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Anavex Life Sciences Corp (NASDAQ:AVXL) Is About To Enter A Pivotal Year

Anavex Life Sciences Corp (NASDAQ:AVXL) Is About To Enter A Pivotal Year
Written by
Chris Sandburg
Published on
December 13, 2016
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Anavex Life Sciences Corp. (NASDAQ:AVXL) is picking up strength on the back of a corporate update, which offered a high degree of clarity in to the company's numbers and operations ahead of what looks set to be a pivotal 2017 for the company. We've kept a close eye on Anavex over the last year, and expect big things from the company in the long run, but its up more than 30% over the last month, and it's time to ask whether there's going much run room ahead of next year's catalysts.Let's take a look at the conference update, and try to come up with an answer.First, for those not familiar with a company, let's start with a quick introduction.Anavex is a development stage biotechnology company with a focus on developing treatments for neurodegenerative diseases. It's current lead focus is Alzheimer's and it's lead asset is ANAVEX 2-73. The drug is designed to work by restoring what's called cellular homeostasis to the neurological environment in Alzheimer's' patients. The process through which it achieves this is pretty complicated (we've discussed it in detail in the past, so readers looking for an introduction can find one here) but essentially the drug attempts to reverse the damage done by the disease at a cellular level. If it works, therefore, Anavex hopes to be able to halt, or even reverse, the progression of Alzheimer's. Obviously this is a big task, and one that hundreds of companies haven't been able to complete successfully in the past two decades alone, but early data suggests that Anavex might have something that sets it aside from the rest of the bunch.The next job is to take the drug into a large scale efficacy study, and it's this that is going to serve up catalysts next year, and make 2017 a make or break year for the company.We learned the financial position of Anavex ahead of this make or break year from the latest update – so how do things stand?For a company in this position, the most important metric is cash on hand. Shareholders can avoid being diluted if the company can fund its upcoming trials, and in this instance, things look good. Anavex reported cash and cash equivalents of $17.3 million as of December 12, 2016. The company wants to kick off two trials next year, one the above discussed phase II/III in Alzheimer's and another, a phase II in Rett's. There's also the chance of a phase II initiation in Parkinson's but we get the impression that this latter trial is secondary in terms of focus right now, meaning it's probably resource pivotal.The cash on hand should be enough to carry out both of these trials, just about, but there's a good chance the company will raise at some point mid 2017, either for continued trial funding or ahead of a registration submission for 273. During fiscal 2016, which ended at September 30, the company spent just shy of $10 million. This, of course, will ramp up in 2017 as the trials initiate, but should remain within the current on hand figure.Current market cap is $155 million, which as mentioned is up considerably across the last month alone, but we think there's plenty of run room left as we head in to 2017. The three trial initiations are all catalysts, and speculative volume should flow in to the company in anticipation of these catalysts moving markets. As data hits from the lead trial, and it should hit quite early on an interim release, and its' indicative of efficacy, there's going to be a lot to get excited about.Bottom line: this one's not done yet.We will be updating our subscribers as soon as we know more. For the latest updates on AVXL, sign up below!Disclosure: We have no position in AVXL and have not been compensated for this article.

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