by Sonya Colberg, Senior Editor - 10/14/2015 12:47:52 AM
The Anavex Life Sciences (OTC: AVXLD) chief executive told TheStreetSweeper that he has no idea who was so kind as to pay $200,000 to a penny stock newsletter to hype the company stock.
“Absolutely not by us. That’s crazy!” CEO Christopher Missling told TheStreetSweeper in an Oct. 13 telephone interview. “We only do very ethical work. Let me tell you this. We really don’t want any association with anything like that. It’s absolutely inappropriate.”
The Stockpalooza email was reproduced in a Hotstocked newsletter here, and certainly sounds like a paid promotion:
Importantly, Stockpalooza removed all doubt about that Anavex tout. The newsletter said in its disclaimer that it expects $200,000 for promoting AVXLD:
“StockPalooza.com.com expect to be compensated Two Hundred Thousand Dollars Cash via Bank Wire Transfer by a third party for a 1 Day Marketing Program regarding AVXLD. This compensation/expected compensation, expired or not, is a major conflict of interest in our ability to be unbiased. Therefore, this newsletter should be read as a commercial advertisement only. The third party, company, or their affiliates may wish to liquidate shares, which has the potential to hurt share prices.”
The complete disclosure is below:
Mr. Missling said he would probably have to take legal action against a company “blaming or accusing us.”
TheStreetSweeper reiterated that a third party reportedly bought the promotion and asked if he knew who that might be. Mr. Missling said he had “no idea about it.” He insisted that such a promotion doesn’t make sense because the company burns only about $400,000 per month.
“We are not by any means highly promotional,” said Mr. Missling. “We would never, ever consider paying even $1 for what you mentioned.”
TheStreetSweeper will continue investigating that generous promotion and other concerns under development in the ongoing Anavex drama.
Immediately following our Oct. 6 expose, here, the over-the-counter stock company announced a 1-to-4 reverse stock split that provided an automatic shot in the arm needed for an uplist application to the Nasdaq.
“I don’t react to anything. I am doing my job,” said Mr. Missling.
He said they had been working on uplisting for “many, many months.”
Along with the red flags TheStreetSweeper recently described here, we’ve highlighted additional issues surrounding Anavex:
*Tout, Tout - Anavex suddenly announced – one day before it happened – that the company would present during the Oct. 13 “OktoberINVESTfest” program. This is an extremely small “Invest in Bavaria” conference, here.
And the presentation was allotted just 20 minutes. The overview appears to be the shortest presentation of the day and, as Mr. Missling confirmed, was identical to the Ladenburg presentation in September. No new data. In fact, there’s been nothing new to present since the unremarkable presentation in July.
Mr. Missling said investors simply want companies and management to be seen.
"It's not promotional," he said. "We were invited. We didn't pay for it."
So … Another announcement. The same old presentation. In our opinion, just more hype.
*Cruel Hope - When TheStreetSweeper suggested to Mr. Missling that it is cruel to offer false hope for Alzheimer’s disease, Mr. Missling said, “We’re cautiously optimistic. I don’t want to have anyone’s hopes up.”
Anavex’s lead candidate is just in phase IIa testing and he said we’ll have to wait to see if the candidate even progresses to phase III.
“Nothing else matters but phase III,” said Mr. Missling.
We agree. Overvalued Anavex is even more speculative and risky for investors prior to phase III - which may or may not happen, anyway.
*No Current Roskamp Connection – Anavex announced a clinical development agreement in January 2014 with Roskamp Institute, a company that proclaimed positive results for a product of Star Scientific, a company TheStreetSweeper wrote about in 2011. The biotech was served with federal criminal subpoenas in 2013 regarding private stock placements, ultimately leading to a 2-year prison sentence last January for former Virginia governor Bob McDonnell.
“Maybe we didn’t know about it at the time, I guess,” said CEO Missling.
He said nothing moved beyond initial discussion with Roskamp at the time.
“We basically have no connection with them anymore,” he added.
*Overseas Trials - Despite this headline, “Anavex receives regulatory approval to initiate phase 2a clinical trial of Anavex 2-73 and Anavex Plus for Alzheimer’s disease,” the trial has not been conducted in the US. Rather, it received Down Under approval for clinical tests that are being conducted in Australia. Mr. Missling said conducting the study in Australia takes about as long as it would take to prepare a new drug application in the United States. He said if phase III happens, it will take place in the U.S.
*Small Trial - Testing only 32 patients, as opposed to the typical 100 to 300 patients, Anavex’s phase IIa test involves an unusually small number of participants even for such early human testing. Mr. Missling said 32 is sufficient and more efficient at this stage.
*Phase II – This phase simply determines whether the drug can have any efficacy whatsoever. At this point, the drug is presumed to have no therapeutic usefulness at all.
*Phase IIa – Anavex says it will present results of this subset of phase II next month. The primary purpose is designed simply to explore safety and how much drug should be given. Mr. Missling said the company intends to release novel results of data in November.
