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Why Anavex Life Sciences Shares Are Up 17% Today

By James Brumley - Jun 28, 2021 at 12:33PM

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The biopharma developer dropped some big (but mostly expected) news about the success of one of its drugs.

What happened

Shares of biopharma outfit Anavex Life Sciences (AVXL -4.88%) are up 17.2% as of early afternoon following a trial update for its flagship therapy ANAVEX 2-73. The drug, also called blarcamesine, prompted marked improvements in the cognitive capabilities of Parkinson's disease patients.

So what

ANAVEX 2-73 is Anavex Life Sciences' flagship project, in phase 3 trials as a therapy for Rett syndrome and Alzheimer's disease. Monday's jolt, however, was sparked by encouraging progress in the phase 2 trial of the treatment of Parkinson's disease dementia. In effect, the drug's use correlates with nearly a 19% relative improvement in movement disorder linked to Parkinson's, easily surpassing the "meaningful clinical change" standard.

Notably, dementia patients who were given ANAVEX 2-73 saw measurable increases in the activation of sigma-1 receptors. This is the second such study to demonstrate a correlation between activated sigma-1 receptors and diminished Parkinson's dementia symptoms, suggesting Anavex's developmental efforts are properly targeting the underlying conditions of the disease.

Rising chart punching through the of a computer monitor.

Image source: Getty Images.

Now what

The biopharma company will be submitting its findings to the U.S. Food and Drug Administration for feedback, likely anticipating that the trial will advance to phase 3 tests. If phase 3 goes as well as phase 2 trials have this far, ANAVEX 2-73 will then be submitted to the FDA for a final approval of the drug.

For shareholders, however, big moves like this one are difficult to trade. The stock is now up nearly 200% from May's low, largely in anticipation of today's update. With nothing else to add to the story, a "sell the news" outcome is more than a little possible -- at least in the near future.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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