Summary

This article is a response to a recent bearish Anavex article on SeekingAlpha.

It is also some amount of research put together to justify my belief in the science behind Anavex.

Anavex may succeed, or it may fail, but it has a novel approach to Alzheimer's that should be fairly considered by investors.

A recent bearish article on Anavex (NASDAQ:AVXL) on SeekingAlpha led a few of my subscribers to ask me what's going on with the company. I hadn't written much on Anavex (AVXLD) since I interviewed Dr Missling and published a PRO article couple months back. So I emailed him with a list of questions in order to get his comments. I even offered to set him up for a live discussion with my subscribers. However, it appears that he is not interested in talking to me. Too bad. That ruffled me a little bit, I must admit.

But then I considered that this is a company which I had called out at about 45 cents, and in 3 months, it went up 5-fold, making me a bit of money. Also, I considered that they may actually come up with some good drug for Alzheimer's - so I calmed down and got back to my task of writing a rejoinder to that bearish SA article.

Here's what I had asked Dr Missling:

1. What is the selection procedure for the Michael J Fox foundation grant that you received for Parkinson's?

2. Please give us a detailed brief on the current clinical stage of ANAVEX 2-73?

3. Can you give me a few peer-reviewed journal citations for the science behind ANAVEX 2-73?

4. Please give a competitive analysis of ADAS-COG, EEG/ERP, and other measurements, especially with respect to ANAVEX 2-73 and its trial.

5. Comment on larger and smaller sample sizes and their relevance and strength of proof in Alzheimer's trials.

6. Did you pay a penny stock website $200,000 for a 1-day promotion campaign?

Now, about that last question. I really don't believe anyone who doesn't have cognitive impairment is going to pay some rag the price of a Greek villa in an economic downturn for a one day promotion campaign. I mean, who even listens to these people any more? I know scientist types are sometimes a little clueless about how things work on Wall Street - but even they know better than that. I was also told by a fellow contributor that he got it direct from their Director of Business and IR that neither Anavex nor the CEO paid that rag sheet anything. Now, I really don't know who their Director of Business and IR is, because I couldn't find anybody with that specific designation on their website. Nevertheless, I still cannot believe that figure.

And even if it were true, I don't care about self-promotion as long as it is not false-promotion. What's that catchy American phrase? - if you've got it, flaunt it.

As for the first question, the reason I asked that is because MJFF is the leader in Parkinson's disease research support. Unlike retail investors, they have solid research abilities of their own in evaluating a grant request - they cannot be easily duped. So if they have given AVXL a grant, it means that they have studied the drug candidate, ANAVEX 2-73, and found it interesting in Parkinson's - a disease similar to Alzheimer's in many respects. Here's an extensive quote from their grants page to show why they gave it to Anavex:

Neurorestorative Effects of a Sigma-1 Receptor Agonist in a Model of Parkinson's Disease

Research Grant, 2015

Study Rationale:
In a previous MJFF-sponsored project, we evaluated PRE-084 (an experimental compound binding to the sigma-1 receptor) in pre-clinical models of Parkinson's disease. Chronic treatment with PRE-084 produced a gradual improvement of motor deficits and activated molecules involved in brain repair. In this project, we will evaluate a sigma-1 receptor agonist (ANAVEX2-73) produced by Anavex, which is now being evaluated in patients with Alzheimer's disease. In our experimental study, the efficacy of ANAVEX2-73 on Parkinson's biology will be compared to that of PRE-084 and other Sig-1R ligands.

Hypothesis:
The overarching aims of the study are to find a dose of ANAVEX2-73 producing a pattern of neurorestorative effects comparable to that of PRE-084 and to translate this dose into an equivalent dose for human use.

Study Design:
We will test the biological activity of ANAVEX2-73 in pre-clinical models and compare to PRE-084, previously shown to promote recovery of forelimb use, up-regulation of trophic factors and anti-inflammatory effects in the brain in this model. We will assess target engagement by measuring the ability of the tested compounds to prevent a radioactive ligand from binding to brain sigma-1 receptors.

Impact on Diagnosis/Treatment of Parkinson's Disease:
The present study holds potential to impact the way Parkinson's disease is treated. We aim to develop a new pharmacological approach to boost repair mechanisms and dampen inflammation in the part of the brain that is most affected by Parkinson's. If this treatment exerts the expected effects, it could slow the progression of the disease.

Next Steps for Development:
If successful, this study will accelerate the translation of pre-clinical findings into the first clinical trial of ANAVEX2-73 as a potential disease-modifying therapy for Parkinson's disease. ANAVEX2-73 has already been tested for safety and tolerability in humans with positive results.

You may want to read through that entire text to see that they do indeed say some nice stuff about ANAVEX 2-73, specifically that it may hold "potential to impact the way Parkinson's disease is treated." Also note that PRE-084, another drug that binds to sigma 1-r, demonstrated "a gradual improvement of motor deficits and activated molecules involved in brain repair."

