Anavex Life Sciences Corp (AVXL)

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A $1000 Anavex Share Price? How so?

What would it take for an Anavex share price to be $1000?

First, this is no projection or prognostication of any future Anavex share price. Don’t use any of this information to guide or direct any Anavex equity purchase. Mostly, it’s all for fun. But, could it happen? Could the Anavex share price someday be $1000? Let’s have some fun and play with the numbers.

The first number to decide upon would be the number of outstanding shares that could be traded. Presently, there are just over 41 million shares of AVXL. To simplify things, let’s presume there will eventually be 50 million Anavex shares.

Share prices, generally, are determined by the market’s knowledge of and perception of dividends. For a $1000 share price, the central questions are these: what would be required corporate revenues to support such a price, and what fraction of those revenues would flow into shareholder dividends?

So, let’s look at backwardly. Let’s start with a presumed $1000 Anavex share price. What dividends size would support this share price?

We need to recognize the P/E ratio, the ratio of a company's stock price to the company's earnings per share. Presently, on the Dow Jones, P/E ratios are about 20 to 1. Therefore, a $1000 share price requires a dividend of 1/20 of $1000; a dividend payout of $50.

How much money would Anavex Life Sciences Corp. have to have to send out $50 to all of its 50 million shareholders? 50 x 50 million = 2.5 billion. Somehow, Anavex would have to have a minimum of $2.5 billion to cover a $50 annual dividend cost.

Now here’s the real rub. With its annual revenues, the company must cover all of its costs, including sales costs, product manufacturing costs, taxes, loan costs, facilities costs, licensing costs, R&D, salaries, among others. What percentage of total revenues, after all of these costs have been paid, might be available for shareholder dividends?

One site (https://www.simplysafedividends.com/pfizer-pfe-dividend-stock-analysis/) indicates that Pfizer, a major US pharmaceutical, pays out approximately 50% of its annual revenues to shareholders. If Anavex could do this, to do a $50 dividend payout, annual revenues would have to be approximately $5 billion.

Now, what would it take for Anavex to gather annual corporate revenues of $5 billion?

Things here are pretty murky. Two crucial questions: globally, how many patients each year will be purchasing or using Anavex products, and, at what prices?

Let’s go conservatively to begin with. Let’s assume the total global market for Anavex drugs, in five or 10 years, will be 20 million people. Next, let’s assume (not very likely) that annual personal Anavex drug costs are merely $500. 20 million patients times $500 equals $10 billion of annual revenues.

If those turn out to be the actual working numbers, a $50 dividend and $1000 share price are plausible.

But the global market for Anavex drugs is likely to be some multiple of 20 million. One website claims that about 44 million people have diagnosed Alzheimer’s disease across the globe, with many more yet undiagnosed.

Fewer numbers of Parkinson’s disease, but they are in the millions, along with those who have other central nervous system diseases Anavex drugs might eventually treat.

Given the tremendous costs of conventional CNS disease treatments, Anavex might charge $1000 a year per patient, while saving governments and insurance companies many thousands of dollars of annual per patient costs.

So, with 50 million global Anavex patients, with an annual per patient income of $1000, Anavex would have an annual income of $50 billion. If, as with Pfizer today, half of that flowed to shareholders, $25 billion would be divided among the 50 million Anavex shareholders — a whopping $500 per share dividend. At a 20 to 1 P/E ratio, Anavex shares would trade for about $10,000.

Again, none of this should guide or direct any AVXL share purchases. Anavex 2-73 clinical trials might fail. The FDA may never approve an Anavex drug. The company would go bust. The numericals posted here, by no means, are the only factors involved in the successes of Anavex’s future. Do your own careful due diligence. In startup firms like Anavex, never, ever, invest more than you can afford to lose.

My best wishes for Anavex Life Sciences Corp., its shareholders, but most importantly for the millions of suffering people Anavex technologies might successfully treat.