Anavex Life Sciences Corp. (NASDAQ:AVXL) Could Build On The Recent Bounce

Back on August 7, Anavex Life Sciences Corp. (NASDAQ:AVXL) reported fiscal third quarter 2017 financial results. Markets responded to the news pretty negatively and Anavex bottomed out around $3.38 during the sessions subsequent to the release of the numbers. Towards the end of the week last week, however, and early this week, the company looks to be staging something of a recovery. At market close on August 14, Anavex went for $4.10 a share. The company currently trades a little off this price, opening on August 15 at $3.96, but remains up on its post financial report price.We think this bounce could be indicative of some medium to long-term strength and that current prices might be a nice entry point in anticipation of said action.This is one we have covered before on quite a few occasions. It's also one that, across the period, has taken a bit of a beating in mainstream financial news media. The mechanism of action of its lead candidate has the potential to render what amounts to billions of dollars of Alzheimer's research wasted and wider market forces seem not to want the asset to successfully reach commercialization.Against this backdrop of negative media attention, however, Anavex has fared relatively well. The company is up more than 11% on its pricing this time last year and reached highs in excess of six dollars in February, April and June respectively. Without any real fundamental drivers behind the decline from these highs to current pricing, it's very reasonable to assume that we will see six dollars broken once again across the next twelve months and especially if a number of near-term catalysts hit press as indicative of efficacy and safety across the company's pipeline.Before addressing the catalysts, let's quickly touch on the numbers reported last week.The headline figure, and the figure that most likely caused the selloff in the company, was a net loss reported at $3.6 million, or $0.09 per share, compared to a net loss of $2.2 million, or $0.06 per share, for for the same quarter a year earlier. Operating expenses increased across the period, from $3.7 million to $2.3 million. Cash burn also increased, from $3.0 million to $2.2 million.For us, none of this really matters.The only figure we were looking at in this release was the cash balance and that came in at $24.8 million at June 30, 2017, compared to $9.2 million at September 30, 2016.With a burn of $3 million, that gives the company a runway of at least two years. Sure, burn is likely to increase as Anavex advances its pipeline into late stage development, but for a company of this size, a two-year runway at current burn is nothing to scoff at.So what about the catalysts?Anavex intends to initiate three phase 2 studies over the coming quarters, each of which will look at its lead asset (a drug called Anavex 2-73) in a separate neurological condition. The first is a phase 2 study in Rett syndrome, the second a phase 2 study in Parkinson's disease and the third a phase 2/3 study in Alzheimer's disease.The two former, the Rett syndrome and the Parkinson's disease studies, are 12-week randomized studies. This means, assuming no enrollment issues, data should be forthcoming very quickly, with first-half 2018 not unrealistic if the trials get underway between now and the first quarter of next year (as expected).The latter is likely going to be a 12-month study, meaning we won't see data before late 2018 early 2019, but if numbers hit press as positive, the wait will be worth it.The bottom line with this company is that it has essentially been treading water over the last few months waiting to get the above-mentioned clinical programs underway. This means markets have been given very little to go at from a valuation perspective, lending more weight than is valid to the top line financials. Once we start to see reports on operational advance (with the enrollment initiation of the above discussed studies being strong examples of such) focus will shift to the potential of Anavex 2-73 and speculative volume will start to flow into the company in anticipation of trial related catalysts.Dilution isn't a near-term risk based on the cash figure reported above, but we may see some degree of raise next year as the Alzheimer's program kicks off and draws resources.Check out our previous coverage of this one here.We will be updating our subscribers as soon as we know more. For the latest updates on AVXL, sign up below!Image courtesy of Daniel Friedman via FlickrDisclosure: We have no position in AVXL and have not been compensated for this article.