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Replies to post #348713 on Anavex Life Sciences Corp (AVXL)
Written by
Terry Chrisomalis
Marketplace
Author of Biotech Analysis Central. Actionable ideas on small-large cap biotech stocks through deep analysis.
Anavex: Misunderstood Data And Possible Positive FDA Meeting Can Lead To Great Trade Opportunity
Feb. 01, 2022 11:37 PM ETAnavex Life Sciences Corp.
Summary
Positive results reported from the phase 3 AVATAR study using Anavex 2-73 for the treatment of adult females with Rett Syndrome; Primary endpoint of RSBQ AUC met with statistical significance.
Positive results from phase 3 AVATAR study, along with prior positive results from phase 2, being taken to FDA to discuss potential approval pathway for patients with Rett Syndrome.
Results from the phase 3 study, using Anavex 2-73 for the treatment of patients with Alzheimer's Disease are expected 2nd half of 2022.
The global Alzheimer's market is expected to reach $25 billion by 2027.
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Anavex Life Sciences (AVXL) just posted positive top-line results from its phase 3 study known as AVATAR. This was a late-stage study using Anavex 2-73 for the treatment of adult females with Rett Syndrome. The primary endpoint of the study was met when compared to placebo. Not only that, but all secondary endpoints were met. Despite this solid clinical data, the stock traded lower when the news was announced. With the stock trading lower, this creates a great buying opportunity. Why? It is because the company is going to meet with the FDA and discuss data it obtained from a prior phase 2 study and this phase 3 AVATAR study. The reason to do this would be to determine a possible approval pathway. Whether or not the FDA agrees on an approval pathway remains up in the air, but the data released by Anavex speaks for itself. The bottom-line is that the primary endpoint was met. What also will come to consideration is that there are no FDA approved drugs for Rett Syndrome. At worst, which may or may not happen, is that the FDA may want another study. On the other hand, if the FDA agrees that the data is solid enough to warrant approval, then Anavex will be able to file for regulatory approval. This is only one indication in the pipeline as well. It is using Anavex-273 for the treatment of patients with Alzheimer's Disease (AD) and Parkinson's Disease (PD). The point here is that these other shots on goal are large market indications.
A Much Needed Treatment For Those With No Alternatives
Anavex announced positive results from its phase 3 AVATAR study using Anavex 2-73 (Blarcamesine) for the treatment of adult females with Rett Syndrome. Rett Syndrome is a rare genetic mutation that affects brain development in girls. It is quite to notice it at first, because it is not observed in the first few months. Once it does come into play, those who have this rare disease experience:
--Loss of motor skills over time
--Loss of speech
--Loss of muscle movement
What's bad is that in the first 6 to 18 months, everything is fine with brain development in girls and then all of a sudden they lose all those 3 abilities I noted above. How can this be? Another item to note is that it mainly occurs as a result of a de-novo mutation of the MeCP2, CDKL5, and FOXG1 genes. De-novo meaning that the mutated gene is not inherited, but occurs spontaneously. Boys can possibly get Rett Syndrome, but it is very rare. More than likely clinical studies focus on recruiting girls with Rett Syndrome, because it is more prevalent for them to have it. MeCP2 is the gene to focus on for these patients, because it is needed for brain development. As such, those with Rett Syndrome have this gene mutated and it eliminates the potential for the brain to function properly.
The positive results from the phase 3 AVATAR study offer hope to these patients who desperately need a treatment. This late-stage study recruited a total of 33 adult female patients with Rett Syndrome. All of them were positive for the MeCP2 gene which when mutated causes brain development problems. The trial met the primary endpoint and all secondary endpoints as well. The primary endpoint of the study, which was RSBQ AUC, was met with statistical significance. What is "RSBQ" and why is it important for this patient population? RSBQ stands for "Rett Syndrome Behaviour Questionnaire". It is done by a caregiver of the patient in which neurobehavioral symptoms observed in these patients are rated based on a scale. The total possible points represent the sum of the 45 items with a maximum score of 90 points. Each item is scored on a Likert scale of "0" to "2" points, with 8 subscales measuring items like:
--Breathing issues
--Repetitive face movements
--Hand behaviors
--Body Rocking and expressionless face
--General Mood
--Night-time behaviors
--Fear/Anxiety
--Walking/Standing
The final outcome was that adult female patients given Anavex 2-73 achieved a statistically significant improvement in RSBQ AUC of 72.2% compared to those on placebo with only a 38.5% improvement. This improvement, noted with statistical significance was achieved with a p-value of p=0.037. The secondary endpoints themselves of "ADAMS" behavior symptoms score and CGI-I response were also statistically significant as well. The drug was also tolerable and safe. Treatment emergent adverse events (TAES) were similar across those who took Anavex 2-73 and those who took placebo.
The thing is that these results are solid. Not only was treatment safe/tolerable, but all endpoints of the study were met. With a Rett Syndrome population that has no treatment alternatives, I believe that an upcoming meeting with the FDA should go quite well. Current treatment options only try to treat the individual symptoms themselves. For example, patients:
Taking medications for sleep issues, breathing issues and tight muscles
Physical therapy for joint and walking issues
Speech therapy for learning non-verbal communication
Support services for job training/learning
If a daily oral liquid of Anavex 2-73 can help these patients improve on all these measures, then I don't see why the FDA wouldn't want to help advance this forward. Anavex is expected to meet with the FDA to discuss this clinical data and, based on what I see, I believe there is a good chance that the FDA will allow an approval pathway forward. As a worst-case scenario, the FDA may request one additional study if it feels that the data is not enough. But in my opinion, it wouldn't matter, because it can be seen that Anavex's drug works in treating these patients.
