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Anavex Life Sciences Corp (NASDAQ:AVXL) Correction Presents Opportunity

Anavex Life Sciences Corp (NASDAQ:AVXL) Correction Presents Opportunity
Written by
Alex Carlson
Published on
July 28, 2016
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The date July 27, 2016 will be one which almost every trader and investor in Anavex Life Sciences Corp (NASDAQ:AVXL) will remember. While the bears may have won the battle that day, they still have not won the war. Might of fact, they've been fighting a losing battle pretty much all year shorting AVXL. While shares ended the day down 40%, the stock still held the $4 support level and finished in the area where it traded for much of May and June before going on a bull run in July.The reason for the drop is that the Mini Mental State Examination (MMSE) marks registered a slight deterioration at the 31 week mark compared to the 5 week mark. What ended up happening was that the bears jumped all over this and some nervous longs panicked and dumped their shares. The market was clearly expecting an improvement here and not expecting results that showed a sustained score around the baseline.Further hurting 2-73 was that the Alzheimer’s Disease Co-operative Study - Activities of Daily Living Inventory (ADCS-ADL) reported a lower score as well. Here, investors were expecting an improvement like we saw in week 17 over week 5.Now these were the two negatives and what the market chose to focus on. However, there were plenty of positives. We like what Associate Professor Stephen Macfarlane, FRANZCP, Head of Clinical Governance, Dementia Centre HammondCare, had to say.

“The demonstration of an extended period of both cognitive and functional stability out to 31 weeks in a patient population that would normally be expected to experience ongoing cognitive decline is an encouraging milestone in the development of ANAVEX 2-73. The 31-week data also validates the earlier observation of improvements on tasks within the Cogstate battery. The specificity and consistency of these benefits suggest that ANAVEX 2-73 can sustain activation of attentional and working memory functions with repeated dosing in Alzheimer’s disease. Of noticeable interest was also HAM-D data showing beneficial effects of ANAVEX 2-73 on insomnia, agitation and anxiety at 31 weeks, which might suggest an additional important role of ANAVEX 2-73 for the amelioration of behavioral and psychological symptoms of dementia (BPSD).”

We cannot discount how much an improvement in overall quality of life it is for Alzheimer's patients in regards to insomnia, agitation and anxiety. The goal of Alzheimer's treatment is to make patient's life more manageable. This is why the patient retention rate at the end of the 31 weeks was 84%. Further helping make the case for 2-73 was the results where 2-73 was used alone compared to with Donepezil.This is why the 17-week and 31-week data supports the plan to prepare for a larger, double-blind, placebo-controlled study of ANAVEX 2-73 in Alzheimer’s disease patients. Also keep in mind that the primary endpoint of the Phase 2a trial is to establish safety, tolerability and maximum tolerated dose (MTD) of ANAVEX 2-73. Secondary endpoints include exploratory cognitive as well as functional measures using Mini Mental State Examination (MMSE) and evaluation of Alzheimer’s Disease Co-operative Study - Activities of Daily Living Inventory (ADCS-ADL), respectively. ANAVEX 2-73 has proven already to be safe and that it is well tolerated and why the retention rate is so high at 84%.Are we disappointed by the results? Yes and No. We're more disappointed in the market's reaction. However, when the market overreacts, that creates a buying opportunity. For those that missed out on the earlier bull run in AVXL, the pullback is welcomed. While in the short term, we expect some further weakness as more nervous longs bail, the reality is that we're still in the middle of the 2-73 study. There's still plenty of innings left to play. As we said on July 1:

After consolidating between $4 and $4.75 per share for over a month, we’re finally getting the breakout we were looking for on Anavex Life Sciences Corp (NASDAQ:AVXL). We’ve been pounding the table on AVXL for quite some time and told our readers and subscribers that Anavex will continue to defy the bears. There is perhaps no other biotech trading that has more haters than Anavex. When you objectively look at Anavex and see that the science behind the company is real, it astonishes us that there seems to be more rooting for its failure than its success.

We will be monitoring AVXL closely and alerting our subscribers when we feel the time is right to enter on the long side. For our latest updates on AVXL, sign up for our free small cap newsletter today!Disclosure: We have no position in AVXL and have not been compensated for this article.

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