Summary

• AVXL is nearing completion in multiple pivotal trials in neurodegenerative and neurodevelopmental diseases.

• Blarcamesine, an S1R & M1-M4 muscarinic agonist is capable of rescuing cellular homeostasis throughout the body, from the CNS to the heart.

• Reductions in neuroinflammation, expression of neurotransmitters, protein clearing, restorative autophagy, and mRNA transcription, likely prompt cascading beneficial effects.

• I outline a possible prioritization for future indications. Assessed indications were: Alzheimer's Disease, Parkinson's Disease Dementia, Parkinson's Disease, Rett Syndrome, Angelman Syndrome, Infantile Spasms, Fragile X, holistic Autism Spectrum Disorders, Frontotemporal Dementia, Depression, Cancer, Cerebral Palsy, Retinal Disorders, Sexual Dysfunction, General Aging, ALS, Multiple Sclerosis, Heart Disease, Batten Disease, and Insomnia/Sleep issues.

• Complete analysis is available in PDF form.

Investment Thesis

Anavex Life Sciences Corporation (AVXL) is expecting late-stage Rett Syndrome and Alzheimer’s disease clinical data in 2022 for their lead drug candidate Blarcamesine (Anavex 2-73). Blarcamesine is potentially the most promising remedy for holistic neurodegenerative and neurodevelopmental diseases in development, thanks to its wide-sweeping mechanism of action (MOA) revolving around Sigma-1 receptor (S1R) & muscarinic agonist properties. Considering a 5-year cash runway of ~$151m, no expectation for near-term dilution, and short-term pivotal trial outcomes, the current $1.05B (~$13.60 per share) market cap is significantly undervalued and should currently surpass $2B (~$25 per share), as other biotech companies - such as Annovis Bio Inc. (ANVS) and Cassava Sciences Inc. (SAVA) - with worse clinical outcomes or lesser statistical power, and earlier-stage trials, have achieved. While ANVS and SAVA have their unique merits, AVXL deviates with exceptional room for growth beyond Alzheimer's, an extensive pipeline in large unmet needs, a slew of orphan disorders, an immaculate safety profile, and an entire platform of other early-stage drugs like Anavex 3-71, Anavex 1-41, and Anavex-1066 which provide long-term growth potential.

Wide-Sweeping Therapeutic Potential

S1R expression is normally triggered in old age and during times of neuronal stress in order to activate failing neurotransmitters (compensatory) such as M1-M4 muscarinic, D1/D2 dopamine, and 5-HT serotonin receptors. S1R is seen to be under-expressed in CNS disorders like Alzheimer's Disease. Additionally, S1R expression resumes mitochondrial autophagy function – a process critical to homeostatic aging. In most neurodegenerative and neurodevelopmental diseases, chronic neuroinflammation, and cascading neurotransmitter faults lead to catastrophic failure of the cell, which intensifies negative effects throughout the body. Perhaps most detrimental, this state of disrepair isn’t conducive to neurogenesis or neuroplasticity, preventing the body from healing itself. In essence, the ability for the body to slowly bring back neurotransmitter expression, rescue autophagy, and suppress neuroinflammation, is what Blarcamesine has now proven to do in a robust array of preclinical and in-human Rett Syndrome, Parkinson’s disease Dementia, and Alzheimer’s disease trials. (Anavex & Autophagy) (In-depth Autophagic Response)

In a 130-hour meta-analysis, comparisons between therapeutic MOA benefits and potential disease indications were made to mathematically quantify (with a degree of uncertainty) how relevant Blarcamesine’s therapeutic effects are to a swath of neurodegenerative and neurodevelopmental diseases. Therapeutic benefit assessed include; REM sleep improvement, Gut Microbiome Diversification, Chromatin Remodeling/Gene Expression, Autophagic Homeostasis/Protein Clearing, Neuroinflammation Reduction, Endothelial/Nitric Oxide Regulation, 5-HT Expression (Serotonin), D1/D2 Expression (Dopamine), GABA Regulation, Calcium Regulation, BDNF Regulation (encompassing Neurogenesis/Plasticity), ATP Production, and Seizure Protection. These benefits were ran against Alzheimer’s Disease, Parkinson’s Disease Dementia, Parkinson’s Disease (non-dementia), Rett Syndrome, Angelman Syndrome, Infantile Spasms, Fragile X, Autism Spectrum Disorders (ASD), Frontotemporal Dementia (FTD), Depression, Cancer, Cerebral Palsy, Retinal Disorders, Sexual Dysfunction, General Aging, ALS, Multiple Sclerosis, Heart Disease, Batten Disease, and Insomnia/Sleep Issues.

