This quarterly report contains forward-looking statements. Forward-looking statements are projections of events, revenues, income, future economic performance or management's plans and objectives for our future operations. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" and the risks set out below, any of which may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Our interim financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our interim financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report, particularly in the section entitled "Risk Factors" of this quarterly report.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "common shares" refer to the common shares in our capital stock.

As used in this quarterly report, the terms "we", "us", "our" and "Anavex" mean Anavex Life Sciences Corp., unless otherwise indicated. We have no subsidiaries.

Corporate History

We were incorporated in the State of Nevada on January 24, 2004, under the name "Thrifty Printing, Inc." On January 25, 2007, we changed our name to "Anavex Life Sciences Corp." We effected this name change by merging with our wholly owned subsidiary, named "Anavex Life Sciences Corp.", a Nevada corporation that we formed specifically for this purpose. We changed the name of our company to better reflect the direction and business of our company. Our name change was effected with NASDAQ on January 25, 2007 and our common shares became quoted on the OTC Bulletin Board on January 25, 2007 under the new stock symbol of "AVXL".

Our principal business office is located at 14 Rue Kleberg, CH-1201 Geneva, Switzerland. Our registered office for service in the State of Nevada is located at 3990 Warren Way, Reno, NV 89509.

Our Current Business

We are an emerging biopharmaceutical company engaged in the discovery and development of novel drug targets for the treatment of cancer and neurological diseases. Our proprietary SIGMACEPTOR™ discovery Platform involves the rational drug design of compounds that fulfill specific criteria based on unmet market needs and new scientific advances.

Our SIGMACEPTOR™-C program involves the development of novel and original drug candidates targeting cancer. Our lead drug candidates exhibit high, non-exclusive affinity for sigma receptors with strong evidence for selective pro-apoptotic, anti-metastatic and low toxicity properties in various types of solid cancers such as colon, prostate, breast, lung, etc.

Plan of Operation

The following discussion and analysis summarizes our plan of operation for the next 12 months, our results of operations for the nine months ended June 30, 2008, and changes in our financial condition from our year ended September 30, 2007.

Overview

This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those anticipated in these forward-looking statements.

Over the next 12 months, we will continue to develop our proprietary SIGMACEPTOR™ Discovery Platform to determine which compounds, if any, are ready for the next stage of research, be it pre-clinical or clinical trials. We will also, through the direction of our Chief Scientific Officer Dr. Vamvakides, engage certain research institutions and laboratories for the conduct of specific research and reports.

Anticipated Cash Requirements

For the next 12 months we plan to expend a total of approximately $7,185,000 to
continue the development of our proprietary SIGMACEPTOR™ Discovery Platforms.
The majority of our capital resources requirement is needed to enter one or more
of our current compounds into clinical trials. Specifically, we estimate our
operating expenses and working capital requirements for the next 12 months to be
as follows:

              Expense                                         Cost
              Research and Development Activities     $  5,200,000
              Officer and Employee Compensation            800,000
              Sales and Marketing                          175,000
              Legal, Accounting and Professional Fees      110,000
              General and Administrative                   900,000
              Total                                   $  7,185,000

Research and Development Activities

ANAVEX's SIGMACEPTOR(TM)-N program pipeline is focused on developing disease-modifying treatments for neurological conditions.

Considerable advancements have been made with ANAVEX 2-73 and its optimized derivative ANAVEX 19-144. ANAVEX 2-73 is expected to be the first compound to enter clinical trials in 2009 for Alzheimer's disease. Moreover, ANAVEX 2-73 or its optimized derivative ANAVEX 19-144 is intended

Promising developments have also been made with ANAVEX's ANAVEX 1-41. In recent pre-clinical animal studies, the compound demonstrated significant neuroprotective benefits through the prevention of oxidative stress, which damages and destroys cells and is believed to be a primary cause of Alzheimer's disease. The novel mechanism of action of ANAVEX 1-41 demonstrates that the compound may influence the course of Alzheimer's disease and prevent or limit the creation of plaques that destroy brain cells in the hippocampus, the part of the brain that regulates learning, emotion and memory. Published results were presented at the Neuroscience 2007 conference in San Diego, California. Most recent results were presented in the ICAD 2008 conference in Chicago, where the neuroprotective profile of the candidate drug was highlighted with accompanying results. Testing on ANAVEX 1-41 is being conducted in cooperation with Universite Montpellier in France. Phase 1 trials of ANAVEX 1-41 on humans are expected to commence late in 2009.

