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The Small-Cap Biotech That Could Take Down Biogen (BIIB), Celgene (CELG), Eli Lilly (LLY) and Gilead (GILD) in Alzheimer's

11/9/2016 6:06:55 AM

The Small-Cap Biotech That Could Take Down Biogen, Celgene, Eli Lilly and Gilead in Alzheimer's November 9, 2016
By Mark Terry, Breaking News Staff

Can Hamilton, Bermuda-based Axovant (AXON) beat Biogen (BIIB), Celgene (CELG), Eli Lilly (LLY) and Gilead (GILD) to the market with an Alzheimer’s drug? At least one analyst thinks it’s possible.

On October 6, Axovant announced that its first patients had been screened for its confirmatory Phase III trial of RVT-101 in Alzheimer’s. It also indicated the U.S. Food and Drug Administration (FDA) had granted the study a Special Protocol Assessment (SPA). The trial, called MINDSET, is an international, multi-center, double blind, placebo-controlled 24-week trial.

On November 7, the company released its second-quarter and first-half financial results, as well as a dementia pipeline update.

“We are pleased to announce that patient recruitment in the MINDSET study is expected to conclude by the end of 2016,” said Vivek Ramaswamy, Axovant’s chief executive officer, in a statement. “An important part of our mission is to accelerate the development of promising drug candidates to improve the lives of patients and their families. We are delighted with the rapid enrollment of the MINDSET study, in which we are evaluating intepirdine as an oral, once-daily, add-on therapy to the current standard of care in mild-to-moderate Alzheimer’s disease. We look forward to announcing the results from the MINDSET study, the HEADWAY-DLB study, and our broader set of pipeline programs throughout 2017.”

Although Gilead, Celgene, Merck (MRK) and others are all going after Alzheimer’s with trial results expected in the upcoming year, the most direct competitor to Axovant is Danish company Lundbeck. Lundbeck’s idalopirdine has a similar mechanism of action as intepirdine, and has two Phase III trials due in 2017. Both drugs are 5HT6 antagonists. RBC analyst Michael Yee, in a note to investors this week, only gives Lundbeck’s drug a 20 percent probability of success.

Lundbeck’s drug failed a pivotal Phase III study in September.
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He’s far more optimistic about Axovant’s chances, writing, “We see 60 percent probability of success for Phase III (intepirdine) on a $2 billion to $4 billion Alzheimer’s drug, which could result in five to 10 times potential upside.” He also gave the company’s stock an outperform rating and a $40 price target. But the company stock is currently trading down for $11.66.

A lot of that is because of the financial part. The company reported $32 million in research and development expenses for the quarter, and $57.35 million for the six-month period. Shares had dropped 7.2 percent to $11.15 on November 7, a five-month low.

The company is also testing another drug, nelotanserin, for the visual hallucinations caused by Alzheimer’s disease and Lewy body dementia. Axovant projects data from a Phase II trial of 20 patients will be released in February. Yee wrote, “If data were great (strong numerical reduction in hallucinations), we believe we could see a 20 to 25 percent move for Axovant versus minor downside if negative.” But the key catalyst is the MINDSET trial data later in the year.

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