Indication Priority Methodology

A weighted point-based evaluation matrix was then devised to mathematically prioritize therapeutic benefit to individualistic disorders. Please see below for end-results of this analysis; overarching analytic display (graphic 1), therapeutic benefit % congruent with individual disorders (graphic 2), and % of disorders therapeutic benefits are congruent with (graphic 3). One of the end-goals of this analysis was to determine whether or not Anavex made a good decision prioritizing Rett Syndrome over Angelman Syndrome in clinical trials, and whether off-label prescription for Angelman Syndrome patients would be warranted/valid considering all analyzed facets. To not tease the reader, the answer was yes, and yes.

In a similar situation accounting for 8,124,800 early stage patients, Blarcamesine can likely provide therapeutic effect vastly outpacing placebo and standard of care to 1,501,463 patients (18% of all early stage patients). These patients have the S1R wild type variant (84% probability) and non-APOE3 alleles (22% probability). Individuals have approximately 18% chance of having both S1R wild type and non-APOE3 alleles. For visualization this is "Group 2" (top green line) on the ADCS-ADL graphic.

If disease stage is unaccounted for, Blarcamesine could be expected to second-most optimally treat 13% of all MCI-AD and all-stage Alzheimer's patients. Second-most optimal treatment could see a 237% improvement over standard of care, in most cases substantially stagnating pathogenesis.

United States Alzheimer's Market Size Conclusion

Considering the metrics described above, Blarcamesine could feasibly provide at least dramatically slowed or disease-halting treatment to ~84% of early-stage patients (66%+18%), and the same treatment to ~61% of all-stage Alzheimer's patients (48%+13%).

According to multiple financial analysis conveyed prior to Aduhelm approval, large unmet need CNS indications like Alzheimer’s and Parkinson’s disease Dementia could yield $2,500 to $8,300 per patient annually (Cost Analysis f/Aduhelm). In addition, Anavex’s CEO, Christopher Missling, has mentioned expected revenues for Rett Syndrome to be in the $2-6B ballpark. The top 10 publicly traded biopharmaceutical companies currently (Dec 21) trade at an average of 36.14 P/E (Astrazeneca being an outlier at 87.66). When we combine large market penetration into highly unmet needs, the potential revenue generated could cause Anavex to easily surpass $1,000 per share if the company maintains current dilution and doesn’t further split the stock. If Alzheimer’s disease is approved in 2022/early-2023, the company could see potential peak revenues of $17-24B annually. With a P/E of 36 and minimal additional dilution, the share price would exceed $6,000. Rett Syndrome peak sales alone could cause the share price to exceed $700 in similar circumstances.

Unknowns & Assumptions

Most of the analysis within this article is contingent upon the drugs MOA working as intended and as described by the company/peer-reviewed journals. Deviation from this hypothesis would likely change market size, chances of approval, and indication swath. In addition, it is important to note potential partnership and marketing costs which would devalue the best case share price presented above. It is also possible the company ultimately fails its current clinical trials, or fails to maintain its coffers - although unlikely considering its multi-year runway. While it is technically feasible for Anavex to be surpassed in clinical development by a competitor, this seems unlikely as there are few companies running like-trials, and most are not as far in development. Finally, while the author regulated as many variables and biases as possible during the indication prioritization analysis, the author is an expert is aerospace and does not have a formal background in biotechnology - please view this analysis with a level of speculation and set expectation.

Exceedingly Bullish on Long-term & Short-term Company Growth

With the extraordinary reward presented with Anavex’ s potential clinical success, a long position in Anavex appears to be exceptionally warranted. All trials to date have had overwhelming efficacy with many transformative catalysts coming within the next 12 months. This meta-analysis lends credence to Anavex breaking the mold in precision medicine and potentially surpassing even the largest of existing biopharmaceutical companies in market capitalization (exceeding $100B) over the long-term. In the short-term, Anavex represents an extremely undervalued prospect with an absolute minimal fair value around $25 per share. 2022 will play host to at least 2 pivotal moments for Anavex; their Alzheimer's 2b/3 data readout mid-to-late year, and the conclusion of their Rett Syndrome trial suite - also mid-year. As other biotech developing S1R agonists continue expanding, it is increasingly likely S1R platforms will become a healthcare staple. Furthermore, it is my strong belief that Blarcamesine’s address of sweeping dysfunction presents the drug as the best catch-all medicine in development today.