Monday, May 18, 2015

How much is Anavex Life Sciences (AVXL) worth?

In my opinion, the value of Anavex stock depends on the upcoming results of the phase 2a  clinical drug trial of Anavex 273 which is currently underway. The preliminary results are scheduled to be released in the 3rd quarter of 2015 (July-Sept.). If that news shows it is at least marginally effective against Alzheimer's (and by extension, against Mild Cognitive Impairment), then Anavex stock will be worth a lot. If that news shows it is ineffective, it will be worth very little.

I have Mild Cognitive Impairment, which may be an early stage of Alzheimer's, and there are no effective drugs for MCI or Alzheimer's. I noticed I have not been posting on this blog, but on Facebook, but since I noticed that, I decided to also put this here so perhaps more people can see it. DISCLAIMER: I own a bunch of Anavex stock, although I hope Anavex 273 works well more for my brain than for my portfolio.

Anavex Life Sciences is still in an initial research stage, meaning it has no products yet, and no revenue. That means a lot of traditional means of valuating a company won't work. For example, you can't apply a "times-earnings" formula, because they have no earnings. There are many ways to estimate a company's value, however, and here is what I came up for Anavex with a few years ago. This is based on Avavex 273 being effective, because if it is ineffective, it will be worth near zero.

Estimate the number of patients who could benefit from Anavex 273 before its patents expire, estimate the lifetime retail value per patient, and multiply those to get an estimate of the total retail value of Anavex 273. Estimate a profit percentage to remove the costs of manufacturing, distribution, marketing, etc. and multiply it by the total retail value to estimate the company value. This value is based on  Anavex 273 (and the Anavex 273 Plus variant) only, and does not include the other sigma receptor drug candidates the company has in development because they are not as far along in the development process. You can estimate the value per share simply by dividing the estimated company value by the number of shares, but the share should include exercisable options, warrants, and convertible debt, not just the current float or outstanding shares.

Here are some estimates I came up with a long time ago:

Number of U.S. Patients, Alzheimers only 14,000,000
Lifetime Value Per Patient, retail, A-273 only $10,000
Retail Value $140,000,000,000
Profit Percentage 20%
Company Value, A-273 for Alzheimers only $28,000,000,000
Outstanding Shares (if all are exercised) 116,400,000
Value Per Outstanding Share, A-273-Alz only $241

Substitute your own estimates and see your own what-if analysis. My notes say my estimates are for U.S. Alzheimer's patients only because that was the only reliable numbers I could find. There are many millions more worldwide with Alzheimer's and others with Mild Cognitive Impairment, but those numbers are much harder to track down or estimate. My lifetime value per patient estimate is based on an initial therapy  period followed by a permanent maintenance dose. I have a vague recollection that someone told me my profit percentage estimate may be quite low -- but I am not a stock analyst and I am not an expert in the pharmaceutical industry. My total for outstanding shares was calculated a long time ago, and in the most recent meeting-in-lieu-of-an-annual-shareholders-meeting, shareholders authorized Anavex to issue more shares, and I have not reexamined their SEC filings to update an accurate count.

As of this writing, Avavex is still trading below half a dollar per share. Its price between now and the phase 2a trial results are anyone's guess, because the stock market is an auction, after all, so it is subject to issues of awareness, emotions, and estimates on the likelihood of success in the phase 2a trail. If the trial is successful, there should be lots of articles about it, which can dramatically increase awareness of the stock and increase positive emotions about it, leading fewer people to sell and more people to buy, which is the standard recipe for dramatic increases in stock prices. Based on my estimates above, there is a lot up upward potential.

If my estimate of potential company value seems unrealistic when compared to profitable, long-established pharmaceutical companies, perhaps I have made gross errors in my estimates. An alternative is that the potential for Avavex is just that good because of the huge number of potential patients, the death-sentence severity of the disease, and the current lack of any drug competitors.

I am very optimistic about the prospects for Anavex 273 being successful, but my notes on my study of that issue are incomplete. My expectations are irrelevant, however, because the results to be announced next quarter will supersede any analysis I performed in the past. Anavex Life Sciences is traded on OTC-QX, which is the relatively new high-requirement over-the-counter board. Anavex management and reporting is NASDAQ-ready, in my opinion, once they have a product on the market and have revenue that meets the threshold for NASDAQ. The last few months, liquidity of Anavex on OTC has not been an issue because it has become one of the more popular stocks on OTC. My biggest surprise is that with the recent increase in popularity, that so many people are still willing to sell shares. I guess if you bought at twenty cents and sell at forty, you're satisfied to have doubled your money, right? If the phase 2a results are bad, then I guess they made a good choice, but otherwise I don't think their satisfaction will last if the stock price goes into tens or hundreds of dollars per share.

Wednesday, January 21, 2015

A Ketogenic Diet is helping me overcome Mild Cognitive Impairment!

Oops. I had forgotten that I had started a keto-diet diary here. Well, here's the latest...