Question 2 is simply answered. ANAVEX 2-73 reported early evidence of improved cognition in AD patients from the initial phase 2a study data at the AAIC 2015 in July. Late September, and ahead of schedule, Anavex completed patient enrollment for the Phase 2a Alzheimer's trial, enrolling 32 patients in all. This gives it time to report topline results by end-2015. Although this is an MTD trial, it could still act as a major catalyst. Event-related potentials (EEG/ERP) will be used to assess cognitive effects in these 32 patients, most of whom are also taking donepezil. Part B of the study will take another year. "Secondary endpoints are dose response, bioavailability, exploratory cognitive effects using electroencephalographic (EEG) activity, including event-related potentials (EEG/ERP), Mini Mental State Examination (MMSE), Cogstate and evaluation of ADSC-ADL and add-on therapy to donepezil, the current standard of care, which represents ANAVEX PLUS, the combination of ANAVEX 2-73 and donepezil (Aricept)."

Now let's come to the 3rd question, the pedigree of sigma 1-r agonists and how far they have been studied by scientists and shown to help with cognition and motor function in AD patients. I did some research, and there are literally hundreds of scholarly articles and research on the subject. Here's a shortlist, abstracts redacted for easier comprehension:

  1. Sigma-1 receptor agonists as therapeutic drugs for cognitive impairment in neuropsychiatric diseases.

Abstract

Cognitive impairment is a core feature of patients with neuropsychiatric diseases such as schizophrenia and psychotic depression. The drugs currently used to treat cognitive impairment have significant limitations, ensuring that the search for more effective therapies remains active. Endoplasmic reticulum protein sigma-1 receptors are unique binding sites in the brain that exert a potent effect on multiple neurotransmitter systems. Accumulating evidence suggests that sigma-1 receptors play a role in both the pathophysiology of neuropsychiatric diseases, and the mechanistic action of some therapeutic drugs…

2. Role of sigma-1 receptors in neurodegenerative diseases

Abstract

…Sigma receptors, particularly the sigma-1 receptor subtype, …can modulate many biological mechanisms associated with neurodegeneration. These receptors therefore represent compelling putative targets for pharmacologically treating neurodegenerative disorders.

3. Neuroprotective effects of sigma-1 receptor agonists against beta-amyloid-induced toxicity

Abstract

…Beta-amyloid protein-induced neuronal death was substantially attenuated by the σ1 receptor agonist .… These results suggest that σ1receptor agonists might function as neuroprotectant agents in Alzheimer's disease.

4. Sigma1 (σ1) receptor agonists and neurosteroids attenuate β25-35-amyloid peptide-induced amnesia in mice through a common mechanism (by T Maurice, connected with Anavex)

Abstract

The sigma1 (σ1) receptor agonists exert potent anti-amnesic effects, as they apparently block the learning impairments either induced by the muscarinic receptor antagonist scopolamine, the N-methyl-d-aspartate receptor antagonist dizocilpine or inherently due to the age-related deficits in senescence-accelerated mice. …

These results demonstrate that: (NYSE:I) the anti-amnesic effect of σ1receptor agonists may be of therapeutic relevance in pathological states affecting the cholinergic and/or glutamatergic systems, such as in pathological aging; (ii) neurosteroids play an important role in learning processes and may collectively constitute a therapeutic target; (NASDAQ:III) the interaction between σ1 systems and neurosteroids appears indeed of behavioural relevance.

I could go on and on. Bottomline, there's considerable research to show that a proper clinical trial of a sigma -1r agonist is necessary in Alzheimer's. A lot has been done in abeta plaque reduction, and it hasn't worked. Anavex is an interesting, upstream hypothesis that needs to be tested out in clinical trials. That is what Anavex is doing, and whether it ultimately succeeds or not, it is on the right track.

Questions 4 and 5 I wouldn't discuss too much because I am not an expert in the area. However, it is my understanding that subjective measurements of cognition, memory or motor function aren't always as sound as objective or machine-read measurements. On the other hand, machine measurements are not always easily interpretable. A proper balance between the two types are required, and a comprehensive endpoint in a comprehensive trial should consider both. As for trial size, I believe that is somewhat limited by budget. Also, this is phase 2a, and one can expect larger ITT populations as we progress into further trial stages. This trial will simply indicate and inform future trials.

So, what did this article (try to) accomplish? Well, it tried to show that this small microcap company Anavex, which has shown unbelievable upward movement in the last 2-3 months, isn't a scam company. The bearish article intended to say that because Harvey Lalach is involved with AVXL, therefore it is a scam. Well, I don't care about Harvey Lalach, especially since he doesn't seem to be around any longer. However, there is some reputable science behind this company. They can succeed in trial, or fail in trial - but they are, in fact, doing a trial on a robust hypothesis.

This article also tried to show that not everything that looks too good to be true is false. The bearish article by fellow contributor Daniel Ward resorted to some illogicality when it suspected Anavex by reason of overperformance, or because it is a shell that was once a photofinishing business. These things don't matter. What matters is the science. I think we have established that there is believable science behind this company. Hence my bullish stance.