I know I’ve said this before, and sometimes it’s a lie: I’m going to try to keep this one brief.
Agora Financial’s FDA Trader service has a new pitch out — which normally might not get that much attention, since everyone is suddenly terrified of biotech stocks after a brutal month or two — but the promise is not just that a drug will get approved and make you rich… the promise is that this company will “revolutionize modern medicine.”
So what are they talking about? Well, the short answer is, “a cure for Alzheimer’s Disease.”
Which, depending on how long you’ve been investing in or reading about healthcare stocks, will either make you want to reach for your wallet or hide under your desk. Alzheimer’s Disease is by far the largest and most lucrative market that is underserved by pharmaceuticals — and the constant search for new treatments for this awful, high volume disease that has been a money pit for pharmaceutical companies. The disease is challenging and still very poorly understood, the only treatments available now are disappointing and help just some of the patients with some of their symptoms, and any new drug faces extraordinary challenges and very expensive clinical trials.
But, of course, if anyone does come up with a cure or a preventive for Alzheimer’s Disease that’s safe and approvable, they could make a whole boatload of money. So we see pitches about tiny biotech companies that have a cure for Alzheimer’s every now and then.
That’s what this one is today — the ad is for FDA Trader from Agora, edited by Ray Blanco (who has been the default editor of most of their technology-focused newsletters for many years — this newsletter used to be helmed by Paul Mampilly, but he moved a couple buildings down to work at Stansberry)… so what are we told about this secret little company?
Well, here’s why Gumshoe readers are asking about this one:
“On Saturday, November 7, a CEO you’ve likely never heard of will step up to the podium….
“Standing at that podium, he’ll be in front of the most respected names in his industry.
“When he starts speaking, he could change forever everything we think we know about one of the most frightening diseases in world history.Are you getting our free Daily Update
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“What he has to say could revolutionize modern medicine for reasons I’ll show you here today.
“The market frenzy his comments create could also make you incredibly wealthy.
“That’s because, when the markets open on Monday, November 9, the stock of the company this CEO leads could explode rapidly higher.
“If this CEO’s presentation on November 7 goes as well as I expect, starting Monday, November 9, you could take part in an epic share price explosion.
“I’m talking about the chance at gains of as much as 2,150% or more as this tiny company rockets from under $9.00 to $200 and beyond.”
So, 2,150% gains — nice, right? And he implies that, while it “may take time,” the huge gains will start right away on November 9. Assuming, of course, that he’s right about what this CEO is going to say.
Some more clues? Well, let me give you another wee taste of the hype first:
“If You Buy Just One Stock For the Next Year, This is the One
“This CEO’s company might control what we come to view as the breakthrough of the decade.
“Over 5 million Americans, in fact, suffer as I write from the disease this company aims to treat.
“Actually, ‘treat’ isn’t the right word.
“If this company’s trial results continue to progress as well as early reports indicate, this company’s breakthrough could actually ‘reverse’ the disease.
“What we’re dealing with here… for the first time in modern medical history… is the potential ability to take a disease with no cure and no good treatment…
“… and stop it in its tracks. That’s the big picture.
“This advance, it goes without saying, could be unprecedented. No one has ever seen anything like this before.”
OK, OK — enough drooling! I know, I know, it’s supposed to make us filthy rich, and make us feel good about owning shares of the company that finally eradicates the scourge of Alzheimer’s… so what is it?
Final clues for you — don’t worry, I won’t make you sift through the whole ad (you can see it here if you want the water torture version), but we do need to confirm that this company is the one I think it is. The clues:
“For the first time in history, we may have an AD drug on our hands that stops and reverses the symptoms of the disease.
“Here’s the important point:
“Phase 2A testing of this drug took a small group of patients with mild-to-moderate Alzheimer’s symptoms and put them on the drug for 36 days.
“83% of patients had a positive response, and the cognitive skills / memory testing of those patients increased 4x over the current ‘standard of care’ drug.
“Keep in mind, this preliminary Phase 2A data didn’t have optimized dosing. The treatment also wasn’t administered long-term.
“For a small Phase 2A study, this was a profound and fascinating result:
“83% of those who took the drug saw a benefit.
“And improvement in memory function was a robust 4x increase over the current standard drug.”
So the basic spiel is, this company is releasing more detail from their Phase 2A trial for some kind of Alzheimer’s Disease drug, and Blanco thinks it will show continued success and the stock will rocket forward as they progress into Phase 3 and move toward determining whether the drug is really safe and effective on a large scale, making us all gazillions of dollars. But, of course, you’ll “miss out” if you don’t subscribe to his newsletter ($1,600, please) before the CEO gives his presentation in a couple weeks.
And the stock? Thinkolator sez this is one we’ve seen similarly teased many, many times: Anavex Life Sciences (AVXLD on the OTCQX as of today, though it will begin trading on the Nasdaq tomorrow at AVXL), standard-bearer of the Alzheimer’s hopefuls in the junior biotech space for nearly a decade now.
Yes, Anavex will be reporting some results on November 7 at a conference — though it won’t be the CEO, it will be the principal investigator from Australia reporting the results. This will be an updated version of the results they announced a few months ago, since the first part of the two-part study has now been fully enrolled and they have more data. This is largely a dose-finding study, though they’re also hoping for some positive efficacy results and, of course, a lack of surprise safety concerns.
