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Here's Why Anavex Life Sciences Jumped Higher Today

By Brian Orelli, PhD – Oct 15, 2020 at 3:13PM

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The biotech's drug appears to help patients with Parkinson's disease dementia.

Shares of Anavex Life Sciences (AVXL -1.34%) are up 5.8% at 2:06 p.m. EDT, having been up as much as 28.8%. Investors are excited about the company's drug, ANAVEX2-73, having passed a phase 2 clinical trial in patients with Parkinson's disease dementia.

The study used the Cognitive Drug Research (CDR) computerized assessment system, which is a series of tests used to measure cognition in patients with dementia and other diseases that affect a patient's ability to think. The effect on CDR was "clinically meaningful," according to the company. The study compared two doses of ANAVEX2-73 to placebo, and the company said the results were "dose-dependent," meaning patients responded better to the higher dose than the lower dose.

Unfortunately, "clinically meaningful" and "dose-dependent" were all the information that investors got about the positive study. Anavex didn't release any data on how much better patients taking ANAVEX2-73 did on the CDR than the patients taking placebo. As companies are apt to do, Anavex is saving the data release for a medical conference.

Doctor talking to an elderly patient in an examining room.

Image source: Getty Images.

Passing the phase 2 study is a good first step, but investors should keep in mind that the devil is still in the details. Anavex still needs to run at least one more clinical trial to get ANAVEX2-73 approved by the Food and Drug Administration; knowing the magnitude of the change in cognition will give investors a better sense of how likely it is that the drug will pass that pivotal study.

The biotech company is also testing ANAVEX2-73 in patients with Rett syndrome and Alzheimer's disease, so there's potential to expand beyond Parkinson's disease dementia. Investors won't have to wait too long; data from the phase 2 study in Rett syndrome -- a genetic disorder that affects children's ability to speak, walk, eat, and breathe easily -- are expected this quarter.

Brian Orelli, PhD and The Motley Fool have no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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