Axovant Takes Center Stage With Biggest Biotech IPO Ever, Baby-Faced CEO

Axovant Takes Center Stage With Biggest Biotech IPO Ever, Baby-Faced CEO
June 12, 2015
By Mark Terry and Riley McDermid, Breaking News Staff

NEW YORK -- Alzheimer’s drugmaker Axovant Sciences Ltd. exploded onto the public scene this week, raising $315 million in its initial public offering Wednesday night, the largest ever deal for a pre-revenue biotech company, according to data compiled by Bloomberg. By the end of trading Thursday, shares in the company doubled to a market value of $2.87 billion.

The startup biotech is banking on one Alzheimer’s treatment, RVT-101 , it acquired from GlaxoSmithKline . The company has raised eyebrows because it is led by 29-year-old Vivek Ramaswamy, a former hedge fund manager, the rare CEO under 30 for biotech, which typically has older C-level executives.

Axovant’s IPO was $15 per share, and on Thursday rose nearly 100 percent to $29.90 per share. The stock was continuing to rise this morning, selling at $29.90 per share at the time of this writing. Since the start of the year the biotech industry has raised $1.6 billion on the NASDAQ Biotech Index, according to Bloomberg. The NBI is trading at 9.8 times annual sales, compared with 1.9 times for the S&P 500, which has some analysts worried that the biotech stocks are becoming overvalued.

Bermuda-based Axovant acquired RVT-101 from GSK in December for $5 million, plus additional milestone payments if the drug is approved. The Alzheimer’s drug is currently Axovant’s sole drug prospect, which means the drug once worth $5 million to GSK, is now valued at more than $2 billion based on the stock prices. Phase II trials showed RVT-101 was successful in alleviating some of the symptoms of the drug, but did not prevent the disease from progressing, CNBC reported.

RVT-101 is a neurotransmitter targeted therapy that works through the release of acetylcholine. The company is expected to take the drug into Phase III trials. Ramaswamy told CNBC the basic science behind the drug has shown to be an effective treatment in the battle against the debilitating Alzheimer’s, and he believes the drug is “only one additional phase 3 study away from the approval of this drug on a global basis.”

Ramaswamy also said he was interested in advancing RVT-101 for the treatment of other forms of dementia. While RVT-101 is currently the company’s only drug, Ramaswamy told Bloomberg the company would likely seek to acquire more drug prospects for its pipeline.

In addition to helming Axovant, Ramaswamy founded Roivant Sciences, sits on the board of OnCore Biopharma and is chairman of the board of Tekmira Pharmaceuticals .

The Alzheimer’s market is highly competitive, with multiple companies working on treatments for various stages of the disease. Eli Lilly and Company and Biogen, Inc. are working on treatments to slow the disease’s advance. Additionally, earlier this year Biogen reported positive results with its experimental Alzheimer’s drug BIIB037, which targets amyloid plaque in the brain, which many believe is at the root of the disease. In April Biogen announced its drug BIIB037, or aducanumab, led to reductions in brain amyloid plaque by as much as 71 percent. The plaque reduction was more pronounced as the dose of the drug increased and over time and Biogen also announced the drug was able to reduce cognitive decline.

Mark Schoenebaum, a biotech analyst and medical doctor who leads the biotech team at ISI Evercore, said in a note to investors in May that the drug is already setting itself up as a competitor for Eli Lilly and Company (LLY)’s solanezumab. “The doctor's overall impression of the data was extremely positive, with caveats,” wrote Schoenebaum in a note.

“In our doctor's opinion, the data presented today put BIIB037 ‘in a completely different league’ than Lilly's solanezumab,” said Schoenebaum. “He said that most investigators were very positive about the data, and some were ecstatic. For our doctor, it was critical there was a dose response curve on MMSE and CDR-SB in a relatively short time frame.”

BIIB037 binds to amyloid plaques in the brain as a way to slow the progress of Alzheimer's disease (AD). Biogen's head of research and development, Doug Williams, said at the time it had achieved those endpoints and more, reducing amyloid levels in “both a dose- and time-dependent fashion."

Williams said that BIIB037 improved cognition in patients with early signs of the disease 54 weeks after starting treatment, in a Phase 1 trial involving 200 patients. He added that Biogen will present full results of the trial at a medical meeting next year.

Because of those encouraging results at such an early stage of testing, the company will be leap-frogging BIIB037 into Phase III trials, said Biogen. It did not give a date for when the trials would start but analysts have projected the likely start will be mid-2015.

Wall Street analysts presented with the data at Deutsche Bank 's BioFEST conference in Boston last Dec. 6 were literally speechless at the impact of the results in a field known for chronic failures.

"You've got me tongue-twisted with the Alzheimer's data," Deutsche Bank analyst Robyn Karnauskas told Williams during the presentation, reported CNBC.

The overwhelmingly encouraging results were a surprise to biotech watchers, because several large companies have tried and failed to develop similar Alzheimer’s therapies in recent year, including Johnson & Johnson , Eli Lilly and Company (LLY) and Pfizer Inc. .

Biogen is looking to begin a Phase III trial, which if it proves successful, would then lead the company to seek approval to market the drug. There are several drugs on the market that help manage Alzheimer’s, but none treat the primary cause, including Eisai Company, Ltd.’s Aracept. According to a Bloomberg report, there have been more than 100 failed efforts to develop a treatment for Alzheimer’s disease since 1998. A 2014 report in Alzheimer’s Research UK showed 244 Alzheimer’s drugs were tested between 2002 and 2012, but only one was approved – Lundbeck A/S’s Ebixa, Bidness Etc. reported. In an interview with Forbes, Ramaswamy told Forbes RVT-101 benefited both cognition and patients’ ability to function at 24 weeks, something he said Ebixa is unable to do.

Alzheimer's disease, a type of dementia, affects 15 million people worldwide, a number that is expected to grow to 75 million by 2030 due, in part, to the lack of effective treatments. In total there are about 50 million people suffering from some form of dementia worldwide. There are currently no drugs that target the cause of Alzheimer’s the most common form of dementia. There is a widespread belief that the buildup of amyloid plaque in the brain is one of the primary causes of the disease.

The size of the market for patients with AD varies in estimates, but Schoenebaum has predicted pricing to weigh in at around $25,000 per course.

“There are 600,000 mild AD patients in the U.S.,” he wrote. “At a net price of around $20,000 (below TNFs), 65 percent penetration would yield a potential sales opportunity of around $8 billion in the U.S. alone. The ex-U.S. patient opportunity is similar, but price will probably be lower.”

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