Beleaguered Axovant Begins Cutting Jobs While Exiting CEO Gets $2.6M+ Severance Package

When David Hung abruptly left Axovant Sciences this week, he walked away with a hefty severance package of $2.26 million as well as a discretionary bonus of $300,000, according to a filing with the U.S. Securities and Exchange Commission.

Not only is Hung walking away with a comfortable severance package, Axovant also agreed to reimburse him for any ongoing medical expenses over the next 18 months. In retrospect, Hung was only with Axovant for a total of 10 months.

Hung’s departure was abrupt, but perhaps not totally unexpected given the serious missteps the company has made under his tenure. On Monday, Hung resigned his position as chief executive officer ostensibly “to pursue other opportunities,” according to a company statement. His departure from Axovant, one of billionaire biotech investor Vivek Ramaswamy’s companies, came after a series of stumbles during his tenure at the helm. First, the company’s hoped-for Alzheimer’s drug interpirdine failed to meet endpoints in a Phase III trial. Then interpirdine again failed in a Phase IIb trial as a treatment for patients with dementia with Lewy bodies (DLB). In January, Axovant announced it was scrapping interpirdine, a 5-HT6 receptor antagonist the company acquired from GlaxoSmithKline for $5 million.

Perhaps though, the final straw came at the J.P. Morgan Healthcare Conference in January. Hung and Axovant were forced to admit it misreported mid-stage data on a drug it hoped to take into Phase III. During the conference, Hung announced that nelotanserin, a 5-HT2a receptor inverse agonist, showed a positive trend in motor improvement in patients with dementia with Lewy bodies (DLB) and Parkinson’s disease dementia (PDD). One day after making that announcement though, the company retracted its statement.

While Hung has left his role as CEO, he will still work with Axovant as a scientific advisor. The same can’t be said for some company employees. In addition to announcing Hung’s departure on Monday, the company announced a corporate realignment that includes a headcount reduction. That reduction, according to the SEC filing, will include layoffs as well as some employees being transferred to positions in other Ramaswamy companies. Although Axovant did not provide a headcount of those who would be leaving the company, it did say the company will pay about $1.5 million in severance and related costs. The headcount reduction is expected to be completed in the third quarter, Axovant said in its SEC filing.

Also included in the SEC filing is the compensation for new CEO Pavan Cheruvu, who has been with the company since 2015. Cheruvu will have a salary of $500,000 and will be eligible for annual bonuses that have a target amount equal to 60 percent of his salary beginning with the next fiscal year, according to the filing. When he was tapped as CEO, Cheruvu was awarded 1.9 million shares of stock at $1.81 per share. That totals about $3.4 million.

Shares of Axovant were down nearly 10 percent Wednesday. The stock closed at $1.63 per share. In premarket trading though, shares jumped about 4 percent to $1.69.