SIGMACEPTOR(TM)-C program pipeline involves the development of novel and original drug candidates targeting cancer. To date we have identified over 50 compounds that have exhibited growth inhibiting activity at a low micromolar and two of them even lower at a nanomolar range concentration.

ANAVEX 7-1037, the company's lead drug candidate for the treatment of colorectal cancer and other types of solid tumours, recently revealed chemotherapeutic potential without toxic side effects in advanced pre-clinical studies. The compound has been shown to kill human colon cancer cells and also significantly suppress tumour growth in immune-deficient mice. Published results were presented at the 15th Euroconference on Apoptosis in Portoroz, Slovenia. Testing on ANAVEX 7-1037 is being conducted in cooperation with the Academy of Athens' Institute of Biomedical Research.

Published results for ANAVEX 1-41, ANAVEX 2-73 and ANAVEX 7-1037 are available at www.anavex.com/publications.html.

Officer and Employee Compensation

We currently employ two executive officers including a president, and a chief scientific officer. Additionally we have three employees to assist in product research, strategic planning and business development. On February 1, 2008 we hired 19 consulting laboratory staff to work in our research facilities. We anticipate we may spend up to approximately $800,000 in compensation to our officers, employees and consultants during the next 12 months.

General Administration

We anticipate spending approximately $900,000 on general and administration costs in the next 12 months. These costs will consist primarily of rent and facility support expenses as well as finance and administrative support compensation but excluding legal fees and auditor's fees.

Results of Operations

Third Quarter and Nine Months Summary

                                 Three Months ended           Nine Months ended
                                       June 30                     June 30
                                  2008          2007          2008          2007
Revenue                      $          0   $        0   $          0   $        0
Expenses                        1,680,314      254,847      3,279,627      436,246
Interest and Dividend Income            0            0              0            0
Net Loss                     $  1,680,314   $  254,847   $  3,279,627   $  436,246

Revenue

We are presently in the exploration stage of our business. We have not earned any revenues to date, and do not anticipate earning revenues until we further develop our compound candidates and market them to pharmaceutical companies, which could take up to several years or more. Our company will not likely generate cash flow sufficient to meet our capital expenditure requirements for many years to come, if ever. We will require additional monies during the next 12 month period to execute our business plan. We plan to obtain this additional money through the sale of our equity securities or through borrowing the money from existing shareholders or third parties.

Expenses

Our operating expenses for the period ended June 30, 2008 and 2007 are outlined
in the table below:

                           Three Months Ended June 30          Nine Months Ended June 30
Expenses                     2008               2007             2008              2007
Accounting and audit   $        22,538    $        5,745   $        59,267    $     14,464
fees
Amortization                     4,816                 -             4,816               -
Bank charges and                22,928             1,638            36,549           2,223
interest
Consulting - Note 5            341,722           155,700           965,300         255,500
Legal fees                     (24,385 )          10,591            32,460          25,677
Management fees - Note               -                 -                 -               -
5
Office and                      27,973             8,445            90,520          20,681
miscellaneous
Registration and                 1,883             3,497             6,602           9,522
filing fees
Rent - Note 5                   15,000            30,000            75,000          40,000
Research and                   248,232            39,953           694,948          65,496
development
Stock based                    675,349                 -           959,349               -
compensation - Note 6
Website design and               1,424                 -             1,424           3,586
maintenance
                       $     1,337,480    $      255,569   $     2,926,235    $    437,149

Total operating expenses during the quarter ended June 30, 2008 increased by 171% compared to the same period in 2007 primarily due to increased research and development costs and increased consulting fees relating to the hire of our lab consultants.