Additional Shots On Goal With Multiple Candidates To Reduce Risk
I believe based on safety/efficacy data noted above, there is an approval pathway for Rett Syndrome for FDA approval eventually. However, Anavex 2-73 has other possible opportunities in other indications as well. It is being used to treat patients with Alzheimer's Disease and Parkinson's Disease. The Alzheimer's Disease indication is being explored in a phase 3 study, while the Parkinson's Disease study completed two phase 2 studies. The global Alzheimer's market is expected to reach $25 billion by 2027. The only major risk with this indication is that it is a huge gamble. That's because about 99% of Alzheimer's clinical trials fail. On the other hand, I believe that Anavex 2-73 may do better for patients with Parkinson's Disease (PD). It is expected that results from the phase 3 study, using Anavex 2-73 for the treatment of patients with AD, will be released by the 2nd half of 2022. This sets up another huge catalyst for the stock as well, besides the FDA meeting for the Rett Syndrome data. With respect the Parkinson's Disease program, two phase 2 studies have been completed as noted directly above. Anavex will submit this data to the FDA to seek regulatory guidance. If the FDA feels that the data is good enough to advance another study, it may give a green light for a phase 3 study for patients with PD. Anavex 2-73 is also being advanced in another phase 3 study treating patients with Fragile-X syndrome, along with two preclinical indications of Angelman's Syndrome and infantile spasms. This doesn't even include the other candidates in the pipeline, which are Anavex 3-71 (Neurodegenerative diseases), Anavex 1-41 (Neurodegenerative diseases/stroke/Depression) and Anavex 1066 (visceral pain/acute and neuropathic pain).
Financials
According to the 10-K SEC Filing, Anavex Life Sciences had cash of $152.1 million as of September 30, 2021. It only used $30.4 million of its cash to fund its operations for its fiscal year 2021. The increase in cash was driven by two different financing events. The first was an At-the-Market (ATM) agreement with Cantor Fitzgerald & Co. and SVB Leerink LLC as well. During Fiscal 2021, it sold 5,634,576 shares of common stock to generate net proceeds of $76.7 million. The other cash raise occurred on June 24, 2021, whereby Anavex sold 2,380,953 common shares of stock at a price of $21 per share. It raised $46.9 million in net proceeds from this offering. It believes that it has enough cash to fund its operations beyond 12 months of the filing of its 10-K financial statement. Of course, it likely won't wait to raise cash up to that point. If anything, I believe it may raise additional cash by mid-2022. With Alzheimer's data coming shortly thereafter in the 2nd half of 2022, it would be risky to wait to raise cash afterwards. Despite huge confidence for the Alzheimer's study, the rate of failure is huge at 99% for these types of studies.
Risks To Business
The first risk to make note of would be the use of Anavex 2-73 in patients with Rett Syndrome. I think the data is solid, which I have laid out above why this is the case. Therefore, I believe that the FDA may allow the company to have an approval pathway going forward for this program. What also may be possible is that it will need to see another study, so the upcoming FDA meeting does remain a risk with respect to this program. The second big risk would be the phase 3 trial readout of Anavex 2-73 for the treatment of patients with AD. This late-stage study is expected to have a data readout in the 2nd half of 2022. As I alluded to above, the failure rate is huge for Alzheimer's studies. Therefore, there is no guarantee that the primary endpoint will be met for this phase 3 study. Lastly, I predict a cash raise before the trial readout for the Alzheimer's study. I don't believe that it will gamble on the notion that it will succeed in the phase 3 AD study and then be able to raise cash afterwards. I think it will be done beforehand.
Conclusion
Despite the risk laid out above, I feel that Anavex Life Sciences is a good long-term biotech to own. That's because it achieved statistical significance in the phase 3 AVATAR study in adult females with Rett Syndrome. Again, the worst-case scenario is that the FDA requires another study which may delay approval for a year or two. However, I don't believe this is a high probability based on the trial meeting all the endpoints of the study, along with an excellent safety profile for Anavex 2-73. There are so many other indications for Anavex 2-73 as well, which provides additional shots on goal. Not only that, but I also stated that they have 3 other drugs in the pipeline being developed which are: Anavex 3-71, Anavex 1-41 and Anavex 1066. I believe that the data was misunderstood, which led to a lower share price upon initial reaction. However, I provided proof on why the data highlighted above leads me to believe that the FDA will likely allow for an approval pathway for Anavex 2-73 for the treatment of adult females with Rett Syndrome.
This article is published by Terry Chrisomalis, who runs the Biotech Analysis Central pharmaceutical service on Seeking Alpha Marketplace. If you like what you read here and would like to subscribe to, I'm currently offering a two-week free trial period for subscribers to take advantage of. My service offers a deep-dive analysis of many pharmaceutical companies. The Biotech Analysis Central SA marketplace is $49 per month, but for those who sign up for the yearly plan will be able to take advantage of a 33.50% discount price of $399 per year.
