Anavex Life Sciences Corp (AVXL)

[falconer66a]

Mechanism of Action Notwithstanding...

Now that the mechanism(s) of action of Anavex 2-73 have been independently elucidated and confirmed in a paper in a major peer-reviewed journal, the formerly so-frequent cautions that it’s not really known either if or how the drug works, will be (thankfully) infrequent. Those who throw that argument against Anavex Life Sciences Corp wall will find it no longer sticks. Instead, the mud of that now-negated argument will soil the accusers’ shirts. No longer a factor.

Nonetheless, the paper’s findings, per se, are not likely to promote any significant AVXl share price elevation. They may help create a higher low-end price resistance floor, as those who have accumulated AVXLs now have firm assurance that the drug works and will, eventually, gain and have applications that will make Anavex Life Sciences Corp a revenue-generating entity.

But, frankly, the vast majority of equity investors, whether mom-and-pop retail types, or even big institutions, simply can’t (or won’t) read and understand the arcane biochemistry and cytology of the paper. The only thing taken away from it by most is that, yes, Anavex 2-73 really does work, and by otherwise inscrutable methods those white lab coat guys understand.

All of that merely creates, perhaps, a new, slightly higher share price floor. Many might be hoping that the paper will propel AVXL much higher. I doubt it. Equity buyers, whether individuals or institutions, buy shares only in anticipation of their growth in value. The new paper, by itself, won’t bring any new revenues to Anavex Life Sciences Corp. That will happen only when the company gets the approval to sell Anavex 2-73 somewhere, for something (perhaps Australia first).

And that won’t happen until drug regulation agencies see positive clinical results from any one of the tree trials getting under way. As exciting as the information in the paper is, it won’t, by itself, significantly propel the AVXL share price. Simply, the market has to see people getting better after taking our drug. Then...? Watch out.