Market Hopes Lightning Strikes Twice for New CEO of Axovant Sciences Ltd. (NYSE:AXON)

Axovant Sciences Ltd. (NYSE:AXON)

Axovant Sciences Ltd. (NYSE:AXON) today announced that it has acquired the services of Dr. David Hung as CEO and shares have rocketed in response. Last year Dr. David Hung successfully led the biotech firm he founded, Medivation, to an exit through acquisition by Pfizer for $14.3 billion. That exit gave investors a 32-fold return on their initial investment. Axovant’s board hopes that lightening can strike twice and the market has signaled approval by sending AXON shares 25% higher on heavy volumes.

Dr. Hung, an oncologist, founded Medivation as a biotech firm that would address the Alzheimer’s disease but after some failed clinical trials he changed direction and ultimately developed the prostate cancer drug Xtandi. That drug’s success led to Pfizer’s $14 billion acquisition of the company and the acknowledgement that Dr. Hung was one of the few proven stars of the biotech industry. After reviewing over 20 offers, Dr. Hung settled on Axovant Sciences Ltd. (NYSE:AXON).

Axovant Sciences Ltd. (NYSE:AXON) was not founded by a healthcare professional, but by a 31-year-old former hedge fund manager named Vivek Ramaswamy. Ramaswamy was Axovant’s CEO until he convinced Dr. Hung to take the reins. Axovant is one of five firms that Ramaswamy founded under the umbrella of Roivant Sciences. Dr. Hung’s return to a biotech firm addressing Alzheimer’s leads many to speculate that the original failing of Medivation to successfully tackle the disease left Dr. Hung with a hunger to take the dreaded disease on once again. But experts caution that Alzheimer’s is a much greater challenge than prostate cancer and that the road to a successful treatment is littered with biotech firms that tried, and failed, to bring a treatment to market.

Currently Axovant Sciences Ltd. (NYSE:AXON) is in Phase 2 clinical trials with Intepirdine. Top line results are due by late September of 2017. In spite of the reaction of investors to Dr. Hung’s hiring, analysts acknowledge that Intepirdine has been a failure at Lundbeck, Pfizer, and Glaxo and few experts give the drug better odds of success at Axovant. Regardless of the skill and acumen Dr. Hung brings to the table, the results are already in the pipeline. Many believe Hung’s contribution will be long-term and may not even result in an Alzheimers treatment given his ability to pivot business objectives when needed.

Axovant Sciences Ltd. (NYSE:AXON) traded above $31 after its IPO in early 2016. However, AXON shares have mostly traded at less than half of that figure since the public offering. Prior to the announcement of Dr. Hung’s appointment to the CEO position, analysts were decidedly split on the future of Axovant Sciences Ltd. (NYSE:AXON). In December of 2016, Oppenheimer rated AXON shares as a “Strong Buy” but a short time later in that same month, Laidlaw rated AXON shares as a “Sell”.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

Author: Marcus Anderson

Marc has a degree in economics and a MSc. in Finance. Marc worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

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