Anavex Life Sciences Corp (AVXL)

[whiskeysausage]

Daniel Ward failed to do an acceptable level of research on his most recent Anavex review: The risk is that he misled readers through omission, intentional or otherwise, did not fully answer questions, and in doing so, may have failed to reveal the entire Anavex picture.
This review is set in a “AUTHOR/ARTICLE/WARD” general summary with a COUNTER-ARGUMENT style response. These opinions are mine alone with facts and opinions having been gathered from multiple online sources and message boards from investors that are indefinitely smarter than me. Credit goes to those investors when able.

ARTICLE: Author does a decent job of attempting to recap the history of Anavex. Timeline is generally historically accurate in regards to former founders and photo-company listing purchase. Author uses these historical points to imply the company is currently flawed and bases a significant portion of his argument on these historical references.

LEADERSHIP: Author fails to mention the other members of board; Tasos Zografidis, MS, PhD, Bernd Metzner, PhD, Elliot Favus, MD, Tom Skarpelos, Steffen Thomas, PhD,
and the scientific advisors;
Abraham Fisher, PhD, Norman Relkin, MD, PhD, Michael Gold, MD, John Harrison, PhD, Ottavio Arancio, MD, PhD, Tangui Nicolas Maurice, Ph.D., Jeffrey Cummings, MD, Paul Aisen, MD, Corinne Lasmézas, DVM, PhD, Jacqueline French, MD, FAAN, Harald Hampel, MD, MA, PhD, MSc. The Chief Science Officer of Gogstate Manruff and the CEO of Neuronetrix Cecchi.MISLEADING:

LEADERSHIP CONCLUSION: Author puts entirely too much weight on former founder's influence in 2006/7, Harvey Lalach was CEO and has since been long fired. Lalach has an apparent knack for founding companies and the founders of the then-new Anavex may have known that their drug approach was potentially revolutionary and may have made a small deal with a small devil. (Per Wildcard on YMB) "Tom Skarpelos or Dr. Vamvakides, the two guys who are the real founders of Anavex. Harvey Lalach was merely the first CEO they hired, which was a mistake they have corrected." To continue extrapolation - CEO's come and go. They are hired to do a job and are fired when they don't produce. Also, nearly every founding CEO of most companies are replaced or removed before moving up into the big leagues.

Reference: wwwDOTbusinessinsiderDOTcom/how-often-do-founding-ceos-get-replaced-2011-8

Continued: There are more PhD's and MD's in and supporting Anavex than in some Hospitals, and there are more scientific leaders (like Hampel, Manruff, Cecchi) working with Anavex than you could shake a stick at. You don't get that sort of backing if the company is false, management is weak, or the science doesn't work. Harvey was fired before 2012, indicating clarity of mind and strength of the members on the Anavex board. Also of particular note, Anavex has initiated a near-complete house cleaning as of Dr. Missling's hiring as CEO in 2013.


COMPANY's ORIGINS: The Author makes frequent historically-accurate references that Anavex used to be a Photo-services company. The owners purchased it to gain OTC market entry, which is an incredibly normal business procedure and thus not a valid argument, as this also happened in 2006 (nearly ten years ago).

LEADERSHIP and FOUNDING ARGUMENT: OVERALL MISLEADING: Anyone that uses the “photo-company Anavex came from” argument is digging too deep and may be using smoke-and-mirrors to confuse and mislead investors by discussing something that is no longer relevant. Mitsubishi used to be an airplane company, Twitter was Odeo, a podcasting company, Starbucks used to be an Espresso machine sales company, Nintendo was a taxi and rice company. The list goes on and the purchase of a listed company to save money to enter the OTC / NASDAQ and then affect a name change is common practice.

References:
wwwDOTanavexDOTcom/about-us/management_directors/
wwwDOTanavexDOTcom/about-us/scientific_advisors/
wwwDOTforbesDOTcom/sites/jasonnazar/2013/10/08/14-famous-business-pivots/


ARTICLE: Author states he is not impressed with Dr. Missling's resume:

ANAVEX CEO RESUME: Dr. Christopher U. Missling, the Chief Executive Officer of Anavex, has over 20 years of healthcare industry experience within large pharmaceutical companies, the biotech industry and investment banking. He has been an investment banker in the healthcare practice at Deutsche Bank, serving pharmaceutical, biotech, and diagnostic companies, and most recently was head of healthcare investment banking at Brimberg & Co. in New York. At Aventis (now Sanofi), Dr. Missling worked as head of financial planning on all aspects of financial strategy and M&A. He was the Chief Financial Officer of Curis (NASDAQ: CRIS) and ImmunoGen (NASDAQ: IMGN) where during his tenure shareholder value increased significantly. Dr. Missling has an MS and PhD from the University of Munich in Chemistry and an MBA from Northwestern University Kellogg School of Management.

