the better but I understand the strategy for preventing takeovers. My best guess is that we'll be slightly over 85M shares when Avavex gets its first approval. And right at 100 million when Anavex gets or doesn't get Alzheimer's approval.
A blockbuster drug and a 5+ year runway would give Anavex all sorts of leverage.
Thanks!
Thank you!
I love the optimism, hopefully you are correct. I always try to leave allowance for doubt -- the evidence is certainly pointing in the right direction, but there's also a three-way footrace and AVXL has some competition for the first time since AXON years ago. It's not enough to keep me awake at night but it's enough to keep me from going "all in" with my discretionary funds...
Thanks for all your insight, and for explaining everything in a way that's easy for non-science types to understand.
Fingers crossed we can revisit this post in December and smile.
Thanks Old!
From what I've seen, insurance companies are hesitant to approve drugs that have not gone through a full Phase 3 trial. So if Anavex ends up getting accelerated approva or based on its pivotal trial results it gets approval, it could harm its ability to convince insurance companies to cover it in the short-term. Long-term I believe there would be too much political pressure not to cover it.
What usually happens is that Medicare will be the first to cover a drug, and one by one the insurance companies follow suit. But this is going to add billions of dollars to their healthcare costs -- and while I do agree that the net costs will be lower with a good drug on the market, a lot of those cost savings do not pertain to private insurers (i.e., nursing and home-health aides, etc)
Because insurance companies are in the business of making money, and it's not in their financial preservation interests to approve new and expensive treatments. Eventually they'll probably fall like dominos but I would expect them to fight tooth-and-nail at the beginning simply because it's not going to help their balance sheets and P&L shareholder reports.
Even if Dr. Missling keeps prices reasonable, and I think he's going to try his best to do so -- no Martin Shkreli antics -- what happens to the insurance companies that have to eat those costs? Doubtful that they'll be allowed to drop their high-risk customers so premiums for everyone else go up across the board.
Fully diluted is now more than 100 million shares because of the outstanding share increase authorization and the blank-check preferred shares at Dr. Missling's disposal.
I think 100 million shares issued seems about right by the time we get to August/September 2022.
Thanks!! This is excellent.
Dr. Missling isn't perfect when it comes to the public side being a CEO. But he's been masterful at identifying a strategy and pursuing it.
He has a long-term plan. This doesn't benefit traders but it will reward long-term shareholders who are sitting on long-term capital gains and don't care if the stock price is $10 or $100 because the real gamble for big reward is FDA approval. I doubt many long-term investors are going to flee just before the FDA ruling after waiting patiently for the past 6 years.
Last post of the day. Hit 15 post limit.
But the reason for the slow recruiting is that Anavex was also recruiting for PDD and Rett. It's a small company with limited resources so that's understandable that it would take longer than if it had devoted all its time and money toward Alzheimer's.
It'll be interesting to see how this all plays out over the next 6-12 months
I think a bounce back to the $20-$22 range would be appropriate. We may trend in that range for while before the next slow and steady rise if/when more positive news is released.
I can see this getting back to $30 by Thanksgiving or Christmas.
Easiest way if I understand you correctly is to just screenshot the page.
https://www.pcmag.com/news/how-to-take-a-screenshot-on-any-device
I didn't know that. Thanks for that info. I'm still learning about CRTX.
If Anavex is the safer drug by a wide margin, that should change the calculus of the FDA's decision. Especially if Anavex has more long-term data and a priority review voucher.
I'd feel a lot more comfortable if AVXL closes this week above $18.50. If it fails to break above $18 today, that could be all that's needed to drop it down into the final wave.
I wouldn't discount a complementary role for a partner -- I mentioned this with a possible AVXL / SAVA merger earlier, but CRTX may make more sense. It'll take a while though because while both drugs are safe on their own, a trial would be needed to study the safety and efficacy when taken together.
My concern is that the FDA won't want to approve more than 2 Alzheimer's drugs within a year. Aducanumab is a placeholder until something better comes along, so it's a race to see who gets to replace it. Anavex is probably on a slower track for Alzheimer's, which is why I like that Dr. Missling is also focusing on Rett and Parkinson's. If/when it gets approved for Alzheimer's, it'll boil down to the data and which drug is more effective between AVXL, CRTX and SAVA
Unfortunately nobody knows if making all the difference is a positive or negative. We like to imagine Frost writing this to persuade people to take risks and follow their hearts, not the masses.
But it's just as likely that taking the road less traveled was the wrong choice, and that all the difference isn't necessarily a good thing. Maybe that road less traveled is less traveled for a reason because its path is riddled with venomous snakes.
No time for love, Dr. Jones!
