Eoneren
A paper recently came out in Science magazine that has great importance for Anavex Life Sciences Corp. (NASDAQ:AVXL) and other Alzheimer’s Disease (“AD”) drug developers that are not working with the amyloid plaque hypothesis. The paper claims that a seminal 2006 paper published in Nature, lead authored by Sylvain Lesne, may have used manipulated images to prove the so-called amyloid hypothesis. As of today, the original Nature paper has this editorial comment:
14 July 2022 Editor’s Note: The editors of Nature have been alerted to concerns regarding some of the figures in this paper. Nature is investigating these concerns, and a further editorial response will follow as soon as possible. In the meantime, readers are advised to use caution when using results reported therein.
In the last 16 years, billions of dollars have been spent on Amyloid beta plaque research, leading to just one highly controversial drug approval – Biogen’s (BIIB) aduhelm. Other research areas such as inflammation, immune dysfunction, protein misfolding, even bacterial infection, have been sidelined by the “mainstream.” As the Science paper says:
Hundreds of clinical trials of amyloid-targeted therapies have yielded few glimmers of promise, however; only the underwhelming Aduhelm has gained FDA approval. Yet Aβ still dominates research and drug development. NIH spent about $1.6 billion on projects that mention amyloids in this fiscal year, about half its overall Alzheimer’s funding. Scientists who advance other potential Alzheimer’s causes, such as immune dysfunction or inflammation, complain they have been sidelined by the “amyloid mafia.” Forsayeth says the amyloid hypothesis became “the scientific equivalent of the Ptolemaic model of the Solar System,” in which the Sun and planets rotate around Earth.
Coming now to Anavex, its AD drug is Blarcamesine, or ANAVEX-2-73, which is an agonist of the intracellular sigma-1 chaperone protein. While this is well-known material in longtime AVXL bull circles, here’s a quick quote from the ALZFORUM describing the mechanism of action:
Specifically, it is a mixed ligand for sigma1/muscarinic receptors. Expressed in most tissues and located at focal contacts between mitochondria and the endoplasmic reticulum, the sigma-1 receptor forms heterodimers with many other membrane receptors, and as such influences multiple cellular pathways and physiological processes. Blarcamesine reportedly binds the sigma-1 receptor in the high nanomolar and the muscarinic receptor in the low micromolar range.
What I want to point out is that Blarcamesine works entirely differently and has no relation to the Aβ hypothesis. On the other hand, according to ALZFORUM, dozens of clinical trials are being run with the Aβ hypothesis. Thus, one, there will be less competition for companies like AVXL. Two, hopefully, the bear thesis will be more consistent with the lack of success in the Alzheimer’s space. Bear and bull theses both have their uses in investing, as in a democracy. However, what I decry is the motivation, which should ideally be to help other investors and support medical innovation, not to manipulate a stock’s price for personal gain.
AVXL stock is up 30% since my May coverage. In that article, I noted some of the criticisms surrounding their Rett Syndrome trial. The company now has 4 active assets, 2 in clinical trials, and they have 6 phase 3 clinical trials running right now. This is a long way from where they were a few years ago, with nothing to show except a lot of criticism.
Recently, there was a selloff in the Alzheimer’s space after Roche’s (OTCQX:RHHBY, OTCQX:RHHBF) much-touted crenezumab, another anti-amyloid drug, failed a 252-patient midsized trial. In that same period, Biogen announced halting of commercial activities for aduhelm after the controversial drug failed to get payer coverage in the U.S. It is sad, however, that non-amyloid approaches to Alzheimer’s should be hurt when amyloid approaches fail. It should have been the other way around. Hopefully, debunking the myth of the amyloid hypothesis will change this pattern.
2022 is an important year for Anavex. It will release data from two phase 2/3 trials in 2H 2022 – Alzheimer’s disease, and for children with Rett syndrome. The stock is quite buoyant; in June, one analyst raised their price target to $33. Among non-amyloid candidates, this is the most advanced; Cassava Sciences (SAVA) has had some major issues lately, although simufilam is also a promising oral molecule.
Just this month, at the Alzheimer’s Association International Conference (AAIC) held in San Diego, Anavex presented data that showed how ANAVEX2-73 impacted the neurodegenerative genes of patients with Alzheimer’s and Parkinson’s disease. According to the company:
Expression levels of pathological dysregulated neurodegenerative genes of both Alzheimer’s and Parkinson’s disease were significantly restored by the therapeutic effect of ANAVEX®2-73 (p<0.005)
Here’s how this happened. Transcriptomics analysis (RNAseq), which helps understand how genes express proteins, was performed on 14,150 genes of Parkinson’s disease dementia (PDD) patients treated with ANAVEX®2-73 as well as those on placebo. The analysis identified a gene network which was differentially expressed in ANAVEX®2-73 patients than in placebo patients, after 14 weeks of treatment. This gene network was relevant to pathways involved in neurodegenerative diseases, especially Alzheimer’s disease and Parkinson’s disease, and its presence in the drug arm and not in the placebo arm with stat sig (p<0.005) demonstrated the role of ANAVEX®2-73 in restoring genetic expression, lack of which is usually seen in these patients. Previously, this trial also showed improvements in motor and cognitive functions. The correlation between such improvements and relevant gene expressions through the agency of ANAVEX®2-73 is what makes this study very interesting.
Financials
AVXL has a market cap of $900mn and a cash reserve of $153mn. As the company noted in their earnings call:
At our current cash utilization rate and range, we believe we have sufficient cash runway to fund operations and clinical programs beyond the next four years.
Research and development expenses for the third quarter of 2022 were $9.3 million, while general and administrative expenses were $3.2 million.
The company’s cash runway guidance, as the CEO clarified in their earnings call, takes into consideration some commercialization costs, helped by the fact that they have “sufficient drug product for the entire commercial rollout of ANAVEX 2-73 in Rett syndrome.” However, the company is also considering other non-dilutive debt financing at a later stage.
Bottom Line
AVXL is a very interesting stock, and the next 6 months will have important data updates. Given the extreme social media debate surrounding every aspect of the company, I am somewhat wary of the stock. Such debates often do not lead to rational price movement; however, like I said, I look forward to how this program develops in the next year or so.
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