AUTHOR'S RESUME: I am an analyst and Level II Candidate in the CFA Program that has gained experience in the investment industry through positions as a proprietary trader and a portfolio management administrator. I look for a way to minimize risk in biopharmaceutical investing through conservative pipeline valuation and balance sheet analysis to identify companies with a compelling upside potential and risk profile. Along with my stock-specific analysis pieces, I write a column called Biotech Weekly where I discuss a major theme in the industry.

CONCLUSION: AUTHOR MAY BE DELUSIONAL: I assure the author, it may be his own insecurities shining through as he may fear that no one is impressed with his flailing "blogosphere" resume. Author admits to not having a Ph.D, is not a certified MD, and author does not appear to be able to rival Dr. Missling’s work history. This author wishes him all the luck on his Level II candidacy, as it will only make him a better trader / author.


AUTHOR: Author argues an 'n' value of 32 is not statistically significant.

REALITY: FDA specifically requested 32 patient 'n' value due to its ease of scalability. FDA is specifically requesting and allowing a 32n value to expedite treatment and allow for study-price effectiveness. P3's are designed to be scalable to represent the results of P2 studies. Something that must be read twice to appreciate, the FDA understands that if P2 results are great, then those P2 results can lead to lower P3 'n' enrollment because there were no or marginal P2 side effects. A poor or mediocre P2 that is "ok," will yield a higher 'n' in P3 in order to "really make sure" that there is nothing wrong with the drug. It is entirely possible that if Anavex's 2-73 P2 yields little to no side effects and shows clearly definable positive results, 2-73 may get expedited under the FDA's Orphan / Accelerated Access program.

Source: U.S. Department of Health and Human Service Food and Drug Administration February 2010, hfp://www.fda.gov/downloads/Drugs/.../Guidances/ucm201790.pdf
hfp://www.fda.gov/downloads/Drugs/Guidances/UCM072137.pdfs.

Examples of "n" of 32:
Merk, MK-8931, 32 patients, April 2012
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC4373002/


AUTHOR: 99% of all AD drugs have failed.

CORRECT: BUT AUTHOR FAILS TO ADDRESS 2-73 APPROACH: The author does not explain a Sigma-1 focused treatment. Almost all prior AD drugs have failed because they have never addressed the S-1 receptor, but 2-73 is one of the first drugs to address the S-1 receptor, in turn addressing protein mis-folding, and the results have been indicated to be phenomenal. Failure to mention "how" the drug works is akin to making an argument against the use of electric heaters because all the coal-powered heaters before them were sooty.

PRICE RUN: Anavex has gained nearly 1000% in the past year.
CORRECT: It has been an amazing run, from $0.15 to $1.40 to a ¼ RS to $6.80 to its current position on October 20th of $9.02. This is logical and expected given that the science was never the problem, it was the need to realign the company. Dr. Missling has turned this ship and Anavex is back on course. Given multiple estimates from multiple MB’s, the price of a commercialized 2-73 to treat AD can yield $50-$500/share given the $67b market for AD. If the November 7th data is anything in line with the July 22nd data, it is in this author’s opinion that AVXL would reasonably experience another 100% to 1000% run in SP.


A LOT OF EXHUBERANCE: CORRECT:
IS IT MISPLACD? NOT AT ALL: Daniel Ward, the Author, confirmed through Twitter, in quick fashion, announced that he would write an article on Anavex and subsequently did research on a company that he was not previously aware of. He spent an entire ten hours researching the deep-past while maybe not taking into account all the relevant history to include the past 2 years of changes, relevant leadership, and recent discoveries.

Things the Author may have missed, ignored, downplayed, or not been aware of:

INTERM RESULTS: 2015 July 22: Interim results of 12 patients showed an 80% response rate and 400% increase in efficacy with little to no side effects other than "some dizziness" experienced at more than recommended dosing levels. The study showed a 38% increase in cognition, a score rated on a 0 (no neural deficit) to 70 (extreme/vegetative) scale. A normal day to day person without any issues will generally score a 5. A person with a score of 30 is considered moderately impaired. The interim results on July 22nd of 2-73 showed a 38% improvement in cognition, which out of 70 points, is a 26.6 point improvement.
Even if the remaining 2/3rds of the patients showed no improvement, the P2 results would statistically be 150% better than current standard of care at roughly 8.8 point improvement.
Let us compare the drugs that have already been approved.
(Credit to tdeank1 from YMB)
Namenda Results showed the mean difference in the ADCS-ADL change scores for Namenda compared with placebo was 3.4 units.
Aricept-treated patients compared to placebo were only 2.8 and 3.1 units
Galantamin was 2.9 points for lower dose and 3.1 for higher dose.
Exelon-treated subjects compared to the subjects on placebo, were 1.8, 2.9, and 1.8 units
Point being (pun intended), 2-73 results 1/3 of the way through the study are already two to three times more effective than currently approved medication if the 2A 2-73 study was stopped or the rest of the patients showed zero improvement. If the results of the 2A follow the original July 22nd results, 2-73 stands to be a total 26 +/- a few points better than anything currently out there.

