Axovant Fails To Pull The Sword From The Stone; Alzheimer's Drug Fails

Axovant Sciences Ltd AXON suffered a setback in its phase 3 trial called MINDSET in which its exploratory drug called intepirdine failed to improve the quality of life in people suffering from Alzheimer's. The drug isn't intended to be a cure for the disease but the company expected the therapy to at least delay the worst symptoms, STAT noted.

Intepirdine failed in both the primary endpoint of cognition and function over 24 weeks compared to baseline, Oppenheimer's Jay Olson commented in a research report. A secondary endpoint was the Clinician Interview-Based Impression of Change plus caregiver interview (CIBIC+), which showed 0.12 points with a p-value of 0.02.

Shares of Axovant plummeted more than 70 percent Tuesday and hit a new 52-week low of $6.13 before slightly rebounding.

Axovant does have another phase 2b trial called HEADWAY which is underway for the treatment of DLB and data is expected by the end of the year of 2017, the analyst continued. The dose in this trial is higher and DLB is fundamentally different compared to Alzheimer's (see Olson's track record here).

Also, the company does have a second asset called nelotanserin which has shown some promising results in the treatment of DLB in two ongoing phase 2 trials. But the DLB trial in patients with RBD remains in the enrolling stage and data isn't expected until 2018.

Finally, the phase 3 trial results represents a "major disappointment" and a "setback" for Axovant but "nelotanserin and a potential deal could help AXON get back on track." In the meantime, Olson downgrades Axovant's stock rating from Outperform to Perform while withdrawing a prior $30 price target.

"While we had previously predicted an $11 floor in AXON shares consisting of $8 for nelotanserin and $3 of cash, the company plans to deploy cash for business development to rebuild its pipeline," the analyst concluded. "We prefer to hold off assigning value to cash until we see specific assets brought into the pipeline."

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