Anavex Life Sciences Corp (AVXL)

[falconer66a]

About the Standard of Care (SOC)

An important factor in any future medical uses for Anavex drugs (once approved by the Food and Drug Administration and available for prescription) will be the Standard of Care (SOC) mandate. It would be useful for Anavex investors to understand the meaning and application of SOC. We hope and believe Anavex 2-73 will eventually be the SOC for Alzheimer’s, dramatically eclipsing (and negating) any of the few Alzheimer’s drugs currently on pharmacy shelves. As most are aware, none of those provide continuing good results. At best, they merely suppress the severity of symptoms but for a short, limited period of time, from a few weeks to a few months; whereupon the symptomatic trend toward death resumes. Tragically, that’s the meager Standard of Care today.

What, then, is the definition of SOC? Very interesting — and very promising for Anavex Life Sciences and its shareholders (but even more so for Alzheimer’s victims).

Here is one website’s definitions http://www.medicinenet.com/script/main/art.asp?articlekey=33263 :

Standard of care: 1. A diagnostic and treatment process that a clinician should follow for a certain type of patient, illness, or clinical circumstance. Adjuvant chemotherapy for lung cancer is "a new standard of care, but not necessarily the only standard of care." (New England Journal of Medicine, 2004)

2. In legal terms, the level at which the average, prudent provider in a given community would practice. It is how similarly qualified practitioners would have managed the patient's care under the same or similar circumstances. The medical malpractice plaintiff must establish the appropriate standard of care and demonstrate that the standard of care has been breached.

I find this very interesting, particularly the last paragraph telling the legal implications. To me (I’m not a legal professional, be advised) it appears that once FDA approves Anavex 2-73 for Alzheimer’s treatment, the drug will instantly become the Standard of Care, and importantly, all practitioners will have to preferentially prescribe it. Failure to do so would get them in trouble with their medical malpractice insurance company.

There is no reason whatsoever to believe Anavex 2-73 won’t become the American Standard of Care treatment for Alzheimer’s, once it gains FDA approval. Approval and use in other countries should rapidly follow (or occur even before American approval, depending on what favorable clinical results become known).

Try, then, running the numbers yourself, attempting to gauge the plausible financial outcomes of eventual Anavex 2-73 use in the US. Plug the numbers in a spreadsheet and see the totals.

First, determine the potential number of Alzheimer’s patients that would benefit from Anavex 2-73. In another, related cell, plug in the patient’s (well, insurance company’s) daily or single-dose costs. Plug in a treatment period. Next, guess how much of sales revenue goes to Anavex. Plug in total outstanding shares, etc. Then, guess how much of these corporate revenues will flow down to shareholders in annual dividends.

Lastly, conjecture on an eventual Anavex price/earnings ratio, to project future share price ranges.

Those numbers will be interesting, at either very low price and low returns ranges, on up to the high ends. By any useful conjecture, the AVXL share price will not stay below $10, by any means. When I did this, share prices ranged in the high double digits into three-digit numbers.

Gonna be fun watching this all play out eventually in the market.