Given Alzheimer's destructive and relentlessness pursuit, it is of strong opinion that the FDA would be hard pressed not to approve 2-73, either on interim results alone or after completion.

References:wsw.com/webcast/ladenburg/avxl/index.aspx (audio) http://www.anavex.com/investors/investor-material/ (corporate presentation page 16, how the drug is different, page 5 and 6, efficacy page 15)

UPLISTING: Uplisting to the NASDAQ: any time between now and November 6th. Larger market exposure, larger fund availability.

SPLIT: Reverse Split: Conducted to expedite the uplisting. Viewed by many as a very positive move.

PARTNERSHIPS: Pending Partnership: Anavex is likely already in talks with potential partners. Partnerships bring with it milestone payments, expedited research and industrial support.

MONEY: Company has ~$13m in cash with a small churn of $400k a month. Able to continue for 2 more years without an ounce of dilution. Able to dilute another ~60m shares but may not have to pending partnership milestone payments and other sources of funding.

PRODUCTS: Pipe-line: Too numerous to mention, but 2-73 may have also been indicated in the ability to treat Epilepsy and Parkinson's, which may each yield a $10-$50 increase in SP on approval alone.

THE BIG REVEAL: November 7: Full 2A results will be published (to discuss safety and secondary points to discuss efficacy with MMSE, etc) with initial 2A part B results out to 3 months. Anavex is flying in their top board nd scientific members after receiving "Late breaking" approval from CTAD - an act only offered to news that truly is late breaking and has amazing results.

EXUBERANCE YES: JUSTIFIED? ABSOLUTLEY: Investors ARE “very exuberant” and have every reason to be. Anavex would likely not rush into the November 7th conference to release late breaking news and fly in their top members in order to reveal mediocre results. In the same way they rushed into the July 22nd conference to reveal their stunning results (indicating 26points improvement on cognition). Subsequently, news outlets will likely not let such a discovery go by the wayside, and any news announcement may cause monumental spikes in price. It could reasonably be expected that exuberance on November 9th, the first trading day after the conference, will be even greater than the exuberance experienced July 22nd, and with good reason, as Anavex may have legitimately cured Alzheimer's.

It is in my humble opinion that Ward may have failed to fully research, disclose, discover, explain, or given his short research window, may simply not have understood the importance of the “other” things that are in play with AVXL(D)’s recent 1000% run-up. In not fully grasping the importance, Ward may have accidently and perhaps unintentionally written his report as if he were writing a car-review for a 1995 Ford Mustang and then unintentionally posted it as a 2016 Ford Mustang review. True, he talked about horsepower, torque, wheel base, mpg's, and even the electric windows, but it is my opinion, by not digging deeply enough or into current events that may have direct or indirect effects on the exuberance or excitement of investors, he may have accidentally rushed through his ten hours of likely very focused and efficient research, (and given his stellar reputation, the sub-par article was most likely a silly accident and not representative of his true potential) and he may have simply written a sub-par report posing as a real report that may have unintentionally misled the reader and investors, resulting in some sellers to sell their shares on the 20th of October, in which time AVXLD experienced a momentary dip in share price. But it’s ok, the share price largely recovered without incident because many traders and readers realized the article only talked about the 'old' Anavex and painted old information as if it were representative of the ‘current’ Anavex.
End.

Disclosure: I currently hold a large position in AVXL and have done so since the fifty-cent range. I do not intended on buying or selling any position in the next 72-hours as all my funds have been exhausted by “exuberantly” purchasing copious shares of AVXL. I am not a professional investor and no one should make any financial decisions based on this very informative and long written op-ed. The opinions expressed herein are only opinions and conjecture, do not represent Anavex the company, and may have errors and omissions that may have been intentionally or unintentionally made. This review is not a character assault on Daniel Ward and his work, rather, are an expressed op-ed of the recent article he published written by another on why his article appeared wrong, misguided, not completely accurate, misrepresentative, rushed, full of straw man arguments, fallacies, biased, and otherwise just wrong.