I have had Mild Cognitive Impairment (MCI) for years, slowly getting worse, and then just over 2 years ago I had a bout of encephalitis that crashed my brain. I recovered a lot from the encephalitis, but it appeared some of that damage might be permanent. I started eating a ketogenic diet 4 weeks ago because it seemed to me it should be a hyped-up version of consuming occasional Medium-Chain-Tryglycerides, so I expected it to help my MCI some, and I blindly hoped it might help some of my remaining symptoms from the encephalitis.
The picture below is a screen-shot of a self-assessment I have been doing, assisted by my family. I am scheduled for objective re-assessments by professionals in March, but this self-assessment is extremely good news and very promising.
There have been multiple studies on adding Medium Chain Triglycerides (MCT) to a diet to boost blood ketones to alleviate some symptoms of Alzhiemer's, MCI, and other neurodegenerative disorders. I tried that. Occasionally eating or drinking MCT's gave me a spike that barely registered on a blood test, lasted for less than an hour, and the increase in brain function was noticeable, but less than useful, so I did not keep it up.
Well, somehow (my notes don't cover this, and I don't remember) I started hearing about ketogenic diets and began to research it. The purpose of eating/drinking MCT's is to increase blood ketones a little bit. A ketogenic diet causes nutritional ketosis, which gives a much higher level of blood ketones (still far below dangerous levels that uncontrolled diabetics get with ketoacidosis), and it keeps them there every minute of every day! Why aren't lots of people with MCI and Alzheimer's using ketogenic diets? I haven't found anyone else who's done it, but it made sense to me, so I started reducing my carbohydrates dramatically as I continued to study.
I attempted to induce ketosis with a high-protein, medium-fat, low-carb diet and did that for 8 days, but my blood ketones were barely registering. Still, I thought I noticed some subtle improvements in brain function. Then I learned that high-protein prevented nutritional ketosis because the liver makes glucose out of all the excess protein. I had gone high-protein instead of high-fat out of a fear of dietary fat ingrained over the decades by "experts." Then I learned a *lot* about ketogenic diets and how high-fat is not only not a problem, it's actually far superior to low-fat, high-carb diets for most people. So, I switched to a high-fat, adequate-protein, very-low-carb diet and my ketones shot up into the nutritional ketosis range and have stayed there.
It takes weeks for the body to fully adjust to ketosis, and I have been seeing steady improvements in my brain function. Most of our body's cells can use fatty acids for energy in addition to glucose, but not the brain cells. The brain cells, however, can make use of ketones for energy. Since people with MCI, Alzheimer's, etc. have brain cells which can no longer use glucose as efficiently as they used to, ketones can fill in the energy gap in the brain. When staring ketosis, though, first there are a number of systemic changes that take weeks to accomplish. Like at first, the muscles may take most of the blood ketones. Later, after various adjustments, more ketones become available to the brain cells. That partly explains why my improvements have been gradual.
In the last week or two, I have also learned a lot about proper levels of sodium, potassium, and magnesium, and have just begun a careful diet supplementation to get those minerals in adequate amounts and in correct proportions. Sodium and potassium control cell membranes, which affects what is allowed into and out of each cell. MCI and other patients have brain cells that have accumulated garbage they have not correctly gotten rid of, so there is a possibility that my new regimen of minerals could help in that regard.
I still have a lot to learn and a lot to do, but it is extremely exciting for me that for the first time since I first noticed symptoms of MCI, I have *improved* rather than continue to slowly decline.

7/23/2014, Began comprehensive calorie-counting to lose weight.
Nov. 2014, Average self-assessment scores during November after 5 months of reduced calories, losing ~15 pounds, mostly off my waist.
12/15/2014, Began a high-protein, medium-fat, low-carb diet in an effort to produce blood ketones to help my brain, not realizing that excess protein would be converted to glucose, suppressing ketone production. I was still under the influence of "dietary fat is always bad" myth.
12/22/2014, Switched to a high-fat, adequate-protein, low-carb diet that is necessary for full nutritional ketosis diet half through the day after 8 days on high-protein diet that produced only .1 to .7 millimolars of serum beta-hydroxybutyrate.
12/23/2014, First full day on a high-fat, adequate-protein, low-carb diet, and the ketones shot up into the nutritional ketosis range of .5 to 5 and stayed there.
12/25/2014, Some brain improvements noticed after only 3 days on ketogenic diet (plus 8 days on low-carb diet).
1/7/2015, 15th day of nutritional ketosis
1/13/2015, 21st day of ketosis
1/20/2015, Tuesday, 28th day of ketosis
1/23/2015, Friday, 31st day of ketosis, comprehensive fasting blood tests
1/24/2015, 20 tests of blood glucose, blood ketones, blood pressure, and pulse over 24 hour period.
3/11/2015, Memory re-assessment with neuropsychologist
??? Get results of objective assessment of memory status from neuropsychologist
??? Neurologist and general practitioner to discuss all improvements and possible return to work
Severity Scale
1 = much better than average
2 = slightly better than average
3 = normal
4 = annoying
5 = interferes with work
6 = too bad to work as a Premier Field Engineer
7 = too bad for any job
8 = too bad to take care of self