Interesting to see analysts offering a very similar opinion than the ones we have shared through this thread. In fact, if they had summarised the latest HC AVX threads, the outcome would have been very close to the latest Fat Prophet newsletter - see and enjoy extract below.
Avexa ? Buy AVX around $0.13
Given Avexa?s status at the riskier end of our portfolio, the stock?s latest pullback is not necessarily cause for any significant concern. The markets? bias has shifted away from risk in recent weeks and this is weighing on Avexa, rather than the weakness representing a fundamental deterioration in the investment case for Avexa.
The latest update on the progress of the company?s HIV treatment, ATC, has however contributed to investor disquiet. This is not due to the product?s performance in testing. Indeed, ATC continues to perform well in trials. The product delivered better results than was the case for patients using the currently available alternative 3TC, in terms of inhibiting the presence and progression of HIV. Of critical importance, ATC has not provided any evidence to doubt its safety and patients have no tolerance difficulties with the drug.
Rather, the element of the press release that appears to have generated some additional concern among investors is the statement that the results are ?not statistically significant?. The lack of statistical significance is due to CEO Julian Chick?s decision to cut short ATC?s phase III trial in favour of an earlier evaluation.
The lack of statistical significance was a potential outcome of the decision. After speaking to Dr Chick on the matter, he confirmed that Avexa?s focus is on proving ATC?s commercial viability by establishing trends in the data. The existence of these trends should be sufficient to demonstrate ATC?s value to a potential partner.
Had the phase III trial continued, it would have run through 2011. A longer development timeframe not only defers Avexa?s potential transition to profitability, it also increases the risk of a rival product weakening the case for ATC. We therefore considered management?s decision to shorten the testing phase to be the right step at the time and we continue to do so.
In terms of the latest results, the highlights include a 6.3% rate of patients that ?could not control their viral load suppression?. HIV treatments suppress the measurable presence of the virus, which ATC does more effectively than the current standard of care. However, the virus? presence will ?bounce back? in some cases. This bounce back occurred at a rate of 6.3% for ATC, which is almost half the 12.2% experienced by patients on the best currently available treatment.
Patients using ATC also recorded a greater CD4 cell increase over the 24 weeks, at a rate of 98 cells per microliter, compared to 73 for current treatment. This shows an improvement in the patient?s immune response, which is of course the area that HIV attacks.
Perhaps most compelling, only 3.8% of ATC patients recorded a progression of their disease, compared to 16.2% for those under current treatment. HIV is a progressive disease that gets worse as time goes on. ATC?s enhanced ability to slow this process is therefore a major selling point for the product.
All in all, the data continues to show that ATC has a demonstrable advantage over the current best available HIV treatment. Commercialisation remains a viable goal and our investment case is therefore unchanged. Given that the stock is currently trading below its recent SPP price of $0.14, we recommend the stock as a buy to Members without exposure....
AVX Price at posting:
13.0¢ Sentiment: Buy Disclosure: Held