I am not a biotech investor, and not an expert on the disease or the drug, but my impression is that it’s a measure of how desperate we are for any kind of hope in Alzheimer’s Disease that this trial is generating so much attention — the results in July, as I saw it, were that 10 out of 12 patients showed memory improvement, without any kind of placebo arm. It’s hard enough to run a good clinical trial without a double blind placebo, but doing one in areas of memory and cognition, where you’re counting on the interpretations of patients and other human beings to judge whether there’s improvement, strikes me as not very powerful. That’s not necessarily a criticism of the company, they’re still trying to determine what dosing and regiment has the best chance of working and they will certainly be required to have huge double-blind trials before they get approval on this drug — to say nothing of part B of this current trial, which will not be complete for at least a year… it’s just a reminder that, in Alzheimer’s especially, it’s important not to get your hopes up too quickly.
The drug is Anavex 2-73, which we’ve certainly mentioned a few times — it has been the highest profile “hopeful” drug for Alzheimer’s among the junior biotechs for a long time. And it’s history tells you something about how hard it is to develop drugs for this disease — they initially thought they’d be filing for an IND and starting their Phase 1 trials for Anavex 2-73 back in 2008. Ray Blanco’s former colleague pitched this one back in December of last year, too, and he and several other newsletters have pitched it as the “end of the Grey Plague” or the “next blockbuster” for almost as long as Stock Gumshoe has existed (we started publishing in 2007, FYI).
Anavex does have other drugs in development, too — though they jump around some as hope and potential shifts, and they don’t appear to currently be spending money on any of the other drugs right now, it’s all about Anavex 2-73 and Anavex Plus (which is just Anavex 2-73 plus Aricept, the current “standard of care” drug for Alzheimer’s symptoms).
And, as you might expect, the company does not have the capital to run a multi-year Phase 3 trial (assuming they eventually get that far) with hundreds of patients — but it has become more of a mainstream stock this year as they reported good Phase 1 results, started Phase 2, and applied for uplisting to Nasdaq, with much higher trading volume and a rising price… so they should at least be able to raise money on better terms. They also have an agreement in place with their big institutional investor, Lincoln Park Capital, that could bring in another $50 million if I’m reading the terms right — presumably Lincoln park also gets some kind of sweetener in the form of warrants or pricing or something, I haven’t checked.
The presentation on the trial will be at a conference on clinical trials in Alzheimer’s Disease in Barcelona in early November, Anavex’s press release about it is here. Judging from past Alzheimer’s trials I’ve seen over the years, my guess would be that they’ll require another Phase 2 trial or maybe 2b/3a trial if you want to start parsing that, which would probably not start until next year sometime, and they’d require a long Phase 3 trial of a couple years, at least. And, of course, given the past performance of Alzheimer’s Disease drugs and the continued lack of real detailed understanding about the disease and its causes, I’d assume we should probably continue to give them a low number in the “probability of approval” department.
That’s said, I reiterate, as someone who is not not not an expert on this drug, this disease, or even this company — but the symptom-treating drugs that have been developed, have, in the rare cases where they’ve made it through to approval, taken a loooong time. The reward is high — Aricept, despite the fact that it really isn’t a “cure” for Alzheimer’s and doesn’t reverse the progress of the disease, still had peak sales well into the billions before it went off patent a few years ago — so we should expect the risk to be high, too.
For me, the biggest risk is that we’re talking about a tiny company riding high on sentiment and still probably a year or more from entering the most expensive phase of drug development (it’s up dramatically on the year, though that followed a four-year decline from the days when the IND was first being talked about for Anavex 2-73 — AVXL is up a couple hundred percent this year, and is down about 90% since the 2008 highs). I may be a bit too cynical about this one, since I’ve written about the “promise” of a real disease-modifying drug for Alzheimer’s Disease at least a half dozen times over the last seven years, and it’s always been about Anavex, and they’re still just in a Phase 2 trial with 32 patients. But that said, the stock has clearly performed well this year because of the new attention, the progress into early stage trials and lack of bad news and, probably more than anything else, the public attention and massive size of the end market.
If past Alzheimer’s drug hopes are any indication, there are four scenarios I could guess at: A, it could collapse on the next news release or sometime in the current trial because of bad news; B, it could consume a couple hundred million dollars running a big phase 3 trial and fail to show good results because of poor safety or lacking efficacy, and see the share price drop on bad news and capital raisings over several years; C, it could attract a suitor if they get “phase 3 ready” and get bought out or partnered to cut costs, driving the shares up further; or D, it could, maybe sometime early in the 2020s after another 5 years of clinical trials, eventually get approved and be the cure everyone’s looking for. My guess is “B” … but, as I noted above, I may be too cynical on this one and it has certainly gotten some folks excited so far this year.
So that’s what we’ve got for you today — whaddya think? Willing to bet on Anavex this time around? Let us know with a comment below.
P.S. I should note that our favorite biotech columnist, Dr. KSS, has been unimpressed by Anavex in the past — he last commented on it here, I think.
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