Recently, Anavex Life Sciences Corp. (AVXL 4.02%) inked an an agreement with Biogen (BIIB 0.52%), joining the ranks of several high-profile drug developers with Biogen partnerships, including Ionis Pharmaceuticals Inc. (IONS 4.01%). In the biotechnology industry, no two agreements are alike, and these two have plenty of differences.
Let's put Anavex and Ionis under a microscope to see which is better positioned to provide gains in the years ahead.
Separate deals with Biogen have lifted the stock price of both Anavex Life Sciences and Ionis Pharmaceuticals by double digits over the past month. The magnitude of their significance is far from equal, though, even after adjusting for the companies' different sizes.
Over the past four quarters, Ionis booked $176 million in revenue and sports a market cap of about $4.4 billion at recent prices. Its eye-popping price-to-sales ratio of about 24.5 is partly due to high expectations for one of its most exciting drug candidates, nusinersen. Following positive phase 3 results that suggest nusinersen could become the first approved treatment for spinal muscular atrophy, Biogen agreed to pick up the tab for developing and commercializing the drug going forward, triggering a $75 million payment to Ionis in the process.
Biogen has already submitted nusinersen's application to the FDA, which is widely expected to receive a stamp of approval. If successful, peak annual sales could reach around $1.5 billion, triggering up to $150 million in additional milestone payments and a royalty percentage up to the mid-teens.
Nusinersen alone doesn't justify Ionis' huge market cap, but it could be the tip of a biotech iceberg. Biogen and Ionis were working together to develop five other drugs when Ionis last reported, and more could be on the way.
Biogen isn't the only company with deep pockets collaborating with Ionis. Another rare-disease candidate developed in partnership with GlaxoSmithKline is in a late-stage trial, and there are several others in earlier clinical stages with Roche and Bayer, just to name a few.
Not a big deal
Anavex Life Sciences has sponsored one mid-stage trial with its only clinical-stage candidate, 2-73 for treatment of Alzheimer's disease, and its market cap of just $138 million at recent prices reflects its limited pipeline. The agreement it announced late last month involves Biogen testing 2-73 in one of its labs to see how it affects a certain type of nerve cell thought to play a role in multiple sclerosis, not Alzheimer's.
Anavex 2-73 has already shown an ability to protect similar cells outside of living organisms. If Biogen's scientists can repeat the results, the big biotech is expected to conduct more costly animal studies along the same lines.
While previous results suggest a move to animal studies is probable, there was no mention of any form of monetary compensation. There's a wide chasm between animal and human trials that most new drug candidates never cross. If Biogen eventually offers to sponsor clinical trials with 2-73, the agreement would merit a substantial stock movement for tiny Anavex. At this very early stage, though, it's hardly worth a press release.
On their own
Although Anavex's 32-patient study in Alzheimer's disease set out to determine a prudent dosage for later studies, it will also gather efficacy results from remaining patients for two years. Unfortunately, the 31-week efficacy figures weren't thrilling enough to entice any potential collaborators.
If cognitive decline comes to a halt among the remaining patients taking 2-73 over the two-year observation period, a partner might come knocking. The results would need to be pretty amazing, though, because Anavex didn't include a control group in the study for comparison.
Anavex finished June with just $7.7 million in working capital, and long-term assets worth less than a new iPhone. Without a revenue stream, and 35.7 million shares outstanding at about $3.73 each, raising enough equity to fund a late-stage Alzheimer's trial would heavily dilute investors' slice of any potential profits. If 2-73 continues to disappoint, as nearly all Alzheimer's candidates before it have, the company could end up with nothing in clinical development.
Ionis, on the other hand, has already commercialized two products. They also own volanesorsen through its Akcea subsidiary. This drug candidate is in late-stage clinical trials for treatment of a severe, inherited form of dyslipidemia. With plenty of shots on goal, there's a solid chance of coming out ahead with Ionis, despite its lofty valuation at the moment. That makes it the better buy, hands down.