“If it turns out to be objectively interesting or intriguing, it will be what will be. I don’t know what the data will be,” said Mr. Missling.
If the drug makes it to phase III, it would need FDA approval and big bucks - costs can run around $500 million to $1 billion to go from lab to commercial approval in the US. But Anavex has only ~$13 million in its cash drawer.
No one has found an Alzheimer's cure after many years of research by top pharmaceutical companies. Eli Lilly, plus the team of Pfizer, Elan and Johnson & Johnson are only just now anticipating possibly getting their drugs to market as early as 2016. Even then, analysts predict those two drugs have only a 20-to-50 percent shot at success.
In our view, Anavex is more likely to get hit by lightning – or run out of tolerant investors - than to be the company that eventually puts an effective Alzheimer's drug in the medicine cabinet.
After more digging into Anavex – previously traded under the stock symbol AVXL, but temporarily trading under AVXLD - we remain convinced the stock is excessively hyped and continues to pose a significant investment risk.
We believe a fair valuation for Anavex stock, taking into consideration the stock split, is about 55 cents to 60 cents per share.
* Important Disclosure: The owners of TheStreetSweeper hold a short position in AVXLD and stand to profit on any future declines in the stock price.
* Editor's Note: As a matter of policy, TheStreetSweeper prohibits members of its editorial team from taking financial positions in the companies that they cover. To contact Sonya Colberg, the author of this story, please send an email to firstname.lastname@example.org.
These crooks will try anything to steal your shares.
Ignore the noise
Hold on to your shares
Also the article came out around APRIL 2015
Am sure with data in November.7 coming and we will be on everyone radar
Anavex will put a stop to it
Can you imagine how huge this will be in 10yrs?
If everything goes well
Inside Science) -- The great plague is coming. After 100 years of research and billions of dollars spent around the world, we still have no protection and there is none on the horizon.
The coming public health disaster is Alzheimer's disease and other forms of dementia. Alzheimer's already is the sixth leading cause of death in the U.S., the fifth leading cause for Americans over the age of 65, and these ranks may even be higher, as death certificates may underreport the actual number of cases. In 2010, according to the Centers for Disease Control and Prevention, 83,494 Americans died of it, and it was a contributing cause of 26,488 more deaths. The cost of health care to treat Alzheimer's that year was $200 billion and is heading to the trillion dollar mark.
Around 40 million people have a form of dementia world-wide. Dementia is a broad term for cognitive decline, the inability to think, reason, and remember. More than half the cases are Alzheimer's. Other types include vascular, Lewy body and frontaltemporal dementias.
Because people are living longer and Alzheimer's is generally a disease of age, the number of cases is expected to grow quickly. The result could be catastrophic.
The country that is most likely to be hit the hardest is Japan. With a shrinking, aging population, it is predicted that by 2060 more than 40 percent of the population will be over the age of 65 -- prime candidates for Alzheimer's and other dementias.
The disease is expected to become so prevalent that it may disrupt Japan's economy and society if no treatment is found, according to Takaomi Saido, team leader at the Laboratory for Proteolytic Neuroscience at Riken University, quoted in the newspaper, Japan Times.
The first patient
Alzheimer's disease was first identified at the end of the 19th century, when a German woman, a homemaker named Auguste Deter, showed signs of mental deterioration well before such symptoms typically make their mark. She was 51, much too early for senile dementia.
When she died, Alois Alzheimer, a neuropathologist, and his partner, Emil Kraepelin, did an autopsy and found that Frau Deter's brain was clogged with lumpy, oval-shaped clumps, plaques of the protein beta-amyloid and tangles of a protein now known as tau. The men agreed the new disease would be named after Alzheimer.
There are several forms of Alzheimer's, a relatively rare kind that runs in families; an early-onset variety that strikes in mid-life (about five percent), and the more common disorder found in people — more likely women — later in life, usually people in their 70s and 80s.
Beginning very early in life, people naturally acquire a damaging substance called tau in the brain. It has been found in children as young as 10 years old, said Eric Karran, Director of Research at Alzheimer's Research UK, Britain's leading dementia research charity.
"What we think happens, everyone — you, I, everyone we consider normal — has tau abnormalities in the brain," he said. By itself it does not do enough damage to make a difference. As we get older, it is likely responsible for the normal, age-related memory loss many people experience. Symptoms include common complaints like losing keys and misremembering names.
But, if there is another "provocation," the deposition of amyloid, an amino acid, the result is far more severe. The tau creates the tangles that clog the brain and the beta amyloid forms the plaques. Nerve cells die and the brain loses a lot of tissue.
The reason there is such a long time between the beginning of the disorder and the symptoms, Karran said, is in part because of the plasticity of the brain. As the amyloid does its damage, the brain compensates. If one neural pathway doesn't work, the brain finds a detour. That works until there are no more detours and the damage becomes evident in the patient's behavior.
Two people can have the same apparent damage but one has mental difficulties and the other doesn't. Scientists think people have a cognitive reserve, and people who use their brains, are well-educated and use analysis in their work, are less likely to be affected. At least, that is how the reasoning goes.
