Axovant Sciences Ltd (NASDAQ:AXON)

Axovant Sciences Ltd (NASDAQ:AXON) Alzheimer’s Treatment Flops

Axovant Sciences Ltd (NASDAQ:AXON)

Pharmaceutical firm Axovant Sciences Ltd (NASDAQ:AXON) has disclosed that development for a trial Alzheimer’s drug would be halted after it failed to meet its endpoints. Consequently shares of the company fell by 74.7% to settle at $6.13 on Tuesday – a record low.

According to the New York-based firm, there was no difference between a placebo and the drug (known as intepirdine) in the trial involving 1,150 participants. The trial measured the ability of trial participants to carry out regular daily activities such as bathing and dressing. The drug did not affect brain power significantly.

Axovant Sciences Ltd (NASDAQ:AXON)

5-HT6 antagonists

Intepirdine was meant to be taken daily. It is in the class of treatments known as 5-HT6 antagonists. These drugs work by assisting in the release of acetylcholine by blocking 5-HT6 receptors. Acetylcholine is a neurotransmitter which is required in order to perform normal cognitive activities. The failure has raised doubts over whether the mechanism has potential in the development of Alzheimer’s treatments.

“Following a slew of failures with other 5-HT6 receptor antagonists, Axovant Sciences Ltd (NASDAQ:AXON)’s intepirdine put the nail in the coffin for the mechanism in Alzheimer’s disease,” Brian Skorney an analyst at Baird wrote in a research note.

Alzheimer’s is the most common type of dementia. In the United States it affects approximately 5.5 million people. Earlier in the year Lundbeck, a pharmaceutical firm based in Denmark, revealed that the late-phase trials of a similar drug using the same mechanism had failed to meet the endpoints as well. Other pharmaceutical companies that have failed to develop an Alzheimer’s drug include Merck and Eli Lilly.

Consistent failure

Over the years drug companies have invested billions of dollars trying to find a treatment for Alzheimer’s since the potential global market for a cure is 44 million-strong. So far only four Alzheimer’s drugs have received U.S. Food and Drug Administration (FDA) approval. The last time the FDA greenlit a new Alzheimer’s drug was 14 years ago. According to some analysts and doctors, pharmaceutical firms are conducting trials without having a full understanding of the science behind the disease.

Axovant Sciences Ltd (NASDAQ:AXON) did not develop intepirdine from the ground up and had actually bought the rights from GlaxoSmithKline three years ago at a price of $5 million. The pharmaceutical startup went public a year later in 2015 achieving a valuation of close to $3 billion. At the time questions were raised over the lofty valuation given that it was based on a drug which in the hands of the previous owner, GSK, had flopped consistently in trials.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: Monica has an undergraduate degree in Accounting and an MBA she earned – with Honors. She has six years of experience in the financial markets and has been an analyst for the past two years.

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.