Current market cap $40m
$8m in cash
EV of around $33m
How much is a working Alzheimer's drug worth?
Aricept (donepezil), the leading Alzhiemer's drug out there sells for a few billion per year. If Xanamem makes it past phase 3, it's a $10b drug, no question. That's 250x it's current valuation. So for the market to be valuing Actinogen at $40m, it's saying that there is only a 0.4%, or 1 in 250 chance that Xanamem will make it.
Question is, does Xanamem work?
Their Cortisol hypothesis seems strong, which is quite important, and is the reason that people have invested at least 15 years into research, and spent $30m on acquiring these drugs and developing it. What's more important, the data from XanaHES is good, and the more you dig in, the better it seems.
On a test for working memory, it decreased a healthy elderly population's average reaction time by 25%, or 160ms (810ms to 650ms). That effect was statistically significant at P<0.01, meaning there's less than 1% chance that this effect could occur due to pure chance. On a test of visual attention, reaction times decreased from 550ms to 500ms, P<0.05, and on a test for psychomotor function, it decreased times from 360ms to 320ms.
If only one of these tests showed up positive, I'd be skeptical. But these three tests out of six showed significant benefits, while the other three showed mild benefits.
You might ask, is 25% reduction in reaction time important? Well, between the ages of 60 and 85, people gain 30-50ms in reaction time in these exact same tests (CogState). What about people with Alzheimer's? Well people with Mild Cognitive Impairment are slower by around 50-70ms, and people with frank Alzheimer's Disease are slower by about 150-200ms. Xanamem has demonstrated that it can speed up people's times by 50-160ms. So reading from the CogState results, Xanamem can basically reverse the symptoms of Mild Cognitive Impairment, and cut the symptoms of Alzhiemer's disease by at least half.
The market thinks there's a 1 in 250 chance this drug will benefit patients, hence the current price of 3.5c, or $40m. The question is, what do you think?
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