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Recently, Anavex Life Sciences (NASDAQ:AVXL) stock popped nearly 30% after presenting some encouraging results from one of its Alzheimer's candidates. It's not uncommon for promising Alzheimer's results to move a stock. What makes the recent climb in Anavex shares so interesting is that it occurred in response to preclinical data observed in rats, from a drug that flies in the face of the prevailing thesis of how the disease could be treated.

Over the past decade, at least 99% of Alzheimer's drug candidates that began clinical testing have failed. The ones that exist now, such as Aricept, can alleviate symptoms for a while but fail to slow the rate of cognitive decline. America will spend some $226 billion this year caring for sufferers of the disease, and an aging population is accelerating spending. Without any disease-modifying drugs available, the first to market will almost certainly become a multibillion-dollar blockbuster.

With so much to be gained, it's easy to see how minor developments -- such as presentations of preclinical data without any mention of working with regulators to make it available for clinical testing -- can move a stock. Small-cap biotechs without revenue streams, such as Anavex, are prone to wild price swings on data that would barely move the needle for larger companies with Alzheimer's candidates, such as Eli Lilly and Biogen.

AVXL Market Cap Chart

In the past year alone, Anavex shareholders have seen their investments rise more than 800%, only to fall about 80% since October. That's not to say stock prices of bigger drugmakers aren't susceptible to positive or negative data, but the swings aren't nearly as pronounced.

Although the latest price swing for Anavex occurred in response to a preclinical stage program, the company's lead Alzheimer's candidate, 2-73, has produced some compelling results in clinical trials. Let's compare Anavex's program with those of its gargantuan rivals and see if it's worth the tremendous risk.

Glimmers of hope
With so much on the line, you might think we'd know what causes the disease, but we don't. The most popular notion is that amyloid plaques consistently found in the brains of Alzheimer's patients cause the disease. Both Eli Lilly with solanezumab and Biogen with aducanumab have shown they can affect the formation of such plaques. But proving they slow the rate of cognitive decline is another matter.

A few years back, Eli Lilly's solanezumab failed to reach its goals in two large and expensive phase 3 trials. However, among mildly affected patients, some measurements showed improvements that were just strong enough to be considered statistically significant.

With so much to be gained if successful, Eli Lilly isn't giving up on solanezumab. A third phase 3 trial with over 1,000 patients is under way, and top-line results are expected next October.

More recently, Biogen's aducanumab showed a great deal of promise in a 166-patient phase 1 study this spring. The highest of three doses studied fired on all cylinders, showing a significantly reduced rate of cognitive decline and amyloid plaque formation. However, there were some safety issues involving brain swelling. This outcome pinned hopes to a smaller dosage that, a couple of months later, produced surprisingly weak results with regard to cognitive decline, and only a slight safety improvement.

With 166 patients split into four dosage arms and a placebo control group, a couple of outliers could be clouding our picture of aducanumab. We'll know more in early 2020, when the company expects to report top-line results of two ongoing phase 3 trials involving 2,700 patients.

Something different
A competing theory, championed by Anavex Life Sciences, suggests activation of sigma-1 receptors with its lead candidate, 2-73, leads to a "broad range of modulatory effects" that collectively act to reverse memory loss and protect neurons.

While I'd prefer a well-defined mechanism of action, this wouldn't be the first drug to succeed despite a fuzzy understanding of how it actually works. Also troubling is the surprisingly small amount of clinical data for a candidate that has been under investigation for at least eight years.

Although the main goal of phase 1 studies is to find a safe dosage, that doesn't mean you can't glean some efficacy hints in the process. In stark contrast to Biogen's phase 1 study of aducanumab, Anavex didn't include Alzheimer's patients in the first clinical study of 2-73 and instead opted to enroll 22 healthy white men between 18 and 55 years old.

But a phase 2 study started last December has given us very little to chew on as well. The 36-day first half of the trial expects to treat 32 mild-to-moderate Alzheimer's patients, and in November the company reported data from just 12. Patients showed a significantly improved response to stimulus as measured by the P300 wave. Making comparisons at this stage is next to impossible, as this measurement hasn't been reported for solanezumab, aducanumab, or any other Alzheimer's candidate I can find.

We shouldn't need to wait much longer to know how well Anavex's candidate stacks up to Biogen's and Lilly's. According to clinicaltrials.gov, full results of the phase 2a trial, including 52-week data with cognitive measurements used by Lilly and Biogen, should be ready this month, although the company hasn't announced a date to present them.

If 2-73 is shown to slow the rate of cognitive decline more effectively than solanezumab or aducanumab, Anavex investors can expect terrific gains. If not, however, a complete lack of clinical-stage candidates to fall back on could result in heavy losses. With the extremely limited clinical data to base a decision on, it's hardly worth the risk.

Editor's note: The title of this article has been updated to remove any implication that Anavex Life Sciences thinks Eli Lilly and Biogen have Alzheimer's wrong. Anavex has never claimed that either Eli Lilly or Biogen have Alzheimer's wrong; it is the opinion of the author that Anavex's unique approach to the disease, if successful, could imply that Eli Lilly and Biogen may not be taking the best approach to fighting Alzheimer's.

Cory Renauer has no position in any stocks mentioned. The Motley Fool recommends Biogen. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.