Anavex Life Sciences Corp (NASDAQ:AVXL), the clinical stage biopharmaceutical developing treatments for neurodegenerative and neurodevelopmental diseases, has been recently under the radar of many institutional investors. We assessed the company first in this article, and this other one also. Suddenly, other investment sites analyzed the company as well and noted its potential. Zacks Investment Research upgraded the company from hold to buy, and gave the company a price target of $7. Other analysts, such as Noble Financial, gave the company a target price of $16.

The share price as of May 17, 2017 is $5.65, and the firms are giving the company a price target that is much higher than the current one. Hence, the editorial team decided to research the catalysts of the company to understand what is going on. We believe that someone seems to know something as every dip has been met with share buying. Have a look at the recent price action.

Source

Business

Let’s focus on ANAVEX 2-73. The drug passed an initial Phase 1 study in Germany and it was in August 2014, when the company started the Phase 2a study. This last trial was to compare oral and intravenous doses in a two-phase, 36-days crossover design, followed by a 6-months extension. The next phase of the trial started in December 2014 and the company commenced a follow-up period of daily dosing  in September 2015 that was supposed to last for six to 12 months. Anavex completed a Phase 2a trial with ANAVEX™ 2-73 in November 2016. Thereafter, the Company plans to initiate a potentially pivotal 6/12-months Phase 2/3 trial with ANAVEX™ 2-73. Thus, it seems that the company may have the results soon.

We found exactly the same theory hidden on the Yahoo Finance Forum of the company, which by the way is becoming very popular. We could see 1,492 reactions in that forum from AVXL followers. Therefore, we encourage investors to check it from time to time. Let us remind you that along with our email alerts, this is a very interesting tool to stay on top of AVXL developments.

Recent Developments

On May 10, 2017, the company released its Q2 2017 earnings. Our take is that the company keeps showing a strong balance sheet with plenty of cash; $23.4 million as of March 31, 2017. In addition, the amount of liabilities is not worrying and the balance sheet is quite clean:

March 31, 2017 September 30,2016
ASSETS
Current
Cash and cash equivalents $ 23,351,567 $ 9,186,814
Sales tax recoverable 60,636 79,347
Prepaid expenses 141,989 180,124
23,554,192 9,446,285
Deposits 52,396 52,396
$ 23,606,588 $ 9,498,681
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current
Accounts payable and accrued liabilities $ 2,033,692 $ 3,119,993
Deferred grant income 86,205 70,532
2,119,897 3,190,525

Source

The income statement for this quarter surprised the market as it did in the last previous ones, because EPS was better than expected. Furthermore, the company reported an increase in R&D, which should be appreciated by the investors. In our opinion, the more the R&D expenses, the faster the company will develop new products. Finally, the President and Chief Executive Officer of Anavex, Christopher U. Missling, provided some information about the next R&D expenses on the ANAVEX 2-73 drug:

“We are on track to initiate placebo-controlled efficacy and safety trials this year in Alzheimer’s and Parkinson’s disease as well as Rett syndrome, for which ANAVEX 2-73 was granted Orphan Drug Designation (ODD) by the U.S. Food and Drug Administration (FDA).” Source

Additionally, the company seems to be adding people with relevant know-how. We refer to people with expertise working with the FDA. On May 1, 2017, the company noted the appointment of Emmanuel O. Fadiran, RPh, PhD, as Senior Vice President of Regulatory Affairs. Dr. Fadiran has 24 years of regulatory experience within the U.S. Food and Drug Administration (FDA), having held leadership positions at the FDA’s Center for Drug Evaluation and Research (CDER). We celebrated the news, since his role in the US administration will help him guide the AVXL’s next steps to get the FDA approval for its new drug. This is what the the CEO of the company said about him. We could not agree more:

“Dr. Fadiran has an accomplished track record of working within the FDA, his depth of experience makes him an excellent choice to manage the considerable number of regulatory filings that Anavex has planned.” Source

Our take on the recent upside movement – Institutional traders are buying

In small companies such as this one, it is sometimes complicated to control that employees don’t talk to people in the investment industry. The fact that the company is about to release information about the ANAVEX 2-73 final trial may encourage traders to ask about how is the process going. We say this since as of May 18, 2017, the company’s share price is rising without news and it has been doing this type of illogical movements for months. Additionally, hedged funds, such as Park West Asset Management or Knoll Capital, and mutual funds, like Blackrock or Vanguard, have been buying recently. Investors should find their own conclusions:

Owner Name Date Shared Held Change (Shares) Change (%) Value (in 1,000s)
PARK WEST ASSET MANAGEMENT LLC 03/31/2017 2,962,090 1,462,090 97.47 16,736
BLACKROCK INC. 03/31/2017 1,605,252 1,603,908 119,338.39 9,070
VANGUARD GROUP INC 03/31/2017 1,485,681 171,577 13.06 8,394
BLACKROCK FUND ADVISORS 12/31/2016 1,057,856 171,797 19.39 5,977
KNOLL CAPITAL MANAGEMENT, LP 03/31/2017 724,205 0 0.00 4,092
STATE STREET CORP 03/31/2017 523,810 132,745 33.94 2,960
NORTHERN TRUST CORP 03/31/2017 370,004 19,161 5.46 2,091

Conclusion

Something seems to be going on with AVXL. The company is about to release results about its drug ANAVEX 2-73, which is close to its final trial. The FDA will need to say if the drug is finally accepted soon, and we believe that the new ex-FDA executive hired by AVXL may help in the process. Additionally, big hedge funds and institutional traders are buying large stakes in the company. All this is happening in a company that shows a clean balance sheet and is on the verge of a major breakthrough in Alzheimer’s treatment. To sum up, there is a lot to like in this company, so be alert. We will be updating our subscribers as soon as we know more. For the latest updates on AVXL, sign up below!

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Disclosure: We have no position in AVXL and have not been compensated for this article.