I didn't expect it to drop under $20 after it held that price level for a while. I think there are a lot of new investors / traders who entered the stock and are finally taking losses at the 20-25% range.
I'm a bit worried that CRTX may beat Anavex to the punch with the FDA if its true results are due in November. This could be an interesting area to look at the options expirations for a short-term wager if the stock price does indeed drop to the $15 level.
Good luck!
CRTX looks like much worse competition for Anavex, if it's true that it also works upstream.
One concern is that the FDA will be reluctant to approve too many Alzheimer's drugs at one time.
This is why I believe that Anavex will not sell its priority review voucher if it's able to get one from Rett Approval. It'll need to use it to get A273 to the front of the line.
I think one more wave is possible, perhaps even likely -- clearly the market is not betting on tomorrow's conference call providing much in the way of a positive update.
I don't know if it gets back to 15 -- 50% haircuts are a nice milestone figure but I see the support closer to the $16.30-$16.70 range, if it even gets that low.
I'm going to sell some $15 puts with as far of a strike date as possible.
Like I said, the FDA will get around to approving A273 when it gets to it. And a lot of this has to do with who is running the FDA.
123Tom, any thoughts on this?
Take a look at the AVXL 1 month chart. It's not the most perfect Elliott Wave I've seen but the pattern is definitely emerging.
I don't think you were wrong about the larger environment. You just had too short of a timeline for when the adverse impact would be felt.
The economy is a lagging indicator to events that occur months or years prior. I don't think we will feel the full effects of this pandemic for at least another year, maybe longer -- but at some point the debts will have to be paid and while qualitative easing may be a short-term necessity, it's impossible to spend your way out of debt in the long-term.
With a company like Anavex, however, externalities aren't quite as important a factor. A drug of this magnitude that may have the ability to prevent Alzheimer's will experience inelastic market demand. Similarly, if the drug trials fail the stock will crash to the value of its cash holdings / number of shares outstanding. This will happen in a good or bad economy.
If the drug works, the stock hits $100. If doesn't get approved, the stock goes to maybe $3.
Your prediction for the economy will be proven correct in time. I just don't know that it matters much for Anavex.
There is only one day that matters. Approval day. Everything up until then is inconsequential as is the share price. Because the day that A273 is granted approval for Alzheimers it'll be too late for people to get in at a good price. Similarly, if its rejected it'll too late by the time we find out for any of us to exit at a good price.
It's all a waiting game now. I do agree with your timeline though.
1. Wall Street money that will help advance future pipeline drugs
2. A potentially complementary drug that works well with A273 (imagine if this combo ended up being the new Anavex Plus that Dr. Missling originally hoped to pair with Aricept)
3. A potentially lucrative blood diagnostic test that would be used in millions of health screenings every year
4. It would also allow Dr. Missling to retain final decision making authority, something he'll probably have to give up when he partners with a larger firm or agrees to a buyout.
I have no stake in SAVA. But I do think the blood test could be a nice addition to Anavex's portfolio if it works and gets FDA approval. The medical device world is also very lucrative and would be a good additional source of recurring revenue to fund future pipeline development. Similar to how J&J develops drugs, but also sells Band-Aids.
I don't know if there was a buyout offer -- even a meager one -- way back when Biogen was interested in A273 for MS treatment. It's possible. I also highly doubt that Dr. Missling would have been willing to reveal anything to Biogen regarding the Alzheimers trials knowing that they were developing a competing drug candidate.
I do agree with you that if Aducanumab gets pulled from the market or replaced, or if insurance companies refuse to pay for it, Biogen will deeply regret not pursuing Anavex when it had an opportunity to do so -- but I don't think there would have been many offers that Dr. Missling was willing to accept because of his confidence that Sigma-1 was an unturned key in neurological research.
Depends what the terms are. If SAVA thinks that AVXL is going to beat it to market with a superior product, but that the two drugs may complement each other, the SAVA CEO may end up deciding that part of something is better than all of nothing.
Think about it: why would anyone continue the SAVA trial and -maybe- get decent long-term results when A273 is available with years of clinical data available?
There was a company whose name escapes me, I will try to remember it and will post if I do, but they were developing a promising drug but another company ended up beating them to market and they basically shut everything down and pivoted to elsewhere in the pipeline. The drug may have worked but it wasn't going to be the standard of care so why spend time and money pursuing it? I think this may be a situation SAVA finds itself in if A273 is as good as we hope it is.
I wasn't proposing a 50/50 partnership. I just think that two small companies teaming up provides more profit potential for both sides than essentially being acquired by a larger company. Manufacturing and marketing can both be outsourced initially.
The deal would also benefit AVXL because SAVA has an interesting blood test, SavaDX, in development that looks promising.