No Attention To The Science. Not A Factor
For several years, now, I’ve tried to find the correlations between biotech share prices and the science that underlies each biotech firm. For biotechs addressing CNS diseases, such as Biogen and Anavex, there appears to be virtually no correlation. I conclude that the majority of biotech investors, both retail and institutional, either don’t understand the basal science of the firms they invest in, or, for whatever reasons, elect to look at other extraneous factors to control their buy and sell decisions.
Biogen announces that their Alzheimer’s drug, a monoclonal antibody, for the first time actually caused an undisclosed degree of amyloid reduction in Alzheimer’s patients. Also, the drug slowed the progression of the severity of the disease’s symptoms. Consequently, Biogen share prices elevated rather sharply.
Of course, the drug had to be administered intravenously, at doses high enough that for some it caused brain swelling. The actual degree to which it slowed the progression of Alzheimer’s was not clearly told.
I won’t lay out the science of Anavex Life Sciences Corp, demonstrated in both murine and human subjects. Were I to do that, my point would be strongly affirmed by the Anavex critics who would then quickly lay out — as they have over the last several years — their noted deficiencies in Anavex science.
It’s clear, very few invest in Anavex (or Biogen, et al.) because they believe the underlying science is sound and will yield marketable drugs. Instead, they “read the market” and figure out how the majority of science-ignorant investors will respond to their hazy perceptions of a company’s future.
Presently, “the market” thinks Biogen has a big future; that it finally has a new, big treatment for millions of Alzheimer’s patients. Shareholders are going to get rich, for sure, now.
“The market” also knows with full confidence that little Anavex can’t possibly have a future. The company could show that some people taking their drug had an almost complete reversal of their severe Alzheimer’s symptoms, and no one would pay any attention. Wait......? (Point proven.)
A few of us, on the “outside,” with small to moderate long-term AVXL positions, will continue to watch the Anavex story develop; fully expecting overwhelming pronouncements of Anavex deficiency and decline until some national medical authority grants marketing permission for an Anavex drug. Then, against all that the really smart biotech investors know, a few might buy in, thinking the company, at last, might be somewhat profitable.
Until then? We’ll just read and watch. Biotech investors know their stuff. It’s virtually unrelated to any science, any mechanism of action, or actual therapeutic outcomes. It’s only what they think “the market” will perceive. Market sociology and investor psychology, only. Until Anavex gets formal approval to sell a drug somewhere, I’ll just sit back and watch. It will only be more of what we’ve been watching for three years now. The science is irrelevant. It’s market psychology, alone.
