Estimating Potential Gains from an AVXL Position
Have an AVXL position, a holding of the shares of Anavex Life Sciences Corp.? Or considering the acquisition of one?
It would then be useful to calculate estimated or potential values of such an equity holding. As I do about once a year I punched my AVXL numbers on a spreadsheet. Same numbers as before. No changes. All are estimations of potential values. If Anavex goes bust, the values will all be zero (except for the negative value of my sunk costs in acquiring my modest AVXL position).
I’ll give only some starting numbers; not my final number runouts. I’ll let each determine those for himself.
I presumed two different scenarios for Anavex. In the first, I presumed that at some time in the future blarcamesine would be prescribed and allowed as an anti-aging prophylactic; where a certain number of people would take a tablet of blarcamesine each day, to preserve health in the last half of life.
Of course, these numbers are only rather arbitrary estimates. In practice (should this all play out) the numbers could be larger or smaller. For prophylactic purposes I presumed that people taking blarcamesine would pay a dollar a day for the drug. Of that, I presumed that 10%, ten-cents, would end up going out to AVXL shareholders as dividends.
To be conservative, I then presumed just 300 days in the year; a total of $30 annually going out in dividends for each blarcamesine prophylaxis patient.
I won’t reveal the total number of patients who would be taking blarcamesine each year for prophylaxis. Estimate your own number.
At the same time, I estimated that there will be a total of 100 million (100,000,000) outstanding AVXL shares.
With those estimates, one can calculate the total amount going out in dividends. Divide the total funds available for dividends by 100,000,000; which will reveal the annual per-share dividend.
Then, multiply the size of your AVXL position by the per-share dividend. That’s your yearly AVXL dividends total.
The other calculation I made involved blarcamesine as a treatment for Alzheimer’s (some day). Same run-through. For this, I presumed each Alzheimer’s patient taking blarcamesine would yield to Anavex $1 per day that would drop down to dividends payouts. Again, to be conservative, I presumed only 300 days in the year. For each Alzheimer’s patient taking blarcamesine, $300 each year would go out in dividend payments.
Then, estimate for yourself how many Alzheimer’s patients would be taking blarcamesine each year. Multiply that times 300 and that’s the estimated dividends total for the year.
Divide that by outstanding shares, 100,00,000, and you have the size of the per-share dividend.
Lastly, multiply that dividend number times the number of AXL shares you have or will purchase. Your annual dividends number.
It’s clear. If blarcamesine gains sales and use approval, and it is used either as a cheap prophylactic, or as the standard of care (SOC) treatment of Alzheimer’s, just a tiny AVXL position will be very profitable. I have a very moderate AVXL position, acquired incrementally over many years with discretionary budget funds. I was astonished at the number of digits needed in my calculations.
Run your own numbers. Be aware of the eventual dollar-value potentials for an AVXL position, of any size.
