Biotech stocks are wont to crash hard when investors are presented with negative data from a clinical trial. More rare is for the stock to hit the skids due to… no data being presented at all.
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That appeared to be the case on Monday for Anavex Life Sciences (AVXL), which saw out the session 23% into the red. The company gave its quarterly business update and investors were hoping for the much awaited top-line data from ANAVEX 2-73’s Phase 2/3 study in Alzheimer’s disease (AD). However, the data will not be available until Thursday, when the company will present it at the Clinical Trials on Alzheimer’s Disease (CTAD) Congress, which will take place in San Francisco, CA.
“Management would not provide any guidance/comments on expectations for the data or a plan for the next steps, and the conservative gesture may have disappointed investors that were hoping to hear a positive tone from the company, thereby contributing to the weakness of the stock,” said BTIG analyst Yun Zhong.
For the results to be considered a success, Zhong is hoping the data will exhibit a “positive trend in efficacy” which will support the continued development of the AD program.
The lack of data from the AD trial was not the only disappointing development. The top-line data readout from the Phase 2/3 study in pediatric patients with Rett syndrome has been pushed out from 1Q23 to 1H23, which Zhong thinks “may have been another reason for the weakness.”
In fact, Zhong considers the Rett syndrome program to be more “de-risked,” and with data from the 132-patient study in Parkinson’s disease dementia (PDD) exhibiting improvement in motor function in addition to cognition, so is the the Parkinson’s disease (PD) program, especially considering Anavex’s intention to talk with the FDA regarding a potential pivotal study.
While Zhong warns that Thursday’s AD data could cause “significant volatility,” given the compound’s versatility and long-term potential, Zhong sticks with a Buy rating and $35 price target. The implication for investors? Upside of a very robust 302% from current levels. (To watch Zhong’s track record, click here)
It’s not as if Zhong’s lofty objective is an outlier; the Street’s average target stands at $39.25, making room for 12-month gains of 351%. Moreover, with only positive reviews on file – 4, in total – the stock garners a Strong Buy consensus rating. (See AVXL stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
