Anavex Life Sciences Corp (AVXL)

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Big jumps or drops after news usually occur when the news itself (not just that there is a catalyst) is unexpected. So for example SMMT released highly anticipated key data at WCLC last week. The drug was expected to perform the same in European descent as Asian but the data was nuanced (probably almost as good but not quite --- yet survival data was immature and could look better (or worse) next year). The SP dropped 25% as trial news worse than WS expected. I remember when Acadia got trofinetide approval - first in class and A273 at least a year behind - and yet price moved down 5%. Approval was >90% baked into SP but the realization that now they need to market a poorly tolerated drug with limited benefit kicks in.

With a share price of 9-10, AVXL is priced closer to MAA withdrawal with need for an additional trial, not for success. If WS felt conditional approval or full approval was most probable, the SP would likely be at least 20, and if complete approval was most probable, then even higher. WS interest in a stock and its potential for large pop or drop, to an extent, can be gauged by option price IV. IV is now about 100 (vs typical 75) but was briefly >500 before the highly anticipated CTAD 2022. There is still a couple months for IV to climb (and unless MAA withdrawn shortly, I expect it will) as we are probably still 2 months from MAA withdrawal vs regulatory success/failure time. I would expect a very large jump in SP (>$40) if full marketing authorization occurs and the fantasy of a short bonfire might even come to pass as there is no chance for the shorts to fight the influx of new investors. A conditional approval will still cause a price jump as the market is huge and $20-30 (depending on terms) is probable and shorts may even try to fight the pop in SP but it stays higher than now. Failure for approval (which would be due to limited proof of efficacy not because of a safety flaw) will put the price at $4-5 --- only a 50% drop because this outcome is partially priced in. New investors won't enter.