Why Former Medivation CEO and a Once-Failed Alzheimer's Drug Could be a Recipe for Disaster for Axovant

Why Former Medivation CEO and a Once-Failed Alzheimer's Drug Could be a Recipe for Disaster for Axovant April 19, 2017
By Mark Terry, BioSpace.com Breaking News Staff

Axovant Sciences recently announced that David Hung, former founder, president and chief executive officer of Medivation was named to be its new chief executive officer. Shortly after that announcement, Axovant exploded, from $15.02 on April 5 to its current price of $21.61.

David Liang, writing for The Motley Fool, says, “Whoa, whoa, whoa! It’s still Axovant. Let’s not get too excited here.”

Let’s take a look.

Hung is notable for having sold his company to Pfizer (PFE) last year for $14 billion. Axovant, however, is not Medivation. Or as Liang pungently writes, “Let’s call a spade a spade here—a fresh coat of paint won’t make this outhouse a mansion.”

Axovant’s founder, Vivek Ramaswamy, is 31 years old, a former hedge fund manager dubbed a “whiz kid” for launching several pricey IPOs. So, investors seem to have confidence in him—or at least his charisma—but his track record is, well, sort of nonexistent.

Liang writes, “And Ramaswamy, although he can list an undergraduate degree from Harvard and a law degree from Yale on his CV, has never before successfully brought a drug from development to commercialization.” Which does make one wonder where all the investor enthusiasm comes from.

And Axovant has a primary drug, RVT-101 (intepirdine), for Alzheimer’s disease. Topline results are expected from the MINSET trial in late September 2017. The trial looks at 1,315 patients on a stable background therapy of donepezil (Aricept) who will receive either intepirdine or a placebo.

Which is where things get even more problematic. First, late-stage trials are where Alzheimer’s drugs go to die. Well over 125 have failed in Phase III trials after promising results in early-stage trials.

Liang writes, “Over the past decade, 99.6 percent of Alzheimer’s treatments have failed in clinical trials. I believe RVT-101 will be no different. RVT-101 is what is known as a 5-HT6 inhibitor. As mentioned earlier, this drug is believed to function by increasing the release of acetylcholine in the brain. While this sounds like it may work in theory, a Danish pharmaceutical company called Lundbeck previously pulled the plug on the development of its own 5-HT6 product after it failed in three consecutive studies as treatment for Alzheimer’s in 2015.”

Ramaswamy acquired intepirdine from GlaxoSmithKline for $5 million. GSK was willing to give up on intepirdine for so little because it had already failed four consecutive mid-stage trials for Alzheimer’s disease.

If there’s anything going for the drug, it’s that Aricepet is the top-selling Alzheimer’s drug. It’s generally not considered all that great a drug—there are currently no great drugs for Alzheimer’s disease—but it’s what gets prescribed the most. If intepirdine can show that it helps Aricept work a little better, then it might tag along for the ride.

Liang also writes, “Lastly, and potentially most troubling, the company lists Ramaswamy’s mother and brother as the Vice President of Medical Affairs and the Vice President of Corporate Development for Axovant, respectively. In 2015, these two were granted stock options totaling 1,012,500 common shares.”

It’s not completely clear why this is a problem. His mother, Geetha Ramaswamy, was a geriatric psychiatrist with Merck and Schering-Plough, so there seem to be legitimate credentials there. The brother, Shankar Ramaswamy, although his professional credentials appear to be limited to his brother’s companies, did receive his MD from Brown University. And when Hung came on board, he brought experienced people with him, Marion McCourt as president and chief operating officer, her position at Medivation, and Kathryn Falberg and William Anthony Vernon as independent directors.

But Liang’s hardly the only critic of intepirdine. Derek Lowe, writing for Science Translational Medicine, “You would never know, to read a lot of Ramaswamy’s press coverage that the Axovant drug works through a mechanism that has failed twice in Alzheimer’s clinical trials so far. It has an extremely low chance of working this time, too—if there’s some convincing reason why this latest attempt should succeed where the others have failed, I haven’t heard it. So the risk/reward behind Axovant’s IPO makes no sense to me at all.”

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