Equity Compensation

On June 3, 2008, we approved a compensation package for company directors, under our 2007 Stock Option Plan, to issue 150,000 stock options to each director, exercisable into shares of common stock at an exercise price of US $5.00 per share until June 3, 2013. The options will vest in 50% increments with the first 50% vesting immediately and the second 50% vesting on June 3, 2009. We issued a total of 450,000 options to three of our directors.

Liquidity and Capital Resources

Working Capital

                                         At June 30, 2008 At March 31, 2008
       Current Assets                         10,799           14,188
       Current Liabilities                  1,790,842         1,107,709
       Working Capital Surplus (Deficit)   (1,780,043)       (1,093,521)


Cash Flows

                                                Nine Months Ended
                                                     June 30
                                                 2008       2007
Net cash used in operating activities         (1,709,601) (265,157)
Net cash provided by financing activities      1,821,052   253,000
Net cash used by investing activities          (105,677)      -
Increase (decrease) in cash during the period    5,774    (12,157)

Future Financing

We had cash in the amount of $5,799 as of June 30, 2008 and cash on hand as of the date of filing this quarterly report on Form 10-QSB is not sufficient to fund our current estimates of our operating expenses and working capital requirements for the next 12 months.

We anticipate that we will not be able to generate revenues until we further develop our compound candidates and market them to pharmaceutical companies, which could take up to several years or more. Our company will not likely generate cash flow sufficient to meet our capital expenditure requirements for many years to come, if ever. We will require additional monies during the next 12 month period to execute our business plan. We plan to obtain this additional money through the sale of our equity securities or through borrowing the money from existing shareholders or third parties.

It is possible that we may not be able to obtain funds required for our continued operation through the sale of our equity securities or through borrowing the money from existing shareholders or third parties. The additional financing we seek may not be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become due and we will be forced to scale down or perhaps even cease the operation of our business.

There is substantial risk regarding our ability to continue as a going concern as the continuation of our business is dependent upon obtaining further financing and the eventual success of our research and development program in discovering and developing a compound to the point where it can be marketed to pharmaceutical companies. Then, we will be dependant on the market acceptance of any product we may offer and the continuing successful development of our product offerings and related technologies. Finally, we will be required to achieve a profitable level of operations. However, these steps are a long way off for our company at its present stage and we must focus for the time being on raising funds and conducting our planned research and development. Because we intend to raise the additional funds through the sale of our equity securities, the issuance of additional equity securities by us could result in a

Off-Balance Sheet Arrangements

Our company has no outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. Our company does not engage in trading activities involving non-exchange traded contracts.

Much of the information included in this quarterly report includes or is based upon estimates, projections or other "forward looking statements". Such forward looking statements include any projections or estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.

Such estimates, projections or other "forward looking statements" involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other "forward looking statements". Prospective investors should consider carefully the risk factors set out below.

Risks Related To Our Business

We are an early development stage biotechnology research and development company and may never be able to successfully develop marketable products. We have a very limited relevant operating history upon which an evaluation of our performance and prospects can be made. There is no assurance our future operations will result in profits. If we cannot generate sufficient revenues, we may suspend or cease operations.

We are an early development stage company and have not generated any revenues to date and have no operating history. All of our potential drug compounds are in the concept stage and have not undergone significant testing in non-clinical studies or in clinical trials. Moreover, we cannot be certain that our research and development efforts will be successful or, if successful, that our potential drug compounds will ever be approved for sales to pharmaceutical companies or generate commercial revenues. We have no relevant operating history upon which an evaluation of our performance and prospects can be made. We are subject to all of the business risks associated with a new enterprise, including, but not limited to, risks of unforeseen capital requirements, failure of potential drug compounds either in non-clinical testing or in clinical trials, failure to establish business relationships and competitive disadvantages as against larger and more established companies. If we fail to become profitable, we may suspend or cease operations.

