Annovis Biopharma, the holy grail to a multi-billion dollar market?

Company Overview

Annovis Biopharma, is a small-cap biotech firm with a pipeline attempting to target neurodegenerative diseases including, Alzheimer’s, Parkinson’s, Chronic Traumatic Encephalopathy and Traumatic Brain Injury, with each market worth $6bn, $5.69bn, $80bn ,$70bn. The company currency trades at around 25$ a share, has a market cap of around $160 million dollars and an EV of $151 million. The company has several drugs in pipeline

ANVS-401 its lead clinical candidate (Phase II) has demonstrated promise producing statistically significant reductions in CSF biomarkers, APP/Aβ, tau/phospho-tau and α-synuclein in animal studies and in human studies. These biomarkers are noted to be important in the etiology of Alzheimer’s as they cause several oxidative stress reactions produced by senile plaques (produced from Abeta) and neurofibrillary tangles (NFT’s). (produced from hyperphosphorylated tau) The tangles result in the degeneration of cholinergic neurons — the loss of which — highly correlates to memory and attention deficits.

Market Dynamics

Alzheimers consists of around 50 million people worldwide with an additional 10 million cases a year as populations continue to age. As such the market continues to grow and is currently estimated to grow at a CAGR of 17.5% to $25 billion a year by 2027. The market’s standard of care is currently dominated by generics which aren’t curative and only treat the symptoms without doing much to improve prognosis.

With an aging population, Alzheimer’s has remained a graveyard with 130 failures since 1998 including several high profile failures from big pharma including Eli Lilly (solanezumab), Roche (gantenerumab) but also yielding some sharp stock movements with companies producing promising results, notably with Cassava Sciences (87.4%) on positive phase 2b data and Inmune Bio (92%) on positive phase 1 data.

The Pipeline

ANVS401

ANVS401 (Posiphen) is the pure (+) enantiomer of phenserine, both of which reduce production of amyloid through inhibition of translation of its mRNA. It reduced APP and Aβ in neuronal cultures and brains of wild-type and AD transgenic mice (Lahiri et al., 2007; Marutle et al., 2007). The drug was reported to be neuroprotective and neurotrophic in AD mouse models (Lilja et al., 2013; Lilja et al., 2013), and to normalize memory impairment, learning, and synaptic function (Teich et al., 2018).

The drug also recently posted (n = 19) statistically significant reductions in motor movement in its P2 Parkinson’s trial when compared to baseline and placebo, as well as non-significant differences in adverse events vs placebo.

ADR data was also collected during Phase 1 studies which demonstrate a respectable side effect profile that shouldn’t cause tolerance issues.

ANVS405

ANV405 is the R-enantiomer of phenserine, which acts in similar fashion to ANVS401 except it also possesses anti-cholinesterase activity. Recent studies have demonstrated a far more interesting pharmacological action, in that it inhibits programmed neuronal cell death (PNCD, eg, apoptosis/autophagy) across multiple cellular and animal neuronal injury models at clinically translatable doses. (Grieg et al., 2020).

ANVS301

ANVS301 (Bisnormcerysine) is a butyrylcholinesterase (BChE) inhibitor, similar to AChE counterparts, Donepezil etc. The drug demonstrated in Phase 1 studies positive improvements in memory when compared to baseline and placebo.

Management and Balance Sheet

Management includes CEO Maria Maccechini who holds a postdoc in molecular biology and is the founder of the company, she has a background in angel investing (ex- RobinHood Ventures) which suggested that they would likely look for a buyout for some of these assets. I also listened into her conversations with an analyst at the redchip small cap conference where she openly stated that she isn’t looking to develop the drug the entire year. This suggests that the potential for a buyout or licensing deal is likely once the Alzheimer data is out. The board also consists of previous coworkers from her Robinhood Ventures which furthers my conviction in the belief that they will look to sell.

Annovis Bio currently has £8m remaining on the balance and the expense to carry through the Phase 2a trials was £4.5m. Based on this, that would leave Annovis with ~3m at the end of 21 and final data from the Phase 2a trials to be expected by “early winter”. An additional $100m boost to their balance sheet could also come from a future sale of a priority drug review voucher should their filing for orphan drug status be successful and they decide to sell.*

The Verdict

Annovis is a low on cash biotech which has demonstrated positive data within Parkinsons and is yet to produce data in Alzheimer’s. Given the lack of a raise post Parkinson’s data PR to around $48, I suspect the company has — what they believe to be — strong Alzheimer’s data and will most likely use this catalyst to then raise post announcement. The other potential is that the company has a partnership forming which the CEO mentioned was a route they would be willing to take toward commercialisation. Given the stock has rolled back down to its previous baseline of ~$25, I would consider this an optimal position to take in a speculative bet. For those with lesser risk appetites a covered call position most likely yields the greatest risk reward as Alzheimer’s data is expected in Q2 and would expect it by the end of May to early June.