Yet, many very bright active people get Alzheimer's, including the writers Iris Murdoch and Terry Pratchett (who died of it earlier this month), artist Norman Rockwell, and the composer Aaron Copland. The victim in the best-selling novel and film Still Alice, is a linguistic professor. Her condition is totally plausible.
A lack of effective treatment options
Four drugs have been approved to treat Alzheimer's in the U.S. Their use is somewhat controversial among neurologists because they do not work very well, if at all. They seem to slow the progression of the disease for some people for a while and then stop working. Like drugs for Parkinson's, they treat symptoms of the disease, but not the underlying pathology. Nonetheless, they are the only treatments for Alzheimer's.
Three of the drugs are called cholinesterase inhibitors, which essentially protect against the depletion of acetylcholine, a neurotransmitter involved in communication between brain cells. Acetylcholine plays a role in memory and learning. The best known because it is widely advertised is Aricept, available generically as donepezil. Two other similar drugs are Razadyne (galantamine) and Exelon (rivastigmine).
The British National Institute for Clinical Excellence withdrew approval of donepezil in 2005 for use in mild to moderate Alzheimer's disease, saying there was no evidence it did any good. They changed their minds a few years later and permitted its use for moderate cases of Alzheimer's. It still is prescribed for mild to moderate Alzheimer's in the U.S. as well as for more severe stages of the disease.
The other drug is Namenda. Called an NMDA-receptor antagonist, which protects healthy nerve cells from the neurotransmitter glutamate. Alzheimer's patients have too much glutamate that overstimulates cells.
There is no way to measure the effectiveness of the drugs — there is no reliably accurate test for Alzheimer's the way a doctor could see someone's temperature go down after taking medication, or measuring sugar in the blood. The drugs do not appear to alter anything; if they work at all, they treat the symptoms while the disease continues to kill brain cells. One huge study in the United Kingdom showed the drug-induced plateau lasts about nine months if it works at all. Karran said the drugs were tested on an efficacy measurement scale ranging from 1 to 70 and registered between 2.5 and 3, hardly anything.
Nechama Bernhardt, a Towson, Maryland neurologist, in private practice, who prescribes the drugs, said it is almost impossible to determine their efficacy. For instance, most people with Alzheimer's also are depressed, and depression can lead to cognitive impairment. Sometimes, it is the first symptom noticed. If the patient is successfully treated for depression and at the same time they undergo Alzheimer's treatment, the impairment improves and physicians can't tell whether it was the depression medicine or the Alzheimer's drugs.
Doctors still prescribe the available Alzheimer's drugs because they are cheap (available in generic form) and that's all they have to offer.
In fact, it is not only Alzheimer's that is the threat, said Bernhardt.
"We have no cures for any of the neurodegenerative diseases, including Parkinson's and ALS [amyotrophic lateral sclerosis or Lou Gehrig's disease]," she said.
So after all these years, and all the research, there is no cure and no real treatment. Why?
I'm reading about people planning on selling and then getting back in at a better price. Or people selling at $20 or even $60 per share. I was in ACAD at ~$2.00 sold at avg price of $7. ACAD has traded as high as ~$50. I was in BIDU around ~$60. Sold at an average of $150. BIDU has traded over $1200 (pre split). And of course I've lost $$ in investments. The point is; STOP and calculate the revenue potential IF AVXL really has the next treatment for Alzheimer's as well as the many other central nervous system disorders.
5.3 M - US Alzheimer's cases
5.3 M - EU Alzheimer's cases
1.8 M - Japan Alzheimer's cases
Assume 25% of these patients treated
3.1 M - Total treated
$6000 per year treatment cost, very reasonable and actually probably on the low side. Avg. lifetime cost for someone with Alzheimer's is $174K.
3.1M * $6000 = $18.6B in revenue
Assume we get a BP partner. Assume we give up 50% of revenue. So revenue to AVXL just from this indication is ~$9.3B.
Cost of goods will be very low (a pill). AVXL margins should be at least 25%. So 25% of $9.3B will be an EPS of $46.5 per share with 50M outstanding shares. A PE of 15 yields a pps of $697. And this is only 1/2 of a conservative revenue potential for Alzheimer's.
GILD bought their crown jewel HCV drug for $11B. They've been getting somewhere around $10B in revenue per year for HARVONI drug combo. If BP wanted to purchase AVXL I think the $11B price that GILD paid for the HCV drug would be a good starting point. At $11B and ~40M shares outstanding this would be ~$275 per share.
IF the data remains positive I will only sell the portion of my holdings that gets back my original investment at $100 per share. Then I'm just going to wait for the revenue stream to start. AVXL 2-73 will be on the market by 1Q 2018 maybe sooner if the safety profile remains clean.
Another thing to consider. Long term vs. short term capital gains. Every time you sell and take a short term profit the government will help you spend your profit.
I've made many many mistakes in my investing career. And the worst mistakes were not buying into dogs. The worst mistakes I've made was not letting my winners run. AVXL is a winner.
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