All of our potential drug compounds will require extensive additional research and development, including non-clinical testing and clinical trials, as well as regulatory approvals, before we can market them. We cannot predict if or when any of the potential drug compounds we intend to develop will be approved for marketing. There are many reasons that we may fail in our efforts to develop our potential drug compounds. These include:

º the possibility that non-clinical testing or clinical trials may show that our potential drug compounds are ineffective and/or cause harmful side effects;

º our potential drug compounds may prove to be too expensive to manufacture or administer to patients;

º our potential drug compounds may fail to receive necessary regulatory approvals from the United States Food and Drug Administration or foreign regulatory authorities in a timely manner, or at all;

º even if our potential drug compounds are approved, we may not be able to produce them in commercial quantities or at reasonable costs;

º even if our potential drug compounds are approved, they may not achieve commercial acceptance;

º regulatory or governmental authorities may apply restrictions to any of our potential drug compounds, which could adversely affect their commercial success; and

º the proprietary rights of other parties may prevent us or our potential collaborative partners from marketing our potential drug compounds.

If we fail to develop our potential drug compounds, our financial results and financial condition will be adversely affected, we will have to delay or terminate some or all of our research and development plans and may be forced to cease operations.

Our research and development plans will require substantial additional future funding which could impact our operational and financial condition. Without the required additional funds, we will likely cease operations.

It will take several years before we are able to develop marketable potential drug compounds, if at all. Our research and development plans will require substantial additional capital, arising from costs to:

º conduct research, non-clinical testing and human studies;

º establish pilot scale and commercial scale manufacturing processes and facilities; and

º establish and develop quality control, regulatory, marketing, sales, finance and administrative capabilities to support these programs.

º the pace of scientific progress in our research and development programs and the magnitude of these programs;
º the scope and results of preclinical testing and human studies;
º the time and costs involved in obtaining regulatory approvals;
º the time and costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims;
º competing technological and market developments;
º our ability to establish additional collaborations;
º changes in our existing collaborations;
º the cost of manufacturing scale-up; and
º the effectiveness of our commercialization activities.

We base our outlook regarding the need for funds on many uncertain variables. Such uncertainties include the success of our research initiatives, regulatory approvals, the timing of events outside our direct control such as negotiations with potential strategic partners and other factors. Any of these uncertain events can significantly change our cash requirements as they determine such one-time events as the receipt or payment of major milestones and other payments.

Additional funds will be required to support our operations and if we are unable to obtain them on favorable terms, we may be required to cease or reduce further research and development of our drug product programs, sell some or all of our intellectual property, merge with another entity or cease operations.

If we fail to demonstrate efficacy in our non-clinical studies and clinical trials our future business prospects, financial condition and operating results will be materially adversely affected.

The success of our research and development efforts will be greatly dependent upon our ability to demonstrate potential drug compound efficacy in non-clinical studies, as well as in clinical trials. Non-clinical studies involve testing potential drug compounds in appropriate non-human disease models to demonstrate efficacy and safety. Regulatory agencies evaluate these data carefully before they will approve clinical testing in humans. If certain non-clinical data reveals potential safety issues or the results are inconsistent with an expectation of the potential drug compound's efficacy in humans, the regulatory agencies may require additional more rigorous testing, before allowing human clinical trials. This additional testing will increase program expenses and extend timelines. We may decide to suspend further testing on our potential drug compounds if, in the judgment of our management and advisors, the non-clinical test results do not support further development.

Moreover, success in non-clinical testing and early clinical trials does not ensure that later clinical trials will be successful, and we cannot be sure that the results of later clinical trials will replicate the results of prior clinical trials and non-clinical testing. The clinical trial process may fail to demonstrate that our potential drug compounds are safe for humans and effective for indicated uses. This failure would cause us to abandon a drug candidate and may delay development of other potential drug compounds. Any delay in, or termination of, our non-clinical testing or clinical trials will delay the filing of an Investigational New Drug application and New Drug Application with the FDA and, ultimately, our ability to commercialize our potential drug compounds and generate product revenues. In addition, our clinical trials will involve small patient populations. Because of the small sample size, the results of these early clinical trials may not be indicative of future results.