Anavex Life Sciences Corp. Just Got a Lot More Interesting (AVXL)

Advertisement

Just for the record, a drug that’s granted the Food and Drug Administration’s so-called “orphan drug” designation isn’t inherently guaranteed the regulator’s approval. Roughly two out of three of orphan drugs end up being approved by the FDA, and almost half of all the drugs the FDA approved last year were orphan drugs.

Anavex Life Sciences Just Got a Lot More Interesting (AVXL)

Throw in the fact that only 5% of true orphan illnesses — disease that affect less than 200,000 people per year in the Unites States — have drugs that are approved by the FDA to treat that specific ailment, and what you have are some pretty compelling odds for a pharmaceutical company willing to take aim at a small market.

That’s why Anavex Life Sciences Corp. (AVXL) shares are up a hefty 10%-plus on Friday. Its ANAVEX 3-71 was recently granted an orphan drug designation by the Food & Drug Administration as a therapy for a subset of Alzheimer’s, largely mowing a path toward an eventual approval.

ANAVEX 3-71 and AVXL Stock

ANAVEX 3-71, for the unfamiliar, is the preclinical therapy that takes aim at improving cognition for Alzheimer’s disease patients, primarily by activating sigma-1 receptors.

ANAVEX 3-71 is believed to work by reducing the activity of P35, which readily becomes P25. P25 easily reacts with cyclin-dependent kinase 5 (or cdk5), which has been linked to neurodegeneration of the brain’s sigma-1 receptors. It matters, as Alzheimer’s patients tend to exhibit significantly less (about half the norm) sigma-1 receptor density in their brains; some believe this aspect of the disease is just as problematic as the buildup of amyloid beta plaque.

It may or may not be a “cure” in the sense of the word understood by most. ANAVEX 3-71 doesn’t appear to undo or repair the underlying damage associated with Alzheimer’s, though it does seem to stave off addition cognitive dysfunction with its “neuroprotection” function. Indeed, the drug is only in preclinical testing right now, meaning it has not been tested on humans.

Nevertheless, the company saw enough promise in the premise to report three weeks ago that ANAVEX 3-71 was effective at improving cognition in rats.

The FDA was obviously impressed as well.

A Foothold

To be clear, ANAVEX 3-71 is still years away from any actual FDA approval as a treatment for the masses. And, the orphan drug designation doesn’t apply to the drug’s use as a treatment for any and all Alzheimer’s patients. The designation only applies to the drug as a treatment for frontotemporal dementia (FTD), which applies to only between 10% and 20% of U.S dementia patients … or between 50,000 and 60,000 people per year.

Yet, this isn’t apt to remain a small-market solution.

It may or may not be the current intent of Anavex or the FDA, but the reality is, it’s much easier for Anavex to widen the approved usage of ANAVEX 3-71 by leveraging any success it demonstrates as a treatment for frontotemporal dementia.

This is true for several orphan drugs that show promise as treatments for non-orphan ailments, but Alzheimer’s is particularly well-suited for a drug like ANAVEX 3-71 since in the course of treating frontotemporal dementia it may also address other symptoms of the disease.

While scientists and researchers have a pretty good handle on the causes of most diseases, Alzheimer’s and dementia continue to be gray areas.

Amyloid plaque, once thought the cause, may well be a symptom. Some research has even found this plaque to be irrelevant. Tangled tau proteins have also been scrutinized as a cause, yet that’s also been inconclusive in research. The fact is, there may be multiple causes of, and signs of, Alzheimer’s disease, and different degrees of those causes or symptoms from one sufferer to the next.

Never even mind the fact that it can be tough to quantify something subjective like cognitive function.

As for what that means to Anavex and AVXL shareholders, it opens the door to the possibility that ANAVEX 3-71 and the other drugs like it in the company’s pipeline may be more potent than presently assumed because they largely take an approach few other biopharma outfits have taken yet … the sigma-1 receptor.

Bottom Line for AVXL

While Anavex holds promise, current or prospective AVXL owners should bear in mind it’s still a very speculative idea, and at best remains years away from putting a drug on the market. ANAVEX 2-73 is the furthest along the development path, but it’s only in phase 2 trials at this time.

Nevertheless, from a risk-vs-reward perspective, the “reward” side of the question was pumped up quite a bit by today’s news.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

More From InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2016/04/anavex-avxl-stock-interesting-today/.

©2024 InvestorPlace Media, LLC